Omnibus Budget Reconciliation Act of 1990
PL 101-508 (H.R.5835), enacted 11/05/1990

104 STAT. 1388 
PUBLIC LAW 101-508—NOV. 5, 1990 
Public Law 101-508 
101st Congress 
An Act 
Nov. 5, 1990 
[H.R. 5835] 
Omnibus Budget 
Reconciliation 
Act of 1990. 
Agricultural 
Reconciliation 
Act of 1990. 
To provide for reconciliation pursuant to section 4 of the concurrent resolution on the 
budget for fiscal year 1991. 
Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the "Omnibus Budget Reconciliation Act 
of 1990". 
SEC. 2. TABLE OF TITLES. 
Title I. Agriculture and related programs. 
Title II. Banking, housing, and related programs. 
Title III. Student loans and labor provisions. 
Title IV. Medicare, medicaid, and other health-related programs. 
Title V. Income security, human resources, and related programs. 
Title VI. Energy and environmental programs. 
Title VII. Civil service and postal service programs. 
Title VIII. Veterans' programs. 
Title IX. Transportation. 
Title X. Miscellaneous user fees and other provisions. 
Title XI. Revenue provisions. 
Title XII. Pensions. 
Title XIII. Budget enforcement. 
TITLE I—AGRICULTURE AND RELATED 
PROGRAMS 
SEC. 1001. SHORT TITLE; TABLE OF CONTENTS. 
7 use 1421 note. 
(a) SHORT TITLE.—This title may be cited as the "Agricultural 
Reconciliation Act of 1990". 
(b) TABLE OF CONTENTS.—The table of contents of this title is as 
follows: 
Sec. 1001. Short title; table of contents. 
Subtitle A—Commodity Programs 
Sec. 1101. Triple base for deficiency payments. 
Sec. 1102. Calculation of deficiency payments based on 12-month average. 
Sec. 1103. Acreage reduction program for 1991 crop. 
Sec. 1104. Acreage reduction programs for 1992 through 1995 crops. 
Sec. 1105. Loan origination fees and other savings. 
Subtitle B—Other Agricultural Programs 
Sec. 1201. Authorization levels for rural electric and telephone loans. 
Sec. 1202. Authorization levels for FmHA loans. 
Sec. 1203. APHIS inspection user fee on international passengers. 
Sec. 1204. Additional savings and other provisions. 
Subtitle C—Effective Date 
Sec. 1301. Effective date. 
Sec. 1302. Readjustment of support levels. 
ENROLLMENT ERRATA 
Pursuant to the provisions of H.J. Res. 682, waiving certain enrollment require-
ments with respect to any reconciliation bill, appropriation bill, or continuing reso-
lution for the remainder of the One Hundred First Congress, and providing for the 
subsequent preparation and certification of printed enrollments, this printed enroll-
ment contains corrections in indentation, typeface, and type size and includes foot-
notes identifying obvious errors in spelling or punctuation in the hand enrollment. 
•Note: For information on the printing of this law and a related Presidential memorandum, see the editorial 
note at the end. 
PUBLIC LAW 101-508—NOV. 5, 1990 
Subtitle A—Commodity Programs 
104 STAT. 1388-1 
SEC. 1101. TRIPLE BASE FOR DEFICIENCY PAYMENTS. 
(a) WHEAT.—Section 107B(c)(l)(C)(ii) of the Agricultural Act of 
1949 (as added by section 301 of the Food, Agriculture, Conservation, 
and Trade Act of 1990) is amended by striking "100 percent" and 
inserting "85 percent". 
(b) FEED GRAINS.—Section 105B(c)(l)(C)(ii) of the Agricultural Act 
of 1949 (as added by section 401 of the Food, Agriculture, Conserva-
tion, and Trade Act of 1990) is amended by striking "100 percent" 
and inserting "85 percent". 
(c) UPLAND COTTON.—Section 103B(c)(l)(C)(ii) of the Agricultural 
Act of 1949 (as added by section 501 of the Food, Agriculture, 
Conservation, and Trade Act of 1990) is amended by striking "10() 
percent" and inserting "85 percent". 
(d) RICE.—Section 101B(c)(l)(C)(ii) of the Agricultural Act of 1949 
(as added by section 601 of the Food, Agriculture, Conservation, and 
Trade Act of 1990) is amended by striking "100 percent" and insert-
ing "85 percent". 
SEC. 1102. CALCULATION OF DEFICIENCY PAYMENTS BASED ON 12-
MONTH AVERAGE. 
(a) WHEAT.—Clause (ii) of section 107B(c)(l)(B) of the Agricultural 
Act of 1949 (as added by section 301 of the Food, Agriculture, 
Conservation, and Trade Act of 1990) is amended to read as follows: 
"(ii) PAYMENT RATE OF 1994 AND 1995 CROPS.—The 
payment rate for each of the 1994 and 1995 crops of 
wheat shall be the amount by which the established 
price for the crop of wheat exceeds the higher o
f
— 
"(I) the lesser of— 
"(aa) the national weighted average market 
price received by producers during the market-
ing year for the crop, as determined by the 
Secretary; or 
"(bb) the national weighted average market 
price received by producers during the first 5 
months of the marketing year for the crop, as 
determined by the Secretary, plus 10 cents per 
bushel; or 
"(II) the loan level determined for the crop, prior 
to any adjustment made under subsection (a)(3) for 
the marketing year for the crop of wheat.". 
Qa) FEED GRAINS.—Clause (ii) of section 105B(c)(l)(B) of the Agricul-
tural Act of 1949 (as added by section 401 of the Food, Agriculture, 
Conservation, and Trade Act of 1990) is amended to read as follows: 
"(ii) PAYMENT RATE OF 1994 AND 1995 CROPS.—The 
payment rate for each of the 1994 and 1995 crops of 
corn, grain sorghums, oats, and barley shall be the 
amount by which the established price for the respec-
tive crop of feed grains exceeds the higher of— 
"(I) the lesser of— 
"(aa) the national weighted average market 
price received by producers during the market-
ing year for the crop, as determined by the 
Secretary; or 
7 use 1445b-3a. 
7 use 1444f. 
7 use 1444-2. 
7 use 1441-2. 
104 STAT. 1388-2 
PUBLIC LAW 101-508—NOV. 5, 1990 
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7 u s e 1445J. 
7 u s e 1445b-3a 
note. 
7 u s e 1444f. 
"(bb) the national weighted average market 
price received by producers during the first 5 
months of the marketing year for the crop, as 
determined by the Secretary, plus 7 cents per 
bushel; or 
"(11) the loan level determined for the crop, prior 
to any adjustment made under subsection (a)(3) for 
the marketing year for the respective crop of feed 
grains.". 
(c) RICE.—Clause (ii) of section 101B(c)(l)(B) of the Agricultural Act 
of 1949 (as added by section 601 of the Food, Agriculture, Conserva-
tion, and Trade Act of 1990) is amended to read as follows: 
"(ii) 
PAYMENT RATE OF 1994 
AND 1 9 9 5 CROPS.—The 
payment rate for each of the 1994 and 1995 crops of rice 
shall be the amount by which the established price for 
the crop of rice exceeds the higher of— 
"(I) the lesser of— 
"(aa) the national average market price re-
ceived by producers during the calendar year 
that contains the first 5 months of the market-
ing year for the crop, as determined by the 
Secretary; or 
"(bb) the national average market price re-
ceived by producers during the first 5 months 
of the marketing year for the crop, as deter-
mined by the Secretary, plus an appropriate 
amount that is fair and equitable in relation to 
wheat and feed grains (as determined by the 
Secretary); or 
"(II) the loan level determined for the crop.". 
(d) CONFORMING AMENDMENT.—Section 114(c) of the Agricultural 
Act of 1949 (as amended by section 1121(a) of the Food, Agriculture, 
Conservation, and Trade Act of 1990 and redesignated by section 
1161(a)(1) of such Act) by striking "wheat, feed grains, and rice 
which payments are calculated on the basis of the national weighted 
average market price (or, in the case of rice, the national average 
market price) for the marketing year for the crop" and inserting 
"wheat and feed grains which payments are calculated as provided 
in sections 107B(c)(lXB)(ii), 107B(p), or 105B(c)(lXB)(ii)". 
SEC. 1103. ACREAGE REDUCTION PROGRAM FOR 1991 CROP. 
, (a) WHEAT.—In the case of the 1991 crop of wheat, the Secretary of 
Agriculture shall provide for an acreage limitation program as 
described in section 107B(e)(l)(F) of the Agricultural Act of 1949 (as 
added by section 301 of the Food, Agriculture, Conservation, and 
Trade Act of 1990). 
(b) FEED GRAINS.—Subparagraph (F) of section 105B(e)(l) of the 
Agricultural Act of 1949 (as added by section 401 of the Food, 
Agriculture, Conservation, and Trade Act of 1990) is amended to 
read as follows: 
"(F) 
ACREAGE LIMITATION PROGRAM FOR 1 9 9 1 CROP.—In 
the case of the 1991 crop of corn, the Secretary shall provide 
for an acreage limitation program (as described in para-
graph (2)) under which the acreage planted to corn for 
harvest on a farm would be limited to the corn crop acreage 
base for the farm for the crop reduced by not less than 7.5 
percent.". 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-3 
SEC. 1104. ACREAGE REDUCTION PROGRAMS FOR 1992 THROUGH 1995 
7 USC 1445-3a 
CROPS. 
no*«-
(a) IN GENERAL.—Notwithstanding any other provision of law, 
except as provided in subsections 03) and (c), the Secretary of Agri-
culture shall announce an acreage limitation program for each of 
the 1992 through 1995 crops of— 
(1) wheat under which the acreage planted to wheat for 
harvest on a farm would be limited to the wheat crop acreage 
base for the farm for the crop reduced by— 
(A) in the case of the 1992 crop of wheat, not less than 6 
percent; 
(B) in the case of the 1993 crop of wheat, not less than 5 
percent; 
(C) in the case of the 1994 crop of wheat, not less than 7 
percent; and 
(D) in the case of the 1995 crop of wheat, not less than 5 
percent; and 
(2) corn, grain sorghum, and barley under which the acreage 
planted to the respective feed grain for harvest on a farm would 
be limited to the respective feed grain crop acreage base for the 
farm for the crop reduced by not less than 7 ¥2 percent. 
(b) STOCKS-TO-USE RATIO.—Subsection (a) shall not apply to a crop 
if the Secretary estimates for such crop that the stocks-to-use ratio 
will be less than— 
(1) in the case of wheat, 34 percent; and 
(2) in the case of corn, grain sorghum, and barley, 20 percent. 
(c) TERMINATION.—If the Secretary determines that the quantity 
of soybeans on hand in the United States on the first day of the 
marketing year for the 1991 crop of soybeans (not including any 
quantity of soybeans of the 1991 crop) will be less than 325,000,000 
bushels, subsection (a) shall not apply to any of the 1992 through 
1995 crops of wheat and feed grains. 
SEC. 1105. LOAN ORIGINATION FEES AND OTHER SAVINGS. 
(a) OILSEEDS.—Section 205 of the Agricultural Act of 1949 (as 7USC1446f. 
added by section 701(2) of the Food, Agriculture, Conservation, and 
Trade Act of 1990) is amended— 
(1) by redesignating subsection (m) as subsection (n); and 
(2) by inserting after subsection (1) the following new subsec-
tion: 
"(m) LOAN ORIGINATION FEE.— 
"(1) LOANS.—The Secretary shall charge a producer a loan 
origination fee for a crop of oilseeds, in connection with making 
a loan, equal to the product obtained by multiplying— 
"(A) the loan level determined for the crop under subsec-
tion (c); by 
"(B) 2 percent; by 
"(C) the quantity of oilseeds for which the producer ob-
tains the loan. 
"(2) LOAN DEFICIENCY PAYMENTS.—The Secretary shall deduct, 
from the amount of any loan deficiency payment made under 
subsection (e), an amount equal to the amount of the loan 
origination fee that would otherwise be paid under paragraph 
(1) if the producer obtained a loan rather a loan deficiency 
payment.". 
(b) PEANUTS.— 
104 STAT. 1388-4 
PUBLIC LAW 101-508—NOV. 5, 1990 
7 use I446c-a. 
(1) IN GENERAL.—Section 108B of the Agricultural Act of 1949 
(as added by section 806 of the Food, Agriculture, Conservation, 
and Trade Act of 1990) is amended— 
(A) by redesignating subsection (g) as subsection (h); and 
(B) by inserting after subsection (f) the following new 
subsection: 
^ 
"(g) MARKETING ASSESSMENT.— 
"(1) IN GENERAL.—The Secretary shall provide, by regulation, 
for a nonrefundable marketing assessment applicable to each of 
the 1991 through 1995 crops of peanuts. The assessment shall be 
made in accordance with this subsection and shall be on a per 
pound basis in an amount equal to 1 percent of the national 
average quota or additional peanut support rate per pound, as 
applicable, for the applicable crop. No peanuts shall be assessed 
more than 1 percent of the applicable support rate under this 
subsection. 
"(2) FIRST PURCHASERS.— 
"(A) IN GENERAL.—Except as provided under paragraphs 
(3) and (4), the first purchaser of peanuts shall— 
"(i) collect from the producer a marketing assessment 
equal to Vi percent of the applicable national average 
support rate times the quantity of peanuts acquired; 
"(ii) pay, in addition to the amount collected under 
clause (i), a marketing assessment in an amount equal 
to y^ percent of the applicable national average support 
rate times the quantity of peanuts acquired; and 
"(iii) remit the amounts required under clauses (i) 
and (ii) to the Commodity Credit Corporation in a 
manner specified by the Secretary. 
"(B) DEFINITION.—For purposes of this subsection, the 
term 'first purchaser' means a person acquiring peanuts 
from a producer except that in the case of peanuts forfeited 
by a producer to the Commodity Credit Corporation, such 
term means the person acquiring the peanuts from the 
- 
Commodity Credit Corporation. 
"(3) OTHER PRIVATE MARKETINGS.—In the case of a private 
marketing by a producer directly to a consumer through a retail 
or wholesale outlet or in the case of a marketing by the pro-
ducer outside of the continental United States, the producer 
shall be responsible for the full amount of the assessment and 
shall remit the assessment by such time as is specified by the 
Secretary. 
"(4) LOAN PEANUTS.—In the case of peanuts that are pledged 
as collateral for a price support loan made under this section, Vz 
of the assessment shall be deducted from the proceeds of the 
loan. The remainder of the assessment shall be paid by the first 
purchaser of the peanuts. For purposes of computing net gains 
on peanuts under this section, the reduction in loan proceeds 
shall be treated as having been paid to the producer. 
"(5) PENALTIES.—If any person fails to collect or remit the 
reduction required by this subsection or fails to comply with 
such requirements for recordkeeping or otherwise as are re-
quired by the Secretary to carry out this subsection, the person 
shall be liable to the Secretary for a civil penalty up to an 
amount determined by multiplying— 
"(A) the quantity of peanuts involved in the violation; by 
PUBLIC LAW 101-508--NOV. 5, 1990 
104 STAT. 1388-5 
"(B) the national average quota peanut price support 
level for the applicable crop year. 
"(6) ENFORCEMENT.—The Secretary may enforce this subsec-
tion in the courts of the United States.". 
(2) CONFORMING AMENDMENT.—Section 108B(a)(2) of the Agri-
cultural Act of 1949 (as added by section 806(3) of the Food, 
Agriculture, Conservation, and Trade Act of 1990) is amended 
by inserting after "cost of land" the following: "and the cost of 
any assessments required under subsection (g)". 
(c) SUGAR.—Section 206 of the Agricultural Act of 1949 (as added 
by section 901(2) of the Food, Agriculture, Conservation, and Trade 
Act of 1990) is amended— 
(1) by redesignating subsection (i) as subsection (j); and 
(2) by inserting after subsection (h) the following new sub-
section: 
"(i) MARKETING ASSESSMENT.— 
"(1) SUGARCANE.—Effective only for each of the 1991 through 
1995 crops of sugarcane, the first processor of sugarcane shall 
remit to the Commodity Credit Corporation a nonrefundable 
marketing assessment in an amount equal to .18 cents per 
pound of raw cane sugar processed by the processor from domes-
tically produced sugarcane. 
"(2) SUGAR BEETS.—Effective only for each of the 1991 through 
1995 crops of sugar beets, the first processor of sugar beets shall 
remit to the Commodity Credit Corporation a nonrefundable 
marketing assessment in an amount equal to .193 cents per 
pound of beet sugar processed by the processor from domesti-
cally produced sugar beets. 
"(3) COLLECTION.—Marketing assessments required under this 
subsection shall be collected and remitted to the Commodity 
Credit Corporation in the manner prescribed by the Secretary 
and shall be nonrefundable. 
"(4) PENALTIES.—If any person fails to collect or remit the 
reduction required by this subsection or fails to comply with 
such requirements for recordkeeping or otherwise as are re-
quired by the Secretary to carry out this subsection, the person 
shall be liable to the Secretary for a civil penalty up to an 
amount determined by multiplying— 
"(A) the quantity of cane sugar or beet sugar involved in 
the violation; by 
"(B) the support level for the applicable crop of sugarcane 
or sugar beets. 
"(5) ENFORCEMENT.—The Secretary may enforce this subsec-
tion in the courts of the United States.". 
(d) HONEY.—Section 207 of the Agricultural Act of 1949 (as added 
by section 1001 of the Food, Agriculture, Conservation, and Trade 
Act of 1990) is amended— 
(1) by redesignating subsection (i) as subsection (j); and 
(2) by inserting after subsection (h) the following new sub-
section: 
"(i) MARKETING ASSESSMENT.— 
"(1) IN GENERAL.—Effective only for each of the 1991 through 
1995 crops of honey, producers and producer-packers of honey 
(as defined in paragraphs (5) and (9), respectively, of section 3 of 
the Honey Research, Promotion, and Consumer Information 
Act (7 U.S.C. 4602)) shall remit to the Commodity Credit Cor-
poration a nonrefundable marketing assessment on a per pound 
7 use 1445C-3. 
7 u s e 1446g. 
7 u s e 1446h. 
104 STAT. 1388-6 
PUBLIC LAW 101-508—NOV. 5, 1990 
basis in an amount equal to 1 percent of the national price 
support level for each such crop as otherwise provided in this 
section. 
"(2) COLLECTION.—The assessment shall be collected and 
remitted by the first handler of honey in the manner prescribed 
by the Secretary which, to the extent practicable, shall be as 
provided for in the Honey Research, Promotion, and Consumer 
Information Act. 
"(3) EXEMPTIONS.—All persons who are exempt from the 
payment of the assessment authorized by such Act, and all 
imported honey, shall be exempt from the payment of the 
assessment required by this subsection. 
"(4) PENALTIES.—If any person fails to collect or remit the 
reduction required by this subsection or fails to comply with 
such requirements for recordkeeping or otherwise as are re-
quired by the Secretary to carry out this subsection, the person 
shall be liable to the Secretary for a civil penalty up to an 
amount determined by multiplying— 
"(A) the quantity of honey involved in the violation; by 
"(B) the support level for the applicable crop of honey. 
"(5) ENFORCEMENT.—The Secretary may enforce this subsec-
tion in the courts of the United States.". 
(e) WOOL AND MOHAIR.—Section 704 of the National Wool Act of 
1954 (7 U.S.C. 1783) (as amended by section 201(b) of the Food, 
Agriculture, Conservation, and Trade Act of 1990) is amended by 
adding at the following new subsection: 
"(c) MARKETING ASSESSMENTS.—Effective only for each of the 1991 
through 1995 marketing years for wool and mohair, the Secretary 
shall deduct an amount from the payment to be made available to 
producers of wool and mohair under subsection (a) equal to 1 percent 
of the payment.". 
(f) TOBACCO.—Section 106 of the Agricultural Act of 1949 (7 U.S.C. 
1445) is amended by adding at the end the following new subsection: 
"(g)(1) Effective only for each of the 1991 through 1995 crops of 
tobacco for which price support is made available under this Act, 
producers and purchasers of such tobacco shall each remit to the 
Commodity Credit Corporation a nonrefundable marketing assess-
ment in an amount equal to .5 percent of the national price support 
level for each such crop as otherwise provided for in this section. 
"(2) Such producer assessments and purchaser assessments shall 
be— 
"(A) collected in the same manner as provided for in section 
106A(d)(2) or 106B(d)(3), as applicable; and 
"(B) enforced in the same manner as provided in section 
106A(h) or 106B(j), as applicable. 
"(3) The Secretary may enforce this subsection in the courts of the 
United States.". 
7 use 1446e. 
(g) OTHER SAVINGS.—Section 204 of the Agricultural Act of 1949 
(as added by section 101 of the Food, Agriculture, Conservation, and 
Trade Act of 1990) is amended— 
(1) in subsection (g)— 
(A) in paragraph (1), by striking "1991 through 1994" and 
inserting "1992 through 1995"; 
(B) in the matter preceding subparagraph (A) of para-
graph (2)— 
(i) by inserting after "purchases" the following: "in 
the following calendar year"; and 
PUBLIC LAW 101-508—NOV. 5,1990 
104 STAT. 1388-7 
(ii) by inserting after "producers" the following: "in 
such following calendar year"; and 
(C) in paragraph (2)(B), by striking "that calendar year" 
and inserting "such following calendar year"; 
(2) by redesignating subsections (h) and (i) as subsections (j) 
and (k), respectively; and 
(3) by inserting after subsection (g) the following new subsec-
tions: 
"(h) REDUCTION IN PRICE RECEIVED.— 
"(1) IN GENERAL.—Beginning January 1, 1991, the Secretary 
shall provide for a reduction in the price received by producers 
for all milk produced in the United States and marketed by 
producers for commercial use, in addition to any reduction in 
price required under subsection (g). 
"(2) AMOUNT.—The amount of the reduction under paragraph 
(1) in the price received by producers shall be— 
"(A) during calendar year 1991, 5 cents per hundred-
weight of milk marketed; and 
"(B) during each of the calendar years 1992 through 1995, 
11.25 cents per hundredweight of milk marketed, which 
rate shall be adjusted on or before May 1 of each of the 
calendar years 1992 through 1995 by an amount per 
hundredweight that is necessary to compensate for refunds 
made under paragraph (3) on the basis of marketings in the 
previous calendar year. 
"(3) REFUND.—The Secretary shall provide a refund of the 
entire reduction under paragraph (2) in the price of milk re-
ceived by a producer during a calendar year, if the producer 
provides evidence that the producer did not increase marketings 
in the calendar year that such reduction was in effect when 
compared to the immediately preceding calendar year. 
"(i) ENFORCEMENT.— 
"(1) COIXECTION.—Reductions in price required under subsec-
tion (g) or (h) shall be collected and remitted to the Commodity 
Credit Corporation in the manner prescribed by the Secretary. 
"(2) PENALTIES.—If any person fails to collect or remit the 
reduction required by subsection (g) or (h) or fails to comply 
with such requirements for recordkeeping or otherwise as are 
required by the Secretary to carry out such subsection, the 
person shall be liable to the Secretary for a civil penalty up to 
an amount determined by multiplying— 
"(A) the quantity of milk involved in the violation; by 
"(B) the support rate for the applicable calendar year for 
milk. 
"(3) ENFORCEMENT.—The Secretary may enforce subsection (g) 
or (h) in the courts of the United States.". 
Subtitle B—Other Agricultural Programs 
SEC. 1201. AUTHORIZATION LEVELS FOR RURAL ELECTRIC AND TELE-
PHONE LOANS. 
Title III of the Rural Electrification Act of 1936 (7 U.S.C. 931 et 
seq.) is amended by adding at the end the following new section: 
104 STAT. 1388-8 
PUBLIC LAW 101-508—NOV. 5, 1990 
7 use 940d. 
"SEC. 314. AUTHORIZATION LEVELS FOR RURAL ELECTRIC AND TELE-
PHONE LOANS. 
"(a) IN GENERAL.—Subject to the other provisions of this section 
and notwithstanding any other provision of law, for each of fiscal 
years 1991 through 1995, insured loans may be made in accordance 
with this title from the Rural Electrification and Telephone Revolv-
ing Fund established under section 301 in amounts equal to the 
following levels: 
"(1) For fiscal year 1991, $896,000,000. 
"(2) For fiscal year 1992, $932,000,000. 
"(3) For fiscal year 1993, $969,000,000. 
"(4) For fiscal year 1994, $1,008,000,000. 
"(5) For fiscal year 1995, $1,048,000,000. 
"(h) REDUCTION.—Notwithstanding any other provision of law, for 
each of fiscal years 1991 through 1995, the Administrator shall— 
"(1) reduce the amounts otherwise made available for insured 
loans made from the Rural Electrification and Telephone 
Revolving Fund by— 
"(A) $224,000,000 for fiscal year 1991; 
"(B) $234,000,000 for fiscal year 1992; 
"(C) $244,000,000 for fiscal year 1993; 
"(D) $256,000,000 for fiscal year 1994; and 
"(E) $267,000,000 for fiscal year 1995; and 
"(2) use the funds made available from such reductions in 
each fiscal year to guarantee loans under subsection (d). 
"(c) MANDATORY LEVELS.—Notwithstanding any other provision of 
law, the Administrator shall make insured loans at the levels 
authorized by this section for each of fiscal years 1991 through 1995 
taking into account any reductions under subsection (b). 
"(d) GUARANTEED LOANS— 
"(1) IN GENERAL.—Except as otherwise provided in this 
subsection and subsection (e) and notwithstanding any other 
provision of law, in carrying out this Act, the Administrator 
shall guarantee loans made by legally organized lending agen-
cies to the extent of the reduction in insured loans as provided 
in subsection (b). 
"(2) AMOUNT OF GUARANTEE.—The guarantees authorized 
under paragraph (1) shall be 90 percent of the principal of and 
interest on the loan and shall be made only upon the request of 
the borrower. 
"(3) No FEDERAL INSTRUMENTALITY.—The Administrator may 
not provide any such guarantee for a loan made by the Federal 
Financing Bank, the Rural Telephone Bank, or any other lend-
ing agency that is an agency or instrumentality of the United 
States other than banks for cooperatives. 
"(4) AUTHORITY.—The Administrator is authorized to approve 
such guarantees subject to full use being made during each 
fiscal year of insured loan amounts made available during the 
fiscal year. 
"(5) CONSTRUCTION.—Nothing in this subsection shall be con-
strued as modifying the authority provided in section 306. 
"(e) IMPLEMENTATION.— 
"(1) IN GENERAL.—The Administrator shall implement the 
reduction in insured loans provided by subsection (b) in a 
manner that will lessen its adverse effect. 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-9 
"(2) 
ALLOCATION BETWEEN ELECTRIC AND TELEPHONE PRO-
GRAMS.—The reductions required by subsection (b) shall be 
allocated between the electric and telephone programs for each 
fiscal year in proportion to the amount of insured funds made 
available for each such program during the fiscal year in 
annual appropriations Acts. 
"(3) ELECTRIC BORROWER'S OPTION.—If the amount of an 
insured electric loan is reduced as a result of the require-
ments of subsection (b), the electric borrower may, at the 
option of such borrower, obtain capital to replace the amount 
of the reduction— 
"(A) with the assistance of a loan guarantee (as provided 
by subsection (d)); 
"(B) from internally generated funds of the electric bor-
rower; 
"(C) from private credit sources with a lien accommoda-
tion provided by the Administrator; or 
"(D) from other private sources.". 
SEC. 1202. AUTHORIZATION LEVELS FOR FmHA LOANS. 
(a) IN GENERAL.—Subsection (b) of section 346 of the Consolidated 
Farm and Rural Development Act (7 U.S.C. 1994(b)) is amended to 
read as follows: 
"(b)(1) For each of the fiscal years 1991 through 1995, real estate 
and operating loans may be insured, made to be sold and insured, or 
guaranteed in accordance with subtitles A and B, respectively, from 
the Agricultural Credit Insurance Fund established under section 
309 in amounts equal to the following levels: 
"(A) For fiscal year 1991, $4,175,000,000, of which not less 
than $827,000,000 shall be for farm ownership loans under 
subtitle A. 
"(B) For fiscal year 1992, $4,343,000,000, of which not less 
than $861,000,000 shall be for farm ownership loans under 
subtitle A. 
"(C) For fiscal year 1993, $4,516,000,000, of which not less than 
$895,000,000 shall be for farm ownership loans under subtitle A. 
"(D) For fiscal year 1994, $4,697,000,000, of which not less 
than $931,000,000 shall be for farm ownership loans under 
subtitle A. 
"(E) For fiscal year 1995, $4,885,000,000, of which not less 
' 
than $968,000,000 shall be for farm ownership loans under 
subtitle A. 
"(2) Subject to paragraph (3), such amounts set forth in paragraph 
(1) shall be apportioned as follows: 
"(A) For fiscal year 1991— 
"(i) $1,019,000,000 for insured loans, of which not less 
than $83,000,000 shall be for farm ownership loans; and 
"(ii) $3,156,000,000 for guaranteed loans, of which not less 
than $744,000,000 shall be for guarantees of farm ownership 
loans. 
"(B) For fiscal year 1992— 
"(i) $1,060,000,000 for insured loans, of which not less 
than $87,000,000 shall be for farm ownership loans; and 
"(ii) $3,283,000,000 for guaranteed loans, of which not less 
than $774,000,000 shall be for guarantees of farm ownership 
loans. 
"(C) For fiscal year 1993— 
39-194 O - 91 - 14 : QL 3 Part 2 
104 STAT. 1388-10 
PUBLIC LAW 101-508—NOV. 5, 1990 
"(i) $1,102,000,000 for insured loans, of which not less 
than $90,000,000 shall be for farm ownership loans; and 
"(ii) $3,414,000,000 for guaranteed loans, of which not less 
than $805,000,000 shall be for guarantees of farm ownership 
loans. 
"(D) For fiscal year 1994— 
"(i) $1,147,000,000 for insured loans, of which not less 
than $94,000,000 shall be for farm ownership loans; and 
"(ii) $3,550,000,000 for guaranteed loans, of which not less 
than $837,000,000 shall be for guarantees of farm ownership 
loans. 
"(E) For fiscal year 1995— 
"(i) $1,192,000,000 for insured loans, of which not less 
than $97,000,000 shall be for farm ownership loans; and 
"(ii) $3,693,000,000 for guaranteed loans, of which not less 
than $871,000,000 shall be for guarantees of farm ownership 
loans. 
"(3) Notwithstanding any other provision of law: 
"(A) The Secretary shall— 
"(i) reduce the amounts otherwise made available for 
insured loans by— 
"(I) $482,000,000, for fiscal year 1991; 
"(II) $614,000,000, for fiscal year 1992; 
"(III) $760,000,000, for fiscal year 1993; 
"(IV) $859,000,000, for fiscal year 1994; and 
"(V) $907,000,000, for fiscal year 1995; and 
"(ii) use the funds made available from such reductions in 
each fiscal year to guarantee loans under section 351. 
"(B) The total amount of insured loans shall bear the same 
ratio to the amount of insured farm ownership loans as the 
dollar amount specified in paragraph (2)(A)(i) for insured loans 
bears to the dollar amount specified therein for insured farm 
ownership loans. 
"(C) If more than 70 percent of the number of loans guaran-
teed under section 351 in a fiscal year have been guaranteed to 
persons to whom the Secretary had not previously made an 
insured loan under this Act, in lieu of the dollar amounts 
specified in subparagraph (A) for the immediately succeeding 
fiscal year, the dollar amounts which shall apply shall each be 
the product obtained by multiplying— 
"(i) such dollar amount; by 
"(ii) the quotient o
f
— 
"(I) the number of persons provided with guaranteed 
loans under section 351 in the fiscal year to whom the 
Secretary had not previously made an insured or a 
guaranteed loan under this Act; divided by 
"(II) the total number of persons provided with 
guaranteed loans under section 351 in the fiscal year. 
"(4) Notwithstanding subsection (a), the Secretary shall, as soon as 
practicable after the date of enactment of this subsection, make, 
insure, or guarantee loans at the levels authorized by this subsection 
for each of the fiscal years 1991 through 1995.". 
(b) INTEREST RATE REDUCTION PROGRAM.— 
(1) IN GENERAL.—Section 351 of such Act (7 U.S.C. 1999) is 
amended— 
(A) in subsection (c)— 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-11 
(i) by striking "50 percent" and inserting "100 per-
cent"; and 
(ii) by striking "2 percent" and inserting "4 percent"; 
and 
(B) in subsection (d), by striking ", or 3 years, whichever 
is less". 
(2) EXTENSION OF PROGRAM FOR 2 YEARS.—Section 1320 of the 
Food Security Act of 1985 (7 U.S.C. 1999 note) is amended by 
striking "1993" and inserting "1995". 
(c) DEMONSTRATION PROJECT FOR PURCHASE OF SYSTEM LAND.— 
Section 351(h)(1) of such Act (7 U.S.C. 1999(h)(1)) is amended by 
striking "3-year" and inserting "4-year". 
SEC. 1203. APHIS INSPECTION USER FEE ON INTERNATIONAL PAS-
SENGERS. 
Section 2509(a) of the Food, Agriculture, Conservation, and Trade 
Act of 1990 is amended— 
21USC 136a. 
(1) in paragraph (1), by striking "a commercial vessel, 
commercial aircraft, commercial truck, or railroad car," and 
inserting "an international passenger, commercial vessel, 
commercial aircraft, commercial truck, or railroad car."; and 
(2) in paragraph (3)(B)— 
(A) by adding at the end of clause (ii) the following: "Any 
such reimbursement shall be subject to appropriations 
under clause (v)."; and 
(B) by adding at the end the following new clause: 
"(v) AUTHORIZATION OF APPROPRIATIONS.—There are 
authorized to be appropriated each fiscal year amounts 
in the Fund for use for quarantine or inspection 
services.". 
SEC. 1204. ADDITIONAL SAVINGS AND OTHER PROVISIONS. 
(a) INTEGRATED FARM MANAGEMENT PROGRAM.—Section 1451 of 
the Food, Agriculture, Conservation, and Trade Act of 1990 is 7 USC 5822. 
amended— 
(1) in subsection (d), by striking "enroll not more than" and 
inserting "enroll not less than"; and 
(2) in subsection (h)(7)(A), by striking "shall not be eligible" 
and inserting "shall be eligible". 
(b) FOOD AID ASSISTANCE.—The Agricultural Trade, Development, 
and Assistance Act of 1954 (as amended by section 1512 of the Food, 
Agriculture, Conservation, and Trade Act of 1990) is amended— 
(1) in section 202(eXl), by striking "private" and all that 7 USC 1722. 
follows through "Administrator" and inserting "the Adminis-
trator, not less than $10,000,000, and not more than $13,500,000, 
shall be made available in each fiscal year to private voluntary 
organizations and cooperatives"; 
(2) in section 406, by adding at the end the following new 7 USC 1736. 
subsection: 
"(d) AVAILABILITY OF FUNDS.—Funds shall be available under this 
Act only to the extent provided in advance in appropriation Acts."; 
and 
(3) in section 407(c)(4), by striking "providing ocean" and 7 USC 1736a. 
inserting "providing ocean transportation or". 
(c) TOBACCO PROGRAM ADJUSTMENT.—Section 213 of the Dairy and 
Tobacco Adjustment Act of 1983 (7 U.S.C. 51 Ir) is amended— 
104 STAT. 1388-12 
PUBLIC LAW 101-508—NOV. 5, 1990 
(1) in subsection (d), by inserting before the period the follow-
ing: ", subsection (e), and subsection (f)"; and 
(2) in subsection (f), by adding at the end the following new 
paragraph: 
"(4) Subsection (d) shall apply with respect to fees and charges 
imposed to cover the costs of such end user identification, certifi-
cation, and reporting activities.". 
(d) EMERGENCY LOANS.—Section 2269 of the Food, Agriculture, 
7 use 1421 note. 
Conservation, and Trade Act of 1990 is amended by— 
(1) striking "(7 U.S.C. 1981(b))" and inserting "(7 U.S.C. 
1961(b))"; and 
(2) striking "1988" and inserting "1990". 
7 use I36w 
(e) FIFRA USER FEES.—Notwithstanding any provision of the 
note. 
Omnibus Budget Reconciliation Act of 1990, nothing in this title or 
the other provisions of this Act shall be construed to require or 
authorize the Administrator of the Environmental Protection 
Agency to assess or collect any fees or charges for services and 
activities authorized under the Federal Insecticide, Fungicide, and 
Rodenticide Act (7 U.S.C. 136 et seq.). 
Subtitle C—Effective Date 
7 u s e 51 Ir note. 
SEC. 1301. EFFECTIVE DATE. 
This title and the amendments made by this title shall become 
effective 1 day after the date of enactment of the Food, Agriculture, 
Conservation, and Trade Act of 1990, or December 1, 1990, which-
ever is earlier. 
7 u s e 1421 note. 
SEC. 1302. READJUSTMENT OF SUPPORT LEVELS. 
(a) FAILURE TO ENTER INTO AGREEMENT.—If by June 30, 1992, the 
United States does not enter into (within the context of section 
1102(a) of the Omnibus Trade and Competitiveness Act of 1988 (19 
U.S.C. 2902)) an agricultural trade agreement in the Uruguay 
Round of multilateral trade negotiations under the General Agree-
ment on Tariffs and Trade (GATT), agricultural acreage limitation 
and price support and production adjustment programs and export 
promotion levels shall be reconsidered and adjusted by the Secretary 
of Agriculture (hereafter in this section referred to as the "Sec-
retary") in accordance with subsection (b), as appropriate to protect 
the interests of American agricultural producers and ensure the 
international competitiveness of United States agriculture. 
(b) REQUIRED MEASURES.—Pursuant to subsection (a), in order to 
protect the interests of American agricultural producers and en-
sure the competitive position of United States agriculture, the 
Secretary— 
(1) is authorized to waive any minimum level for any acreage 
limitation program required or authorized for any of the 1993 
through 1995 crops of wheat, feed grains, upland cotton, or rice 
established under section 107B(e), 105B(e), 103B(e), or lOlB(e) of 
the Agricultural Act of 1949 (as amended by sections 301, 401, 
501, and 601 of the Food, Agriculture, Conservation, and Trade 
Act of 1990), respectively; 
(2) shall.increase by $1,000,000,000 for the period beginning 
October 1, 1993, and ending September 30, 1995, the level of 
export promotion programs authorized under the Agricultural 
Trade Act of 1978 (as amended by section 1531 of the Food, 
PUBLIC LAW 101-508—NOV. 5,1990 
104 STAT. 1388-13 
Agriculture, Conservation, and Trade Act of 1990), in addition 
to any amounts otherwise required or made available under 
such programs; and 
(3) shall permit producers to repay price support loans for any 
of the 1993 through 1995 crops of wheat and feed grains at the 
levels provided under sections 107B(a)(4) and 105B(a)(4) of the 
Agricultural Act of 1949, respectively. 
(c) FAILURE OF AGREEMENT TO ENTER INTO FORCE.—If by June 30, 
1993, an agricultural trade agreement under the Uruguay Round of 
multilateral trade negotiations under the General Agreement on 
Tariffs and Trade has not entered into force for the United States, 
agricultural price support and other programs and export promotion 
levels shall be reconsidered and adjusted by the Secretary in accord-
ance with subsection (d), if the Secretary determines such action is 
appropriate to protect the interests of American Eigricultural 
producers and ensure the international competitiveness of United 
States agriculture. 
(d) SPECIFIC MEASURES.— 
(1) MEASURES TO BE CONSIDERED.—Pursuant to subsection (c), 
the Secretary shall consider— 
(A) waiving all or part of the requirements of this title, 
and the amendments made by this title, requiring reduc-
tions in agricultural spending; 
(B) increasing the level of funds made available for the 
programs authorized under the Agricultural Trade Act of 
1978; and 
(C) permitting producers to repay price support loans for 
any of the 1993 through 1995 crops of wheat and feed grains 
at the levels provided under sections 107B(aX4) and 
105B(a)(4) of the Agricultural Act of 1949, respectively. 
(2) AUTHORITY.—The Secretary is authorized to implement 
the measures specified in subparagraphs (A), (B), and (C) of 
paragraph (1). This authority shall be in addition to, and not in 
place of, any other authority under any other provision of law. 
(3) IMPLEMENTATION.—If the Secretary determines the action 
is appropriate pursuant to subsection (c), the Secretary shall 
implement measures specified in subparagraph (A) of para-
graph (1) and either or both of the measures specified in 
subparagraph (B) or (C) of paragraph (1). 
(e) LIMITATION.—This section shall not be construed to authorize 
the Secretary to reduce the level of income support provided to 
agricultural producers in the United States. 
(f) TERMINATION.—The provisions of subsections (a) and (b) shall 
cease to be effective if the President certifies to Congress that the 
failure referred to in subsection (a) to enter into an agricultural 
trade agreement in the Uruguay Round of multilateral trade nego-
tiations under the GATT is a result in whole or in part of the 
provisions of section 151 of the Trade Act of 1974 (19 U.S.C. 2191), or 
essentially similar provisions, not applying or in effect not applying 
during the period ending May 31, 1991 (or during the period June 1, 
1991, through May 31,1993, if the condition of section 1103(bXlXBXi) 
is satisfied) to implementing bills submitted with respect to such an 
agreement entered into during the applicable period under section 
1102(b) of the Omnibus Trade and Competitiveness Act of 1988 (19 
U.S.C. 2902(b)). 
104 STAT. 1388-14 
PUBLIC LAW 101-508—NOV. 5, 1990 
TITLE II—BANKING, HOUSING, AND RELATED PROGRAMS 
Subtitle A—Federal Deposit Insurance Assessments 
Sec. 2001. Short title. 
Sec. 2002. FDIC authorized to increase assessment rates as necessary to protect in-
surance funds. 
Sec. 2003. FDIC authorized to make mid-year adjustments in assessment rates. 
Sec. 2004. FDIC authorized to set designated reserve ratio as necessary in face of 
significant risk of substantial losses to insurance fund. 
Sec. 2005. FDIC authorized to borrow from Federal Financing Bank. 
Subtitle B—FHA Mortgage Insurance 
Sec. 2101. Increase in mortgage limit. 
Sec. 2102. Mortgagor equity. 
Sec. 2103. Mortgage insurance premiums. 
Sec. 2104. Mutual mortgage insurance fund distributions. 
Sec. 2105. Actuarial soundness of mutual mortgage insurance fund. 
Sec. 2106. Home equity conversion mortgage insurance demonstration. 
Subtitle C—Auction of Federally Insured Mortgages 
Sec. 2201. Auction of multifamily mortgages. 
Subtitle D—Crime and Flood Insurance Programs 
Sec. 2301. Crime insurance program. 
Sec. 2302. Flood insurance program. 
Subtitle E—Effective Date 
Sec. 2401. Effective date. 
TITLE II—BANKING, HOUSING, AND 
RELATED PROGRAMS 
^mentRate 
Subtltlc A—Fcdcral Dcposlt Insurancc 
Act of 1990. 
Assessments 
12 u s e 1811 
SEC. 2001. SHORT TITLE. 
"*'^" 
This Act may be cited as the "FDIC Assessment Rate Act of 1990". 
SEC. 2002. FDIC AUTHORIZED TO INCREASE ASSESSMENT RATES AS NEC-
ESSARY TO PROTECT INSURANCE FUNDS. 
(a) BANK INSURANCE FUND.—Section 7(b)(1)(C) of the Federal De-
posit Insurance Act (12 U.S.C. 1817(b)(1)(C)) is amended to read as 
follows: 
"(C) ASSESSMENT RATE FOR BANK INSURANCE FUND MEMBERS.— 
"(i) IN GENERAL.—The assessment rate for Bank Insur-
ance Fund members shall be the greater of 0.15 percent or 
such rate as the Board of Directors, in its sole discretion, 
determines to be appropriate— 
"(I) to maintain the reserve ratio at the designated 
reserve ratio; or 
"(II) if the reserve ratio is less than the designated 
reserve ratio, to increase the reserve ratio to the des-
ignated reserve ratio within a reasonable period of 
time, 
"(ii) FACTORS TO BE CONSIDERED,—In making any deter-
mination under clause (i), the Board of Directors shall 
consider the Bank Insurance Fund's expected operating 
expenses, case resolution expenditures, and income, the 
effect of the assessment rate on members' earnings and 
PUBLIC LAW 101-508—NOV. 5,1990 
104 STAT. 1388-15 
capital, and such other factors as the Board of Directors 
may deem appropriate. 
"(iii) MINIMUM ASSESSMENT.—Notwithstanding clause (i), 
the assessment shall not be less than $1,000 for each 
member in each year.". 
(b) SAVINGS ASSOCIATION INSURANCE FUND.—Section 7(bXlXD) of 
the Federal Deposit Insurance Act (12 U.S.C. 1817(bXlXD)) is amend-
ed to read as follows: 
"(D) ASSESSMENT RATE FOR SAVINGS ASSOCIATION INSURANCE 
FUND MEMBERS.— 
"(i) IN GENERAL.—The assessment rate for Savings 
Association Insurance Fund members shall be the greater 
of 0.15 percent or such rate as the Board of Directors, in its 
sole discretion, determines to be appropriate— 
"(I) to maintain the reserve ratio at the designated 
reserve ratio; or 
"(II) if the reserve ratio is less than the designated 
reserve ratio, to increase the reserve ratio to the des-
ignated reserve ratio within a reasonable period of 
time, 
"(ii) FACTORS TO BE CONSIDERED.—In making any deter-
mination under clause (i), the Board of Directors shsill 
consider the Savings Association Insurance Fund's expected 
operating expenses, case resolution expenditures, and 
income, the effect of the assessment rate on members' 
earnings and capital, and such other factors as the Board of 
Directors may deem appropriate. 
"(iii) MINIMUM ASSESSMENT.—Notwithstanding clause (i), 
the assessment shall not be less than $1,000 for each 
member in each year. 
"(iv) TRANSITION RULE.—Until December 31, 1997, the 
assessment rate for Savings Association Insurance Fund 
members shall not be less than the following: 
"(I) From January 1, 1990, through December 31, 
1990, 0.208 percent. 
"(II) From January 1, 1991, through December 31, 
1993, 0.23 percent. 
"(Ill) From January 1, 1994, through December 31, 
1997, 0.18 percent.". 
(c) CLERICAL AMENDMENTS REFLECTING $1,000 MINIMUM ASSESS-
MENT PROVISIONS OF CURRENT LAW.—Section 7(bX2)(A) of the Fed-
eral Deposit Insurance Act (12 U.S.C. 1817(bX2XA)) is amended— 
(1) by inserting "or subparagraph (CXiii) or (DXiii) of subsec-
tion (bXD" after "subsection (cX2)"; and 
(2) in clauses (i) and (ii), by inserting "the greater of $500 or 
an amount" before "equal to the product of. 
SEC. 2003. FDIC AUTHORIZED TO MAKE MID-YEAR ADJUSTMENTS IN 
ASSESSMENT RATES. 
(a) ASSESSMENT RATES.—Section 7(bXlXA) of the Federal Deposit 
Insurance Act (12 U.S.C. 1817(bXl)(A)) is amended to read as follows: 
"(A) ASSESSMENT RATES PRESCRIBED.— 
"(i) AUTHORITY TO SET RATES.—Subject to clause (iii), the 
Corporation shall set assessment rates for insured deposi-
tory institutions at such times as the Corporation, in its sole 
discretion, determines to be appropriate. 
104 STAT. 1388-16 
PUBLIC LAW 101-508—NOV. 5, 1990 
"(ii) RATE FOR EACH FUND TO BE SET INDEPENDENTLY.—The 
Corporation shall fix the assessment rate of Bank Insur-
ance Fund members independently from the assessment 
rate for Savings Association Insurance Fund members. 
"(iii) DEADLINE FOR ANNOUNCING RATE CHANGES.—The 
Corporation shall announce any change in assessment 
rates.— 
"(I) for the semiannual period beginning on January 
1 and ending on June 30, not later than the preceding 
November 1; and 
"(II) for the semiannual period beginning on July 1 
and ending on December 31, not later than the preced-
ing May 1.". 
(b) ASSESSMENT PROCEDURES.—Section 7(b)(2)(A) of the Federal 
Deposit Insurance Act (12 U.S.C. 1817(b)(2)(A)), as amended by sec-
tion 2(c) of this Act, is amended— 
(1) by striking "annual" each time it appears; 
(2) in clause (i)(I), by inserting "during that semiannual 
period" after "member"; and 
(3) in clause (ii)(I), by inserting "during that semiannual 
period" after "member". 
(c) CONFORMING AMENDMENT ON TIMING OF ASSESSMENT CRED-
ITS.—Section 7(d)(1)(A) of the Federal Deposit Insurance Act (12 
U.S.C. 1817(d)(1)(A)) is amended to i-ead as follows: 
"(A) The Corporation shall prescribe and publish the aggre-
gate amount to be credited to insured depository institutions— 
"(i) in the semiannual period beginning on January 1 and 
ending on June 30, not later than the preceding Novem-
ber 1; and 
"(ii) in the semiannual period beginning on July 1 and 
ending on December 31, not later than the preceding 
May 1.". 
SEC. 2004. FDIC AUTHORIZED TO SET DESIGNATED RESERVE RATIO AS 
NECESSARY IN FACE OF SIGNIFICANT RISK OF SUBSTANTIAL 
LOSSES TO INSURANCE FUND. 
Section 7(b)(1)(B) of the Federal Deposit Insurance Act (12 U.S.C. 
1817(b)(1)(B)) is amended— 
(1) by striking ", not exceeding 1.50 percent," each time it 
appears; 
(2) in clause (iii)— 
(A) by inserting "and" at the end of subclause (I); 
(B) by striking subclauses (II) and (III); and 
(C) by redesignating subclause (IV) as subclause (II); and 
(3) in clause (iv)— 
(A) by inserting "and" at the end of subclause (I); 
(B) by striking subclauses (II) and (III); and 
(C) by redesignating subclause (IV) as subclause (II). 
SEC. 2005. FDIC AUTHORIZED TO BORROW FROM FEDERAL FINANCING 
BANK. 
Section 14 of the Federal Deposit Insurance Act (12 U.S.C. 1824) is 
amended— 
(1) in the heading, by striking "SEC. 14." and inserting: 
"SEC. 14. BORROWING AUTHORITY. 
"(a) BORROWING FROM TREASURY.—"; 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-17 
(2) in subsection (a), as designated by paragraph (1)— 
(A) by striking "this section" each time it appears and 
inserting "this subsection", and 
(B) by striking "The Corporation may employ such funds" 
and inserting "The Corporation may employ any funds 
obtained under this section"; and 
(3) by adding after subsection (a), as amended by paragraph 
(2), the following new subsection: 
"(b) BORROWING FROM FEDERAL FINANCING BANK.—The Corpora-
tion is authorized to issue and sell the Corporation's obligations, on 
behalf of the Bank Insurance Fund or Savings Association Insur-
ance Fund, to the Federal Financing Bank established by the Fed-
eral Financing Bank Act of 1973. The Federal Financing Bank is 
authorized to purchase and sell the Corporation's obligations on 
terms and conditions determined by the Federal Financing Bank. 
Any such borrowings shall be obligations subject to the obligation 
limitation of section 15(c) of this Act. This subsection does not affect 
the eligibility of any other entity to borrow from the Federal 
Financing Bank.''. 
Subtitle B—FHA Mortgage Insurance 
SEC. 2101. INCREASE IN MORTGAGE LIMIT. 
Section 203(b)(2) of the National Housing Act (12 U.S.C. 1709(b)(2)) 
is amended by striking "150 percent (185 percent until October 31, 
1990) of the dollar amount specified" and inserting the following: 
"185 percent of the dollar amount specified". 
SEC. 2102. MORTGAGOR EQUITY. 
Section 203(b)(2) of the National Housing Act (12 U.S.C. 1709(b)(2)) 
is amended by adding at the end the following new undesignated 
paragraph: 
"Notwithstanding any other provision of this paragraph, a mort-
gage may not involve a principal obligation (including such initial 
service charges, appraisal, inspection, and other fees £is the Sec-
retary shall approve) in excess of 98.75 percent of the appraised 
value of the property (97.75 percent, in the case of a mortgage with 
an appraised value in excess of $50,000), plus the amount of the 
mortgage insurance premium paid at the time the mortgage is 
insured. For purposes of the preceding sentence, the term 'appraised 
value' means the amount set forth in the written statement required 
under section 226, or a similar amount determined by the Secretary 
if section 226 does not apply.". 
SEC. 2103. MORTGAGE INSURANCE PREMIUMS. 
(a) PREMIUMS.—Section 203(c) of the National Housing Act (12 
U.S.C. 1709(c)) is amended— 
(1) by inserting "(1)" after "(c)"; 
(2) by striking the last sentence; and 
(3) by adding at the end the following new paragraph: 
"(2) Notwithstanding any other provision of this section, each 
mortgage secured by a 1- to 4-family dwelling and executed on or 
after October 1, 1994, that is an obligation of the Mutual Mortgage 
Insurance Fund, shall be subject to the following requirements: 
"(A) The Secretary shall establish and collect, at the time of 
insurance, a single premium payment in an amount equal to 
104 STAT. 1388-18 
PUBLIC LAW 101-508—NOV. 5, 1990 
2.25 percent of the amount of the original insured principal 
obligation of the mortgage. Upon payment in full of the prin-
cipal obligation of a mortgage prior to the maturity date of the 
mortgage, the Secretary shall refund all of the unearned pre-
mium charges paid on the mortgage pursuant to this subpara-
graph. 
"(B) In addition to the premium under subparagraph (A), the 
Secretary shall establish and collect annual premium payments 
in an amount equal to 0.50 percent of the remaining insured 
principal balance (excluding the portion of the remaining bal-
ance attributable to the premium collected under subparagraph 
(A) and without taking into account delinquent payments or 
prepayments) for the following periods: 
"(i) For any mortgage involving an original principal 
obligation 
(excluding 
any . premium 
collected 
under 
subparagraph (A)) that is-less than 90 percent of the ap-
praised value of the property (as of the date the mortgage is 
accepted for insurance), for the first 11 years of the mort-
gage term. 
"(ii) For any mortgage involving an original principal 
obligation 
(excluding 
any 
premium 
collected 
under 
subparagraph (A)) that is greater than or equal to 90 per-
cent of such value, for the first 30 years of the mortgage 
term; except that notwithstanding the matter preceding 
clause (i), for any mortgage involving an original principal 
obligation 
(excluding 
any 
premium 
collected 
under 
subparagraph (A)) that is greater than 95 percent of such 
value, the annual premium collected during the 30-year 
period under this clause shall be in an amount equal to 0.55 
percent of the remaining insured principal balance (exclud-
ing the portion of the remaining balance attributable to the 
premium collected under subparagraph (A) and without 
taking into account delinquent payments or prepay-
ments).". 
12 use 1709 
(b) TRANSITION PROVISIONS.—Notwithstanding section 203(c) of the 
"ote. 
National Housing Act (as amended by subsection (a)), mortgage 
insurance premiums on mortgages executed during fiscal years 1991 
through 1994 and that are obligations of the Mutual Mortgage 
Insurance Fund shall be subject to the following requirements: 
(1) 1991 AND 1992.—For mortgages executed during fiscal 
years 1991 and 1992 (but after the date of the effectiveness of 
regulations issued under subsection (c)), the Secretary shall 
establish and collect the following premiums: 
(A) UP-FRONT.—At the time of insurance, a single pre-
mium payment in an amount equal to 3.80 percent of the 
amount of the original insured principal obligation of the 
mortgage. 
(B) ANNUAL.—In addition to the premium under subpara-
graph (A), annual premium payments in an amount equal 
to 0.50 percent of the remaining insured principal balance 
(excluding the portion of the remaining balance attrib-
utable to the premium collected under subparagraph (A) 
and without taking into account delinquent payments or 
prepayments), for any mortgage involving an original prin-
cipal obligation (excluding any premium collected under 
subparagraph (A)) that is— 
PUBLIC LAW 101-508—NOV. 5,1990 
104 STAT. 1388-19 
(i) less than 90 percent of the appraised value of the 
property (as of the date the mortgage is accepted for 
insurance), for the first 5 years of the mortgEige term; 
(ii) greater than or equal to 90 percent of such value 
but equal to or less than 95 percent of such value, for 
the first 8 years of the mortgage term; and 
(iii) greater than 95 percent of such value, for the 
first 10 years of the mortgage term. 
(2) 1993 AND 1994.—For mortgages executed during fiscal 
years 1993 and 1994, the Secretary shall establish and collect 
the following premiums: 
(A) UP-FRONT.—At the time of insurance, a single pre-
mium payment in an amount equal to 3.00 percent of the 
. amount of the original insured principal obligation of the 
mortgage. 
(B) ANNUAL.—In addition to the premium under subpara-
graph (A), annual premium payments in an amount equal 
to 0.50 percent of the remaining insured principal balance 
(excluding the portion of the remaining balance attrib-
utable to the premium collected under subparagraph (A) 
and without taking into account delinquent payments or 
prepayments), for any mortgage involving an original prin-
cipal obligation (excluding any premium collected under 
subparagraph (A)) that is— 
(i) less than 90 percent of the appraised value of the 
property (as of the date the mortgage is accepted for 
insurance), for the first 7 years of the mortgage term; 
(ii) greater than or equal to 90 percent of such value 
but equal to or less than 95 percent of such value, for 
the first 12 years of the mortgage term; and 
(iii) greater than 95 percent of such value, for the 
first 30 years of the mortgage term. 
(3) REFUNDS.—With respect to any mortgage subject to pre-
miums under this subsection, the Secretary shall refund all of 
the unearned premium charges paid on a mortgage pursuant to 
paragraph (1)(A) or (2)(A) upon payment in full of the principal 
obligation of the mortgage prior to the maturity date. 
(c) REGULATIONS.—The Secretary shall issue regulations to carry 
12 USC 1709 
out this section and the amendments made by this section not later "o*«-
than the expiration of the 90-day period beginning on the date of the 
enactment of this Act. 
SEC. 2104. MUTUAL MORTGAGE INSURANCE FUND DISTRIBUTIONS. 
Section 205 of the National Housing Act (12 U.S.C. 1711) is 
amended by adding at the end the following new subsection: 
"(e) In determining whether there is a surplus for distribution to 
mortgagors under this section, the Secretary shall take into account 
the actuarial status of the entire Fund.". 
SEC. 2105. ACTUARIAL SOUNDNESS OF MUTUAL MORTGAGE INSURANCE 
FUND. 
Section 205 of the National Housing Act (12 U.S.C. 1711), as 
amended by the preceding provisions of this Act, is further amended 
by adding at the end the following new subsections: 
"(f)(1) The Secretary shall ensure that the Mutual Mortgage 
Insurance Fund attains a capital ratio of not less than 1.25 percent 
104 STAT. 1388-20 
PUBLIC LAW 101-508—NOV. 5, 1990 
within 24 months after the date of the enactment of this subsection 
and maintains such ratio thereafter, subject to paragraph (2). 
"(2) The Secretary shall endeavor to ensure that the Mutual 
Mortgage Insurance Fund attains a capital ratio of not less than 2.0 
percent within 10 years after the date of the enactment of this 
subsection, and shall ensure that the Fund maintains at least such 
capital ratio at all times thereafter. 
"(3) Upon the expiration of the 24-month period beginning on the 
date of the enactment of this subsection, the Secretary shall submit 
to the Congress a report describing the actions the Secretary will 
take to ensure that the Mutual Mortgage Insurance Fund attains 
the capital ratio required under paragraph (2). 
"(4) For purposes of this subsection: 
"(A) The term 'capital' means the economic net worth of the 
Mutual Mortgage Insurance Fund, as determined by the Sec-
retary under the annual audit required linder section 538. 
"(B) The term 'capital ratio' means the ratio of capital to 
unamortized insurance-in-force. 
"(C) The term 'economic net worth' means the current cash 
available to the Fund, plus the net present value of all future 
cash inflows and outflows expected to result from the outstand-
ing mortgages in the Fund. 
"(D) The term 'unamortized insurance-in-force' means the 
remaining obligation on outstanding mortgages which are 
obligations of the Mutual Mortgage Insurance Fund, as esti-
mated by the Secretary. 
"(g) The Secretary shall provide for an independent actuarial 
study of the Mutual Mortgage Insurance Fund to be conducted 
annually and shall report annually to the Congress regarding the 
financial status of the Fund. 
"(h)(1) If, pursuant to the independent annual actuarial study of 
the Mutual Mortgage Insurance Fund required under subsection (g), 
the Secretary determines that the Mutual Mortgage Insurance Fund 
is not meeting the operational goals under paragraph (2), the Sec-
retary may not issue distributions, and may, by regulation, propose 
and implement any adjustments to the insurance premiums under 
section 203(c) or section 2103(b) of the Omnibus Budget Reconcili-
ation Act of 1990. Upon determining that a premium change is 
appropriate under the preceding sentence, the Secretary shall 
immediately notify Congress of the proposed change and the reasons 
for the change. Any such premium change shall not take effect 
before the expiration of the 90-day period beginning upon such 
notification. 
"(2) The operational goals referred to in paragraph (1) shall be— 
"(A) maintaining an adequate capital ratio; 
"(B) 
meeting 
the 
needs 
of 
homebuyers 
with 
low 
downpayments and first-time homebuyers by providing access 
to mortgage credit; 
"(C) minimizing the risk to the Fund and to homeowners from 
homeowner default; and 
"(D) avoiding adverse selection.". 
SEC. 2106. HOME EQUITY CONVERSION MORTGAGE INSURANCE DEM-
ONSTRATION. 
(a) TERMINATION DATE.—The first sentence of section 255(g) of the 
National Housing Act (12 U.S.C. 1715z-20(g)) is amended by striking 
"September 30,1991" and inserting "September 30,1995". 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-21 
(b) NUMBER OF MORTGAGES INSURED.—Section 255(g) of the Na-
tional Housing Act (12 U.S.C. 1715z-20(g)) is amended by striking 
the second sentence and inserting the following: "The total number 
of mortgages insured under this section may not exceed 25,000.". 
Subtitle C—Auction of Federally Insured 
Mortgages 
SEC. 2201. AUCTION OF MULTIFAMILY MORTGAGES. 
Section 221(gX4) of the National Housing Act (12 U.S.C. 17151(g)(4)) 
is amended by adding after subparagraph (B) the following new 
subparagraph: 
"(C)(i) In lieu of accepting assignment of the original 
credit instrument and the mortgage securing the credit 
instrument under subparagraph (A) in exchange for receipt 
of debentures, the Secretary shall arrange for the sale of 
the beneficial interests in the mortgage loan through an 
auction and sale of the (I) mortgage loans, or (II) participa-
tion certificates, or other mortgage-backed obligations in a 
form acceptable to the Secretary (in this subparagraph 
referred to as 'participation certificates'). The Secretary 
shall arrange the auction and sale at a price, to be paid to 
the mortgagee, of par plus accrued interest to the date of 
sale. The sale price shall also include the right to a subsidy 
payment described in clause (iii). 
'(iiXD The Secretary shall conduct a public auction to 
determine the lowest interest rate necessary to accomplish 
a sale of the beneficial interests in the original credit 
instrument and mortgage securing the credit instrument. 
"(II) A mortgagee who elects to assign a mortgage shall 
provide the Secretary and persons bidding at the auction a 
description of the characteristics of the original credit 
instrument and mortgage securing the original credit in-
strument, which shall include the principal mortgage bal-
ance, original stated interest rate, service fees, real estate 
and tenant characteristics, the level and duration of ap-
plicable Federal subsidies, and any other information deter-
mined by the Secretary to be appropriate. The Secretary 
shall also provide information regarding the status of the 
property with respect to the provisions of the Emergency 
Low Income Housing Preservation Act of 1987 or any subse-
quent Act with respect to eligibility to prepay the mortgage, 
a statement of whether the owner has filed a notice of 
intent to prepay or a plan of action under the Emergency 
Low Income Housing Preservation Act of 1987 or any subse-
quent Act, and the details with respect to incentives pro-
vided 
under 
the 
Emergency 
Low 
Income 
Housing 
Preservation Act of 1987 or any subsequent Act in lieu of 
exercising prepayment rights. 
"(Ill) The Secretary shall, upon receipt of the information 
in subclause (II), promptly advertise for an auction and 
publish such mortgage descriptions in advance of the auc-
tion. The Secretary may conduct the auction at any time 
during the 6-month period beginning upon receipt of the 
information in subclause (II) but under no circumstances 
104 STAT. 1388-22 
PUBLIC LAW 101-508—NOV. 5, 1990 
may the Secretary conduct an auction before 2 months after 
receiving the mortgagee's written notice of intent to assign 
its mortgage to the Secretary. 
"(IV) In any auction under this subparagraph, the Sec-
retary shall accept the lowest interest rate bid for purchase 
that the Secretary determines to be acceptable. The Sec-
retary shall cause the accepted bid to be published in the 
Federal Register. Settlement for the sale of the credit in-
strument and the mortgage securing the credit instrument 
shall occur not later than 30 business days after the date 
winning bidders are selected in the auction, unless the 
Secretary determines that extraordinary circumstances re-
quire an extension (not to exceed 60 days) of the period. 
"(V) If no bids are received, the bids that are received are 
not acceptable to the Secretary, or settlement does not 
occur within the period under subclause (IV), the mortgagee 
shall retain all rights (including the right to interest, at a 
rate to be determined by the Secretary, for the period 
covering any actions taken under this subparagraph) under 
this section to assign the mortgage loan to the Secretary. 
"(iii) As part of the auction process, the Secretary shall 
agree to provide a monthly interest subsidy pa3anent from 
the General Insurance Fund to the purchaser under the 
auction of the original credit instrument or the mortgage 
securing the credit instrument (and any subsequent holders 
or assigns who are approved mortgagees). The subsidy pay-
ment shall be paid on the first day of each month in an 
amount equal to the difference between the stated interest 
due on the mortgage loan and the lowest interest rate 
necessary to accomplish a sale of the mortgage loan or 
participation certificates (less the servicing fee, if appro-
priate) for the then unpaid principal balance plus accrued 
interest at a rate determined by the Secretary. Each in-
terest subsidy payment shall be treated by the holder of the 
mortgage as interest paid on the mortgage. The interest 
subsidy payment shall be provided until the earlier of— 
"(I) the maturity date of the loan; 
"(II) prepayment of the mortgage loan in accordance 
with the Emergency Low Income Housing Preservation 
Act of 1987 or any subsequent Act, where applicable; or 
"(III) default and full payment of insurance benefits 
on the mortgage loan by the Federal Housing Adminis-
tration. 
"(iv) The Secretary shall require that the mortgage loans 
or participation certificates presented for assignment are 
auctioned as whole loans with servicing rights released and 
also are auctioned with servicing rights retained by the 
current servicer. 
"(v) To the extent practicable, the Secretary shall encour-
age State housing finance agencies, nonprofit organizations, 
and organizations representing the tenants of the property 
securing the mortgage, or a qualified mortgagee participat-
ing in a plan of action under the Emergency Low Income 
Housing Preservation Act of 1987 or subsequent Act to 
participate in the auction. 
"(vi) The Secretary shall implement the requirements 
imposed by this subparagraph within 30 days from the date 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-23 
of enactment of this subparagraph and not be subject to the 
requirement of prior issuance of regulations in the Federal 
Register. The Secretary shall issue regulations implement-
ing this section within 6 months of the enactment of this 
subparagraph. 
"(vii) Nothing in this subparagraph shall diminish or 
impair the low income use restrictions applicable to the 
project under the original regulatory agreement or the 
revised agreement entered into pursuant to the Emergency 
Low Income Housing Preservation Act of 1987 or subse-
quent Act, if any, or other agreements for the provision of 
Federal assistance to the housing or its tenants. 
"(viii) This subparagraph shall not apply after Septem-
ber 30, 1995. Not later than January 31 of each year 
(beginning in 1992), the Secretary shall submit to the Con-
gress a report including statements of the number of mort-
gages auctioned and sold and their value, the amount of 
subsidies committed to the program under this subpara-
graph, the ability of the Secretary to coordinate the pro-
gram with the incentives provided under the Emergency 
Low Income Housing Preservation Act of 1987 or subse-
quent Act, and the costs and benefits derived from the 
program for the Federal Government.". 
Subtitle D—Crime and Flood Insurance 
Programs 
SEC. 2301. CRIME INSURANCE PROGRAM. 
(a) EXTENSION OF GENERAL AUTHORITY.—Section 1201(b) of the 
National Housing Act (12 U.S.C. 1749bbb(b)) is amended by striking 
"September 30, 1991" in the matter preceding paragraph (1) and 
inserting "September 30,1995". 
(b) CONTINUATION OF EXISTING CONTRACTS.—Section 1201(b)(1) of 
the National Housing Act (12 U.S.C. 1749bbb(b)(l)) is amended by 
striking "September 30, 1992" and inserting "September 30, 1996". 
(c) EXTENSION OF LIMITATION ON PREMIUMS.—Section 542(c) of the 
Housing and Community Development Act of 1987 (12 U.S.C. 
1749bbb-10c note) is amended by striking "September 30, 1991" and 
inserting "September 30,1995". 
SEC. 2302. FLOOD INSURANCE PROGRAM. 
(a) EXTENSION OF GENERAL AUTHORITY.—Section 1319 of the 
Na-
tional Flood Insurance Act of 1968 (42 U.S.C. 4026) is amended by 
striking "September 30, 1991" and inserting "September 30, 1995". 
(b) EXTENSION OF EMERGENCY PROGRAM.—Section 1336(a) of the 
National Flood Insurance Act of 1968 (42 U.S.C. 4056(a)) is amended 
by striking "September 30, 1991" and inserting "September 30, 
1995". 
(c) EXTENSION OF LIMITATION ON PREMIUMS.—Section 541(d) of the 
Housing and Community Development Act of 1987 (42 U.S.C. 4015 
note) is amended by striking "September 30, 1991" and inserting 
"September 30,1995". 
(d) EXTENSION OF EROSION PROVISIONS.—Section 1306(c)(7) of the 
National Flood Insurance Act of 1968 (42 U.S.C. 4013(c)(7)) is 
104 STAT. 1388-24 
PUBLIC LAW 101-508—NOV. 5, 1990 
amended by striking "September 30, 1991" and inserting "Septem-
ber 30, 1995". 
(e) INCLUSION OF COSTS IN PREMIUMS.— 
(1) ESTIMATES OF PREMIUM RATES.—Section 1307(a) of the 
National Flood Insurance Act of 1968 (42 U.S.C. 4014(a)) is 
amended— 
(A) in paragraph (l)(B)(i), by striking "and" at the end; 
(B) in paragraph (l)(B)(ii), by inserting "and" after the 
comma at the end; 
(C) in paragraph (1)(B), by inserting at the end the follow-
ing new clause: 
"(iii) any remaining administrative expenses in-
curred in carrying out the flood insurance and flood-
plain management programs (including the costs of 
mapping activities under section 1360) not included 
under clause (ii), which shall be recovered by a fee 
charged to policyholders and such fee shall not be 
subject to any agents' commissions, company expense 
allowances, or State or local premium taxes,"; and 
(D) in paragraph (2), by inserting after "title" the 
following: ", and which, together with a fee charged to 
policyholders that shall not be not subject to any agents' 
commission, company expenses allowances, or State or local 
premium taxes, shall include any administrative expenses 
incurred in carrying out the flood insurance and floodplain 
management programs (including the costs of mapping 
activities under section 1360)". 
(2) ESTABLISHMENT OF CHARGEABLE PREMIUM RATES.—Section 
1308 of the National Flood Insurance Act of 1968 (42 U.S.C. 
4015) is amended— 
(A) in subsection (b)— 
(i) by striking "and" at the end of paragraph (2); 
(ii) by redesignating paragraph (3) as paragraph (4); 
and 
(iii) by inserting after paragraph (2), the following 
new paragraph: 
"(3) adequate, together with the fee under paragraph (l)(B)(iii) 
or (2) of section 1307(a), to provide for any administrative 
expenses of the flood insurance and floodplain management 
programs (including the costs of mapping activities under sec-
tion 1360), and"; and 
(B) by striking subsection (d) and inserting the following 
new subsection: 
"(d) With respect to any chargeable premium rate prescribed 
under this section, a sum equal to the portion of the rate that covers 
any administrative expenses of carrying out the flood insurance and 
floodplain management programs which have been estimated under 
paragraphs (l)(BXii) and (l)(B)(iii) of section 1307(a) or paragraph (2) 
of such section (including the fees under such paragraphs), shall be 
paid to the Director. The Director shall deposit the sum in the 
National Flood Insurance Fund established under section 1310.". 
(3) NATIONAL FLOOD INSURANCE FUND.—Section 1310(a)(4) of 
the National Flood Insurance Act of 1968 (42 U.S.C. 4017(a)(4)) is 
amended to read as follows: 
"(4) to the extent approved in appropriations Acts, to pay any 
administrative expenses of the flood insurance and floodplain 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-25 
management programs (including the costs of mapping activi-
ties under section 1360); and". 
(4) ADMINISTRATIVE EXPENSES.—Section 1375 of the National 
Flood Insurance Act of 1968 (42 U.S.C. 4126) is amended by 
striking "program" and all that follows and inserting the fol-
lowing: "and floodplain management programs authorized 
under this title may be paid with amounts from the National 
Flood Insurance Fund (as provided under section 1310(a)(4)), 
subject to approval in appropriations Acts.". 
(5) EXCEPTION TO LIMITATION ON PREMIUM INCREASES.—Not-
withstanding section 541(d) of the Housing and Community 
Development Act of 1987 (42 U.S.C. 4015 note) (as amended by 
this section), the premium rates charged for flood insurance 
under any program established pursuant to the National Flood 
Insurance Act of 1968 may be increased by more than 10 
percent during fiscal year 1991, except that any increase in such 
rates not resulting from the inclusion in chargeable premium 
rates of administrative expenses of the flood insurance and 
floodplain management programs (pursuant to the amendments 
made by this subsection) may not exceed 10 percent. 
42 use 4015 
note. 
Subtitle E—Effective Date 
SEC. 2401. EFFECTIVE DATE. 
If the Cranston-Gonzalez National Affordable Housing Act is 
enacted before the enactment of this Act, the provisions of subtitles 
B and C (of this title) and the amendments made by such subtitles 
shall not take effect. This section shall apply notwithstanding any 
provision relating to effective date or applicability contained in 
subtitle B or C. 
TITLE III—STUDENT LOANS AND LABOR 
PROVISIONS 
Subtitle A—Student Loan Program Savings 
SEC. 3001. SHORT TITLE. 
This subtitle may be cited as the 
tion Initiative Act of 1990". 
'Student Loan Default Preven-
SEC. 3002. SUPPLEMENTAL PRECLAIMS ASSISTANCE PAYMENTS. 
(a) EUMINATION OF SUPPLEMENTAL PRECLAIMS ASSISTANCE RE-
IMBURSEMENTS.—SectioU 428(c) of the Higher Education Act of 1965 
(20 U.S.C. 1078(c)) is amended— 
(1) in the first sentence of paragraph (1)(A), by striking ", 
including the administrative costs of supplemental preclaim 
assistance for default prevention as defined in paragraph 
(6)(C)"; 
(2) in paragraph (6)(C)(i), by striking "this paragraph" and 
inserting "subsection (1)"; 
(3) in paragraph (6)(C)(i)(I), by striking "required or permitted 
u n ^ r paragraph (2)(A) of this subsection and subsection (f)" and 
inserting "generally comparable in intensiveness to the level of 
Student Loan 
Default 
Prevention 
Initiative Act of 
1990. 
20 u s e 1001 
note. 
104 STAT. 1388-26 
PUBLIC LAW 101-508—NOV. 5, 1990 
preclaims assistance performed, prior to the 120th day of delin-
quency, by the guaranty agency as of October 16,1990"; 
(4) in paragraph (6XCXii)— 
(A) by striking "reimbursement" and inserting "pa)anent 
under subsection (1)"; and 
(B) by striking "which the guaranty agency is required or 
permitted to provide pursuant to paragraph (2XA) of this 
subsection and subsection if)" and inserting "described in 
division (iXD of this subparagraph"; and 
(5) by striking the first sentence of paragraph (6XCXiv). 
(b) FIXED PAYMENTS FOR PRECLAIMS ASSISTANCE.—Section 428 of 
such Act is further amended by adding at the end thereof the 
following new subsection: 
"(1) PRECLAIMS ASSISTANCE AND SUPPLEMENTAL PRECLAIMS ASSIST-
ANCE.— 
"(1) ASSISTANCE REQUIRED.—Upon receipt of a proper request 
from the lender, a guaranty agency having an agreement with 
the Secretary under subsection (c) of this section shall engage in 
preclaims assistance activities (as described in subsection 
(cX6XCXiXI)) and supplemental preclaims assistance activities 
(as described in subsection (cX6XC)) with respect to each loan 
covered by such agreement. 
"(2) PAYMENTS FOR SUPPLEMENTAL PRECLAIMS ASSISTANCE.— 
The Secretary shall make pajrments in accordance with the 
provisions of this paragraph to any guaranty agency that en-
gages in supplemental preclaims assistance (as defined in 
subsection (cX6XC)) on a loan guaranteed under this part. Such 
payments shall be equal to $50.00 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.". 
SEC. 3003. INITIAL DISBURSEMENT AND ENDORSEMENT REQUIREMENTS. 
(a) AMENDMENT.—Section 428Gr(bXl) of the Higher Education Act 
of 1965 (20 U.S.C. 1078-7a)Xl)) is amended to read as follows: 
"(1) FIRST YEAR STUDENTS.—The first installment of the pro-
ceeds of any loan made, insured, or guaranteed under this part 
that is made to a student borrower who is entering the first year 
of a program of undergraduate education, and who has not 
previously obtained a loan under this part, shall not (regardless 
of the amount of such loan or the duration of the period of 
enrollment) be presented by the institution to the student for 
endorsement until 30 days after the borrower begins a course of 
study, but may be delivered to the eligible institution prior to 
the end of that 30-day period.". 
20 use 1078-7 
(b) EFFECTIVE DATE.—The amendment made by this section shall 
°°**' 
be effective for loans made on or after the date of enactment of this 
Act to cover the cost of instruction for periods of enrollment begin-
ning on or after January 1,1991. 
SEC. 3004. INELIGIBILITY BASED ON HIGH DEFAULT RATES. 
(a) IN GENERAL.—Section 435(a) of the Higher Education Act of 
20 use 1085. 
1965 (20 U.S.C. 1088(a)) is amended by adding at the end thereof the 
following new paragraph: 
"(3) INELIGIBIUTY BASED ON HIGH DEFAULT RATES.—(A) An 
institution whose cohort default rate is equal to or greater than 
the threshold percentage specified in subparagraph (B) for each 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-27 
of the three most recent fiscal years for which data are avail-
able shall not be eligible to participate in a program under this 
part for the fiscal year for which the determination is made and 
for the two succeeding fiscal years, unless, within 30 days of 
receiving notification from the Secretary of the loss of eligibility 
under this paragraph, the institution appeals the loss of its 
eligibility to the Secretary. The Secretary shall issue a decision 
on any such appeal within 45 days after its submission. Such 
decision may permit the institution to continue to participate in 
a program under this part if— 
"(i) the institution demonstrates to the satisfaction of the 
Secretary that the Secretary's calculation of its cohort de-
fault rate is not accurate, and that recalculation would 
reduce its cohort default rate for any of the three fiscal 
years below the threshold percentage specified in subpara-
graph (B); or 
"(ii) there are, in the judgment of the Secretary, excep-
tional mitigating circumstances that would make the 
application of this paragraph inequitable. 
During such appeal, the Secretary may permit the institution to 
continue to participate in a program under this part. 
"(B) For purposes of determinations under subparagraph (A), 
the threshold percentage is— 
"(i) 35 percent for fiscal year 1991 and 1992; and 
"(ii) 30 percent for any succeeding fiscal year. 
"(C) Until July 1, 1994, this paragraph shall not apply to any 
institution that is— 
"(i) a part B institution within the meaning of section 
322(2) of this Act; 
"(ii) a tribally controlled community college within the 
meaning of section 2(a)(4) of the Tribally Controlled 
Community College Assistance Act of 1978; or 
"(iii) a Navajo Community College under the Navajo 
Community College Act.". 
(b) 
REFUSAL 
TO 
PROVIDE 
STATEMENT 
TO LENDER.—Section 
428(a)(2)(F) of such Act (20 U.S.C 1078(a)(2)(F)) is amended by insert-
ing before the period at the end thereof the following: ", except that, 
in individual cases where the institution determines that the por-
tion of the student's expenses to be covered by the loan can be met 
more appropriately, either by the institution or directly by the 
student, from other sources, the institution may refuse to provide 
such statement or may reduce the determination of need contained 
in such statement". 
(c) EXTENSION OF DEFAULT RATE LIMITATIONS ON S L S LOANS.— 
Section 2003(a)(3) of the Omnibus Budget Reconciliation Act of 1989 20 USC1078-1 
is amended— 
^°^-
(1) by inserting "paragraph (1) o f after "amendments made 
by"; and 
(2) by striking out "October 1, 1991" and inserting "October 1, 
1996". 
(d) EFFECTIVE DATE.—The amendments made by this section shall 
20 USC 1085 
be effective July 1, 1991, except that the amendment made by "°*®-
subsection (b) shall be effective upon enactment. 
SEC. 3005. ABILITY TO BENEFIT. 
(a) IN GENERAL.—Section 484(d) of the Higher Education Act of 
1965 (20 U.S.C. 1091(d)) is amended to read as follows: 
104 STAT. 1388-28 
PUBLIC LAW 101-508—NOV. 5, 1990 
"(d) ABIUTY TO BENEFIT.—In order for a student who is admitted 
on the basis of ability to benefit from the education or training 
offered to be eligible for any grant, loan, or work assistance under 
this title, the student shall, prior to enrollment, pass an independ-
ently administered examination approved by the Secretary.". 
(b) CONFORMING AMENDMENT.—Section 4810t)) of the Higher Edu-
cation Act of 1965 (20 U.S.C. 1088(b)) is amended in the fourth 
sentence by inserting ", except in accordance with section 484(d) of 
this Act," after "shall not". 
20 use 1088 
(c) EFFECTIVE DATE.—The amendments made by this section shall 
^°*®- 
apply to any grant, loan, or work assistance to cover the cost of 
instruction for periods of enrollment beginning on or after Janu-
ary 1,1991. 
SEC. 3006. MAXIMUM SLS LOAN AMOUNTS. 
(a) EFFECTIVE DATE EXTENSION.—Section 2003(b)(2) of the Omnibus 
20 use 1078-1 
Budget Reconciliation Act of 1989 is amended by striking "1991" 
°ote. 
and inserting "1996". 
(b) PERIOD FOR DETERMINATION OF MAXIMUM LOAN AMOUNTS.— 
Section 428A(bXl) of the Higher Education Act of 1965 (20 U.S.C. 
1078-l(b)) is amended by striking "9 consecutive" and inserting "7 
consecutive". 
SEC. 3007. AMENDMENTS TO BANKRUPTCY LAWS. 
(a) AUTOMATIC STAY AND PROPERTY OF THE ESTATE.—(1) Section 
362(b) of title 11, United States Code, is amended— 
(A) in paragraph (12), by striking "or" at the end thereof; 
(B) in paragraph (13), by striking the period at the end thereof 
and inserting a semicolon; and 
(C) by inserting immediately following paragraph (13) the 
following new paragraphs: 
"(14) under subsection (a) of this section, of any action by an 
accrediting agency regarding the accreditation status of the 
debtor as an educational institution; 
"(15) under subsection (a) of this section, of any action by a 
State licensing body regarding the licensure of the debtor as an 
educational institution; or 
"(16) under subsection (a) of this section, of any action by a 
guaranty agency, as defined in section 435(j) of the Higher 
Education Act of 1965 (20 U.S.C. 1001 et seq.) or the Secretary of 
Education regarding the eligibility of the debtor to participate 
in programs authorized under such Act.". 
(2) Section 541(b) of title 11, United States Code, is amended— 
(A) in paragraph (1), by striking "or" at the end thereof; 
(B) in paragraph (2), by striking the period at the end thereof 
and inserting a semicolon and "or"; and 
(C) by adding at the end thereof the following new paragraph: 
"(3) any eligibility of the debtor to participate in programs 
authorized under the Higher Education Act of 1965 (20 U.S.C. 
1001 et seq.; 42 U.S.C. 2751 et seq.), or any accreditation status 
or State licensure of the debtor as an educational institution.". 
11 use 362 note. 
(3) The amendments made by this subsection shall be effective 
upon date of enactment of this Act. 
(b) TREATMENT OF CERTAIN EDUCATION LOANS IN BANKRUPTCY 
J PROCEEDINGS.—(1) Section 1328(aX2) of title 11, United States Code, 
is amended by striking "section 523(aX5)" and inserting "paragraph 
(5) or (8) of section 523(a)". 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-29 
(2) The amendment made by paragraph (1) shall not apply to any 
11 USC 1328 
case under the provisions of title 11, United States Code, commenced 
^°*®-
before the date of the enactment of this Act. 
SEC. 3008. SUNSET PROVISION. 
11 USC 362 note. 
The amendments made by this subtitle shall cease be effective on 
October 1,1996. 
Subtitle B—Labor Related Penalties 
SEC. 3101. OCCUPATIONAL SAFETY AND HEALTH. 
Section 17 of the Occupational Safety and Health Act of 1970 (29 
U.S.C. 666) is amended— 
(1) in subsection (a), by striking "$10,000 for each violation" 
and inserting "$70,000 for each violation, but not less than 
$5,000 for each willful violation; ^ and 
(2) in subsections (b), (c), (d), and (i), by striking "$1,000" and 
inserting "$7,000". 
SEC. 3102. MINE SAFETY AND HEALTH. 
Section 110 of the Federal Mine Safety and Health Act of 1977 (30 
U.S.C. 820) is amended— 
(1) in subsection (a), by striking "$10,000" and inserting 
"$50,000"; and 
(2) in subsection (b), by striking "1,000" and inserting 
"$5,000", and 2 
SEC. 3103. FAIR LABOR STANDARDS. 
Section 16(e) of the Fair Labor Standards Act of 1938 (29 U.S.C. 
216(e)) is amended— 
(1) in the first sentence— 
(A) by striking "or any person who repeatedly or willfully 
violates section 6 or 7"; and 
(B) by striking "not to exceed $1,000 for each such viola-
tion" and inserting "not to exceed $10,000 for each em-
ployee who was the subject of such a violation"; 
(2) by inserting after the first sentence the following: "Any 
person who repeatedly or willfully violates section 6 or 7 shall 
be subject to a civil penalty of not to exceed $1,000 for each such 
violation.", 
(3) by striking "such penalty" each place the term appears 
except after "appropriateness o f and inserting "any penalty 
under this subsection", and 
(4) in the last sentence, by striking "Sums" and inserting 
"Except for civil penalties collected for violations of section 12, 
sums"; and 
(5) by inserting at the end the following new sentence: "Civil 
penalties collected for violations of section 12 shall be deposited 
in the general fund of the Treasury.". 
^ So in original. Probably should be "violation";"-
* So in original. The ", and" probably should be a period. 
104 STAT. 1388-30 
PUBLIC LAW 101-508—NOV. 5, 1990 
TITLE IV—MEDICARE, MEDICAID, AND 
OTHER HEALTH-RELATED PROGRAMS 
Subtitle A—Medicare 
SEC. 4000. REFERENCES IN SUBTITLE; TABLE OF CONTENTS. 
(a) AMENDMENTS TO THE SOCIAL SECURITY ACT.—Except as other-
wise specifically provided, whenever in this title an amendment is 
expressed in terms of an amendment to or repeal of a section or 
other provision, the reference shall be considered to be made to that 
section or other provision of the Social Security Act. 
(b) TABLE OF CONTENTS.—The table of contents of this subtitle is as 
follows: 
Sec. 4000. References in subtitle; table of contents. 
PART 1—PROVISIONS RELATING TO PART A 
Sec. 4001. Payments for capital-related costs of inpatient hospital services. 
Sec. 4002. Prospective payment hospitals. 
Sec. 4003. Expansion of DRG payment window. 
Sec. 4004. PajTnents for medical education costs. 
Sec. 4005. PF^-exempt hospitals. 
Sec. 4006. Hospice benefit extension. 
Sec. 4007. Freeze in payments under part A through December 31. 
Sec. 4008. Miscellaneous and technical provisions relating to part A. 
PART 2—PROVISIONS RELATING TO PART B 
Subpart A—Payment for Physicians' Services 
Sec. 4101. Certain overvalued procedures. 
Sec. 4102. Radiology services. 
Sec. 4103. Anesthesia services. 
Sec. 4104. Physician pathology services. 
Sec. 4105. Update for physicians' services. 
Sec. 4106. New physicians and other new health care practitioners. 
Sec. 4107. Assistants at surgery. 
Sec. 4108. Technical components of certain diagnostic tests. 
Sec. 4109. Interpretation of electrocardiograms. 
Sec. 4110. Reciprocal billing arrangements. 
Sec. 4111. Study of prepayment medical review screens. 
Sec. 4112. Practicing physicians advisory council. 
Sec. 4113. Study of aggregation rule for claims for similar physicians' services. 
Sec. 4114. Utilization screens for physician visits in rehabilitation hospitals. 
Sec. 4115. Study of regional variations in impact of medicare physician payment 
reform. 
Sec. 4116. Limitation on beneficiary liability. 
Sec. 4117. Statewide fee schedule areas for physicians' services. 
Sec. 4118. Technical corrections. 
Subpart B—Other Items and Services 
Sec. 4151. Payments for hospital outpatient services. 
Sec. 4152. Durable medical equipment. 
Sec. 4153. Provisions relating to orthotics and prosthetics. 
Sec. 4154. Clinical diagnostic laboratory tests. 
Sec. 4155. Coverage of nurse practitioners in rural areas. 
Sec. 4156. Coverage of injectable drugs for treatment of osteoporosis. 
Sec. 4157. Separate pajrment under part B for services of certain health practition-
ers. 
Sec. 4158. Reduction in payments under part B during final 2 months of 1990. 
Sec. 4159. Pajrments for medical education costs. 
Sec. 4160. Certified registered nurse anesthetists. 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-31 
Sec. 4161. Community health centers and rural health clinics. 
Sec. 4162. Partial hospitalization in community mental health centers. 
Sec. 4163. Coverage of screening mammography. 
Sec. 4164. Miscellaneous and technical provisions relating to part B. 
PART 3—PROVISIONS RELATING TO PARTS A AND B 
Sec. 4201. Provisions relating to end stage renal disease. 
Sec. 4202. Staff-assisted home dialysis demonstration project. 
Sec. 4203. Extension of secondary payor provisions. 
Sec. 4204. Health maintenance organizations. 
Sec. 4205. Peer review organizations. 
Sec. 4206. Medicare provider agreements assuring the implementation of a patient's 
right to participate in and direct health care decisions affecting the pa-
tient. 
Sec. 4207. Miscellaneous and technical provisions relating to parts A and B. 
PART 4—PROVISIONS RELATING TO PART B PREMIUM AND DEDUCTIBLE 
Sec. 4301. Part B premium. 
Sec. 4302. Part B deductible. 
PART 5—MEDICARE SUPPLEMENTAL INSURANCE POUCIES 
Sec. 4351. Simplification of medicare supplemental policies. 
Sec. 4352. Guaranteed renewability. 
Sec. 4353. Enforcement of standards. 
Sec. 4354. Preventing duplication. 
Sec. 4355. Loss ratios and refund of premiums. 
Sec. 4356. Clarification of treatment of plans offered by health maintenance organi-
zations. 
Sec. 4357. Pre-existing condition limitations and limitation on medical underwrit-
ing. 
Sec. 4358. Medicare select policies. 
Sec. 4359. Health insurance advisory services for medicare beneficiaries. 
Sec. 4360. Health insurance information, counseling, and assistance grants. 
Sec. 4361. Medicare and medigap information by telephone. 
PART 1—PROVISIONS RELATING TO PART A 
SEC. 4001. PAYMENTS FOR CAPITAL-RELATED COSTS OF INPATIENT 
HOSPITAL SERVICES. 
(a) REDUCTION IN PAYMENTS FOR FISCAL YEAR 1991.—Section 
1886(g)(3)(A)(v) (42 U.S.C. 1395ww(g)(3)(A)(v)) is amended by striking 
"September 30,1990" and inserting "September 30,1991". 
(b) 
IMPLEMENTATION OF PROSPECTIVE PAYMENT FOR CAPITAL-
RELATED COSTS.—Section 1886(g)(1)(A) (42 U.S.C. 1395ww(g)(l)) is 
amended by adding at the end the following: "Aggregate payments 
made under subsection (d) and this subsection during fiscal years 
1992 through 1995 shall be reduced in a manner that results in a 
reduction (as estimated by the Secretary) in the amount of such 
payments equal to a 10 percent reduction in the amount of pay-
ments attributable to capital-related costs that would otherwise 
have been made during such fiscal year had the amount of such 
payments been based on reasonable costs (as defined in section 
1861(v)).". 
(c) EXEMPTION FOR RURAL PRIMARY CARE HOSPITALS.—Section 
1886(g)(3)(B) is amended by striking "subsection (d)(5)(D)(iii))." and 
inserting "subsection (d)(5)(D)(iii) or a rural primary care hospital 
(as defined in section 1861(mm)(l))." 
SEC. 4002. PROSPECTIVE PAYMENT HOSPITALS. 
(a) CHANGES IN UPDATE FACTORS.— 
(1) 
IN 
GENERAL.—Section 
1886(bX-3XBXi) 
(42 
U.S.C. 
1395ww(bK3XBXi)) is amended— 
(A) by striking "and" at the end of subclause (V); 
104 STAT. 1388-32 
PUBLIC LAW 101-508—NOV. 5, 1990 
(B) in subclause (VI)— 
(i) by striking "1991" and inserting "1994", and 
(ii) by redesignating such subclause as subclause (IX); 
and 
(C) by inserting after subclause (V) the following new 
subclauses: 
"(VI) for fiscal year 1991, the market basket percentage in-
crease minus 2.0 percentage points for hospitals in all areas, 
"(VII) for fiscal year 1992, the market basket percentage 
increase minus 1.6 percentage points for hospitals in all areas, 
"(VIII) for fiscal year 1993, the market basket percentage 
increase minus 1.55 percentage point for hospitals in all areas, 
and". 
42 use 1395ww 
(2) EFFECTIVE DATE.—The amendments made by paragraph (1) 
°°*®- 
shall apply to payments for discharges occurring on or after 
January 1,1991. 
(b) CHANGES IN DISPROPORTIONATE SHARE PAYMENTS.— 
(1) INCREASE FOR URBAN HOSPITALS WITH MORE THAN lOO 
BEDS.—Section 1886(d)(5)(F)(vii) (42 U.S.C. 1395ww(d)(5)(F)(vii)) is 
amended— 
(A) in subclause (I), by striking "greater than 20.2," and 
all that follows and inserting the following: "greater than 
20.2— 
"(a) for discharges occurring on or after April 1,1990, and 
on or before December 31,1990, (P-20.2)(.65) + 5.62, 
"(b) for discharges occurring on or after January 1, 1991, 
and on or before September 30, 1993, (P-20.2)(.7) + 5.62, 
"(c) for discharges occurring on or after October 1, 1993, 
and on or before September 30,1994, (P-20.2)(.8) + 5.88, and 
"(d) for discharges occurring on or after October 1, 1994, 
(P-20.2)(.825) + 5.88; or"; and 
(B) in subclause (II), by striking "hospital, (P-15)(.6) 
+ 2.5," and inserting the following: "hospital— 
"(a) for discharges occurring on or after April 1, 1990, and 
on or before December 31,1990, (P-15)(.6) + 2.5, 
"(b) for discharges occurring on or after January 1, 1991, 
and on or before September 30, 1993, (P-15)(.6) + 2.5, 
"(c) for discharges occurring on or after October 1, 1993, 
(P-15)(.65) + 2.5,". 
(2) INCREASE FOR HOSPITALS WITH DISPROPORTIONATE INDIGENT 
CARE 
REVENUES.—Section 
1886(d)(5)(F)(iii) 
(42 
U.S.C. 
1395ww(dX5)(F)(iii)) is amended by striking "30 percent" and 
inserting "35 percent". 
(3) REPEAL OF SUNSET.— 
(A) IN GENERAL.—Section 1886(d) (42 U.S.C. 1395ww(d)) is 
amended by striking "and before October 1, 1995," each 
place it appears in paragraph (2)(C)(iv) and paragraph 
(5)(F)(i). 
(B) 
CONFORMING 
AMENDMENTS.—(A) 
Section 
1886(d)(5XBXii) (42 U.S.C. 1395ww(dX5)(B)) is amended to 
read as follows: 
"(ii) For purposes of clause (iXII), the indirect teaching adjust-
ment factor for discharges occurring on or after May 1, 1986, is 
equal to 1.89 X (((1 + r) to the nth power) — 1), where 'r' is the 
ratio of the hospital's full-time equivalent interns and residents 
to beds and 'n' equals .405.". 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-33 
(B) Section 1886(dX3XCXii) (42 U.S.C. 1395ww(dX3XCXii)) is 
amended by striking "occurring—" and all that follows and 
inserting the following: "occurring on or after October 1, 
1986, of an amount equal to the estimated reduction in the 
pajonent amounts under paragraph (5XB) that would have 
resulted from the enactment of the amendments made by 
section 9104 of the Medicare and Medicaid Budget Rec-
onciliation Amendments of 1985 and by section 4003(aXl) of 
the Omnibus Budget Reconciliation Act of 1987 if the factor 
described in clause (iiXH) of paragraph (5XB) (determined 
without regard to amendments made by the Omnibus 
Budget Reconciliation Act of 1990) were applied for dis-
charges occurring on or after such date instead of the factor 
described in clause (ii) of that paragraph.". 
(4) N o RESTANDARDIZING FOR RECENT ADJUSTMENTS.— 
(A) 
ADJUSTMENTS 
UNDER 
OBRA 
1989.—Section 
1886(dX2XCXiv) (42 U.S.C. 1395ww(dX2XCXiv)) is amended by 
striking the period at the end and inserting the 
following: ", except that the Secretary shall not exclude 
additional payments under such paragraph made as a 
result of the enactment of section 6003(c) of the Omnibus 
Budget Reconciliation Act of 1989.". 
(B) 
ADJUSTMENTS 
UNDER 
OBRA 
1990.—Section 
1886(d)(2)(CXiv), as amended by subparagraph (A), is further 
amended by striking "1989." and inserting "1989 or the 
enactment of section 4002(b) of the Omnibus Budget Rec-
onciliation Act of 1990.". 
(5) EFFECTIVE DATE.—The amendments made by paragraphs f^^Y^ 1395ww 
(1), (3), and (4XB) shall apply to discharges occurring on or after 
January 1, 1991, the amendment made by paragraph (2) shall 
apply to discharges occurring on or after October 1, 1991, and 
the amendment made by paragraph (4XA) shall take effect as if 
included in the enactment of the Omnibus Budget Reconcili-
ation Act of 1989. 
(c) PAYMENTS TO RURAL HOSPITALS.— 
(1) 
PHASE-OUT 
OF 
SEPARATE 
AVERAGE 
STANDARDIZED 
AMOUNTS.—Section 1886(bX3)(BXi) (42 U.S.C. 1395ww(bX3XBXi)), 
as amended by subsection (a)(1), is further amended— 
(A) in subclause (VI), by striking "in all areas," and 
inserting "in a large urban or other urban area, and the 
market basket percentage increase minus 0.7 percentage 
point for hospitsds located in a rural area ,"; 
(B) in subclause (VII), by striking "in all areas," and 
inserting "in a large urban or other urban area, and the 
market basket percentage increase minus 0.6 percentage 
point for hospitals located in a rural area,"; 
(C) in subclause (VIII), by striking "in all aregis, and" and 
inserting "in a large urban or other urban area, and the 
market basket percentage incresise minus 0.55 for hospitals 
located in a rural area,"; 
(D) in subclause (IX)— 
(i) by striking "1994" and inserting "1996", and 
(ii) by redesignating such subclause as subclause (XI); 
and 
(E) by inserting after subclause (VIII) the following new 
subclauses: 
note. 
104 STAT. 1388-34 
PUBLIC LAW 101-508—NOV. 5, 1990 
"(IX) for fiscal year 1994, the market basket percentage in-
crease for hospitals located in a large urban or other urban 
area, and the market basket percentage increase plus 1.5 
percentage points for hospitals located in a rural area, 
"(X) for fiscal year 1995, the market basket percentage in-
crease for hospitals located in a large urban or other urban 
area, and such percentage increase for hospitals located in a 
rural area as will provide for the average standardized amount 
determined under subsection (dX3XA) for hospitals located in a 
rural area being equal to such average standardized amount for 
hospitals located in an urban area (other than a large urban 
area), and". 
(2) CONFORMING AMENDMENTS.—(A) Section 1886(bX3XB) (42 
U.S.C. 1395ww(bX3)) is amended— 
(i) in clause (ii), by striking "(A) and (E)," and inserting 
"(A),(C),(D),and(E),"; 
(ii) in subparEigraphs (CXii) and (DXii), by striking "(BXi)" 
each place it appears and inserting "(B)(ii)". 
(B) Section 1886(d) (42 U.S.C. 1395ww(d)) is amended— 
(i) in paragraph (l)(AXiii), by striking "rural, large urban, 
or other urban area" and inserting "large urban or other 
area"; 
(ii) in paragraph (3)(A)— 
(I) in clause (ii), by striking "the Secretary" and 
inserting "and ending on or before September 30, 1994, 
the Secretary", 
(II) by redesignating clause (iii) as clause (v), and 
(III) by inserting after clause (ii) the following new 
clauses: 
"(iii) For discharges occurring in the fiscal year beginning on 
October 1, 1994, the average standardized amount for hospitals 
located in a rural area shall be equal to the average standard-
ized amount for hospitals located in an other urban area. 
"(iv) For discharges occurring in a fiscal year beginning on or 
after October 1, 1995, the Secretary shall compute an average 
standardized amount for hospitals located in a large urban area 
and for hospitals located in other areas within the United States 
and within each region equal to the respective average 
standardized amount computed for the previous fiscal year 
under this subparagraph increased by the applicable percentage 
increase under subsection (b)(3)(B)(i) with respect to hospitals 
located in the respective areas for the fiscal year involved."; 
(iii) in paragraph (3)(B), by striking "for hospitals located 
in an urban area" and all that follows and inserting the 
following: "by a factor equal to the proportion of payments 
under this subsection (as estimated by the Secretary) based 
on DRG prospective pa3anent amounte which are additional 
payments described in paragraph (5)(A) (relating to outlier 
pajpients)."; 
(iv) in paragraph (3XDXi)— 
(I) in the matter preceding subclause (I), by striking 
"an urban area (or," and all that follows through 
"area)," and inserting "a large urban area", and 
(II) in subclause (I), by striking "an urban area" and 
inserting "a large urban area"; 
(v) in paragraph (3)(D)(ii), by striking "a rural area" each 
place it appears and inserting "other areas"; and 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-35 
(vi) in paragraph (8)(D)— 
(I) in the first sentence, by striking "for hospitals 
located in an urban area", and 
(II) by striking the second sentence. 
(3) EFFECTIVE DATE.—The amendments made by paragraph (1) 
and paragraph (2)(A) shall apply to payments for discharges 
occurring on or after January 1, 1991, and the amendments 
made by paragraph (2)(B) shall take effect October 1, 1994. 
(d) AREA WAGE INDEX.— 
(1) DETERMINATION OF AREA WAGE INDEX.—(A) For purposes of 
section 1886(d)(3)(E) of the Social Security Act for discharges 
occurring on or after January 1, 1991, and before October 1, 
1993, the Secretary of Health and Human Services shall apply 
an area wage index determined using the survey of the 1988 
wages and wage-related costs of hospitals in the United States 
conducted under such section. 
(B) The Secretary shall apply the wage index described in 
subparagraph (A) without regard to a previous survey of wages 
and wage-related costs. 
(2) STUDY OF AREA WAGE INDEX ADJUSTMENTS BASED ON PROFES-
SIONAL OCCUPATIONAL COMPONENT.— 
(A) 
STUDY.—The 
Prospective 
Payment 
Assessment 
Commission shall examine available data from States and 
other sources measuring earnings and paid hours of 
employment of hospital workers by occupational category, 
and shall include in such examination an analysis of the 
impact of variation in occupational mix on the computation 
of the 
area wage index determined 
under 
section 
1886(d)(3)(E) of the Social Security Act. 
(B) REPORT TO CONGRESS.—In its March 1991 report, the 
Commission shall include recommendations regarding the 
feasibility and desirability of modifying such area wage 
index to take into account occupational mix, including 
variations in occupational mix resulting from differences in 
State codes and requirements. 
(e) EXTENSION OF REGIONAL FLOOR ON STANDARDIZED AMOUNTS.— 
(1) 
IN 
GENERAL.—Section 
1886(d)(l)(A)(iii) 
(42 
U.S.C. 
1395ww(d)(l)(A)(iii)) is amended by striking "beginning on or 
after" and all that follows through "1990" and inserting "begin-
ning on or after April 1, 1988, and ending on September 30, 
1993,". 
(2) STUDY.—(A) The Secretary of Health and Human Services 
shall collect sufficient data on the input prices associated with 
the non-wage-related portion of the adjusted average standard-
ized amounts established under section 1886(d)(3) of the Social 
Security Act to identify the extent to which variations in such 
amounts among hospitals located in different geographic areas 
are attributable to differences in such prices. 
(B) Not later than June 1, 1993, the Secretary shall submit a 
report to Congress analyzing such data, and shall include in 
such report recommendations regarding a methodology for 
adjusting such average standardized amounts to reflect such 
variations. 
(C) The provisions of chapter 35 of title 44, United States 
Code, shall not apply to data collected by the Secretary under 
subparagraph (A). 
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104 STAT. 1388-36 
PUBLIC LAW 101-508—NOV. 5, 1990 
42 use 1395WW 
note. 
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note. 
42 use 1395x 
note. 
(4) EFFECTIVE DATE.—The amendment made by paragraph (1) 
shall apply to discharges occurring on or after October 1, 1990. 
(f) ELIMINATION OF HOSPITAL OFF-SET FOR SERVICES OF PHYSICIAN 
ASSISTANTS.— 
(1) I N GENERAL.—Section 9338 of the Omnibus Budget Rec-
onciliation Act of 1986 is amended by striking subsection (d). 
(2) EFFECTIVE DATE.—The amendment made by paragraph (1) 
shall take effect as if included in the enactment of the Omnibus 
Budget Reconciliation Act of 1986. 
(g) RESPONSIBILITIES AND REPORTING REQUIREMENTS OF PROSPEC-
TIVE PAYMENT ASSESSMENT COMMISSION.— 
(1) EXPANSION OF RESPONSIBILTIES 3.—Section 1886(eX2) (42 
U.S.C. 1395ww(eX2)) is amended— 
(A) by striking "(2)" and inserting "(2)(A)"; and 
(B) by adding at the end the following new subpara-
graphs: 
"(B) In order to promote the efficient and effective delivery of 
high-quality health care services, the Commission shall, in addition 
to carrying out its functions under subparagraph (A), study and 
make recommendations for each fiscal year regarding changes in 
each existing reimbursement policy under this title under which 
payments to an institution are based upon prospectively determined 
rates and the development of new institutional reimbursement poli-
cies under this title, including recommendations relating to pay-
ments during such fiscal year under the prospective 
payment 
system established under this section for determining payments for 
the operating costs of inpatient hospital services, including changes 
in the number of diagnosis-related groups used to classify inpatient 
hospital discharges under subsection (d), adjustments to such groups 
to reflect severity of illness, and changes in the methods by which 
hospitals are reimbursed for capital-related costs, together with 
general recommendations on the effectiveness and quality of health 
care delivery systems in the United States and the effects on such 
systems of institutional reimbursements under this title. 
"(C) By not later than June 1 of each year, the Commission shall 
submit a report to Congress containing an examination of issues 
affecting health care delivery in the United States, including issues 
relating to— 
"(i) trends in health care costs; 
"(ii) the financial condition of hospitals and the effect of the 
level of payments made to hospitals under this title on such 
condition; 
"(iii) trends in the use of health care services; and 
"(iv) new methods used by employers, insurers, and others to 
constrain growth in health care costs.". 
(2) REPORTING REQUIREMENTS FOR COMMISSION AND SECRETARY; 
ELIMINATION OF OTA REPORTING REQUIREMENTS.—Section 1886 
(42 U.S.C. 1395ww) is amended— 
(A) by striking subparagraph (D) of subsection (d)(4); 
(B) in the second sentence of subsection (eX2)(A), as 
amended by paragraph (IXA), by striking "In addition" and 
all that follows through "the Commission" and inserting 
"The Commission"; 
(C) in subsection (eX3XA)— 
(i) by striking "the Secretary" and inserting "Con-
gress", and 
' So in original. Probably should be "RESPONSIBIUTIES". 
• . * g ^ ^ 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-37 
(ii) by striking the period at the end and inserting the 
following: ", together with its general recommenda-
tions under paragraph (2)(B) regarding the effective-
ness and quality of health care delivery systems in the 
United States."; 
(D) in subsection (e)(4)— 
(i) by striking "(4)" and inserting "(4)(A)", and 
(ii) by adding at the end the following new subpara-
graph: 
"(B) In addition to the recommendation made under subparagraph 
(A), the Secretary shall, taking into consideration the recommenda-
tions of the Commission under paragraph (2)(B), recommend for 
each fiscal year (beginning with fiscal year 1992) other appropriate 
changes in each existing reimbursement policy under this title 
under which payments to an institution are based upon prospec-
tively determined rates."; 
(E) in subsection (e)(5)— 
(i) by striking "recommendation" each place it ap-
pears and inserting "recommendations", and 
(ii) by adding at the end the following new sentence: 
"To the extent that the Secretary's recommendations 
under paragraph (4) differ from the Commission's rec-
ommendations for that fiscal year, the Secretary shall 
include in the publication referred to in subparagraph 
(A) an explanation of the Secretary's grounds for not 
following the Commission's recommendations."; and 
(F) in subsection (e)(6)(G)— 
(i) by striking clause (i), and 
(ii) by redesignating clauses (ii) and (iii) as clauses (i) 
and (ii). 
(3) CONFORMING AMENDMENT.—Section 1845(c)(lXD) (42 U.S.C. 
1395w-l(c)(l)(D)) is amended by striking "reports and". 
(4) P R O P AC STUDY OF MEDICAID PAYMENTS TO HOSPITALS.— 
(A) 
STUDY.—The 
Prospective 
Payment 
Assessment 
Commission shall conduct a study of hospital payment rates 
under State plans for medical assistance under title XIX of 
the Social Security Act, and shall specifically examine in 
such study the relationship between payments under such 
plans and payments made to hospitals under title XVIII of 
such Act, and the financial condition of hospitals receiving 
payments under such plans, with particular attention to 
hospitals in urban areas which treat large numbers of 
individuals eligible for medical assistance under title XIX 
of such Act and other low-income individuals. 
(B) REPORT.—By not later than October 1, 1991, the 
Commission shall submit a report to Congress on the study 
conducted under subparagraph (A) and shall include in 
such report such recommendations relating to require-
ments for payments to hospitals under title XIX of such Act 
as the Commission deems appropriate. 
(5) EFFECTIVE DATE.—The amendments made by this subsec- 42 USC 1395ww 
tion shall take effect on the date of the enactment of this Act. note. 
(h) PROVISIONS RELATING TO GEOGRAPHIC CLASSIFICATION OF HOS-
PITALS.— 
(1) PAYMENTS TO RECLASSIFIED HOSPITALS.— 
(A) IN GENERAL.—Section 
1886(dX8)(C) (42 U.S.C. 
1395ww(d)(8)(C)) is amended— 
104 STAT. 1388-38 
PUBLIC LAW 101-508—NOV. 5, 1990 
42 use 1
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note. 
(i) in clause (i), in the matter preceding subclause (I), 
by striking "area—" and inserting "area, or by treating 
hospitals located in one urban area as being located in 
another urban area—"; 
(ii) by amending clause (i)(II) to read as follows: 
"(II) reduces the wage index for that urban area by more than 
1 percentage point (as applied under this subsection), the Sec-
retary shall calculate and apply such wage index under this 
subsection separately to hospitals located in such urban area 
(excluding all the hospitals so treated) and to the hospitals so 
treated (as if such hospitals were located in such urban area)."; 
(iii) by striking clause (ii); and 
(iv) by redesignating clauses (iii) and (iv) as clauses 
(ii) and (iii). 
(B) EFFECTIVE DATE.—The amendments made by subpara-
graph (A) shall apply to discharges occurring on or after 
January 1,1991. 
(2) GEOGRAPHIC CLASSIFICATION REVIEW BOARD.— 
(A) DEADUNE FOR SUBMISSION OF APPUCATIONS.—For pur-
poses of determining whether a hospital requesting a 
change in geographic classification for fiscal year 1992 
under section 1886(d)(10) of the Social Security Act has met 
the deadline described in subparagraph (C)(ii) of such sec-
tion, an application submitted under such subparagraph 
shall be considered to have been submitted by the first day 
of the preceding fiscal year if it is submitted within 60 days 
of the date of publication of the guidelines described in 
subparagraph (D)(i) of such section. 
(B) TECHNICAL CORRECTIONS.—Section 1886(d)(10) (42 
U.S.C. 1395ww(d)(10)) is amended— 
(i) in subparagraph (A), by striking "Geographical" 
V 
and inserting "Geographic"; 
(ii) in subparagraph (BXi)— 
(I) by striking "representatives" and inserting 
"representative", and 
(II) by striking "1 member shall be a member of 
the Prospective Pa3nnent Assessment Commission, 
and at least"; 
(iii) in subparagraph (BXii), by striking "all" and 
inserting "initial"; and 
(iv) in subparagraph (10XC)(iii)(II)— 
(I) by striking the first 2 sentences and inserting 
the following: "Appeal of decisions of the Board 
shall be subject to the provisions of section 557b of 
title 5, United States Code.", and 
(II) by striking "after" and inserting "after the 
date on which". 
SEC. 4003. EXPANSION OF DRG PAYMENT WINDOW. 
(a) IN GENERAL.—The first sentence of section 1886(aX4) (42 U.S.C. 
1395ww(aX4)) is amended by striking the period and inserting the 
following: ", and includes the costs of all services for which payment 
may be made under this title that are provided by the hospital (or by 
an entity wholly owned or operated by the hospital) to the patient 
during the 3 days immediately preceding the date of the patient's 
admission if such services are diagnostic services (including clinical 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-39 
diagnostic laboratory tests) or are other services related to the 
admission (as defined by the Secretary).". 
(b) EFFECTIVE DATE.—The amendment made by subsection (a) 
shall apply— 
(1) in the case of any services provided during the day imme-
diately preceding the date of a patient's admission (without 
regard to whether the services are related to the admission), to 
services furnished on or after the date of the enactment of this 
Act and before October 1,1991; 
(2) in the case of diagnostic services (including clinical diag-
nostic laboratory tests), to services furnished on or after Janu-
ary 1,1991; and 
(3) in the case of any other services, to services furnished on 
or after October 1,1991. 
(c) ISSUANCE OF INTERIM FINAL REGULATION.—The Secretary of 
Health and Human Services shall issue such regulations (on an 
interim or other basis) as may be necessary to implement this 
section. 
SEC. 4004. PAYMENTS FOR MEDICAL EDUCATION COSTS. 
(a) HOSPITAL GRADUATE MEDICAL EDUCATION RECOUPMENT.— 
(1) IN GENERAL.—The Secretary of Health and Human Serv-
ices may not, before October 1, 1991, recoup payments from a 
hospital because of alleged overpayments to such hospital under 
part A of title XVIII of the Social Security Act due to a 
determination that the amount of pa5nnents made for graduate 
medical education programs exceeds the amount allowable 
under section 1886(h). 
(2) CAP ON ANNUAL AMOUNT OF RECOUPMENT.—With respect to 
overpayments to a hospital described in paragraph (1), the 
Secretary may not recoup more than 25 percent of the amount 
of such overpajrments from the hospital during a fiscal year. 
(3) EFFECTIVE DATE.—Paragraphs (1) and (2) shall take effect 
October 1,1990. 
(b) UNIVERSITY HOSPITAL NURSING EDUCATION.— 
(1) IN GENERAL.—The reasonable costs incurred by a hospital 
(or by an educational institution related to the hospital by 
common ownership or control) during a cost reporting period for 
clinical training (as defined by the Secretary) conducted on the 
premises of the hospital under approved nursing and allied 
health education programs that are not operated by the hospital 
shall be allowable as reasonable costs under part A of title 
XVIII of the Social Security Act and reimbursed under such 
part on a pass-through basis. 
(2) CONDITIONS FOR REIMBURSEMENT.—The reasonable costs 
incurred by a hospital during a cost reporting period shall be 
reimbursable pursuant to paragraph (1) only if^ 
(A) the hospital claimed and was reimbursed for such 
costs during the most recent cost reporting period that 
ended on or before October 1,1989; 
; 
(B) the proportion of the hospital's total allowable costs 
that is attributable to the clinical training costs of the 
approved program, and allowable under (b)(1) during the 
cost reporting period does not exceed the proportion of total 
allowable costs that were attributable to the clinical train-
ing costs during the cost reporting period described in 
subparagraph (A); 
42 u s e 1
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104 STAT. 1388-40 
PUBLIC LAW 101-508—NOV. 5, 1990 
(C) the hospital receives a benefit for the support it 
furnishes to such program through the provision of clinical 
services by nursing or allied health students participating 
in such program; and 
(D) the costs incurred by the hospital for such program do 
not exceed the costs that would be incurred by the hospital 
if it operated the program itself. 
(3) PROHIBITION 
AGAINST RECOUPMENT OF COSTS BY SEC-
RETARY.— 
(A) IN GENERAL.—The Secretary of Health and Human 
Services may not recoup payments from (or otherwise 
reduce or adjust payments under part A of title XVIII of 
the Social Security Act to) a hospital because of alleged 
overpayments to such hospital under such title due to a 
determination that costs which were reported by the hos-
pital on its medicare cost reports for cost reporting periods 
beginning on or after October 1, 1983, and before October 1, 
1990, relating to approved nursing and allied health edu-
cation programs did not meet the requirements for allow-
able nursing and allied health education costs (as developed 
by the Secretary pursuant to section 1861(v) of such Act). 
(B) REFUND OF AMOUNTS RECOUPED.—If, prior to the date 
of the enactment of this Act, the Secretary has recouped 
payments from (or otherwise reduced or adjusted payments 
under part A of title XVIII of the Social Security Act to) a 
hospital because of overpayments described in subpara-
graph (A), the Secretary shall refund the amount recouped, 
reduced, or adjusted from the hospital. 
(4) SPECIAL AUDIT TO DETERMINE COSTS.—In determining the 
amount of costs incurred by, claimed by, and reimbursed to, a 
hospital for purposes of this subsection, the Secretary shall 
conduct a special audit (or use such other appropriate mecha-
nism) to ensure the accuracy of such past claims and payments. 
(5) EFFECTIVE DATE.—Except as provided in paragraph (3), the 
provisions of this subsection shall apply to cost reporting peri-
ods beginning on or after October 1,1990. 
SEC. 4005. PPS-EXEMPT HOSPITALS. 
(a) ADJUSTMENT TO PAYMENT AMOUNTS.— 
(1) 
IN 
GENERAL.—Section 
1886(b)(1)(B) 
(42 
U.S.C. 
1395ww(b)(l)(B)) is amended by striking "(ii) in the case o f and 
all that follows through the semicolon and inserting the follow-
ing: "(ii) in the case of cost reporting periods beginning on or 
after October 1, 1991, an additional amount equal to 50 percent 
of the amount by which the operating costs exceed the target 
amount (except that such additional amount may not exceed 10 
percent of the target amount) after any exceptions or adjust-
ments are made to such target amount for the cost reporting 
period;". 
42 use 1395ww 
(2) EFFECTIVE DATE.—The amendment made by paragraph (1) 
^o*®- 
shall apply to cost reporting periods beginning on or after 
October 1,1991. 
42 u s e 1395WW 
(b) DEVELOPMENT OF NATIONAL PROSPECTIVE PAYMENT RATES FOR 
note. 
CURRENT NON-PPS HOSPITALS.— 
(1) DEVELOPMENT OF PROPOSAL.—The Secretary of Health and 
Human Services shall develop a proposal to modify the current 
system under which hospitals that are not subsection (d) hos-
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-41 
pitals (as defined in section 1886(dXl)(B) of the Social Security 
Act) receive payment for the operating and capital-related costs 
of inpatient hospital services under part A of the medicare 
program or a proposal to replace such system with a system 
under which such payments would be made on the basis of 
nationally-determined average standardized amounts. In devel-
oping any proposal under this paragraph to replace the current 
system with a prospective payment system, the Secretary 
shall— 
(A) take into consideration the need to provide for appro-
priate limits on increases in expenditures under the medi-
care program; 
(B) provide for adjustments to prospectively determined 
rates to account for changes in a hospital's case mix, sever-
ity of illness of patients, volume of cases, and the 
development of new technologies and standards of medical 
practice; 
(C) take into consideration the need to increase the pay-
ment otherwise made under such system in the case of 
services provided to patients whose length of stay or costs of 
treatment greatly exceed the length of stay or cost of 
treatment provided for under the applicable prospectively 
determined payment rate; 
(D) take into consideration the need to adjust payments 
under the system to take into account factors such as a 
disproportionate share of low-income patients, costs related 
to graduate medical education programs, differences in 
wages and wage-r6lated costs among hospitals located in 
various geographic areas, and other factors the Secretary 
considers appropriate; and 
(E) provide for the appropriate allocation of operating 
and capital-related costs of hospitals not subject to the new 
prospective payment system and distinct units of such hos-
pitals that would be paid under such system. 
(2) REPORTS.—(A) By not later than April 1, 1992, the Sec-
retary shall submit the proposal developed under paragraph (1) 
to the Committee on Finance of the Senate and the Committee 
on Ways and Means of the House of Representatives. 
(B) By not later than June 1, 1992, the Prospective Payment 
Assessment Commission shall submit an analysis of and com-
ments on the proposal developed under paragraph (1) to the 
Committee on Finance of the Senate and the Committee on 
Ways and Means of the House of Representatives. 
(c) APPEALS OF TARGET AMOUNTS.— 
(1) DEADUNES FOR REVIEW AND DECISION.—(A) Section 1816(f) 
(42 U.S.C. 1395h(f)) is amended— 
(i) by striking "(1)" and "(2)" and inserting "(A)" and 
"(B)"; 
(ii) by striking "(f)" and inserting "(f)(1)"; and 
(iii) by striking "Such standards and criteria" and all that 
follows and inserting the following: 
"(2) The standards and criteria established under paragraph (1) 
shall include— 
"(A) with respect to claims for services furnished under this 
part by any provider of services other than a hospital— 
"(i) whether such agency or organization is able to proc-
ess 75 percent of reconsiderations within 60 days (except in 
39-194 O - 91 - 15 : QL 3 Part 2 
104 STAT. 1388-42 
PUBLIC LAW 101-508—NOV. 5, 1990 
the case of fiscal year 1989, 66 percent of reconsiderations) 
and 90 percent of reconsiderations within 90 days, and 
"(ii) the extent to which such agency or organization's 
determinations are reversed on appeal; and 
"(B) with respect to applications for an exemption from or 
exception or adjustment to the target amount applicable under 
section 1886(b) to a hospital that is not a subsection (d) hospital 
(as defined in section 1886(d)(1)(B))— 
*'(i) if such agency or organization receives a completed 
application, whether such agency or organization is able to 
process such application not later than 75 days after the 
application is filed, and 
"(ii) if such agency or organization receives an incomplete 
application, whether such agency or organization is able to 
return the application with instructions on how to complete 
the application not later than 60 days after the application 
is filed.". 
(B) Section 
1886(b)(4)(A) (42 U.S.C. 1395ww(b)(4)(A)) is 
amended by adding at the end the following new sentence: "The 
Secretary shall announce a decision on any request for an 
exemption, exception, or adjustment under this paragraph not 
later than 180 days after receiving a completed application from 
the intermediary for such exemption, exception, or adjustment, 
and shall include in such decision a detailed explanation of the 
grounds on which such request was approved or denied.". 
(2) STANDARDS FOR ASSIGNMENT OF NEW BASE PERIOD.—Section 
188603)(4) (42 U.S.C. 1395ww(b)(4)) is amended— 
(A) by redesignating subparagraph (B) as subparagraph 
(C);and 
(B) by inserting after subparagraph (A) the following new 
subparagraph: 
"(B) In determining under subpairagraph (A) whether to assign a 
new base period which is more representative of the reasonable and 
necessary cost to a hospital of providing inpatient services, the 
Secretary shall take into consideration— 
"(i) changes in applicable technologies and medical practices, 
or differences in the severity of illness among patients, that 
increase the hospital's costs; 
"(ii) whether increases in wages and wage-related costs for 
hospitals located in the geographic area in which the hospital is 
located exceed the average of the increases in such costs paid by 
hospitals in the United States; and 
"(iii) such other factors as the Secretary considers appropriate 
in determining increases in the hospital's costs of providing 
inpatient services.". 
42 u s e 1395WW 
(3) 
GUIDANCE 
TO INTERMEDIARIES 
AND 
HOSPITALS.—The 
note. 
Administrator of the Health Care Financing Administration 
J 
shall provide guidance to agencies and organizations performing 
functions pursuant to section 1816 of the Social Security Act 
and to hospitals that are not subsection (d) hospitals (as defined 
in section 1886(d)(1)(B) of such Act) to assist such agencies, 
organizations, and hospitals in filing complete applications with 
the Administrator for exemptions, exceptions, and adjustments 
under section 1886(b)(4)(A) of such Act. 
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(4) EFFECTIVE DATES.—The amendments made by paragraph 
note. 
(1) shall take effect on the date of the enactment of this Act, and 
the amendments made by paragraph (2) shall take effect as if 
* So in original. Probably should be " "(i)". 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-43 
included in the enactment of the Omnibus Budget Reconcili-
ation Act of 1989. 
SEC. 4006. HOSPICE BENEFIT EXTENSION. 
(a) IN GENERAL.—Section 1812 (42 U.S.C. 1395d) is amended— 
(1) in subsection (a)(4), by striking "90 days each" and all that 
follows through "with respect to" and inserting the following: 
"90 days each, a subsequent period of 30 days, and a subsequent 
extension period with respect to"; and 
(2) in subsection (d)— 
(A) in paragraph (1), by striking "90 days each" and all 
that follows through "lifetime" and inserting the following: 
"90 days each, a subsequent period of 30 days, and a 
subsequent extension period during the individual's life-
time", and 
(B) in paragraph (2)(B), by striking "a 90- or 30-day 
period," and inserting "a 90- or 30-day period or a subse-
quent extension period,". 
(b) CONFORMING AMENDMENT.—Section 1814(a)(7)(A) (42 U.S.C. 
1395f(a)(7)(A)) is amended— 
(1) in clause (i), by striking "and" at the end; 
(2) in clause (ii), by striking the semicolon at the end and 
inserting ", and"; and 
(3) by adding at the end the following new clause: 
"(iii) in a subsequent extension period, the medical 
director 
or physician 
described 
in clause 
(i)(II) 
recertifies at the beginning of the period that the 
individual is terminally ill;". 
(c) EFFECTIVE DATE.—The amendments made by this section shall 
apply with respect to care and services furnished on or after Janu-
ary 1,1990. 
SEC. 4007. FREEZE IN PAYMENTS UNDER PART A THROUGH DECEMBER 31. 
(a) IN GENERAL.—Notwithstanding any other provision of law, for 
purposes of determining the amount of payment for items or serv-
ices under part A of title XVIII of the Social Security Act (including 
payments under section 1886 of such Act attributable to or allocated 
under such part) during the period described in subsection (b): 
(1) The market basket percentage increase (described in sec-
tion 1886(b)(3)(B)(iii) of the Social Security Act) shall be deemed 
to be 0 for discharges occurring during such period. 
(2) The percentage increase or decrease in the medical care 
expenditure category of the consumer price index applicable 
under section 1814(i)(2)(B) of such Act shall be deemed to be 0. 
(3) The area wage index applicable to a subsection (d) hospital 
under section 1886(d)(3)(E) of such Act shall be deemed to be the 
area wage index applicable to such hospital as of September 30, 
1990. 
(4) The percentage change in the consumer price index ap-
plicable under section 1886(h)(2)(D) of such Act shall be deemed 
to be 0. 
(b) DESCRIPTION OF PERIOD.—The period referred to in subsection 
(a) is the period beginning on October 21, 1990, and ending on 
December 31, 1990. 
42 u s e 1395d 
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104 STAT. 1388-44 
PUBLIC LAW 101-508—NOV. 5,1990 
SEC. 4008. MISCELLANEOUS AND TECHNICAL PROVISIONS RELATING TO 
PART A. 
(a) WAIVER OF LIABILITY FOR SKILLED NURSING FACILITIES AND 
HOSPICES.— 
(1) SKILLED NURSING FACIUTIES.—The second sentence of sec-
tion 9126(c) of the Consolidated Omnibus Budget Reconciliation 
42USC1395y 
Act of 1985 is amended by striking "October 31, 1990" and 
note. 
inserting "December 31,1995". 
(2) HOSPICES.—Section 9305(f)(2) of the Omnibus Budget Rec-
42 use 1395y 
onciliation Act of 1986 is amended by striking "November 1, 
note. 
1990" and inserting "December 31,1995". 
42USC1395y 
(3) EFFECTIVE DATE.—The amendments made by paragraphs 
note. 
(1) and (2) shall take effect on the date of the enactment of this 
Act. 
(b) HOSPITAL OBLIGATIONS WITH RESPECT TO TREATMENT OF EMER-
GENCY MEDICAL CONDITIONS.— 
(1) CIVIL MONETARY PENALTIES.—Section 1867(dX2XA) (42 
U.S.C. 1395dd(d)(2)(A)) is amended by striking "knowingly" and 
inserting "negligently". 
(2) APPLICATION OF PENALTIES TO SMALL HOSPITALS.—Section 
1867(d)(2)(A) (42 U.S.C. 1395dd(d)(2)(A)) is amended by inserting 
"(or not more than $25,000 in the case of a hospital with less 
than 100 beds)" after "$50,000". 
(3) TERMINATION OF HOSPITAL PROVIDER AGREEMENTS.— 
(A) Section 1867 (42 U.S.C. 1395dd) is further amended— 
(i) by striking paragraph (1) of subsection (d), 
(ii) by redesignating paragraphs (2) and (3) of subsec-
tion (d) as paragraph (1) and (2), respectively, and 
(iii) in subsection (c)(2)(C), by striking "(d)(2)(C)" and 
inserting "(d)(1)(C)". 
(B) Section 1866(a)(l)(I)(i) (42 U.S.C. 1395cc(a)(l)(I)(i)) is 
amended by inserting "and to meet the requirements of 
such section" before the comma at the end. 
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(4) EFFECTIVE DATE,—The amendments made by this subsec-
note. 
tion shall apply to actions occurring on or after the first day of 
the sixth month beginning after the date of the enactment of 
this Act. 
42 u s e 1395dd 
(c) INSPECTOR GENERAL S T U D Y 
OF PROHIBITION ON HOSPITAL 
note. 
EMPLOYMENT OF PHYSICIANS.— 
(1) STUDY.—The Secretary of Health and Human Services 
(acting through the Inspector General of the Department of 
Health and Human Services) shall conduct a study of the effect 
of State laws prohibiting the employment of physicians by 
hospitals on the availability and accessibility of trauma and 
emergency care services, and shall include in such study an 
analysis of the effect of such laws on the ability of hospitals to 
meet the requirements of section 1867 of the Social Security Act 
relating to the examination and treatment of individuals with 
an emergency medical condition and women in labor. 
(2) REPORT.—By not later than 1 year after the date of the 
enactment of this Act, the Secretary shall submit a report to 
Congress on the study conducted under paragraph (1). 
(d) DESIGNATION OF RURAL PRIMARY CARE HOSPITALS.— 
(1) PRIORITY DESIGNATIONS OF BORDER STATE HOSPITALS.—Sec-
tion 1820(i)(2)(C) (42 U.S.C. 1395i-4(i)(2)(C)) is amended by adding 
at the end the following new sentence: "In designating facilities 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-45 
as rural primary care hospitals under this subparagraph, the 
Secretary shall give preference to facilities not meeting the 
requirements of clause (i) of subparagraph (A) that have entered 
into an agreement described in subsection (g)(2) with a rural 
health network located in a State receiving a grant under 
subsection (a)(1).". 
(2) 
ELIGIBIUTY 
OF CERTAIN 
CLOSED 
HOSPITALS.—Section 
1820(f)(1)(B) (42 U.S.C. 1395i-4(f)(l)(B)) is amended by striking 
"is a hospital," and inserting the following: "is a hospital (or, in 
the case of a facility that closed during the 12-month period that 
ends on the date the facility applies for such designation, at the 
time the facility closed),". 
(3) ELIGIBILITY OF URBAN HOSPITALS.—Section 1820(f)(1)(A) (42 
U.S.C. 1395i-4(f)(l)(A)) is amended by striking the semicolon and 
inserting the following: ", or is located in a county whose 
geographic area is substantially larger than the average geo-
graphic area for urban counties in the United States and whose 
hospital service area is characteristic of service areas of hos-
pitals located in rural areas;". 
(4) EFFECTIVE DATE.—The amendments made by paragraphs 
(1), (2), and (3) shall take effect on the date of the enactment of 
this Act. 
(e) SKILLED NURSING FACILITY ROUTINE COST LIMITS.— 
(1) IN GENERAL.—Section 6024 of the Omnibus Budget Rec-
onciliation Act of 1989 is amended by adding at the end the 
following new sentence: "The Secretary shall update such costs 
under such section for cost reporting periods beginning on or 
after October 1, 1989, by using cost reports submitted by skilled 
nursing facilities for cost reporting periods ending not earlier 
than January 31, 1988, and not later than December 31, 1988.". 
(2) 2-YEAR UPDATES REQUIRED.—Sectiou 1888(a) (42 U.S.C. 
13953ry(a)) is amended in the matter following paragraph (4) by 
striking the period and inserting the following: ", and shall, for 
cost reporting periods beginning on or after October 1, 1992 and 
every 2 years thereafter, provide for an update to the per diem 
cost limits described in this subsection". 
(3) EFFECTIVE DATE.—The amendments made by paragraphs 
(1) and (2) shall take effect as if included in the enactment of the 
Omnibus Budget Reconciliation Act of 1989. 
(f) CLARIFICATION OF EXTENSION OF WAIVER FOR FINGER LAKES 
AREA HOSPITAL CORPORATION.— 
(1) IN GENERAL.—The second sentence of section 1886(c)(4) (42 
U.S.C. 1395ww(c)(4)) is amended by striking "rate of increase 
from" and inserting "payments under the State system as 
compared to aggregate payments which would have been made 
under the national system since". 
(2) EFFECTIVE DATE.—The amendment made by paragraph (1) 
shall take effect as if included in the enactment of the Omnibus 
Budget Reconciliation Act of 1989. 
(g) ENROLLMENT IN PART A FOR HMO MEMBERS.— 
(1) IN GENERAL.—Section 1818(c) (42 U.S.C. 1395i-2(c)) is 
amended— 
(A) by striking "and" at the end of paragraph (5), 
(B) by striking the period at the end of paragraph (6) and 
inserting a semicolon, and 
(C) by adding at the end the following new paragraphs: 
42 u s e 1395i-4 
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42 u s e 1395yy 
note. 
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104 STAT. 1388-46 
PUBLIC LAW 101-508—NOV. 5, 1990 
"(7) an individual who meets the conditions of subsection (a) 
may enroll under this part during a special enrollment period 
that includes any month during any part of which the individ-
ual is enrolled under section 1876 with an eligible organization 
and ending with the last day of the 8th consecutive month in 
which the individual is at no time so enrolled; 
"(8) in the case of an individual who enrolls during a special 
enrollment period under paragraph (7)— 
"(A) in any month of the special enrollment period in 
which the individual is at any time enrolled under section 
1876 with an eligible organization or in the first month 
following such a month, the coverage period shall begin on 
the first day of the month in which the individual so enrolls 
(or, at the option of the individual, on the first day of any of 
the following three months), or 
"(B) in any other month of the special enrollment period, 
the coverage period shall begin on the first day of the 
month following the month in which the individual so 
enrolls; and 
"(9) in applying the provisions of section 1839(b), there shall 
not be taken into account months for which the individual can 
demonstrate that the individual was enrolled under section 
1876 with an eligible organization.". 
42 use 1395i-2 
(2) EFFECTIVE DATE.—The amendment made by paragraph (1) 
note. 
shall take effect on February 1,1991. 
(h) NURSING HOME REFORM.— 
(1) NURSE AIDE TRAINING AND COMPETENCY EVALUATION.— 
42 u s e 1395aa 
(A) N o COMPLIANCE ACTIONS BEFORE EFFECTIVE DATE OF 
note. 
GUIDELINES.—The Secretary of Health and Human Services 
may not refuse to enter into an agreement or cancel an 
existing agreement with a State under section 1864 of the 
Social Security Act on the basis that the State failed to 
meet the requirement of section 1819(e)(1)(A) of such Act 
before the effective date of guidelines, issued by the Sec-
retary, 
establishing 
requirements 
under 
section 
1819(f)(2)(A) of such Act, if the State demonstrates to the 
satisfaction of the Secretary that it has made a good faith 
effort to meet such requirement before such effective date. 
(B) PART-TIME NURSE AIDES NOT ALLOWED DELAY IN TRAIN-
42 use l395i-3. 
INC.—Section 1819(b)(5)(A) (42 U.S.C. 1396r(b)(5)(A)) is 
amended— 
(i) by striking "A skilled nursing facility" and insert-
ing "(i) Except as provided in clause (ii), a skilled 
nursing facility"; 
(ii) by striking "(on a full-time, temporary, per diem, 
or other basis) and inserting "on a full-time basis"; 
(iii) by striking "(i)" and "(ii)" and inserting "(I)" and 
"(II)"; and 
(iv) by adding at the end the following: 
"(ii) A skilled nursing facility must not use on a 
temporary, per diem, leased, or on any basis other than 
as a permanent employee any individual as a nurse 
aide in the facility on or after January 1, 1991, unless 
the individual meets the requirements described in 
clause (i).". 
(C) REQUIREMENT TO OBTAIN INFORMATION FROM NURSE 
AIDE REGISTRY.—Section 1819(b)(5)(C) (42 U.S.C. 13951-
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-47 
3(b)(5)(C)) is amended by striking "the State registry estab-
lished under subsection (e)(2)(A) as to information in the 
registry" and inserting "any State registry estabUshed 
under subsection (e)(2)(A) that the facility believes will 
include information". 
(D) RETRAINING OF NURSE AIDES.—Section 1819(b)(5)(D) (42 
U.S.C. 1395i-3(b)(5)(D)) is amended by striking the period at 
the end and inserting ", or a new competency evaluation 
program.". 
(E) CLARIFICATION OF NURSE AIDES NOT SUBJECT TO 
CHARGES.—Section 
1819(f)(2)(A)(iv) 
(42 U.S.C. 
13951-
3(f)(2)(A)(iv)) is amended— 
(i) in subclause (I), by striking "and" at the end; 
(ii) in subclause (II), by inserting after "nurse aide" 
the following: "who is employed by (or who has re-
ceived an offer of employment from) a facility on the 
date on which the aide begins either such program"; 
(iii) in subclause (II), by striking the period at the end 
and inserting ", and"; and 
(iv) by adding at the end the following new subclause: 
"(III) in the case of a nurse aide not described in 
subclause (II) who is employed by (or who has 
received an offer of employment from) a facility 
not later than 12 months after completing either 
such program, the State shall provide for the re-
imbursement of costs incurred in completing such 
program on a prorata basis during the period in 
which the nurse aide is so employed.". 
(F) MODIFICATION OF NURSING FACIUTY DEFICIENCY STAND-
ARDS.— 
(i) IN GENERAL.—Section 1819(f)(2)(B)(iii)(I) (42 U.S.C. 
1395i-3(f)(2)(B)(iii)(I)) is amended to read as follows: 
"(I) offered J
t
)
y or in a skilled nursing facility 
which, within the previous 2 years— 
"(a) has operated under a waiver under 
subsection (b)(4)(C)(ii)(II); 
"(b) has been subject to an extended (or 
partial extended) survey under subsection 
(g)(2)(B)(i) or section 1919(g)(2)(B)(i); or 
"(c) has been assessed a civil money penalty 
described in subsection (h)(2)(B)(ii) or section 
1919(h)(2)(A)(ii) of not less than $5,000, or has 
been subject to a remedy described in clauses 
(i) or (iii) of subsection (h)(2)(B), subsection 
(h)(4), section 1919(h)(l)(B)(i), or in clauses (i), 
(iii), or (iv) of section 1919(h)(2)(A), or", 
(ii) EFFECTIVE DATE.—The amendments made by 42 USC l395i-3 
clause (i) shall take effect as if included in the enact- »^ote. 
ment of the Omnibus Budget Reconciliation Act of 
1987, except that a State may not approve a training 
and competency evaluation program or a competency 
evaluation program offered by or in a nursing facility 
which, pursuant to any Federal or State law within the 
2-year period beginning on October 1, 1988— 
(I) had its participation terminated under title 
XVIII of the Social Security Act or under the State 
plan under title XIX of such Act; 
104 STAT. 1388-48 
PUBLIC LAW 101-508—NOV. 5, 1990 
42 use 1395i-3 
note. 
42 use 1395yy. 
(II) was subject to a denial of payment under 
either such title; 
(III) was assessed a civil money penalty not less 
than $5,000 for deficiencies in nursing 
facility 
standards; 
(IV) operated under a temporary management 
appointed to oversee the operation of the facility 
and to ensure the health and safety of the facility's 
residents; or 
(V) pursuant to State action, was closed or had 
its residents transferred. 
(G) CLARIFICATION OF STATE RESPONSIBILITY TO DETERMINE 
COMPETENCY.—Section 
1819(f)(2)(B) 
(42 
U.S.C. 
13951-
3(f)(2)(B)) is amended in the second sentence by inserting 
"(through subcontract or otherwise)" after "may not dele-
gate". 
(H) EFFECTIVE DATE.—Except as provided in 
subpara-
graph (F), the amendments made by this subsection shall 
take effect as if they were included in the enactment of the 
Omnibus Budget Reconciliation Act of 1987. 
(2) OTHER AMENDMENTS.— 
(A) ASSURANCE OF APPROPRIATE PAYMENT AMOUNTS.—(i) 
Section 1861(v)(l)(E) (42 U.S.C. 1395x(v)(l)(E)) is amended in 
the second sentence by striking "the costs of such facilities" 
and inserting "the costs (including the costs of services 
required to attain or maintain the highest practicable phys-
ical, mental, and psychosocial well-being of each resident 
eligible for benefits under this title) of such facilities". 
(ii) Section 1888(d)(1) (42 U.S.C. 1395xx(d)(l)) is amended 
in the first sentence by striking "(and capital-related costs)" 
and inserting "(including the costs of services required to 
attain or maintain the highest practicable physical, mental, 
and psychosocial well-being of each resident eligible for 
benefits under this title) and capital-related costs". 
(B) DISCLOSURE OF INFORMATION OF QUALITY ASSESSMENT 
AND 
ASSURANCE 
COMMITTEES.—Section 
1819(b)(1)(B) 
(42 
U.S.C. 1395i-3(b)(l)(B)) is amended by adding at the end the 
following new sentence: "A State or the Secretary may not 
require disclosure of the records of such committee except 
insofar as such disclosure is related to the compliance of 
such committee with the requirements of this subpara-
graph.". 
(C) 
PERIOD 
FOR 
RESIDENT 
ASSESSMENT.—Section 
1819(b)(3)(C)(i)(I) (42 U.S.C. 1395i-3(b)(3)(C)(i)(I)) is amended 
by striking "4 days" and inserting "not later than 14 days". 
(D) CLARIFICATION OF RESPONSIBILITY FOR SERVICES FOR 
MENTALLY ILL AND MENTALLY RETARDED RESIDENTS.—Section 
1819(b)(4)(A) (42 U.S.C. 1395i-3(b)(4)(A)) is amended— 
(i) by striking "and" at the end of clause (v), 
(ii) by striking the period at the end of clause (vi) and 
inserting "; and", and 
(iii) by inserting after clause (vi) the following new 
clause: 
"(vii) treatment and services required by mentally ill 
and mentally retarded residents not otherwise provided 
or arranged for (or required to be provided or arranged 
for) by the State.". 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-49 
(E) 
NOTIFICATION 
OF 
SECRETARIAL 
WAIVER.—Section 
1819(b)(4)(C)(ii) (42 U.S.C. 1395i-3(b)(4)(C)(ii)) is amended— 
(i) by striking "and" at the end of subclause (II); 
(ii) by striking the period at the end of subclause (III) 
and inserting a comma; and 
(iii) by adding at the end the following new 
subclauses: 
"(IV) the Secretary provides notice of the waiver 
to the State long-term care ombudsman (estab-
lished under section 307(a)(12) of the Older Ameri-
cans Act of 1965) and the protection and advocacy 
system in the State for the mentally ill and the 
mentally retarded, and 
"(V) the facility that is granted such a waiver 
notifies residents of the facility (or, where appro-
priate, the guardians or legal representatives of 
such residents) and members of their immediate 
families of the waiver.". 
(F) CLARIFICATION OF DEFINITION OF NURSE AIDE.—Section 
1819(b)(5)(F)(i) (42 U.S.C. 1395i-3(b)(5)(F)(i)) is amended by 
striking "(G))," and inserting "(G)) or a registered dieti-
cian,". 
(G) RESIDENTS' RIGHTS TO REFUSE INTRA-FACILITY TRANS-
FERS FOR NON-MEDICAL REASONS.—Section 1819(c)(1)(A) (42 
U.S.C. 1395i-3(c)(l)(A)) is amended— 
(i) by redesignating clause (x) as clause (xi) and by 
inserting after clause (ix) the following new clause: 
"(x) REFUSAL OF CERTAIN TRANSFERS.—The right to 
refuse a transfer to another room within the facility, if 
a purpose of the transfer is to relocate the resident 
from a portion of the facility that is a skilled nursing 
facility (for purposes of this title) to a portion of the 
facility that is not such a skilled nursing facility."; and 
(B) Dy adding at the end the following: "A resident's 
exercise of a right to refuse transfer under clause (x) 
shall not affect the resident's eligibility or entitlement 
to benefits under this title or to medical assistance 
under title XIX of this Act.". 
(H) 
RESIDENT 
ACCESS TO CONICAL RECORDS.—Section 
1819(c)(l)(A)(iv) (42 U.S.C. 1395i-3(c)(l)(A)(iv)) is amended by 
inserting before the period at the end the following: "and to 
access to current clinical records of the resident upon re-
quest by the resident or the resident's legal representative, 
within 24 hours (excluding hours occurring during a week-
end or holiday) after making such a request". 
(I) INCLUSION OF STATE NOTICE OF RIGHTS IN FACIUTY 
NOTICE OF RIGHTS.—Section 1819(c)(l)(B)(ii) (42 U.S.C. 13951-
3(c)(l)(B)(ii)) is amended by inserting "including the notice 
(if any) of the State developed under section 1919(e)(6)" 
after "in such rights)". 
(J) 
SPECIFICATION 
OF 
REQUIRED 
PROGRAMS.—Section 
1819(e)(1)(A) (42 U.S.C. 1395i-3(e)(l)(A)) is amended by strik-
ing "clause (i) or (ii) of subsection (f)(2)(A)" and inserting 
"subsection (f)(2)". 
(K) 
CLARIFICATION OF NURSE AIDE REGISTRY REQUIRE-
MENTS.—Section 
1819(e)(2) (42 U.S.C. 1395i-3(e)(2)) is 
amended— 
104 STAT. 1388-50 
PUBLIC LAW 101-508—NOV. 5, 1990 
(i) in subparagraph (A), by striking the period and 
inserting the following: ", or any individual described 
in subsection (f)(2)(B)(ii) or in subparagraph (B), (C), or 
(D) of section 6901(bX4) of the Omnibus Budget Rec-
onciliation Act of 1989."; and 
(ii) by adding at the end the following new subpara-
graph: 
"(C) PROHIBITION AGAINST CHARGES.—A State may not 
impose any charges on a nurse aide relating to the registry 
established and maintained under subparagraph (A).". 
(L) 
CLARIFICATION ON FINDINGS OF NEGLECT.—Section 
1819(g)(1)(C) (42 U.S.C. 1395i-3(g)(l)(C)) is amended by 
adding at the end the following: "A State shall not make a 
finding that an individual has neglected a resident if the 
individual demonstrates that such neglect was caused by 
factors beyond the control of the individual.". 
(M) TIMING OF PUBLIC DISCLOSURE OF SURVEY RESULTS.— 
Section 1819(g)(5)(A)(i) (42 U.S.C. 1395i-3(g)(5)(A)(i)) is 
amended by striking "deficiencies and plans" and inserting 
"deficiencies, within 14 calendar days after such informa-
tion is made available to those facilities, and approved 
plans". 
(N) 
OMBUDSMAN PROGRAM COORDINATION WITH STATE 
SURVEY AND CERTIFICATION AGENCIES.—Section 1819(gX5)(B) 
(42 U.S.C. 1395i-3(g)(5)(B)) is amended by striking "with 
respect" and inserting "or of any adverse action taken 
against a skilled nursing facility under paragraphs (1), (2), 
or (4) of subsection (h), with respect". 
42 use 1395i-3 
(O) MAINTAINING REGULATORY STANDARDS FOR CERTAIN 
*
*
*
*
*
*
* 
SERVICES.—Any regulations promulgated and applied by the 
Secretary of Health and Human Services after the date of 
the enactment of the Omnibus Budget Reconciliation Act of 
1987 with respect to services described in clauses (ii), (iv), 
and (v) of section 1819(b)(4)(A) of the Social Security Act 
shall include requirements for providers of such services 
that are at least as strict as the requirements applicable to 
providers of such services prior to the enactment of the 
Omnibus Budget Reconciliation Act of 1987. 
42 use 1395i-3 
(P) EFFECTIVE DATES.—The amendments made by this 
^°*®- 
pargigraph shall take effect as if they were included in the 
enactment of the Omnibus Budget Reconciliation Act of 
1987. 
(i) CLARIFICATION OF SECRETARIAL WAIVER AUTHORITY.— 
42 use I395b-1 
(1) RURAL 
HOSPITAL DEMONSTRATION.—The Secretary of 
Health and Human Services is authorized to waive such provi-
sions of title XVIII of the Social Security Act as are necessary to 
conduct any demonstration project for limited-service rural hos-
pitals with respect to which the Secretary has entered into an 
£igreement before the date of the enactment of the Omnibus 
Budget Reconciliation Act of 1989. 
(2) NURSING HOME DEMONSTRATIONS.—Section 6901(d)(3)(B) of 
the Omnibus Budget Reconciliation Act of 1989 is amended— 
(A) by striking "Wisconsin" and inserting "Wisconsin and 
nursing home case-mix demonstration projects in other 
States"; and 
(B) by striking the second sentence. 
note. 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-51 
(3) STATE WAIVER AUTHORITY.—Section 1814(b) (42 U.S.C. 
1395f(b)) is amended— 
(A) in paragraph (3)(B), bv striking "October 1, 1983" and 
inserting "January 1,1981'; 
(B) in the second sentence, by striking "seventh month" 
and inserting "37th month"; and 
(C) by adding at the end the following: "If, by the end of 
such 36-month period, the Secretary determines, based on 
evidence submitted by the Governor of the State, that 
neither of the conditions described in subparagraph (A) or 
(B) of paragraph (3) continues to apply, the Secretary shall 
continue without interruption payment to hospitals in the 
State under the State's system. If, by the end of such 36-
month period, the Secretary determines, based on such 
evidence, that either of the conditions described in subpara-
graph (A) or (B) of such paragraph continues to apply, the 
Secretary shall (i) collect any net excess reimbursement to 
hospitals in the State during such 36-month period (basing 
such net excess reimbursement on the net difference, if any, 
in the rate of increase in costs per hospital inpatient admis-
sion under the State system compared to the rate of in-
crease in such costs with respect to all hospitals in the 
United States over the 36-month period, as measured by 
including the cumulative savings under the State system 
based on the difference in the rate of increase in costs per 
hospital inpatient admission under the State system as 
compared to the rate of increase in such costs with respect 
to all hospitals in the United States between January 1, 
1981, and the date of the Secretary's initial notice), and (ii) 
provide a reasonable period, not to exceed 2 years, for 
transition from the State system to the national pajonent 
system.". 
(4) EFFECTIVE DATE.—The amendment made by paragraphs (1) 
and (2) shall be effective as if included in the enactment of the 
Omnibus Budget Reconciliation Act of 1989. 
(j) DETERMINATION OF REASONABLE COSTS RELATING TO SWING 
BEDS.— 
(1) IN GENERAL.—Section 
1883(aX2)(B)(iiXII) (42 U.S.C. 
1395tt(a)(2)(B)(ii)(II)) is amended by striking "the previous cal-
endar year" and all that follows through the period and insert-
ing "the most recent year for which cost reporting data are 
available with respect to such services (increased in a 
compounded manner by the applicable increase for payments 
for routine service costs of skilled nursing facilities under sec-
tion 1888 for subsequent cost reporting periods and up to and 
including such calendar year) under this title to freestanding 
skilled nursing facilities in the region (as defined in section 
1886(d)(2)(D)) in which the facility is located.". 
(2) HOLD HARMLESS.—If, as a result of the amendment made 
42 USC 1395tt 
by paragraph (1), the reasonable cost of routine services fur- note, 
nished by a hospital during a calendar year (as determined 
under section 1883 of the Social Security Act) is less than the 
reasonable cost of such services determined under such section 
for the previous calendar year, the reasonable cost of such 
services furnished by the hospital during the calendar year 
under such section shall be equal to the reasonable cost deter-
mined under such section for the previous calendar year. 
104 STAT. 1388-52 
PUBLIC LAW 101-508—NOV. 5, 1990 
42 use I395tt 
(3) SWING BEDS CERTIFIED PRIOR TO MAY 1, 1987.—Notwith-
note. 
standing the requirement of section 1883(bXl) of the Social 
Security Act that the Secretary may not enter into an sigree-
ment under such section with a hospital that is not located in a 
rural area, any agreement entered into under such section on or 
before May 1, 1987, between the Secretary of Health and 
Human Services and a hospital located in an urban area shall 
remain in effect. 
42 use 1395tt 
(4) EFFECTIVE DATE.—The amendment made by paragraph (1) 
"°^- 
shall apply to services furnished on or after October 1, 1990. 
42 u s e 1395yy 
(k) PROSPECTIVE PAYMENT SYSTEM FOR SKILLED NuRSING FACILITY 
"°*«- 
SERVICES.— 
(1) DEVELOPMENT OF PROPOSAL.—The Secretary of Health and 
Human Services shall develop a proposal to modify the current 
system under which skilled nursing facilities receive payment 
for extended care services under part A of the medicare pro-
gram or a proposal to replace such system with a system under 
which such payments would be made on the basis of prospec-
tively determined rates. In developing any proposal under this 
paragraph to replace the current system with a prospective 
payment system, the Secretary shall— 
(A) take into consideration the need to provide for appro-
priate limits on increases in expenditures under the medi-
care program without jeopardizing access to extended care 
services for individuals unable to care for themselves; 
(B) provide for adjustments to prospectively determined 
rates to account for changes in a facility's case mix, volume 
of cases, and the development of new technologies and 
standards of medical practice; 
(C) take into consideration the need to increase the pay-
ment otherwise made under such system in the case of 
services provided to patients whose length of stay or costs of 
treatment greatly exceed the length of stay or cost of 
treatment provided for under the applicable prospectively 
determined payment rate; 
(D) take into consideration the need to adjust payments 
under the system to take into account factors such as a 
disproportionate share of low-income patients, differences 
in wages and wage-related costs among facilities located in 
various geographic areas, and other factors the Secretary 
considers appropriate; and 
(E) take into consideration the appropriateness of 
classifying patients and payments upon functional disabil-
ity, cognitive impairment, and other patient characteristics. 
(2) REPORTS.—(A) By not later than April 1, 1991, the Sec-
retary (acting through the Administrator of the Health Care 
Financing Administration) shall submit any research studies to 
be used in developing the proposal under paragraph (1) to the 
Committee on Finance of the Senate and the Committee on 
Ways and Means of the House of Representatives. 
(B) By not later than September 1, 1991, the Secretary shall 
suljmit the proposal developed under paragraph (1) to the 
Committee on Finance of the Senate and the Committee on 
Ways and Means of the House of Representatives. 
(C) By not later than March 1, 1992, the Prospective Payment 
Assessment Commission shall submit an analysis of and com-
ments on the proposal developed under paragraph (1) to the 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-53 
Committee on Finance of the Senate and the Committee on 
Ways and Means of the House of Representatives. 
(1) REVIEW OF HOSPITAL REGULATIONS WITH RESPECT TO RURAL 42 USC I395ww 
HOSPITALS.— 
"°*®-
(1) IN GENERAL.—The Secretary of Health and Human Serv-
ices shall review the requirements applicable under title XVIII 
of the Social Security Act to determine which requirements 
could be made less administratively and economically burden-
some (without diminishing the quality of care) for hospitals 
defined in section 1886(d)(1)(B) of such Act that are located in a 
rural area (as defined in section 1886(d)(2)(D) of such Act). Such 
review shall specifically include standards related to staffing 
requirements. 
(2) REPORT.—The Secretary of Health and Human Services 
shall report to Congress by April 1, 1992, on the results of the 
review conducted under subsection (a), and include conclusions 
on which regulations, if any, should be modified with respect to 
hospitals described in subsection (a). 
(m) MISCELLANEOUS TECHNICAL CORRECTIONS.— 
(1) APPLICATION OF PREENTITLEMENT PSYCHIATRIC HOSPITAL 42 use I395e 
SERVICES TO LIMIT ON INPATIENT HOSPITAL SERVICES.—Effective as note. 
if included in the enactment of the Medicare Catastrophic 
Coverage Repeal Act of 1989, section 101(b)(1)(B) is amended by 
inserting "(other than the limitation under section 1812(c) of 
such Act)" after "limitation". 
(2) PROVISIONS RELATING TO HOSPITALS.— 
(A) 
Section 
1886(d)(5)(D)(iii) 
(42 
U.S.C. 
1395ww(d)(5)(D)(iii)), as amended by section 6003(e)(l)(A)(iv) 
of Omnibus Budget Reconciliation Act of 1989 (in this 
subsection referred to as "OBRA-1989"), is amended by 
striking "The term" and inserting "For purposes of this 
title, the term". 
(B) Section 1820 of such Act (42 U.S.C. 1395i-4), as added 
by section 6003(g)(1)(A) of the Omnibus Budget Reconcili-
ation Act of 1989, is amended— 
(i) in subsection (d)(1), by striking "demonstration"; 
(ii) in subsection (g)(l)(A)(ii), by striking "rural refer-
ral center" and inserting "regional referral center"; 
and 
(iii) in subsection (j), by inserting "and part C" after 
"this part". 
(C) Section 6003(g)(3)(C)(vii)(I) of the Omnibus Budget Rec-
onciliation Act of 1989 is amended by striking "each place it 
42 USC 1395Z. 
appears". 
(D) Section 1835(c) of the Social Security Act (42 U.S.C. 
1395n(c)) is amended— 
(i) in the first sentence, by striking "a hospital" and 
inserting "a hospital or a rural primary care hospital"; 
^ 
(ii) in the second sentence, by striking "1833(a)(2)" 
and inserting "1833(a)(2) (or, in the case of a rural 
primary care hospital, in accordance with section 
1833(a)(6))"; and 
(iii) by striking the third sentence. 
(3) TECHNICAL CORRECTIONS RELATING TO OTHER PROVIDERS OF 
SKRVICES 
(A) Section 1814(i)(l)(C)(i) (42 U.S.C. 1395f(i)(l)(C)(i)), as 
amended by section 6005(a)(2) of the Omnibus Budget Rec-
104 STAT. 1388-54 
PUBLIC LAW 101-508—NOV. 5, 1990 
onciliation Act of 1989, is amended by striking "during 
fiscal year 1990" and inserting "on or after January 1, 1990, 
and on or before September 30,1990,". 
(B) Section 6005(c) of the Omnibus Budget Reconciliation 
42 use I395f 
Act of 1989 is amended by striking "subsection (a)" and 
"°*®" 
inserting "subsections (a) and O^)". 
(C) Section 1818A(d)(l) (42 U.S.C. 1395i-2a(d)(l)), as in-
serted by section 6012(a)(2) of the Omnibus Budget Rec-
onciliation Act of 1989, is amended— 
(i) in subparagraph (A), by inserting "for enrollment 
under this section" after "Premiums", and 
(ii) by striking subparagraph (C). 
(D) Section 1818(g)(2)(B) (42 U.S.C. 1395i-2(g)(2)(B)), as 
added by section 6013(a) of the Omnibus Budget Reconcili-
ation Act of 1989, is amended by striking "subsection (c)" 
and inserting "subsection (c)(6)". 
(F) Section 1819(f)(2)(A)(ii) (42 U.S.C. 1395i-3(f)(2)(A)(ii)) is 
amended by striking "and" at the end. 
(G) Section 1866(a)(1)(F) (42 U.S.C. 1395cc(a)(l)(F) is 
amended— 
(i) in clause (i), by striking the comma at the end and 
inserting "),", and 
(ii) in clause (ii), by striking "(4)(A)" and inserting 
"(3)(A)" and by striking the semicolon at the end and 
inserting a comma. 
PART 2—PROVISIONS RELATING TO PART B 
Subpart A—Payment for Physicians* Services 
SEC. 4101. CERTAIN OVERVALUED PROCEDURES. 
(a) PREVIOUSLY IDENTIFIED PROCEDURES.—Section 1842(b)(14) (42 
U.S.C. 1395u(b)(14)) is amended— 
(1) by inserting "(i)" after "(14)(A)"; and 
(2) by adding at the end of subparagraph (A) the following 
new clause: 
"(ii) In determining the reasonable charge for a physicians' serv-
ice specified in subparagraph (C)(i) and furnished during 1991, the 
prevailing charge for such service shall be the prevailing charge 
otherwise recognized for such service for the period during 1990 
beginning on April 1, reduced by the same amount as the amount of 
the reduction effected under this paragraph (as amended by the 
Omnibus Budget Reconciliation Act of 1990) for such service during 
such period.". 
(b) UNSURVEYED SURGICAL AND TECHNICAL PROCEDURES.—(1) Sec-
tion 1842(b) (42 U.S.C. 1395u(b)) is amended by adding at the end the 
following new paragraph: 
"(16)(A) In determining the reasonable charge for all physicians' 
services other than physicians' services specified in subparagraph 
(B) furnished during 1991, the prevailing charge for a locality shall 
be 6.5 percent below the prevailing charges used in the locality 
under this part in 1990 after March 31. 
"(B) For purposes of subparagraph (A), the physicians' services 
specified in this subparagraph are as follows: 
"(i) Radiology, anesthesia and physician pathology services, 
the technical components of diagnostic tests specified in para-
note. 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-55 
graph (17) and physicians' services specified in paragraph 
(14)(C)(i). 
"(ii) Primary care services specified in subsection (i)(4), hos-
pital inpatient medical services, consultations, other visits, 
preventive medicine visits, psychiatric services, emergency care 
facility services, and critical care services. 
"(iii) Partial, simple and subcutaneous mastectomy; tendon 
sheath injections; small joint arthrocentesis; femoral fracture 
treatments; trochanteric fracture treatments; endotracheal 
intubation; thoracentesis; thoracostomy; lobectomy; aneurysm 
repair; 
enterectomy; 
colectomy; 
cholecystectomy; 
cystourethroscopy; transurethral fulguration; transurerethral 
resection; sacral laminectomy; tympanoplasty with mastoid-
ectomy; and ophthalmoscopy.". 
(2) In applying section 1842(b)(16) of the Social Security Act: J? USC I395u 
(A) The codes for the procedures specified in clause (ii) are as 
follows: Hospital inpatient medical services (HCPCS codes 90200 
through 90292), consultations (HCPCS codes 90600 through 
90654), other visits (HCPCS code 90699), preventive medicine 
visits (HCPCS codes 90750 through 90764), psychiatric services 
(HCPCS codes 90801 through 90862), emergency care facility 
services (HCPCS codes 99062 through 99065), and critical care 
services (HCPCS codes 99160 through 99174). 
(B) The codes for the procedures specified in clause (iii) are as 
follows: Partial, simple and subcutaneous mastectomy (HCPCS 
codes 19160 and 19162); tendon sheath injections and small joint 
arthrocentesis (HCPCS codes 20550, 20600, 20605, and 20610); 
femoral fracture and trochanteric fracture treatments (HCPCS 
codes 27230, 27232, 27234, 27238, 27240, 27242, 27246, and 
27248); endotracheal intubation (HCPCS code 31500); thora-
centesis (HCPCS code 32000); thoracostomy (HCPCS codes 
32020, 32035, and 32036); aneurysm repair (HCPCS codes 35111); 
cystourethroscopy (HCPCS code 52340); transurethral fulgura-
tion 
and 
resection 
(HCPCS 
codes 
52606 
and 
52620); 
tympanoplasty with mastoidectomy (HCPCS code 69645); and 
ophthalmoscopy (HCPCS codes 92250, and 92260).".5 
SEC. 4102. RADIOLOGY SERVICES. 
(a) REDUCTION IN FEE SCHEDULE.—Section 1834(b)(4) (42 U.S.C. 
1395m(b)(4)) is amended— 
(1) by redesignating subparagraphs (D) and (E) as subpara-
graphs (E) and (F), respectively, and 
(2) by inserting after subparagraph (C) the following new 
subparagraph: 
"(D) 1991 FEE SCHEDULES.—For radiologist services (other 
than portable X-ray services) furnished under this part 
during 1991, the conversion factors used in a locality under 
this subsection shall be determined as follows: 
"(i) 
NATIONAL 
WEIGHTED 
AVERAGE 
CONVERSION 
FACTOR.—The Secretary shall estimate the national 
weighted average of the conversion factors used under 
this subsection for services furnished during 1990 
beginning on April 1, using the best available data. 
"(ii) REDUCED NATIONAL WEIGHTED AVERAGE.—The 
national weighted average estimated under clause (i) 
shall be reduced by 13 percent. 
" So in original. The " "." should probably be deleted. 
104 STAT. 1388-56 
PUBLIC LAW 101-508—NOV. 5, 1990 
"(iii) COMPUTATION OF 1990 LOCALITY INDEX RELATIVE 
T
O NATIONAL AVERAGE.—The Secretary shall establish 
an index which reflects, for each locality, the ratio of 
the conversion factor used in the locality under this 
subsection to the national weighted average estimated 
under clause (i). 
"(iv) LOCAL ADJUSTMENT.—Subject to clause (vii), the 
conversion factor to be applied to the professional or 
technical component of a service in a locality is the 
sum of ¥2 of the locally-adjusted amount determined 
under clause (v) and VT. of the GPCI-adjusted amount 
determined under clauses (vi). 
"(v) LOCALLY-ADJUSTED AMOUNT.—For purposes of 
clause (iv), the locally adjusted amount determined 
under this clause is the product of (I) the national 
weighted average conversion factor computed under 
clause (ii), and (II) the index value established under 
clause (iii) for the locality. 
"(vi) GPCI-ADJUSTED AMOUNT.—For purposes of 
clause (iv), the GPCI-adjusted amount determined 
under this clause is the sum o
f
— 
"(I) the product of (a) the portion of the reduced 
national weighted average conversion factor com-
puted under clause (ii) which is attributable to 
physician work and (b) the geographic work index 
value for the locality (specified in Addendum C to 
the Model Fee Schedule for Physician Services 
(published on September 4, 1990, 55 Federal Reg-
ister pp. 36238-36243)); and 
"(II) the product of (a) the remaining portion of 
the reduced national weighted average conversion 
factor computed under clause (ii), and (b) the geo-
graphic practice cost index value specified in sec-
tion 1842(b)(14)(C)(iv) for the locality. 
In applying this clause with respect to the professional 
component of a service, 80 percent of the conversion 
factor shall be considered to be attributable to physi-
cian work and with respect to the technical component 
of the service, 0 percent shall be considered to be 
attributable to physician work. 
"(vii) LIMITS ON CONVERSION FACTOR.—The conversion 
factor to be applied to a locality under this subpara-
graph to the professional or technical component of a 
service shall not be more than 9.5 percent below the 
conversion factor applied in the locality under subpara-
graph (C) to such component, but in no case shall the 
conversion factor be less than 60 percent of the na-
tional weighted average of the conversion factors (com-
puted under clause (i)).". 
(b) SPECIAL RULE FOR TRANSITION FOR RADIOLOGY SERVICES.— 
Section 1848(a)(2)(C) (42 U.S.C. 1395w-4(a)(2)(C)) is amended— 
(1) by inserting "AND RADIOLOGY" after "SPECIAL RULE FOR 
ANESTHESIA", and 
(2) by adding at the end the following: "With respect to 
radiology services, '109 percent' and '9 percent' shall be sub-
stituted for '115 percent' and '15 percent', respectively, in 
subparagraph (A)(ii). 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-57 
(c) REDUCTION IN PREVAILING CHARGE LEVEL FOR OTHER RADIOL-
OGY SERVICES.— 
(1) I N GENERAL.—In applying part B of title XVIII of the 
Social Security Act, the prevailing charge for physicians' serv-
ices, furnished during 1991, which are radiology services may 
not exceed the fee schedule amount established under section 
1834(b) of such Act with respect to such services. 
(2) EXCEPTION.—Paragraph (1) shall not apply to radiology 
services which are subject to section 610503) of the Omnibus 
Budget Reconciliation Act of 1989. 
(d) REDUCTION IN PAYMENTS FOR TECHNICAL COMPONENTS OF CER-
TAIN SCANNING SERVICES.—Section 1834(b)(4) (42 U.S.C. 1395m(b)(4)) 
is amended by inserting after subparagraph (D) the following new 
paragraph: 
"(E) In the case of the technical components of magnetic 
resonance imaging (MRI) services and computer assisted 
tomography (CAT) services furnished after December 31, 
1990, the amount otherwise payable shall be reduced by 10 
percent.". 
(e) LIMITATION ON ADJUSTMENTS.—For radiologist services fur-
nished during 1991 for which payment is made under section 1834(b) 
of the Social Security Act— 
(1) a carrier may not make any adjustment, under section 
1842(b)(3)(B) of such Act, in the payment amount for the service 
under section 1834(b) on the basis that the payment amount is 
higher than the charge applicable, for a comparable service and 
under comparable circumstances, to the policyholders and 
subscribers of the carrier, 
(2) no payment adjustment may be made under 
section 
1842(b)(8) of such Act, and 
(3) section 1842(b)(9) of such Act shall not apply. 
(f) 
U S E OF 
LOCALITIES.—Section 
183403)(1)(B) 
(42 
U.S.C. 
1395m03)(l)(B)) is amended by inserting "locality," after 
"state-
wide,". 
(g) TREATMENT OF NUCLEAR MEDICINE PHYSICIANS.— 
(1) CONTINUATION OF SPECIAL RULE.—Section 6105(b) of 
the 
Omnibus Budget Reconciliation Act of 1989 is amended by 
striking all that follows "Social Security Act" the second place 
it appears and inserting the following: "beginning April 1, 1990, 
and ending December 31,1991, there shall be substituted for the 
fee schedule otherwise applicable a fee schedule based Va on the 
fee schedule computed under such section (without regard to 
this subsection) and % on 101 percent of the 1988 prevailing 
charge for such services.". 
(2) 
ADJUSTED 
HISTORICAL 
PAYMENT 
BASIS.—Section 
1848(a)(2)(D) (42 U.S.C. 1395w-4(a)(2)(D)) is amended— 
(A) in clause (ii) by inserting ", but excluding nuclear 
medicine services that are subject to section 6105(b) of the 
Omnibus Budget Reconciliation Act of 1989" after "section 
183403)(6))", and 
(B) by adding at the end the following: 
"(iii) 
NUCLEAR 
MEDICINE 
SERVICES.—In 
applying 
clause (i) in the case of physicians' services which are 
nuclear medicine services that are subject to section 
6105(b) of the Omnibus Budget Reconciliation Act of 
1989, there shall be substituted for the weighted aver-
42 u s e 1395m 
note. 
42 u s e 1395m 
note. 
42 use 1395m 
note. 
note. 
104 STAT. 1388-58 
PUBLIC LAW 101-508—NOV. 5, 1990 
age prevailing charge the amount provided under such 
section.", 
(h) EXTENSION OF SPUT BILLING RULE FOR INTERVENTIONAL RADI-
OLOGISTS.—Section 6105(c) of the Omnibus Budget Reconciliation Act 
42 use 1395m 
of 1989 is amended by inserting "or 1991" after "1990" each place it 
note. 
appears. 
42 u s e 1395m 
(i) EFFECTIVE D A T E S . — 
(1) Except as otherwise provided, the amendments made by 
this section shall apply to services furnished on or after Janu-
ary 1,1991. 
(2) The amendment made by subsection (f) shall be effective as 
if included in the enactment of the Omnibus Budget Reconcili-
ation Act of 1987. 
SEC. 4103. ANESTHESIA SERVICES. 
(a) REDUCTION IN FEE SCHEDULE.—Section 1842(q)(l) (42 U.S.C. 
1395u(q)(l)) is amended— 
(1) by inserting "(A)" after "(q)(l)", and 
(2) by adding at the end the following new subparagraph: 
"(B) For physician anesthesia services furnished under this part 
during 1991, the prevailing charge conversion factor used in a 
locality under this subsection shall be determined as follows: 
"(i) The Secretary shall estimate the national weighted aver-
age of the prevailing charge conversion factors used under this 
subsection for services furnished during 1990 after March 31, 
using the best available data. 
"(ii) The national weighted average estimated under clause (i) 
shall be reduced by 7 percent. 
"(iii) Subject to clause (iv), the prevailing charge conversion 
factor to be applied in a locality is the sum of— 
"(I) the product of (a) the portion of the reduced national 
weighted average prevailing charge conversion factor com-
puted under clause (ii) which is attributable to physician 
work and (b) the geographic work index value for the 
locality (specified in Addendum C to the Model Fee Sched-
ule for Physician Services (published on September 4, 1990, 
55 Federal Register pp. 36238-36243)); and 
"(II) the product of (a) the remaining portion of the 
reduced national weighted average prevailing charge 
conversion factor computed under clause (ii) and (b) the 
geographic practice cost index value specified in section 
1842(b)(14)(C)(iv) for the locality. 
In applying this clause, 70 percent of the prevailing charge 
conversion factor shall be considered to be attributable to physi-
cian work. 
"(iv) The prevailing charge conversion factor to be applied to 
a locality under this subparagraph shall not be reduced by more 
than 15 percent below the prevailing charge conversion factor 
applied in the locality for the period during 1990 after 
March 31, but in no case shall the prevailing charge conversion 
factor be less than 60 percent of the national weighted average 
of the prevailing charge conversion factors (computed under 
clause (i)).". 
(b) EXTENSION OF REDUCTION FOR SUPERVISION OF CONCURRENT 
SERVICES.—Section 1842(b)(13) (42 U.S.C. 1395u(b)(13)) is amended by 
striking "1991" each place it appears and inserting "1996". 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-59 
SEC. 4104. PHYSICIAN PATHOLOGY SERVICES. 
(a) REDUCTION IN PAYMENTS FOR PHYSICIAN PATHOLOGY SERV-
ICES.—Subsection (f) of section 1834 (42 U.S.C. 1395m) is amended to 
read as follows: 
"(f) REDUCTION IN PAYMENTS FOR PHYSICIAN PATHOLOGY SERVICES 
DURING FISCAL YEAR 1991.— 
"(1) IN GENERAL.—For physician pathology services furnished 
under this part during 1991, the prevailing charges used in a 
locality under this part shall be 7 percent below the prevailing 
charges used in the locality under this part in 1990 after 
March 31. 
"(2) LIMITATION.—The prevailing charge for the technical and 
professional components of an physician pathology service fur-
nished by a physician through an independent laboratory shall 
not be reduced pursuant to paragraph (1) to the extent that such 
reduction would reduce such prevailing charge below 115 per-
cent of the prevailing charge for the professional component of 
such service when furnished by a hospital-based physician in 
the same locality. For purposes of the preceding sentence, an 
independent laboratory is a laboratory that is independent of a 
hospital and separate from the attending or consulting physi-
cians' office.". 
(b) CONFORMING AMENDMENTS.— 
(1) Section 1833(a)(l)(J) of such Act (42 U.S.C. 13951(a)(1)) is 
amended by striking "or physician pathology services" and by 
striking "or section 1834(f), respectively". 
(2) Section 1848(a)(1) of such Act (42 U.S.C. 1395w-4(a)(l)) is 
amended by striking "or 1834(f)". 
(3) Section 4050 of the Omnibus Budget Reconciliation Act of 
1987 is repealed. 
(c) ANCILLARY POLICY.—The Secretary of Health and Human Serv-
ices, in establishing ancillary policies under section 1848(c)(3) of the 
Social Security Act, shall consider an appropriate adjustment to 
reflect the technical component of furnishing physician pathology 
services through a laboratory that is independent of a hospital and 
separate from an attending or consulting physician's office. 
(d) EFFECTIVE DATE.—The amendments made by this section shall 
apply to services furnished on or after January 1,1991. 
SEC. 4105. UPDATE FOR PHYSICIANS'SERVICES. 
(a) PERCENTAGE INCREASE IN M E I FOR 1991.— 
(1) 
IN 
GENERAL.—Section 
1842(b)(4)(E) 
(42 
U.S.C. 
1395u(b)(4)(E)) is amended by adding at the end the following 
new clause: 
"(v) For purposes of this part for items and services furnished in 
1991, the percentage increase in the MEI is— 
"(I) 0 percent for services (other than primary care services), 
and 
"(II) 2 percent for primary care services (as defined in subsec-
tion (i)(4)).". 
(2) CUSTOMARY CHARGES FOR 1991.—Section 184203)(4)(B) (42 
U.S.C. 1395u(b)(4)(B)) is amended by adding at the end the 
following new clause: 
"(iv) In determining the reasonable charge under paragraph (3) 
for physicians' services (other than primary care services, as defined 
in subsection (i)(4)) furnished during 1991, the customary charges 
shall be the same customary charges as were recognized under this 
42 u s e 1395/ 
note. 
42 u s e 1395W-4 
note. 
42 u s e 1395Z 
note. 
104 STAT. 1388-60 
PUBLIC LAW 101-508—NOV. 5, 1990 
section for the 9-month period beginning April 1, 1990. In a case in 
which subparagraph (F) applies (relating to new physicians) so as to 
limit the customary charges of a physician during 1990 to a percent 
of prevailing charges, the previous sentence shall not prevent such 
limit on customary charges under such subparagraph from increas-
ing in 1991 to a higher percent of such prevailing charges.". 
(3) CHANGE IN PAYMENT FOR YEARS AFTER 1991.—Section 1848 
of such Act (42 U.S.C. 1395w-4) is amended in subsection 
(d)(3)(A)-
(A) in clause (i), by inserting "except as provided in clause 
(iii)," after "subparagraph (B),", and 
(B) by adding at the end the following new clause: 
"(iii) 
ADJUSTMENT 
IN PERCENTAGE 
INCREASE.—In 
applying clause (i) for services furnished in 1992 for 
which the appropriate update index is the index de-
scribed in clause (ii)(I), the percentage increase in the 
appropriate update index shall be reduced by 0.4 
percentage points.". 
(b) INCREASE IN PREVAILING CHARGE FLOOR FOR PRIMARY CARE 
SERVICES 
(1) IN GENERAL.—Section 1842(b)(4)(A)(vi) of such Act (42 
U.S.C. 1395u(b)(4)(A)(vi)) is amended by striking "50 percent" 
and inserting "60 percent". 
42 u s e 1395W-4 
(2) BUDGET NEUTRAL IMPLEMENTATION.—In computing the 
note. 
conversion factor under section 1848(d)(1)(B) of the Social Secu-
rity Act for 1992, the Secretary of Health and Human Services 
shall determine the estimated aggregate amount of payments 
under part B of title XVIII of such Act for physicians' services 
in 1991 assuming that the amendments made by this subsection 
did not apply. 
42 use I395u 
(3) EFFECTIVE DATE.—The amendments made by paragraphs 
note. 
(1) and (2) shall apply to services furnished on or after 
January 1,1991. 
(c) VOLUME PERFORMANCE STANDARD FOR FISCAL YEAR 1991.— 
Section 1848(f) (42 U.S.C. 1395w-4(f)) is amended— 
(1) in paragraph (1)(C), by striking "1990" the first place it 
appears and inserting "1991 , and 
(2) by adding at the end of paragraph (2) the following: 
"(C) Notwithstanding subparagraph (A), the performance 
standard rate of increase for a category of physicians' 
services for fiscal year 1991 shall be the sum o
f
— 
"(i) the Secretary's estimate of the percentage by 
which actual expenditures for the category of physi-
cians' services under this part for fiscal year 1991 
exceed actual expenditures for such category of services 
in fiscal year 1990 (determined without regard to the 
amendments made by the Omnibus Budget Reconcili-
ation Act of 1990), and 
"(ii) the Secretary's estimate of the percentage in-
crease or decrease in expenditures for the category of 
services in fiscal year 1991 (compared with fiscal year 
1990) that will result from changes in law and regula-
tions (including the Omnibus Budget Reconciliation 
Act of 1990), reduced by 2 percentage points.". 
42 use 1395W-4 
(d) Not later than 45 days after the date of the enactment of this 
note. 
Act, the Secretary of Health and Human Services, based on the most 
recent data available, shall estimate and publish in the Federal 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-61 
Register the performance standard rates of increase specified in 
section 1848(f)(2)(C) of the Social Security Act for fiscal year 1991. 
SEC. 4106. NEW PHYSICIANS AND OTHER NEW HEALTH CARE PRACTI-
TIONERS. 
(a) EXTENSION OF CUSTOMARY CHARGE LIMIT AND INCLUSION OF 
HEALTH CARE PRACTITIONERS.— 
(1) IN GENERAL.—Subparagraph (F) of section 1842(b)(4) (42 
U.S.C. 1395u(b)(4)) is amended to read as follows: 
"(F)(i) In the case of physicians' services and professional services 
of a health care practitioner (other than primary care services and 
other than services furnished in a rural area (as defined in section 
1886(d)(2)(D)) that is designated, under section 332(a)(1)(A) of the 
Public Health Service Act, as a health manpower shortage area) 
furnished during the physician's or practitioner's first through 
fourth years of practice (if payment for those services is made 
separately under this part and on other than a cost-related basis), 
the prevailing charge or fee schedule amount to be applied under 
this part shall be 80 percent for the first year of practice, 85 percent 
for the second year of practice, 90 percent for the third year of 
practice, and 95 percent for the fourth year of practice, of the 
prevailing charge or fee schedule amount for that service under the 
other provisions of this part. 
"(ii) For purposes of clause (i): 
"(I) The term 'health care practitioner' means a physician 
assistant, certified nurse-midwife, qualified psychologist, nurse 
practitioner, clinical social worker, physical therapist, occupa-
tional therapist, respiratory therapist, certified registered nurse 
anesthetist, or any other practitioner as may be specified by the 
Secretary. 
"(II) The term 'first year of practice' means, with respect to a 
physician or practitioner, the first calendar year during the first 
6 months of which the physician or practitioner furnishes 
professional services for which payment is made under this 
part, and includes any period before such year. 
"(Ill) The terms 'second year of practice', 'third year of prac-
tice', and 'fourth year of practice' mean the second, third, and 
fourth calendar years, respectively, following the first year of 
practice.". 
(2) CONFORMING AMENDMENTS.—Section 6108(a)(2)(A) of the 
Omnibus Budget Reconciliation Act of 1989 is amended— 
42 USC 1395u 
(A) by inserting "or 1991" after "1990", and 
note. 
(B) by inserting "or 1990" after "1989". 
(b) APPLICATION UNDER FEE SCHEDULE.— 
(1) IN GENERAL.—Section 1848(a) (42 U.S.C. 1395w-4(a)) is 
amended by adding at the end the following new paragraph: 
"(4) TREATMENT OF NEW PHYSICIANS.—In the case of physi-
cians' services furnished by a physician before the end of the 
physician's first full calendar year of furnishing services for 
which payment may be made under this part, and during each 
of the 3 succeeding years, the fee schedule amount to be applied 
shall be 80 percent, 85 percent, 90 percent, and 95 percent, 
respectively, of the fee schedule amount applicable to physi-
cians who are not subject to this paragraph. The preceding 
sentence shall not apply to primary care services or services 
furnished in a rural area (as defined in section 1886(d)(2)) that is 
104 STAT. 1388-62 
PUBLIC LAW 101-508—NOV. 5, 1990 
designated under section 322(a)(1)(A) of the Public Health Serv-
ice Act as a health manpower shortage area.". 
42USC1395U. 
(2) CONFORMING AMENDMENTS.—Section 1842(b)(4)(F), as 
amended by subsection (a), is amended— 
(A) in clause (i), by striking "physicians' services and", 
(B) in clause (i), by striking "physician's or", and 
(C) in clause (ii)(II), by striking "physician or" each place 
it appears. 
42 u s e 1395W-4 
(c) CONFORMING ADJUSTMENT IN CONVERSION FACTOR COMPUTA-
note. 
TiON.—In 
computing 
the 
conversion 
factor 
under 
section 
1848(d)(1)(B) for 1992, the Secretary of Health and Human Services 
shall determine the estimated aggregate amount of payments under 
part B for physicians' services in 1991 assuming that the amend-
ments made by this section (notwithstanding subsection (d)) applied 
to all services furnished during such year. 
42 u s e 1395u 
(d) EFFECTIVE D A T E S . — 
note. 
(1) The amendments made by subsection (a) apply to services 
furnished after 1990, except that— 
(A) the provisions concerning the third and fourth years 
of practice apply only to physicians'services furnished after 
1990 and 1991, respectively, and 
(B) the provisions concerning the second, third, and 
fourth years of practice apply only to services of a health 
care practitioner furnished after 1991, 1992, and 1993, 
respectively. 
(2) The amendments made by subsection (b) shall apply to 
services furnished after 1991. 
SEC. 4107. ASSISTANTS AT SURGERY. 
(a) PHYSICIANS AS ASSISTANTS-AT-SURGERY.— 
(1) IN GENERAL.—Section 1848(i) (42 U.S.C. 1395w-4(i)) is 
amended by adding at the end the following: 
"(2) ASSISTANTS-AT-SURGERY.— 
"(A) IN GENERAL.—Subject to subparagraph (B), in the 
case of a surgical service furnished by a physician, if pay-
ment is made separately under this part for the services of 
a physician serving as an assistant-at-surgery, the fee 
schedule amount shall not exceed 16 percent of the fee 
schedule amount otherwise determined under this section 
for the global surgical service involved. 
"(B) DENIAL OF PAYMENT IN CERTAIN CASES.—If the Sec-
retary determines, based on the most recent data available, 
that for a surgical procedure (or class of surgical proce-
dures) the national average percentage of such procedure 
performed under this part which involve the use of a 
physician as an assistant at surgery is less than 5 percent, 
no payment may be made under this part for services of an 
assistant at surgery involved in the procedure.". 
42 use 1395W-4 
(2) AppucATiON IN 1991.—Section 1848(i)(2) of the Social Secu-
note- 
rity Act, as added by the amendment made by paragraph (1), 
shall apply to services furnished in 1991 in the same manner as 
it applies to services furnished after 1991. In applying the 
previous sentence, the prevailing charge shall be substituted for 
the fee schedule amount. 
(b) CONFORMING AMENDMENT.—Section 1862(a)(15) of such Act (42 
U.S.C. 1395y(aX15)) is amended— 
(1) by inserting "(A)" after "(15)", 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-63 
(2) by striking "; or" at the end and inserting ", or", and 
(3) by adding at the end the following new subparagraph: 
"(B) which are for services of an assistant at surgery to which 
section 1848(i)(2)(B) applies; or". 
(c) EFFECTIVE DATE.—The amendment made by subsection shall 
apply with respect to services furnished on or after January 1, 1992. 
SEC. 4108. TECHNICAL COMPONENTS OF CERTAIN DIAGNOSTIC TESTS. 
(a) IN GENERAL.—Section 1842(b) of the Social Security Act (42 
U.S.C. 1395u(b)), as amended by section 4101, is further amended by 
adding at the end the following new paragraph: 
"(18) With respect to payment under this part for the technical (as 
distinct from professional) component of diagnostic tests (other than 
clinical diagnostic laboratory tests and radiology services, including 
portable x-ray services) which the Secretary shall designate (based 
on their high volume of expenditures under this part), the reason-
able charge for such technical component (including the applicable 
portion of a global service) may not exceed the national median of 
such charges for all localities, as estimated by the Secretary using 
the best available data.". 
(b) EFFECTIVE DATE.—The amendment made by subsection (a) 
shall apply to tests and services furnished on or after January 1, 
1991. 
SEC. 4109. INTERPRETATION OF ELECTROCARDIOGRAMS. 
(a) IN GENERAL.—Section 1848(b) of the Social Security Act (42 
U.S.C. 1395w-4(b)) is amended by adding at the end the following 
new paragraph: 
"(3) 
TREATMENT 
OF 
INTERPRETATION 
OF ELECTROCARDIO-
GRAMS.—If payment is made under this part for a visit to a 
physician or consultation with a physician and, as part of or in 
conjunction with the visit or consultation there is an electro-
cardiogram performed or ordered to be performed, no payment 
may be made under this part with respect to the interpretation 
of the electrocardiogram and no physician may bill an individ-
ual enrolled under this part separately for such an interpreta-
tion. If a physician knowingly and willfully bills one or more 
individuals in violation of the previous sentence, the Secretary 
may apply sanctions against the physician or entity in accord-
ance with section 1842(j)(2).". 
(b) EFFECTIVE DATE.—The amendment made by subsection (a) 
shall apply to services furnished on or after January 1, 1992. In 
applying section 1848(d)(1)(B) of the Social Security Act (in comput-
ing the initial budget-neutral conversion factor for 1991), the Sec-
retary shall compute such factor assuming that section 1848(b)(3) of 
such Act (as added by the amendment made by subsection (a)) had 
applied to physicians' services furnished during 1991. 
SEC. 4110. RECIPROCAL BILLING ARRANGEMENTS. 
(a) IN GENERAL.—The first sentence of section 1842(b)(6) of the 
Social Security Act (42 U.S.C. 1395u(b)(6)) is amended— 
(1) by striking "and" before "(C)", and 
(2) by inserting before the period at the end the following: 
", and (D) payment may be made to a physician who arranges 
for visit services (including emergency visits and related serv-
ices) to be provided to an individual by a second physician on an 
occasional, reciprocal basis if (i) the first physician is unavail-
42 u s e 1395y 
note. 
42 u s e 1395u 
note. 
42 u s e 1395W-4 
note. 
104 STAT. 1388-64 
PUBLIC LAW 101-508—NOV. 5, 1990 
42 use 1395u 
note. 
42 use 1395u 
note. 
able to provide the visit services, (ii) the individual has arranged 
or seeks to receive the visit services from the first physician, (iii) 
the claim form submitted to the carrier includes the second 
physician's unique identifier (provided under the system estab-
lished under subsection (r)) and indicates that the claim is for 
such a 'covered visit service (and related services)', and (iv) the 
visit services are not provided by the second physician over a 
continuous period of longer than 60 days", 
(b) EFFECTIVE DATE.—The amendment made by subsection (a) 
shall apply to services furnished on or after the first day of the first 
month beginning more than 60 days after the date of the enactment 
of this Act. 
SEC. 4111. STUDY OF PREPAYMENT MEDICAL REVIEW SCREENS. 
(a) IN GENERAL.—The Secretary of Health and Human Services 
shall conduct a study of the effect of the release of medicare 
prepayment medical review screen parameters on physician billings 
for the services to which the parameters apply. 
(b) LIMITATIONS.—The study shall be based upon the release of the 
screen parameters at a minimum of six carriers. 
(c) REPORT.—The Secretary shall report the results of the study to 
the Committees on Ways and Means and Energy and Commerce of 
the House of Representatives and the Committee on Finance of the 
Senate not later than October 1,1992. 
SEC. 4112. PRACTICING PHYSICIANS ADVISORY COUNCIL. 
Title XVIII of the Social Security Act is amended by inserting 
after section 1867 the following new section: 
"PRACTICING PHYSICIANS ADVISORY COUNCIL 
42 use 1395ee. 
"SEC. 1868. (a) The Secretary shall appoint, based upon nomina-
tions submitted by medical organizations representing physicians, a 
^ Practicing Physicians Advisory Council (in this section referred to as 
the 'Council') to be composed of 15 physicians, each of whom has 
submitted at least 250 claims for physicians' services under this title 
in the previous year. At least 11 of the members of the Council shall 
be physicians described in section 1861(r)(l) and the members of the 
Council shall include both participating and nonparticipating physi-
cians and physicians practicing in rural areas and underserved 
urban areas. 
"(b) The Council shall meet once during each calendar quarter to 
discuss certain proposed changes in regulations and carrier manual 
instructions related to physician services identified by the Sec-
retary. To the extent feasible and consistent with statutory dead-
lines, such consultation shall occur before the publication of such 
proposed changes. 
"(c) Members of the Council shall be entitled to receive reimburse-
ment of expenses and per diem in lieu of subsistence in the same 
manner as other members of advisory councils appointed by the 
Secretary are provided such reimbursement and per diem under this 
title.". 
42 use 1395ff 
SEC. 4113. STUDY OF AGGREGATION RULE FOR CLAIMS FOR SIMILAR 
note. 
PHYSICIANS' SERVICES. 
The Secretary of Health and Human Services shall carry out a 
study of the effects of permitting the aggregation of claims that 
involve common issues of law and fact furnished in the same carrier 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-65 
area to two or more individuals by two or more physicians within 
the same 12-month period for purposes of appeals provided for under 
• 
section 1869(b)(2). Such study shall be conducted in at least four 
carrier areas. The Secretary shall report on the results of such study 
and any recommendations to the Committee on Finance of the 
Senate and the Committees on Energy and Commerce and Ways and 
Means of the House of Representatives by December 31, 1992. 
SEC. 4114. UTILIZATION SCREENS FOR PHYSICIAN VISITS IN REHABILITA- 42 USC 1395u 
TION HOSPITALS. 
note. 
Not later than 180 days after the date of the enactment of this 
Act, the Secretary of Health and Human Services shall issue guide-
lines to assure a uniform level of review of physician visits to 
patients of a rehabilitation hospital or unit patients after the medi-
cal review screen parameter established under section 4085(h) of the 
Omnibus Budget Reconciliation Act of 1987 has been exceeded. 
SEC. 4115. STUDY OF REGIONAL VARIATIONS IN IMPACT OF MEDICARE 42 USC 1395w-4 
PHYSICIAN PAYMENT REFORM. 
note. 
(a) STUDY.—The Secretary of Health and Human Services shall 
conduct a study of— 
(1) factors that may explain geographic variations in Medi-
care reasonable charges for physicians' services that are not 
attributable to variations in physician practice costs (including 
the supply of physicians in an area and area variations in the 
mix of services furnished); 
(2) the extent to which the geographic practice cost indices 
applied under the fee schedule established under section 1848 of 
the Social Security Act accurately reflect variations in practice 
costs and malpractice costs (and alternative'*sources of informa-
tion upon which to base such indices); 
(3) the impact of the transition to a national, resource-based 
fee schedule for physicians' services under Medicare on access 
to physicians' services in areas that experience a disproportion-
ately large reduction in payments for physicians' services under 
the fee schedule by reason of such variations; and 
(4) appropriate adjustments or modifications in the transition 
to, or manner of determining payments under, the fee schedule 
established under section 1848 of the Social Security Act, to 
compensate for such variations and ensure continued access to 
physicians' services for Medicare beneficiaries in such areas. 
(b) REPORT.—By not later than July 1, 1992, the Secretary shall 
submit to Congress a report on the study conducted under subsec-
tion (a). 
SEC. 4116. LIMITATION ON BENEFICIARY LIABILITY. 
Section 1848(g)(2)(A) (42 U.S.C. 1395w-4(g)(2)(A)) is amended by 
adding at the end thereof the following: 
"In the case of evaluation and management services (as specified in 
section 1842(b)(16)(B)(ii)), the preceding sentence shall be applied by 
substituting *40 percent' for '25 percent'.". 
SEC. 4117. STATEWIDE FEE SCHEDULE AREAS FOR PHYSICIANS' SERV- 42 USC 1395w-4 
ICES. 
note. 
(a) IN GENERAL.—Notwithstanding section 1848(j)(2) of the Social 
Security Act (42 U.S.C. 1395w-4(j)(2)), in the case of the States of 
Nebraska and Oklahoma, if the respective State meets the require-
104 STAT. 1388-66 
PUBLIC LAW 101-508—NOV. 5, 1990 
ments specified in subsection (b) on or before April 1, 1991, the 
Secretary of Health and Human Services (Secretary) shall treat the 
State as a single fee schedule area for purposes of determining— 
(1) the adjusted historical payment basis (as defined in section 
1848(a)(2)(D) of such Act (42 U.S.C. 1395w-4(a)(2)(D))), and 
(2) the fee schedule amount (as referred to in section 1848(a) 
(42 U.S.C. 1395w-4(a)) of such Act), 
for physicians' services (as defined in section 1848(j)(3) of such Act 
(42 U.S.C. 1395w-40')(3))) furnished on or after January 1, 1992. 
(b) REQUIREMENTS.—The requirements specified in this subsection 
are that (on or before April 1, 1991) there are written expressions of 
support for treatment of the State as a single fee schedule area (on a 
budget-neutral basis) from— 
(1) each member of the congressional delegation from the 
State, and 
(2) organizations representing urban and rural physicians in 
the State. 
(c) BUDGET NEUTRALITY.—Notwithstanding section 1842(b)(3) of 
such Act (42 U.S.C. 1395u(b)(3)), the Secretary shall provide for 
treatment of a State as a single fee schedule area (as described in 
subsection (a)) in a manner that ensures that total payments for 
physicians' services (as so defined) furnished by physicians in the 
State during 1992 are not greater or less than total payments for 
such services would have been but for such treatment. 
(d) CONSTRUCTION.—Nothing in this section shall be construed as 
limiting the availability (to the Secretary, the appropriate agency or 
organization with a contract under section 1842, or physicians in a 
State) of otherwise applicable administrative procedures for modify-
ing the fee schedule area or areas in the State after implementation 
of subsection (a) with respect to the State. 
SEC. 4118. TECHNICAL CORRECTIONS. 
(a) OVERVALUED PROCEDURES.— 
(1) Section 1842(b)(14) of the Social Security Act (42 U.S.C. 
1395u(b)(14)) is amended— 
(A) in subparagraph (B)(iii)(I), by striking "practice ex-
pense ratio for the service (specified in table # 1 in the 
Joint Explanatory Statement referred to in subparagraph 
(C)(i))" and inserting "practice expense component (per-
cent), divided by 100, specified in appendix A (pages 187 
through 194) of the Report of the Medicare and Medicaid 
Health Budget Reconciliation Amendments of 1989, pre-
pared by the Subcommittee on Health and the Environ-
ment of the Committee on Energy and Commerce, House of 
Representatives, (Committee Print 101-M, 101st Congress, 
1st Session) for the service"; 
(B) in subparagraph (B)(iii)(II), by striking "practice ex-
pense ratio" and inserting "practice expense component 
(percent), divided by 100"; 
(C) in subparagraph (C)(i), by striking "physicians' serv-
ices specified in Table # 2 in the Joint Explanatory State-
ment of the Committee of Conference submitted with the 
Conference Report to accompany H.R. 3299 (the 'Omnibus 
Budget Reconciliation Act of 1989'), 101st Congress," and 
inserting "procedures specified (by code and description) in 
the Overvalued Procedures List for Finance Committee, 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-67 
Revised September 20, 1989, prepared by the Physician 
Payment Review Commission"; 
(D) in subparagraph (C)(iii), by striking "The 'percent 
change' specified in this clause, for a physicians' service 
specified in clause (i), is the percent change specified for the 
service in table # 2 in the Joint Explanatory Statement" 
and inserting "The 'percentage change' specified in this 
clause, for a physicians' service specified in clause (i), is the 
percent difference (but expressed as a positive number) 
specified for the service in the list"; and 
(E) in subparagraph (C)(iv), by striking "such value speci-
fied for the locality in table # 3 in the Joint Explanatory 
Statement referred to in clause (i)" and inserting "the 
Geographic Overhead Costs Index specified for the locality 
in table 1 of the September 1989 Supplement to the Geo-
graphic Medicare Economic Index: Alternative Approaches 
(prepared by the Urban Institute and the Center for Health 
Economics Research)". 
(2) Section 
1842(b)(4)(E)(iv)(I) of such 
Act 
(42 U.S.C. 
1395u(b)(4)(E)(iv)(I)) is amended by striking "Table # 2 " and all 
that Allows through "101st Congress" and inserting "the list 
referred to in paragraph (14)(C)(i)' . 
(3) The amendments made by paragraphs (1) and (2) apply to 42 USC 1395u 
services furnished after March 1990. 
"°**-
03) MVPS AS MULTIPLICATIVE, NOT ADDITIVE.—Section 1848(f)(2)(A) 
(42 U.S.C. 1395w-4(f)(2)(A)) is amended— 
(1) in the matter preceding clause (i) by striking "sum" and 
inserting "product"; 
(2) in clauses (i) through (iy), by inserting "1 plus" before "the-
Secretary's" each place it appears, ^ 
(3) in clause (i), by inserting "(divided by 100)" after "percent-
age increase", ' 
(4) in clauses (ii) and (iv), by inserting "(divided by 100)" after 
"decrease", ® 
(5) in clause (iii), by inserting "(divided by 100)" after 
"percentage growttf ,^ and 
(6) in the matter following clause (iv), by striking "reduced" 
and inserting "minus 1, multiplied by 100, and reduced". 
(c) PERIODIC REVIEW OF GEOGRAPHIC ADJUSTMENT FACTORS.—Sec-
tion 1848(e)(1) of such Act is amended— 
(1) in subparagraph (A), by striking "subparagraph (B)" and 
inserting "subparagraphs (B) and (C)", and 
(2) by adding at the end the following new subparagraph: 
"(C) PERIODIC REVIEW AND ADJUSTMENTS IN GEOGRAPHIC 
ADJUSTMENT FACTORS.—The Secretary, not less often than 
every 3 years, shall review the indices established under 
subparagraph (A) and the geographic index values applied 
under this subsection for all fee schedule areas. Based on 
such review, the Secretary may revise such index and 
adjust such index values, except that, if more than 1 year 
has elasped since the last previous adjustment, the adjust-
ment to be applied in the first year of the next adjustment 
shall be Vz of the adjustment that otherwise would be 
made.". 
(d) ELIMINATION OF RESTRICTION ON INCORPORATION OF TIME IN 
VISIT CODES.—Section 1848(c)(4) (42 U.S.C. 1395w-4(c)(4)) is amended 
by striking "only for services furnished on or after January 1, 1993". 
* So in original. Probably should be ";"• 
^ So in original. Probably should be ";"• 
* So in original. Probably should be ";"• 
* So in original. Probably should be ";". 
104 STAT. 1388-68 
PUBLIC LAW 101-508—NOV. 5, 1990 
(e) TREATMENT OF PRICE INCREASE IN DETERMINING PERFORMANCE 
STANDARD RATES OF INCREASE.—Section 1848(f)(2)(A)(iv) (42 U.S.C. 
1395w-4(f)(2)(A)(iv)) is amended by inserting "including changes in 
law and regulations affecting the percentage increase described in 
clause (i)" after "law or regulations". 
(f) MISCELLANEOUS FEE SCHEDULE CORRECTIONS.— 
(1) CHANGES IN SECTION 1848.—Section 1848 of the Social 
Security Act (42 U.S.C. 1395w-4) is amended— 
(A) in subsection (c)(1)(B), by striking the last sentence; 
(B) in subsections (c)(3)(C)(ii)(II) and (c)(3)(C)(iii)(II), by 
striking "by" the first place it appears in each respective 
subsection, ^° 
(C) in subsection (c), by redesignating the second para-
graph (3), and paragraphs (4) and (5), as paragraphs (4) 
through (6), respectively; 
(D) in subsection (c)(4), as redesignated by subparagraph 
(C),is amended by striking "subsection" and inserting "sec-
tion"; 
(E) in subsection (d)(1)(A), by striking "subparagraph (C)" 
and inserting "paragraph (3)"; 
(F) in subsection (d)(1)— 
(i) in subparagraph (A)— 
(I) by inserting "(or factors)" after "conversion 
factor" each place it appears, 
(II) by inserting "or updates" after "update", and 
(III) by striking "subparagraph (C)" and insert-
ing "paragraph (3)"; and 
(ii) in subparagraph (C)— 
(I) in clause (i), by striking "(or factors)", and 
(II) in clause (ii), by inserting "the conversion 
factor (or factors) which will apply to physicians' 
services for the following year and" before "the 
update (or updates)", and by striking "the follow-
ing" and inserting "such"; 
(G) in subsection (d)(2)(A), in the matter preceding clause 
(i), by striking "services" the first place it appears and 
inserting "services (as defined in subsection (f)(5)(A))"; 
(H) in subsection (d)(2)(A)(ii)— 
(i) by striking "(as defined in subsection (f)(5)(A))" 
and inserting "and for the services involved", and 
(ii) by striking "all such physicians"' and insert-
ing "such"; and 
(I) in the last sentence of subsection (d)(2)(A), by striking 
"proportion of HMO enroUees" and inserting "proportion of 
individuals who are enrolled under this part who are HMO 
enrollees"; 
(J) in subsection (d)(2)(E)(i), by inserting "the" after "as 
set forth in"; 
(K) in subsection (d)(2)(E)(ii)(I), by inserting "payments 
for" after "under this part for"; 
(L) in subsection (d)(3)(B)— 
(i) in clause (i)— 
(I) by striking "update for" and inserting 
"update for a category of physicians' services for"; 
and 
, 
'° So in original. Probably should be ";"• 
PUBLIC LAW 101-508—NOV. 5,1990 
104 STAT. 1388-69 
(II) by striking "physicians' services (as defined 
in subsection (f)(5)(A))" and inserting "services in 
such category"; 
(ii) in clause (ii)— 
(I) by inserting "more than" after "decrease of; 
and 
(II) in subclause (I), by striking "more than"; 
(M) in paragraphs (l)(D)(i) and (2)(A)(i) of subsection (f), by 
striking "calendar years" and inserting "portions of cal-
endar years"; 
(N) in subsection (f)(2)(A)— 
(i) by striking "each performance standard rate of 
increase" and inserting "the performance standard 
rate of increase, for all physicians' services and for 
each category of physicians'services,", 
(ii) in clause (i), by striking "physicians' services (as 
defined in subsection (f)(5)(A) ^^" and inserting "all 
physicians' services or for the category of physicians' 
services, respectively,", 
(iii) in clause (iii), by striking "physicians' services" 
and inserting "all physicians' services or of the cat-
egory of physicians' services, respectively,", and 
(iv) in clause (iv), by striking "physicians' services (as 
defined in subsection (f)(5)(A))" and inserting "all physi-
cians' services or of the category of physicians' services, 
respectively,"; 
(O) in subsection (f)(4)(A), by striking "paragraph (B)" and 
inserting "subparagraph (B)"; 
(P) in subsection (f)(4)(B), by striking "Congress specifi-
cally approves the plan" and inserting "specifically ap-
proved by law"; 
(Q) in subparagraphs (A) and (B) of subsection (g)(2), by 
inserting "other than radiologist services subject to section 
1834(b)," after "during 1991," and after "during 1992,", 
respectively; 
(R) in subsection (i)(l)(A), by striking "historical payment 
basis (as defined in subsection (a)(2)(C)(i))" and inserting 
"adjusted historical payment basis (as defined in subsection 
(a)(2)(D)(i))"; and 
(S) in subsection (j)(l). by striking ", and such other" and 
all that follows through the period and inserting "(as de-
fined by the Secretary) and all other physicians' services.". 
(2) MISCELLANEOUS.— 
(A) Effective as if included in the Omnibus Budget Rec-
onciliation Act of 1989, section 6102(e)(4) of such Act is 42 USC 1395u. 
amended by inserting "determined" after 
"prevailing 
(B) Effective January 1, 1991, section 1842(b)(3)(G) of the 
Social Security Act, as amended by section 6102(e)(2) of 42USC1395u. 
Omnibus Budget Reconciliation Act of 1989, is amended by 
striking 
"subsection 
(j)(l)(C)" and inserting 
"section 
1848(g)(2)". 
(C) Section 1842(b)(12)(A)(ii)(II) of the Social Security Act, 
as amended by section 6102(e)(4) of the Omnibus Budget 
Reconciliation Act of 1989, is amended by striking ", as the 
case may be". 
" So in original. Probably should be "(A))". 
104 STAT. 1388-70 
PUBLIC LAW 101-508—NOV. 5, 1990 
42 use 1395/. 
42 u s e 1395W-4 
note. 
42 use 1395/ 
note. 
42 use 1395u 
note. 
42 use 1395m 
note. 
42 use 1395u 
note. 
42 u s e 1395W-1 
note. 
42 use 1395u 
note. 
42 use 1395m 
note. 
42 use 1395WW 
note. 
(D) Section 1833(a)(1)(H) of the Social Security Act, as 
amended by section 6102(e)(5) of the Omnibus Budget Rec-
onciliation Act of 1989, is amended by striking ", as the case 
may be". 
(E) Section 6102(e)(ll) of the Omnibus Budget Reconcili-
ation Act of 1989 is amended by inserting "of Health and 
Human Services" after "Secretary". 
(F) Effective as if included in the enactment of the Omni-
bus Budget Reconciliation Act of 1989, section 922(d)(1) of 
the Public Health Service Act (42 U.S.C. 299c-l(d)(l)) is 
amended— 
(i) by inserting "(other than of dissemination activi-
ties)" after "evaluations", and 
(ii) by inserting "research, demonstration projects, or 
evaluations o f after "applications with respect to". 
(g) REPEAL OF REPORTS NO LONGER REQUIRED.— 
(1) Subsection (b) of section 4043 of the Omnibus Budget 
Reconciliation Act of 1987 is repealed. 
(2) Subsection (c) of section 4048 of such Act is repealed. 
(3) Section 4049(bXl) of such Act is amended by striking ", and 
shall report" and all that follows up to the period at the end. 
(4) Section 4056(a)(1) of such Act, as redesignated by section 
411(f)(14) of the Medicare Catastrophic Coverage Act of 1988, is 
amended by striking the last sentence. 
(5) Section 4056(b)(2) of such Act is amended by striking the 
second sentence. 
(h) ADJUSTMENT OF EFFECTIVE DATES.—Effective as if included in 
the enactment of the Omnibus Budget Reconciliation Act of 1987— 
(1) section 4048(b) of such Act is amended by striking "Janu-
ary 1,1989" and inserting "March 1,1989", and 
(2) section 4049(b)(2) of such Act is amended by striking 
"January 1,1989" and inserting "April 1,1989". 
(i) TRANSFER OF PROVISION INTO TITLE XVIII.— 
(1) Section 1842 of the Social Security Act (42 U.S.C. 1395u) is 
amended by adding at the end the following new subsection: 
"(r) The Secretary shall establish a system which provides for a 
unique identifier for each physician who furnishes services for 
which payment may be made under this title.". 
(2) Section 9202 of the Consolidated Omnibus Budget Rec-
onciliation Act of 1985 is amended by striking subsection (g). 
a) PPRC—(1) Section 1845 of such Act (42 U.S.C. 1395w-l) is 
amended— 
(A) in subsection (a)(3), by striking "include physicians" and 
inserting "include (but need not be limited to) physicians"; 
(B) by striking subsection (b)(3); 
(C) in subsection (b)(2)— 
(i) by striking "and" at the end of subparagraph (H), 
(ii) by striking the period at the end of subparagraph (I) 
and inserting a semicolon, 
(iii) by striking subparagraphs (A), (B), (C), and (F), 
(iv) by redesignating subparagraphs (D), (E), (G), (H), and 
(I) as subparagraphs (A), (B), (C), (D), and (E), and 
(v) by adding at the end the following new subparagraphs: 
"(F) make recommendations regarding major issues in the 
implementation of the resource-based relative value scale estab-
lished under section 1848(c); 
..-•»«« • - ^ • • ^ ' . • ^ - ' • ^ ' i ^ ^ f^'-jffl'S^tit-V". 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-71 
"(G) make recommendations regarding further development 
of the volume performance standards established under section 
1848(f), including the development of State-based programs; 
"(H) consider policies to provide payment incentives to in-
crease patient access to primary care and other physician serv-
ices in large urban and rural areas, including policies regarding 
payments to physicians pursuant to title XIX; 
"(I) review and consider the number and practice specialties 
of physicians in training and payments under this title for 
graduate medical education costs; 
"(J) make recommendations regarding issues relating to utili-
zation review and quality of care, including the effectiveness of 
peer review procedures and other quality assurance programs 
applicable to physicians and providers under this title and 
physician certification and licensing standards and procedures; 
"(K) make recommendations regarding options to help con-
strain the costs of health insurance to employers, including 
incentives under this title; 
"(L) comment on the recommendations affecting physician 
payment under the medicare program that are included in the 
budget submitted by the President pursuant to section 1105 of 
title 31, United States Code; and 
"(M) make recommendations regarding medical malpractice 
liability reform and physician certification and licensing stand-
ards and procedures. ; and 
(D) by striking subsection (e) and redesignating subsection (f) 
as subsection (e). 
(2) In section 1842(bX2XA) is amended by striking "section 42USCl395u. 
1845(fX2)" and inserting "section 1845(eX2)". 
(k) PROHIBITION OF CERTAIN ADJUSTMENTS.—Section 1848(i) is 
42 USC 1395w-4. 
amended by adding at the end the following new paragraph: 
"(3) No COMPARABILITY ADJUSTMENT.—For physicians' services 
for which payment under this part is determined under this 
section— 
"(A) a carrier may not make any adjustment in the 
payment amount under section 1842(b)(3XB) on the basis 
that the payment amount is higher than the charge ap-
plicable, for a ^ 2 comparable services and under comparable 
circumstances, to the policyholders and subscribers of the 
carrier, 
"(B) no payment adjustment may be made under section 
1842(bX8), and 
"(C) section 1842(b)(9) shall not apply .". 
Subpart B—Provisions Relating to Other Items and 
Services 
42 USC 1395W-1. 
SEC. 4151. PAYMENTS FOR OUTPATIENT HOSPITAL SERVICES. 
(a) REDUCTION IN PAYMENTS FOR CAPITAL-RELATED COSTS.— 
(1) IN GENERAL.—Section 
1861(vXl)(SXii)(I) (42 U.S.C. 
1395x(v)(l)(S)(ii)(I)) is amended by inserting before the period at 
the end the following: ", by 15 percent for payments attrib-
utable to portions of cost reporting periods occurring during 
fiscal year 1991, and by 10 percent for payments attributable to 
portions of cost reporting periods occurring during fiscal year 
1992, 1993, 1994, or 1995". 
'* So in original, "a" probably should be omitted. 
104 STAT. 1388-72 
PUBLIC LAW 101-508—NOV. 5, 1990 
(2) EXEMPTION FOR RURAL PRIMARY CARE HOSPITALS.—Section 
1861(v)(l)(SXii)(II) (42 U.S.C. 1395x(v)(l)(S)(ii)(II)) is amended by 
striking "1886(d)(5)(D)(iii))." and inserting "1886(d)(5)(D)(iii) or a 
rural primary care hospital (as defined in section 1861(mm)(l))." 
(b) REDUCTION IN REASONABLE COSTS OF HOSPITAL OUTPATIENT 
SERVICES 
(1)" IN 
GENERAL.—Section 
1861(v)(l)(S)(ii) 
(42 
U.S.C. 
1395x(v)(l)(S)(ii)) is amended— 
(A) in subclause (II)— 
(i) by striking 
"Subclause 
(I)" and 
inserting 
"Subclauses (I) and (II)", and 
(ii) by striking "capital-related costs of any hospital" 
and inserting "costs of hospital outpatient services pro-
vided by any hospital"; 
(B) in subclause (III)— 
(i) by striking 
"subclause 
(I)" and 
inserting 
"subclauses (I) and (II)", and 
(ii) by striking "capital-related" and inserting "the"; 
(C) by redesignating subclauses (II) and (III) as subclauses 
(III) and (IV); and 
(D) by inserting after subclause (I) the following new 
subclause: 
"(II) The Secretary shall reduce the reasonable cost of outpatient 
hospital services (other than the capital-related costs of such serv-
ices) otherwise determined pursuant to section 1833(a)(2)(B)(i)(I) by 
5.8 percent for payments attributable to portions of cost reporting 
periods occurring during fiscal years 1991, 1992, 1993, 1994, or 
1995.". 
42 u s e 1320b-5 
(2) PROSPECTIVE PAYMENT SYSTEM FOR HOSPITAL OUTPATIENT 
note. 
SERVICES.— 
(A) DEVELOPMENT OF PROPOSAL.—The Secretary of Health 
and Human Services shall develop a proposal to replace the 
current system under which payment is made for hospital 
outpatient services under title XVIII of the Social Security 
Act with a system under which such payments would be 
made on the basis of prospectively determined rates. In 
developing any proposal under this paragraph, the Sec-
retary shall consider— 
(i) the need to provide for appropriate limits on 
increases in expenditures under the medicare program; 
(ii) the need to adjust prospectively determined rates 
to account for changes in a hospital's outpatient case 
mix, severity of illness of patients, volume of cases, and 
the development of new technologies and standards of 
medical practice; 
(iii) providing hospitals with incentives to control the 
costs of providing outpatient services; 
(iv) the feasibility and appropriateness of including 
payment for outpatient services not currently paid on a 
cost-related basis under the medicare program (includ-
ing clinical diagnostic laboratory tests and dialysis 
services) in the system; 
(v) the need to increase payments under the system 
to hospitals that treat a disproportionate share of low-
income patients, teaching hospitals, and hospitals 
located in geographic areas with high wages and wage-
related costs; 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-73 
(vi) the feasibility and appropriateness of bundling 
services into larger units, such as episodes or visits, in 
establishing the basic unit for making payments under 
the system; and 
(vii) the feasibility and appropriateness of varying 
payments under the system on the basis of whether 
services are provided in a free-standing or hospital-
based facility. 
(B) REPORTS.—(i) By not later than January 1, 1991, the 
Administrator of the Health Care Financing Administra-
tion shall submit research findings relating to prospective 
payments for hospital outpatient services to the Committee 
on Finance of the Senate and the Committees on Ways and 
Means and Energy and Commerce of the House of 
Representatives. 
(ii) By not later than September 1, 1991, the Secretary 
shall submit the proposal developed under subparagraph 
(A) to such Committees. 
(iii) By not later than March 1, 1992, the Prospective 
Payment Assessment Commission shall submit an analysis 
of and comments on the proposal developed under subpara-
graph (A) to such Committees, 
(c) PAYMENTS FOR AMBULATORY SURGICAL PROCEDURES AND RADI-
OLOGY SERVICES.— 
(1) MODIFICATION OF COST AND ASC PROPORTIONS OF ASC BLEND 
AMOUNTS.— 
(A) IN GENERAL.—Section 
1833(i)(3)(B)(ii) (42 U.S.C. 
13951(i)(3)(B)(ii)) is amended— 
(i) in subclause (I), by striking "and 50 percent for 
other cost reporting periods." and inserting '50 percent 
for reporting periods beginning on or after October 1, 
1988, and on or before December 31, 1990, and 42 
percent for portions of cost reporting periods beginning 
on or after January 1,1991."; and 
(ii) in subclause (II), by striking "and 50 percent for 
other cost reporting periods." and inserting "50 percent 
for reporting periods beginning on or after October 1, 
1988, and on or before December 31, 1990, and 58 
percent for portions of cost reporting periods beginning 
on or after January 1, 1991.". 
(B) EXTENSION OF ASC BLEND AMOUNTS FOR EYE AND EYE 
AND EAR SPECIALTY HOSPITALS.—The last Sentence of section 
1833(i)(3)(B)(ii) (42 U.S.C. 13951(i)(3)(B)(ii)) is amended by 
striking "in fiscal year 1989 or fiscal year 1990" and insert-
ing "on or after October 1, 1988, and before January 1, 
1995". 
(2) MODIFICATION OF COST AND CHARGE PROPORTIONS FOR RADI-
OLOGY 
SERVICES.—Section 
1833(n)(l)(B)(ii)(I) 
(42 
U.S.C. 
13951(n)(l)(B)(ii)(I)) is amended by striking the period at the end 
and inserting ", and such term means 42 percent in the CEise of 
outpatient radiology services for portions of cost reporting peri-
ods beginning on or after January 1,1991.". 
(3) 2-YEAR FREEZE IN ALLOWANCE FOR INTRAOCULAR LENSES.— 
42 USC 1395/ 
Notwithstanding section 1833(i)(2)(A)(iii) of the Social Security note. 
Act, the amount of payment determined under such section for 
the insertion of an intraocular lens during or subsequent to 
cataract surgery furnished to an individual in an ambulatory 
-194 O - 91 - 16 : QL 3 Part 2 
104 STAT. 1388-74 
PUBLIC LAW 101-508—NOV. 5, 1990 
surgical center on or after the date of the enactment of this Act 
and on or before December 31, 1992, shall be equal to $200, 
SEC. 4152. DURABLE MEDICAL EQUIPMENT. 
(a) PAYMENTS FOR SEAT-LIFT AND TENS.— 
(1) 15 PERCENT REDUCTION IN PAYMENTS FOR TRANSCUTANEOUS 
ELECTRICAL NERVE STIMULATORS.—Section 1834(a)(1)(D) of the 
Social Security Act (42 U.S.C. 1395m(a)(l)(D)) is amended by 
inserting before the period at the end the following: ", and, in 
the case of a transcutaneous electrical nerve stimulator fur-
nished on or after January 1, 1991, the Secretary shall further 
reduce such payment amount (as previously reduced) by 15 
percent". 
(2) SEAT-LIFTS.—Section 1861(n) of the Social Security Act (42 
U.S.C. 1395x(n)) is amended by adding at the end the following: 
"With respect to a seat-lift chair, such term includes only the 
seat-lift mechanism and does not include the chair.". 
42 use 1395m 
(3) EFFECTIVE DATE.—The amendment made by subsection (a) 
note. 
shall apply to items furnished on or after January 1, 1991. 
(b) 
DEVELOPMENT AND APPUCATION OF NATIONAL LIMITS ON 
FEES.— 
(1) INEXPENSIVE AND ROUTINELY PURCHASED DURABLE MEDICAL 
EQUIPMENT AND ITEMS REQUIRING FREQUENT AND SUBSTANTIAL 
SERVICING.—Paragraphs (2) and (3) of section 1834(a) of such Act 
(42 U.S.C. 1395m(a)) are each amended— 
(A) in subparagraph (B)(i), by striking "or" at the end; 
(B) by striking clause (ii) of subparagraph (B) and insert-
ing the following: 
"(ii) in 1991 is the sum of (I) 67 percent of the local 
payment amount for the item or device computed 
under subparagraph (C)(i)(I) for 1991, and (II) 33 per-
cent of the national limited payment amount for the 
item or device computed under subparagraph (C)(ii) for 
1991; 
"(iii) in 1992 is the sum of (I) 33 percent of the local 
payment amount for the item or device computed 
under subparagraph (CXDdD for 1992, and (II) 67 per-
cent of the national limited payment amount for the 
item or device computed under subparagraph (C)(ii) for 
1992; and 
"(iv) in 1993 and each subsequent year is the national 
limited pa3Tnent amount for the item or device com-
puted under subparagraph (CXii) for that year."; and 
(C) by adding at the end the following new subparagraph: 
"(C) COMPUTATION OF LOCAL PAYMENT AMOUNT AND NA-
TIONAL 
UMITED 
PAYMENT 
AMOUNT.—For 
purposes 
of 
subparagraph (B)— 
"(i) the local payment amount for an item or device 
for a year is equal to— 
"(I) for 1991, the amount specified in subpara-
graph (B)(i) for 1990 increased by the covered item 
update for 1991, and 
"(II) for 1992, the amount determined under this 
clause for the preceding year increased by the 
covered item update for 1992; and 
"(ii) the national limited payment amount for an 
item or device for a year is equal to— 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-75 
"(I) for 1991, the local payment amount deter-
mined under clause (i) for such item or device for 
that year, except that the national limited pay-
ment amount may not exceed 100 percent of the 
weighted average of all local payment amounts 
determined under such clause for such item for 
that year and may not be less than 85 percent of 
the weighted average of all local payment amounts 
determined under such clause for such item, and 
"(11) for each subsequent year, the amount deter-
mined under this clause for the preceding year 
increased by the covered item update for such 
subsequent year.". 
(2) MISCELLANEOUS ITEMS AND OTHER COVERED ITEMS.—Section 
1834(a)(8) (42 U.S.C. 1395m(a)(8)) is amended— 
(A) in subparagraph (A)(ii)— 
(i) by striking "or" at the end of subclause (I); 
(ii) in subclause (II)— 
(I) by striking "1991 or", and 
(II) by striking "the percentage increase" and all 
that follows through the period and inserting "the 
covered item update for the year."; 
(iii) by redesignating subclause (II) as subclause (III); 
and 
(iv) by inserting after subclause (I) the following new 
subclause: 
"(II) in 1991, equal to the local purchase price 
computed under this clause for the previous year, 
increased by the covered item update for 1991, and 
decreased by the percentage by which the average 
of the reasonable charges for claims paid for all 
items described in paragraph (7) is lower than the 
average of the purchase prices submitted for such 
items during the final 9 months of 1988; or"; 
(B) by amending subparagraph (B) to read as follows: 
"(B) 
COMPUTATION 
OF NATIONAL 
UMITED 
PURCHASE 
PRICE.—With respect to the furnishing of a particular item 
in a year, the Secretary shall compute a national limited 
purchase price— 
"(i) for 1991, equal to the local purchase price com-
puted under subparagraph (A)(ii) for the item for the 
year, except that such national limited purchase price 
may not exceed 100 percent of the weighted average of 
all local purchase prices for the item computed under 
such subparagraph for the year, and may not be less 
than 85 percent of the weighted average of all local 
purchase prices for the item computed under such 
subparagraph for the year; and 
"(ii) for each subsequent year, equal to the amount 
determined under this subparagraph for the preceding 
year increeised bv the covered item update for such 
subsequent year. ; 
(C) in subparagraph (C)— 
(i) by striking "regional purchase price" each place it 
appears and inserting 
national limited purchase 
price", 
(ii) by striking "and subject to subparagraph (D)", 
104 STAT. 1388-76 
PUBLIC LAW 101-508—NOV. 5, 1990 
(iii) in clause (ii)— 
(I) by striking "75" and inserting "67"; and 
(II) by striking "25" and inserting "33", and 
(iv) in clause (iii)— 
(I) in subclause (I), by striking "50" and inserting 
"33" and by striking "(A)(ii)(II)" and inserting 
"(A)(ii)(III)"; and 
(II) in subclause (II), by striking "50" and insert-
ing "67"; and 
(D) by striking subparagraph (D). 
(3) OXYGEN AND OXYGEN EQUIPMENT.—Section 1834(a)(9) of 
such Act (42 U.S.C. 1395m(a)(9)) is amended— 
(A) in subparagraph (A)(ii)(II), by striking "the percentage 
increase" and all that follows through the period and 
inserting "the covered item increase for the year."; 
(B) by amending subparagraph (B) to read as follows: 
"(B) COMPUTATION OF NATIONAL LIMITED MONTHLY PAY-
MENT RATE.—With respect to the furnishing of an item in a 
year, the Secretary shall compute a national limited 
monthly payment rate equal to— 
' (i) for 1991, the local monthly payment rate com-
puted under subparagraph (A)(ii)(II) for the item for the 
year, except that such national limited monthly pay-
ment rate may not exceed 100 percent of the weighted 
average of all local monthly payment rates computed 
for the item under such subparagraph for the year, and 
may not be less than 85 percent of the weighted aver-
age of all local monthly payment rates computed for 
the item under such subparagraph for the year; and 
"(ii) for each subsequent year, equal to the amount 
determined under this subparagraph for the preceding 
year increased bv the covered item update for such 
subsequent year. ; 
(C) in subparagraph (C)— 
(i) by striking "regional monthly pajnnent rate" each 
place it appears and inserting "national limited 
monthly payment rate", 
(ii) in clause (ii)— 
(I) by striking "75" and inserting "67"; and 
(II) by striking "25" and inserting "33", and 
(iii) in clause (iii)— 
(I) in subclause (I), by striking "50" and inserting 
"33"; and 
(II) in subclause (II), by striking "50" and insert-
ing "67" and by striking "(B)(i)" and inserting 
"(B)(ii)"; and 
(D) by striking subparagraph (D). 
(4) DEFINITION.—Section 1834(a) (42 U.S.C. 1395m(a)) is 
amended by adding at the end the following new paragraph: 
"(14) COVERED ITEM UPDATE.—In this subsection, the term 
'covered item update' means, with respect to a year— 
"(A) for 1991 and 1992, ^^ reduction of 1 percentage point; 
and 
"(B) for a subsequent year, the percentage increase in the 
consumer price index for all urban consumers (U.S. city 
average) for the 12-month period ending with June of the 
previous year.". 
" So in original. Probably should be "a reduction". 
^.ItpwHIH.*-' «. »^--l^i;--, .^ 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-77 
(5) CONFORMING AMENDMENT.—Section 1834(a)(12) (42 U.S.C. 
1395m(a)(12)) is amended by striking "defined for purposes of 
paragraphs (8)(B) and (9)(B)". 
(c) TREATMENT OF "RENTAL CAP" ITEMS.— 
(1) LIMITATION ON MONTHLY RECOGNIZED RENTAL AMOUNTS FOR 
MISCELLANEOUS ITEMS.—Section 
1834(a)(7)(A)(i) (42 U.S.C. 
1395m(a)(7)(A)(i)) is amended— 
(A) by striking "for each such month" and inserting "for 
each of the first 3 months of such period"; and 
(B) by striking the semicolon at the end and inserting the 
following: ", and for each of the remaining months of such 
period is 7.5 percent of such purchase price;". 
(2) OFFER OF OPTION TO PURCHASE FOR MISCELLANEOUS ITEMS; 
ESTABLISHMENT OF REASONABLE LIFETIME.—SectioU 1834(a)(7) o f 
such Act (42 U.S.C. 1395m(a)(7)(A)) is amended— 
(A) in subparagraph (A)(i), by striking "15 months" and 
inserting "15 months, or, in the case of an item for which a 
purchase agreement has been entered into under clause 
(iii), a period of continuous use of longer than 13 months"; 
(B) in subparagraph (A)(ii)— 
(i) by striking "(ii) during the succeeding 6-month 
period of medical need," and inserting "(iv) in the case 
of an item for which a purchase agreement has not 
been entered into under clause (ii) or clause (iii), during 
the first 6-month period of medical need that follows 
the period of medical need during which payment is 
made under clause (i),", and 
(ii) by striking "and" at the end; 
(C) in subparagraph (A)(iii)— 
(i) by striking "(iii)" and inserting "(v) in the case of 
an item for which a purchase agreement has not been 
entered into under clause (ii) or clause (iii),", and 
(ii) by striking the period at the end and insert-
ing "; and"; 
(D) by inserting after clause (i) of subparagraph (A) the 
following new clauses: 
"(ii) in the case of a power-driven wheelchair, at the 
time the supplier furnishes the item, the supplier shall 
offer the individual patient the option to purchase the 
item, and payment for such item shall be made on a 
lump-sum basis if the patient exercises such option; 
"(iii) during the 10th continuous month during which 
payment is made for the rental of an item under clause 
(i), the supplier of such item shall offer the individual 
patient the option to enter into a purchase agreement 
under which, if the patient notifies the supplier not 
later than 1 month after the supplier makes such offer 
that the patient agrees to accept such offer and exer-
cise such option— 
"(I) the supplier shall transfer title to the item to 
the individual patient on the first day that begins 
after the 13th continuous month during which pay-
ment is made for the rental of the item under 
clause (i), 
"(II) after the supplier transfers title to the item 
under subclause (I), maintenance and servicing 
104 STAT. 1388-78 
PUBLIC LAW 101-508—NOV. 5, 1990 
payments shall be made in accordance with clause 
(V);"; 
(E) by inserting after clause (v) of subparagraph (A) (as 
amended by subparagraph (C)) the following new clause: 
"(vi) in the case of an item for which a purchase 
agreement has been entered into under clause (ii) or 
clause (iii), maintenance and servicing payments may 
be made (for parts and labor not covered by the suppli-
er's or manufacturer's warranty, as determined by the 
Secretary to be appropriate for the particular type of 
durable medical equipment), and such payments shall 
be in an amount established by the Secretary on the 
basis of reasonable charges in the locality for mainte-
nance and servicing."; and 
(F) by adding at the end the following new subparagraph: 
"(C) REPLACEMENT OF ITEMS.— * 
"(i) ESTABLISHMENT OF REASONABLE USEFUL LIFE-
TIME.—In accordance with clause (iii), the Secretary 
shall determine and establish a reasonable useful life-
time for items of durable medical equipment for which 
payment may be made under this paragraph or para-
graph (3). 
"(ii) 
PAYMENT 
FOR 
REPLACEMENT ITEMS.—If 
the 
reasonable lifetime of such an item, as so established, 
has been reached during a continuous period of medical 
need, or the carrier determines that the item is lost or 
irreparably damaged, the patient may elect to have 
payment for an item serving as a replacement for such 
item made— 
"(I) on a monthly basis for the rental of the 
replacement item in accordance with subpara-
graph (A); or 
"(II) in the case of an item for which a purchase 
agreement has been entered into under subpara-
graph (A)(ii) or (A)(iii), in a lump-sum amount for 
the purchase of the item, 
"(iii) LENGTH OF REASONABLE USEFUL LIFETIME.—The 
reasonable useful lifetime of an item of durable medi-
cal equipment under this subparagraph shall be equal 
to 5 years, except that, if the Secretary determines 
that, on the basis of prior experience in making pay-
ments for such an item under this title, a reasonable 
useful lifetime of 5 years is not appropriate with re-
spect to a particular item, the Secretary shall establish 
an alternative reasonable lifetime for such item.". 
(3) APPLICATION OF REASONABLE USEFUL LIFETIME FOR ITEMS 
REQUIRING 
FREQUENT 
AND SUBSTANTIAL SERVICING.—Soction 
1834(a)(3) (42 U.S.C. 1395m(a)(3)), as amended by subsection 
(b)(1), is further amended by adding at the end the following 
new subparagraph: 
"(D) REPLACEMENT OF ITEMS.—If the reasonable useful 
lifetime of such an item, as established under paragraph 
(7)(C), has been reached during a continuous period of 
medical need, or the Secretary determines on the basis of 
investigation by the carrier that the item is lost or irrep-
arably damaged, payment for an item serving as a replace-
ment for such item shall be made on a monthly basis for the 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-79 
rental of the replacement item in accordance with subpara-
graph (A).". 
(4) TREATMENT OF POWER-DRIVEN WHEELCHAIRS AS MISCELLANE-
OUS ITEMS OF DURABLE MEDICAL EQUIPMENT.— 
(A) IN GENERAL.—Section 
1834(a)(2)(A) (42 U.S.C. 
1395m(a)(2)(A)) is amended— 
(i) in clause (i), by inserting "or" at the end; 
(ii) in clause (ii), by striking "or" at the end; and 
(iii) by striking clause (iii). 
(B) CRITERIA FOR TREATMENT OF WHEELCHAIR AS CUS-
TOMIZED ITEM.—(i) Section 1834(a)(4) (42 U.S.C. 1395m(a)(4)) 
is amended by adding at the end the following: "In the case 
of a wheelchair furnished on or after January 1, 1992, the 
wheelchair shall be treated as a customized item for pur-
poses of this paragraph if the wheelchair has been meas-
ured, fitted, or adapted in consideration of the patient's 
body size, disability, period of need, or intended use, and 
has been assembled by a supplier or ordered from a manu-
facturer who makes available customized features, modi-
fications, or components for wheelchairs that are intended 
for an individual patient's use in accordance with instruc-
tions from the patient's physician.". 
(ii) The amendment made by clause (i) shall apply to 
items furnished on or after January 1, 1992, unless the 
Secretary develops specific criteria before that date for the 
treatment of wheelchairs as customized items for purposes 
of section 1834(a)(4) of the Social Security Act (in which case 
the amendment made by such clause shall not become 
effective). 
(d) FREEZE IN REASONABLE CHARGES FOR PARENTERAL AND EN-
TERAL NUTRIENTS, SUPPUES, AND EQUIPMENT DURING 1991.—In 
determining the amount of payment under part B of title XVIII of 
the Social Security Act for enteral and parenteral nutrients, sup-
plies, and equipment furnished during 1991, the charges determined 
to be reasonable with respect to such nutrients, supplies, and equip-
ment may not exceed the charges determined to be reasonable with 
respect to such items for 1990. 
(e) 
REQUIRING 
PRIOR 
APPROVAL FOR POTENTIALLY 
OVERUSED 
ITEMS.—Section 1834(a) (42 U.S.C. 1395m(a)), as amended by subsec-
tion (b), is amended by adding at the end the following new para-
graph: 
"(15) 
CARRIER DETERMINATIONS OF POTENTIALLY OVERUSED 
ITEMS IN ADVANCE.— 
"(A) DEVELOPMENT OF UST OF ITEMS BY SECRETARY.—The 
Secretary shall develop and periodically update a list of 
items for which payment may be made under this subsec-
tion that the Secretary determines, on the basis of prior 
payment experience, are frequently subject to unnecessary 
utilization, and shall include in such list seat-lift mecha-
nisms, transcutaneous electrical nerve stimulators, and 
motorized scooters. 
"(B) DETERMINATIONS OF COVERAGE IN ADVANCE.—A car-
rier shall determine in advance whether payment for an 
item included on the list developed by the Secretary under 
subparagraph (A) may not be made because of the applica-
tion of section 1862(a)(1).". 
42 use 1395m 
note. 
42 use 1395u 
note. 
104 STAT. 1388-80 
PUBLIC LAW 101-508—NOV. 5, 1990 
(f) PROHIBITION AGAINST DISTRIBUTION OF MEDICAL NECESSITY 
FORMS BY SUPPLIERS. 
(1) IN GENERAL.—Section 1834(a) (42 U.S.C. 1395m(a)), as 
amended by subsections (b) and (e), is further amended by 
adding at the end the following new paragraph: 
"(16) 
PROHIBITION AGAINST DISTRIBUTION BY SUPPLIERS OF 
FORMS DOCUMENTING MEDICAL NECESSITY.— 
"(A) IN GENERAL,—A supplier of a covered item under 
this subsection may not distribute to physicians or to 
individuals entitled to benefits under this part for commer-
cial purposes any completed or partially completed forms or 
other documents required by the Secretary to be submitted 
to show that a covered item is reasonable and necessary for 
the diagnosis or treatment of illness or injury or to improve 
the functioning of a malformed body member. 
"(B) PENALTY.—Any supplier of a covered item who 
knowingly and willfully distributes a form or other docu-
ment in violation of subparagraph (A) is subject to a civil 
money penalty in an amount not to exceed $1,000 for each 
such form or document so distributed. The provisions of 
section 1128A (other than subsections (a) and (b)) shall 
apply to civil money penalties under this subparagraph in 
the same manner as they apply to a penalty or proceeding 
under section 1128A(a).". 
42 use 1395m 
(2) EFFECTIVE DATE.—The amendment made by paragraph (1) 
°°*®- 
shall apply to forms and documents distributed on or after 
January 1,1991. 
(g) RECERTIFICATION FOR CERTAIN PATIENTS RECEIVING HOME 
OXYGEN THERAPY SERVICES ^~ 
(1) IN GENERAL.—Section 1834(a)(5) (42 U.S.C. 1395m(a)(5)) is 
amended— 
(A) in subparagraph (A), by striking "(B) and (C)" and 
inserting "(B), (C), and (E)"; and 
(B) by adding at the end the following new subparagraph: 
"(E) 
RECERTIFICATION FOR PATIENTS RECEIVING HOME 
OXYGEN THERAPY.—In the case of a patient receiving home 
oxygen therapy services who, at the time such services are 
initiated, has an initial arterial blood gas value at or above 
a partial pressure of 55 or an arterial oxygen saturation at 
or above 89 percent (or such other values, pressures, or 
criteria as 
Jhe Secretary may specify) no payment may be 
made under this part for such services after the expiration 
of the 90-day period that begins on the date the patient first 
receives such services unless the patient's attending physi-
cian certifies that, on the basis of a follow-up test of the 
patient's arterial blood gas value or arterial oxygen satura-
tion conducted during the final 30 days of such 90-day 
period, there is a medical need for the patient to continue to 
receive such services.". 
42 use 1395m 
(2) EFFECTIVE DATE.—The amendments made by paragraph (1) 
note. 
shall apply to patients who first receive home oxygen therapy 
services on or after January 1,1991. 
(h) TECHNICAL CORRECTIONS.—Effective as if included in the enact-
ment of the Omnibus Budget Reconciliation Act of 1987, section 
42 use 1395f 
4062(e) of such Act is amended— 
note. 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-81 
(1) by inserting "(other than oxygen and oxygen equipment)" 
after "covered items", and 
(2) by inserting before the period at the end the following: 
"and to oxygen and oxygen equipment furnished on or after 
June 1,1989". 
(i) EFFECTIVE DATE.—Except as otherwise provided, the amend- 42 USC 1395m 
ments made by this section shall apply to items furnished on or ^ote. 
after January 1,1991. 
SEC. 4153. PROVISIONS RELATING TO ORTHOTICS AND PROSTHETICS. 
(a) PAYMENTS FOR PROSTHETIC DEVICES AND ORTHOTICS AND 
PROSTHETICS.— 
(1) MAINTAINING CURRENT PAYMENT METHODOLOGY.—Section 
1834 (42 U.S.C. 1395m) is amended by adding at the end the 
following new subsection: 
"(h) 
PAYMENT FOR PROSTHETIC DEVICES AND ORTHOTICS AND 
PROSTHETICS.— 
"(1) GENERAL RULE FOR PAYMENT.— 
"(A) IN GENERAL.—Payment under this subsection for 
prosthetic devices and orthotics and prosthetics shall be 
made in a lump-sum amount for the purchase of the item in 
an amount equal to 80 percent of the payment basis de-
scribed in subparagraph (B). 
"(B) PAYMENT BASIS,—Except as provided in subpara-
graph (C), the payment basis described in this subparagraph 
is the lesser of— 
"(i) the actual charge for the item; or 
"(ii) the amount recognized under paragraph (2) as 
the purchase price for the item. 
"(C) EXCEPTION FOR CERTAIN PUBLIC HOME HEALTH AGEN-
CIES.—Subparagraph (B)(i) shall not apply to an item fur-
nished by a public home health agency (or by another home 
health agency which demonstrates to the satisfaction of the 
Secretary that a significant portion of its patients are low 
income) free of charge or at nominal charges to the public. 
"(D) EXCLUSIVE PAYMENT RULE.—This subsection shall 
constitute the exclusive provision of this title for payment 
for prosthetic devices, orthotics, and prosthetics under this 
part or under part A to a home health agency. 
"(2) PURCHASE PRICE RECOGNIZED.—For purposes of paragraph 
(1), the amount that is recognized under this paragraph as the 
purchase price for prosthetic devices, orthotics, and prosthetics' 
is the amount described in subparagraph (C) of this paragraph, 
determined as follows: 
"(A) COMPUTATION OF LOCAL PURCHASE PRICE.—Each car-
rier under section 1842 shall compute a base local purchase 
price for the item as follows: 
"(i) The carrier shall compute a base local purchase 
price for each item equal to the average reasonable 
charge in the locality for the purchase of the item for 
the 12-month period ending with June 1987. 
"(ii) The carrier shall compute a local purchase price, 
with respect to the furnishing of each particular item— 
"(I) in 1989 and 1990, equal to the base local 
purchase price computed under clause (i) increased 
by the percentage increase in the consumer price 
index for all urban consumers (United States city 
104 STAT. 1388-82 
PUBLIC LAW 101-508—NOV. 5, 1990 
average) for the 6-month period ending with 
December 1987, or 
"(II) in 1991, 1992 or 1993, equal to the local 
purchase price computed under this clause for the 
previous year increased by the applicable percent-
age increase for the year. 
"(B) COMPUTATION OF REGIONAL PURCHASE PRICE.—With 
respect to the furnishing of a particular item in each region 
(as defined by the Secretary), the Secretary shall compute a 
regional purchase price— 
"(i) for 1992, equal to the average (weighted by rel-
ative volume of all claims among carriers) of the local 
purchase prices for the carriers in the region computed 
under subparagraph (A)(ii)(II) for the year, and 
"(ii) for each subsequent year, equal to the regional 
purchase price computed under this subparagraph for 
the previous year increased by the applicable percent-
age increase for the year. 
"(C) PURCHASE PRICE RECOGNIZED.—For purposes of para-
graph (1) and subject to subparagraph (D), the amount that 
is recognized under this paragraph as the purchase price 
for each item furnished— 
"(i) in 1989, 1990, or 1991, is 100 percent of the local 
purchase price computed under subparagraph (A)(ii); 
"(ii) in 1992, is the sum of (I) 75 percent of the local 
purchase price computed under subparagraph (A)(iiXII) 
for 1992, and (II) 25 percent of the regional purchase 
price computed under subparagraph (B) for 1992; 
"(iii) in 1993, is the sum of (I) 50 percent of the local 
purchase price computed under subparagraph (A)(ii)(II) 
for 1993, and (II) 50 percent of the regional purchase 
price computed under subparagraph (B) for 1993; and 
"(iv) in 1994 or a subsequent year, is the regional 
purchase price computed under subparagraph (B) for 
that year. 
"(D) RANGE ON AMOUNT RECOGNIZED.—The amount that is 
recognized under subparagraph (C) as the purchase price 
for an item furnished— 
"(i) in 1992, may not exceed 125 percent, and may not 
be lower than 85 percent, of the average of the pur-
chase prices recognized under such subparagraph for 
all the carrier service areas in the United States in that 
year; and 
"(ii) in a subsequent year, may not exceed 120 per-
cent, and may not be lower than 90 percent, of the 
average of the purchase prices recognized under such 
subparagraph for all the carrier service areas in the 
United States in that year. 
"(3) APPLICABIUTY OF CERTAIN PROVISIONS RELATING TO DURA-
BLE MEDICAL EQUIPMENT.—Paragraph (12) and subparagraphs 
(A) and (B) of paragraph (10) and paragraph (11) of subsection (a) 
shall apply to prosthetic devices, orthotics, and prosthetics in 
the same manner as such provisions apply to covered items 
under such subsection. 
"(4) DEFINITIONS.—In this subsection— 
"(A) the term 'applicable percentage increase' means— 
"(i) for 1991, 0 percent, and 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-83 
"(ii) for a subsequent year, the percentage increase in 
the consumer price index for all urban consumers 
(United States city average) for the 12-month period 
ending with June of the previous year; 
"(B) the term 'prosthetic devices' has the meaning given 
such term in section 1861(s)(8), except that such term does 
not include parenteral and enteral nutrition nutrients, sup-
plies, and equipment; and 
"(C) the term 'orthotics and prosthetics' has the meaning 
given such term in section 1861(s)(9), but does not include 
intraocular lenses or medical supplies (including catheters, 
catheter supplies, ostomy bags, and supplies related to 
ostomy care) furnished by a home health agency under 
section 1861(m)(5).". 
(2) CONFORMING AMENDMENTS.—(A) Section 1832(a)(2) (42 
U.S.C. 1395k(a)(2)) is amended— 
(i) in subparagraphs (A) and (B), by striking "subpara-
graph (G)" each place it appears and inserting "subpara-
graph (G) or subparagraph (I)"; 
(ii) by striking "and" at the end of subparagraph (G); 
(iii) by striking the period at the end of subparagraph (H) 
and inserting "; and"; and 
(iv) by adding at the end the following new subparagraph: 
"(I) prosthetic devices and orthotics and prosthetics (de-
scribed in section 1834(h)(4)) furnished by a provider of 
services or by others under arrangements with them made 
by a provider of services.". 
(B) Section 1833(a)(1) (42 U.S.C. 13951(a)(1) is amended— 
(i) by striking ", and (L)" and inserting ", (L)"; and 
(ii) by striking "subparagraph and (N)" and inserting the 
following: "subparagraph, (M) with respect to prosthetic 
devices and orthotics and prosthetics (as defined in section 
1834(h)(4)), the amounts paid shall be the amounts de-
scribed in section 1834(h)(1), and (N)". 
(C) Section 1833(a) (42 U.S.C. 13951(a)) is amended— 
(i) in paragraph (2), in the matter before subparagraph 
(A), by striking "and (H)" and inserting "(H), and (I)"; 
(ii) by striking "and" at the end of paragraph (5); 
(iii) by striking the period at the end of paragraph (6) and 
inserting "; and'; and 
(iv) by adding at the end the following new paragraph: 
"(7) in the case of prosthetic devices and orthotics and 
prosthetics (as described in section 1834(h)(4)), the amounts 
described in section 1834(h).". 
(D) Section 1834(a) (42 U.S.C. 1395m(a)), is amended— 
(i) in the heading, by striking ", PROSTHETIC DEVICES, 
ORTHOTICS, AND PROSTHETICS"; 
(ii) in paragraph (2)(A), by striking "(13)(A)" and inserting 
"(13)"; and 
(iii) in paragraph (13), by striking "means—" and all that 
follows and inserting the following: "means durable medi-
cal equipment (as defined in section 1861(n)), including such 
equipment described in section 1861(m)(5)). 
(3) EFFECTIVE DATE.—The amendments made by paragraphs 42 USC 1395k 
(1) and (2) shall apply to items furnished on or after January 1, note. 
1991. 
(b) PROVISIONS RELATING TO EYEGLASSES.— 
104 STAT. 1388-84 
PUBLIC LAW 101-508—NOV. 5, 1990 
42 use I395u 
(1) PROHIBITION ON REGULATIONS.—(A) Notwithstanding any 
"°*®- 
other provision of law (except as provided in subparagraph (B)) 
the Secretary of Health and Human Services (referred to in this 
subsection as the "Secretary") may not issue any regulation 
that changes the coverage of conventional eyewear furnished to 
individuals (enrolled under part B of title XVIII of the Social 
Security Act) following cataract surgery with insertion of an 
intraocular lens. 
(B) Paragraph (1) shall not apply to any regulation issued for 
the sole purpose of implementing the amendments made by 
paragraph (2). 
(2) CLARIFYING COVERAGE OF POST-CATARACT EYEGLASSES.—(A) 
Section 1861(s)(8) (42 U.S.C. 1395x(s)(8)) is amended by inserting 
after "such devices" the following ", and including one pair of 
conventional eyeglasses or contact lenses .furnished subsequent 
to each cataract surgery with insertion of an intraocular lens". 
(B) Section 1862(a)(7) (42 U.S.C. 1395y(a)(7)) is amended by 
inserting after "eyeglasses" the first place it appears the follow-
ing: "(other than eyewear described in section 1861(s)(8))". 
42 use 1395x 
(C) The amendments made by subparagraphs (A) and (B) shall 
"°*®- 
apply to items furnished on or after January 1, 1991. 
42 u s e 1395m 
(c) GAO S T U D Y OF MEDICARE PAYMENTS FOR PROSTHETIC DEVICES, 
note. 
ORTHOTICS, AND PROSTHETICS.— 
(1) STUDY.—The Comptroller General shall conduct a study of 
the feasibility and desirability of establishing a separate fee 
schedule for use in determining the amount of payments for 
covered items under section 1834(a) of the Social Security Act 
with respect to suppliers of prosthetic devices, orthotics, and 
prosthetics who provide professional services that would take 
into account the costs to such providers of providing such 
services. 
(2) REPORT.—Not later than 1 year after the date of the 
enactment of this Act, the Comptroller General shall submit a 
report on the study conducted under subparagraph (A) to the 
Committees on Energy and Commerce and Ways and Means of 
the House of Representatives and the Committee on Finance of 
the Senate, and shall include in such report any recommenda-
tions regarding payments for prosthetic devices, orthotics, and 
prosthetics under the medicare program that the Comptroller 
General considers appropriate. 
(d) CLARIFICATION OF COVERAGE OF OSTOMY SUPPLIES.— 
(1) 
IN 
GENERAL.—Section 
1866(a)(l)(P) 
(42 
U.S.C. 
1395cc(a)(l)(P)) is amended by striking "ostomy supplies" and 
inserting "catheters, catheter supplies, ostomy bags, and sup-
plies related to ostomy care". 
42 use 1
3
9
5
C
C 
(2) EFFECTIVE DATE.—The amendment made by paragraph (1) 
"°*®- 
shall take effect as if included in the enactment of the Omnibus 
Budget Reconiliationi* Act of 1989. 
SEC. 4154. CLINICAL DIAGNOSTIC LABORATORY TESTS. 
(a) 
LIMIT 
ON 
ANNUAL 
FEE 
SCHEDULE 
INCREASES.—Section 
1833(h)(2)(A)(ii) (42 U.S.C. 13951(h)(2)(A)(ii)) is amended— 
(1) by striking "any other provision of this subsection" and 
inserting "clause (i)"; 
(2) by striking "and" at the end of subclause (I); 
(3) by striking the period at the end of subclause (II) and 
inserting ", and'; and 
'•* So in original. Probably should be "Reconciliation". 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-85 
(4) by adding at the end the following new subclause: 
"(III) the annual adjustment in the fee schedules determined 
under clause (i) for each of the years 1991, 1992, and 1993 shall 
be 2 percent.". 
(b) REDUCTION IN NATIONAL CAP ON FEE SCHEDULES.— 
(1) IN GENERAL.—Section 1833(h)(4)(B) (42 U.S.C. 13951(h)(4XB)) 
is amended— 
(A) in clause (ii), by striking "and" at the end; 
(B) in clause (iii)— 
(i) by inserting "and before January 1, 1991," after 
"1989,'^', and 
(ii) by striking the period at the end and inserting 
", and"; and 
(C) by adding at the end the following new clause: 
"(iv) after December 31, 1990, is equal to 88 percent of the 
median of all the fee schedules established for that test for that 
laboratory setting under paragraph (1).". 
(2) EFFECTIVE DATE.—The amendments made by paragraph (1) 42 USC 1395/ 
shall apply to tests furnished on or after January 1, 1991. "o*®-
(c) CLARIFICATION OF MANDATORY ASSIGNMENT FOR CLINICAL DIAG-
NOSTIC LABORATORY TESTS PERFORMED BY PHYSICIANS.— 
(1) IN GENERAL.—(A) Section 1833(h)(5)(C) of such Act (42 
U.S.C. 13951(h)(5)(C)) is amended by striking "test performed by 
a laboratory other than a rural health clinic" and inserting 
"test, including a test performed in a physician's office but 
excluding a test performed by a rural health clinic". 
(B) Section 1833(h)(5)(D) of such Act (42 U.S.C. 13951(i)(5)(D)) is 
amended by striking "test performed by a laboratory, other 
than a rural health clinic" and inserting "test, including a test 
performed in a physician's office but excluding a test performed 
by a rural health clinic,". 
(2) EFFECTIVE DATE.—The amendment made by paragraph 42 USC 1395/ 
(1)(A) shall take effect as if included in the enactment of the «
<
>
*
«
. 
Consolidated Omnibus Budget Reconciliation Act of 1985, and 
the amendment made by paragraph (IXB) shall take effect as if 
included in the enactment of the Omnibus Budget Reconcili-
ation Act of 1987. 
(d) AGREEMENTS WITH STATES TO DETERMINE COMPLIANCE OF CLINI-
CAL LABORATORIES WITH PROGRAM REQUIREMENTS.— 
(1) IN GENERAL.—Section 1864(a) (42 U.S.C. 1395aa(a)) is 
amended in the first sentence by striking "1861(s)," and insert-
ing "1861(s) or (in the case of a laboratory that does not partici-
pate or seek to participate in the medicare program) the 
requirements of section 353 of the Public Health Service Act,". 
(2) EFFECTIVE DATE.—The amendment made by paragraph (1) 42 USC 1395aa 
shall take effect as if included in the enactment of the Clinical "°*®-
Laboratory Improvement Amendments of 1988. 
(e) TECHNICAL CORRECTIONS.— 
(1) 
Section 
1833(h)(5XA)(ii) 
of 
such 
Act 
(42 
U.S.C. 
13951(hX5XAXii)) is amended— 
(A) in subclause (II), by striking "a wholly-owned subsidi-
ary o f and inserting "wholly owned by"; 
(B) in subclause (III), by striking "laboratory" and insert-
ing "laboratory (but not including a laboratory described in 
subclause (ID), ; and 
(C) in subclause (III), by striking "submits bills or re-
quests for payment in any year" and inserting "receives 
104 STAT. 1388-86 
PUBLIC LAW 101-508—NOV. 5, 1990 
42 u s e 1395W-2. 
42 u s e 1395/ 
note. 
42 u s e 1395Z 
note. 
42 u s e 1395/ 
note. 
requests for testing during the year in which the test is 
performed". 
(2) The heading of section 1846 of such Act is amended by 
striking "OF" and inserting "OR SUPPLIERS OF". 
(3) Effective as if included in the enactment of the Omnibus 
Budget Reconciliation Act of 1986, section 9339(b) of the Omni-
bus Budget Reconciliation Act of 1986 is amended by striking 
paragraph (3). 
(4) Section 6111(b)(2) of the Omnibus Budget Reconciliation 
Act of 1989 is amended by striking "January 1, 1990" and 
inserting "May 1,1990". 
(5) The amendments made by paragraphs (1)(A)^^ (1)(B), (2), 
and (4) shall take effect as if included in the enactment of the 
Omnibus Budget Reconciliation Act of 1989, and the amend-
ment made by paragraph (1)(C) shall take effect January 1, 
1991. 
SEC. 4155. COVERAGE OF NURSE PRACTITIONERS IN RURAL AREAS. 
(a) IN GENERAL.—Section 1861(s)(2)(K) (42 U.S.C. 1395x(s)(2)(K)) is 
amended— 
(1) in clause (ii), by striking "and" at the end; 
(2) by redesignating clause (iii) as clause (iv); and 
(3) by inserting after clause (ii) the following new clause: 
"(iii) services which would be physicians' services if furnished 
by a physician (as defined in subsection (r)(l)) and which are 
performed by a nurse practitioner or clinical nurse specialist (as 
defined in subsection (aa)(3)) working in collaboration (as de-
fined in subsection (aa)(4)) with a physician (as defined in 
subsection (r)(l)) in a rural area (as defined in section 
1886(d)(2)(D)) which the nurse practitioner or clinical nurse 
specialist is authorized to perform by the State in which the 
services are performed, and such services and supplies fur-
nished as an incident to such services as would be covered under 
subparagraph (A) if furnished as an incident to a physician's 
professional servipe, and". 
(b) PAYMENT,— 
(1) 
DIRECT 
PAYMENT.—Section 
1832(a)(2)(B) 
(42 
U.S.C. 
1395k(a)(2)(B)) is amended— 
(A) in clause (ii), by striking "and" at the end; 
(B) in clause (iii), by striking the semicolon and inserting 
a comma; and 
(C) by adding at the end the following new clause: 
"(iv) services of a nurse practitioner or clinical nurse 
specialist provided in a rural area (as defined in section 
1886(d)(2)(D)); and". 
(2) AMOUNT.—Section 1833(a)(1) (42 U.S.C. 13951(a)(1)) as 
amended by section 4153(a)(2)(B), is amended— 
(A) by striking "and" at the end of subparagraph (K); and 
(B) by inserting after subparagraph (L) the following new 
subparagraph: "(M) with respect to services described in 
section 1861(s)(2)(K)(iii) (relating to nurse practitioner or 
clinical nurse specialist services provided in a rural area), 
the amounts paid shall be 80 percent of the lesser of the 
actual charge or the prevailing charge that would be recog-
nized (or, for services furnished on or after January 1, 1992, 
the fee schedule amount provided under section 1848) if the 
" So in original. Probably should be "(IXA),". 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-87 
services had been performed by a physician (subject to the 
limitation described in subsection (r)(2))". 
^ 
(3) CAP ON PREVAILING CHARGE; BILLING ONLY ON ASSIGNMENT-
RELATED BASIS.—Section 1833 (42 U.S.C. 13951) is amended by 
adding at the end the following new subsection: 
"(r)(l) With respect to services described in section 1861(s)(2)(K)(iii) 
(relating to nurse practitioner or clinical nurse specialist services 
provided in a rural area), payment may be made on the basis of a 
claim or request for payment presented by the nurse practitioner or 
clinical nurse specialist furnishing such services, or by a hospital, 
rural primary care hospital, skilled nursing facility or nursing 
facility (as defined in section 1919(a)), physician, group practice, 
ambulatory surgical center, with which the nurse practitioner or 
clinical nurse specialist has an employment or contractual relation-
ship that provides for payment to be made under this part for such 
services to such hospital, physician, group practice, ambulatory 
surgical center. 
"(2)(A) For purposes of subsection (a)(l)(M), the prevailing charge 
for services described in section 1861(s)(2)(K)(iii) may not exceed the 
applicable percentage (as defined in subparagraph (B)) of the 
prevailing charge (or, for services furnished on or after January 1, 
1992, the fee schedule amount provided under section 1848) deter-
mined for such services performed by physicians who are not 
specialists. 
"(B) In subparagraph (A), the term 'applicable percentage' 
means— 
"(i) 75 percent in the case of services performed in a hospital, 
and 
"(ii) 85 percent in the case of other services. 
"(3)(A) Payment under this part for services described in section 
1861(s)(2)(K)(iii) may be made only on an Eissignment-related basis, 
and any such assignment agreed to by a nurse practitioner or 
clinical nurse specialist shall be binding upon any other person 
presenting a claim or request for payment for such services. 
"(B) Except for deductible and coinsurance amounts applicable 
under this section, any person who knowingly and willfully pre-
sents, or causes to be presented, to an individual enrolled under this 
part a bill or request for payment for services described in section 
1861(s)(2)(K)(iii) in violation of subparagraph (A) is subject to a civil 
money penalty of not to exceed $2,000 for each such bill or request. 
The provisions of section 1128A (other than subsections (a) and (b)) 
shall apply to a civil money penalty under the previous sentence in 
the same manner as such provisions apply to a penalty or proceed-
ing under section 1128A(a). 
"(4) No hospital or rural primary care hospital that presents a 
claim or request for payment under this part for services described 
in section 1861(s)(2)(K)(iii) may treat any uncollected coinsurance 
amount imposed under this part with respect to such services as a 
bad debt of such hospital for purposes of this title.". 
(c) CONFORMING AMENDMENT.—Section 1842(b) (42 U.S.C. 1395u(b)) 
is amended by striking "section 1861(sX2)(K)" each place it appears 
in paragraphs (6) and (12) and inserting "clauses (i), (ii), or (iv) of 
section 1861(s)(2)(K)". 
(d) DEFINITION.—Section 1861(aa)(3) (42 U.S.C. 1395x(aa)(3)) is 
amended by striking "The term" and all that follows through "who 
performs" and inserting the following: "The term 'physician assist-
ant', the term 'nurse practitioner', and the term 'clinical nurse 
104 STAT. 1388-88 
PUBLIC LAW 101-508—NOV. 5, 1990 
specialist' mean, for purposes of this Act, a physician assistant, 
nurse practitioner, or clinical nurse specialist who performs". 
42 use 1395k 
(©) EFFECTIVE DATE.—The amendments made by this section shall 
note. 
apply to services furnished on or after January 1,1991. 
SEC. 4156. COVERAGE OF INJECTABLE DRUGS FOR TREATMENT OF 
OSTEOPOROSIS. 
(a) IN GENERAL.—Section 1861 (42 U.S.C. 1395x) is amended— 
(1) in subsection (s)(2)— 
(A) by striking "and" at the end of subparagraph (M), 
(B) by inserting "and" at the end of subparagraph (N), 
and 
(C) by inserting after subparagraph (N) the following new 
subparagraph: 
"(O) a covered osteoporosis drug and its administration (as 
defined in subsection (jj)) furnished on or after January 1, 1991, 
and on or before December 31,1995; and"; and 
(2) by inserting after subsection (ii) the following new sub-
section: 
"Covered Osteoporosis Drug 
"(jj) The term 'covered osteoporosis drug' means an injectable 
drug approved for the treatment of a bone fracture related to post-
menopausal osteoporosis provided to an individual if, in accordance 
with regulations promulgated by the Secretary— 
"(1) the individual's attending physician certifies that the 
patient is unable to learn the skills needed to self-administer 
such drug or is otherwise physically or mentally incapable of 
self-administering such drug; and 
"(2) the individual is confined to the individual's home (except 
when receiving items and services referred to in subsection 
(m)(7)).". 
42 u s e 1395x 
(b) S T U D Y OF EFFECTS OF COVERAGE.— 
note. 
(1) IN GENERAL.—The Secretary of Health and Human Serv-
ices shall conduct a study analyzing the effects of coverage of 
osteoporosis drugs under part B of title XVIII of the Social 
Security Act (as amended by subsection (a)) on the health of 
individuals enrolled under such part and the utilization of 
inpatient hospital and extended care services by such indi-
viduals. 
(2) REPORT.—By not later than October 1, 1994, the Secretary 
shall submit a report to Congress on the study conducted under 
paragraph (1), and shall include in such report such rec-
ommendations regarding expansion of coverage under the 
medicare program of items and services for individuals with 
post-menopausal osteoporosis as the Secretary considers appro-
priate. 
SEC. 4157. SEPARATE PAYMENT UNDER PART B FOR SERVICES OF CER-
TAIN HEALTH PRACTITIONERS. 
(a) SERVICES OF CERTAIN HEALTH PRACTITIONERS NOT TO BE IN-
CLUDED IN INPATIENT HOSPITAL SERVICES.—Section 1861(b) (42 U.S.C. 
1395x(b)) is amended— 
(1) in paragraph (3), by striking "(including clinical psycholo-
gist (as defined by the Secretary))", and 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-89 
(2) in paragraph (4), by striking everything after "intern" and 
inserting ", services described by subsection (s)(2)(K)(i), certified 
nurse-midwife services, qualified psychologist services, and serv-
ices of a certified registered nurse anesthetist; and". 
(b) TREATMENT OF SERVICES FURNISHED IN INPATIENT SETTING.— 
Section 1832(a)(2)(B)(iii) (42 U.S.C. 1395k(a)(2)(B)(iii)) is amended to 
read as follows: 
"(iii) services described by section 1861(s)(2)(K)(i), cer-
tified nurse-midwife services, qualified psychologist 
services, and services of a certified registered nurse 
anesthetist;". 
(c) CONFORMING AMENDMENTS.— 
(1) Section 1862(a)(14) (42 U.S.C. 1395y) is amended— 
(A) by striking "or are services of a certified registered 
nurse anesthetist", and 
(B) by inserting after "this paragraph)" a comma and the 
following: "services described by section 1861(s)(2)(K)(i), 
certified nurse-midwife services, qualified psychologist serv-
ices, 
and 
services 
of 
a 
certified 
registered 
nurse 
(2) 
The 
matter 
in 
section 
1866(a)(1)(H) 
(42 
U.S.C. 42USCl395cc. 
1395x(a)(l)(H)) preceding clause (i) is amended by inserting after 
"and other than" the following: "services described by section 
1861(s)(2)(K)(i), 
certified 
nurse-midwife 
services, 
qualified 
psychologist services, and". 
(d) EFFECTIVE DATE.—The amendments made by the preceding 
subsections apply to services furnished on or after January 1, 1991. 
SEC. 4158. REDUCTION IN PAYMENTS UNDER PART B DURING FINAL 2 
MONTHS OF 1990. 
(a) IN GENERAL.—Notwithstanding any other provision of law 
(including any other provision of this Act, other than subsection 
(b)(4)), payments under part B of title XVIII of the Social Security 
Act for items and services furnished during the period beginning on 
November 1, 1990, and ending on December 31, 1990, shall be 
reduced by 2 percent, in accordance with subsection (b). 
(b) SPECIAL RULES FOR APPLICATION OF REDUCTION.— 
(1) PAYMENT ON THE BASIS OF COST REPORTING PERIODS.—In the 
case in which payment for services of a provider of services is 
made under part B of such title on a basis relating to the 
reasonable cost incurred for the services during a cost reporting 
period of the provider, the reduction made under subsection (a) 
shall be applied to payment for costs for such services incurred 
at any time during each cost reporting period of the provider 
any part of which occurs during the period described in such 
subsection, but only in the same proportion as the fraction of 
the cost reporting period that occurs during such period. 
(2) No INCREASE IN BENEFICIARY CHARGES IN ASSIGNMENT-
RELATED CASES.—If a reduction in payment amounts is made 
under subsection (a) for items or services for which payment 
under part B of such title is made on an assignment-related 
basis (as defined in section 1842(i)(l) of the Social Security Act), 
the person furnishing the items or services shall be considered 
to have accepted payment of the reasonable charge for the items 
or services, less any reduction in payment amount made under 
subsection (a), as payment in full. 
42 use 1395k 
note. 
42 use 1395/ 
note. 
104 STAT. 1388-90 
PUBLIC LAW 101-508—NOV. 5, 1990 
(3) 
TREATMENT 
OF PAYMENTS 
TO HEALTH 
MAINTENANCE 
ORGANIZATIONS.—Subsection (a) shall not apply to payments 
under risk-sharing contracts under section 1876 of the Social 
Security Act or under similar contracts under section 402 of the 
Social Security Amendments of 1967 or section 222 of the Social 
Security Amendments of 1972. 
42 u s e 1395WW 
SEC. 4159. PAYMENTS FOR MEDICAL EDUCATION COSTS. 
(a) HOSPITAL GRADUATE MEDICAL EDUCATION RECOUPMENT.— 
(1) IN GENERAL.—The Secretary of Health and Human Serv-
ices may not, before October 1, 1991, recoup payments from a 
hospital because of alleged overpayments to such hospital under 
part B of title XVIII of the Social Security Act due to a 
determination that the amount of payments .made for graduate 
medical education programs exceeds the amount allowable 
under section 1886(h). 
(2) CAP ON ANNUAL AMOUNT OF RECOUPMENT.—With respect to 
overpayments to a hospital described in paragraph (1), the 
Secretary may not recoup more than 25 percent of the amount 
of such overpayments from the hospital during a fiscal year. 
(3) EFFECTIVE DATE.—Paragraphs (1) and (2) shall take effect 
October 1,1990. 
(b) UNIVERSITY HOSPITAL NURSING EDUCATION.— 
(1) IN GENERAL.—The reasonable costs incurred by a hospital 
(or by an educational institution related to the hospital by 
common ownership or control) during a cost reporting period for 
clinical training (as defined by the Secretary) conducted on the 
premises of the hospital under approved nursing and allied 
health education programs that are not operated by the hospital 
shall be allowable as reasonable costs under part B of title 
XVIII of the Social Security Act and reimbursed under such 
part on a pass-through basis. 
(2) CONDITIONS FOR REIMBURSEMENT.—The reasonable costs 
incurred by a hospital during a cost reporting period shall be 
reimbursable pursuant to paragraph (1) only i
f
— 
(A) the hospital claimed and was reimbursed for such 
costs during the most recent cost reporting period that 
ended on or before October 1,1989; 
(B) the proportion of the hospital's total allowable costs 
that is attributable to the clinical training costs of the 
approved program, and allowable under (b)(1) during the 
cost reporting period does not exceed the proportion of total 
allowable costs that were attributable to clinical training 
costs during the cost reporting period described in subpara-
graph (A); 
(C) the hospital receives a benefit for the support it 
furnishes to such program through the provision of clinical 
services by nursing or allied health students participating 
in such program; and 
(D) the costs incurred by the hospital for such program do 
not exceed the costs that would be incurred by the hospital 
if it operated the program itself. 
(3) 
PROHIBITION AGAINST RECOUPMENT OF COSTS BY SEC-
RETARY.— 
(A) IN GENERAL.—The Secretary of Health and Human 
Services may not recoup payments from (or otherwise 
reduce or adjust payments under part B of title XVIII of the 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-91 
Social Security Act to) a hospital because of alleged over-
payments to such hospital under such title due to a deter-
mination that costs which were reported by the hospital on 
its medicare cost reports for cost reporting periods begin-
ning on or after October 1, 1983, and before October 1, 1990, 
relating to approved nursing and allied health education 
programs did not meet the requirements for allowable nurs-
ing and allied health education costs (as developed by the 
Secretary pursuant to section 1861(v) of such Act). 
(B) REFUND OF AMOUNTS RECOUPED.—If, prior to the date 
of the enactment of this Act, the Secretary has recouped 
payments from (or otherwise reduced or adjusted payments 
under part B of title XVIII of the Social Security Act to) a 
hospital because of overpayments described in subpara-
graph (A), the Secretary shall refund the amount recouped, 
reduced, or adjusted from the hospital. 
(4) SPECIAL AUDIT TO DETERMINE COSTS.—In determining the 
amount of costs incurred by, claimed by, and reimbursed to, a 
hospital for purposes of this subsection, the Secretary shall 
conduct a special audit (or use such other appropriate mecha-
nism) to ensure the accuracy of such past claims and payments. 
(5) EFFECTIVE DATE.—Except as provided in paragraph (3), the 
provisions of this subsection shall apply to cost reporting peri-
ods beginning on or after October 1,1990. 
SEC. 4160. CERTIFIED REGISTERED NURSE ANESTHETISTS. 
Section 1833(1) (42 U.S.C. 13951) is amended— 
(1) in paragraph (1)— 
(A) by inserting "(A)" after "(1)"; and 
(B) by adding at the end the following: 
"(B) In establishing the fee schedule under this paragraph the 
Secretary may utilize a system of time units, a system of base and 
time units, or any appropriate methodology. 
"(C) The provisions of this subsection shall not apply to certain 
services furnished in certain hospitals in rural areas under the 
provisions of section 9320(k) of the Omnibus Budget Reconciliation 
Act of 1986, £is amended by section 6132 of the Omnibus Budget 
Reconciliation Act of 1989."; 
(2) by striking the second sentence of paragraph (2); and 
(3) by striking paragraph (4) and inserting the following: 
"(4)(A) Except as provided in subparagraphs (C) and (D), in deter-
mining the amount paid under the fee schedule under this subsec-
tion for services furnished on or after January 1, 1991, by a certified 
registered nurse anesthetist who is not medically directed— 
"(i) the conversion factor shall be— 
"(I) for services furnished in 1991, $15.50, 
"(II) for services furnished in 1992, $15.75, 
"(III) for services furnished in 1993, $16.00, 
"(IV) for services furnished in 1994, $16.25, 
"(V) for services furnished in 1995, $16.50, 
"(VI) for services furnished in 1996, $16.75, and 
"(VII) for services furnished in calendar years after 1996, 
the previous year's conversion factor increased by the 
update determined under section 1848(d)(3) for physician 
anesthesia services for that year; 
"(ii) the payment areas to be used shall be the fee schedule 
areas used under section 1848 (or, in the case of services fur-
104 STAT. 1388-92 
PUBLIC LAW 101-508—NOV. 5, 1990 
nished during 1991, the localities used under section 1842(b)) for 
purposes of computing payments for physicians' services that 
are anesthesia services; 
"(iii) the geographic adjustment factors to be applied to the 
conversion factor under clause (i) for services in a fee schedule 
area or locality is— 
"(I) in the case of services furnished in 1991, the geo-
graphic work index value and the geographic practice cost 
index value specified in section 1842(q)(l)(B) for physicians' 
services that are anesthesia services furnished in the area 
or locality, and 
"(II) in the case of services furnished after 1991, the 
geographic work index value, the geographic practice cost 
index value, and the geographic malpractice index value 
used for determining payments for physicians' services that 
are anesthesia services under section 1848, 
with 70 percent of the conversion factor treated as attributable 
to work and 30 percent as attributable to overhead for services 
furnished in 1991 (and the portions attributable to work, prac-
tice expenses, and malpractice expenses in 1992 and thereafter 
being the same as is applied under section 1848). 
"(B)(i) Except as provided in clause (ii) and subparagraph (D), in 
determining the amount paid under the fee schedule under this 
subsection for services furnished on or after January 1, 1991, by a 
certified registered nurse anesthetist who is medically directed, the 
Secretary shall apply the same methodology specified in subpara-
graph (A). 
"(ii) The conversion factor used under clause (i) shall be— 
"(I) for services furnished in 1991, $10.50, 
"(II) for services furnished in 1992, $10.75, 
"(III) for services furnished in 1993, $11.00, 
"(IV) for services furnished in 1994, $11.25, 
"(V) for services furnished in 1995, $11.50, 
"(VI) for services furnished in 1996, $11.70, and 
"(VII) for services furnished in calendar years after 1997, the 
previous year's conversion factor increased by the update deter-
mined under section 1848(d)(3) for physician anesthesia services 
for that year. 
"(C) Notwithstanding subclauses (I) through (V) of subparagraph 
(A)(i)-
"(i) in the case of a 1990 conversion factor that is greater than 
$16.50, the conversion factor for a calendar year after 1990 and 
before 1996 shall be the 1990 conversion factor reduced by the 
product of the last digit of the calendar year and one-fifth of the 
amount by which the 1990 conversion factor exceeds $16.50; and 
"(ii) in the case of a 1990 conversion factor that is greater 
than $15.49 but less than $16.51, the conversion factor for a 
calendar year after 1990 and before 1996 shall be the greater 
of— 
"(I) the 1990 conversion factor, or 
"(II) the conversion factor specified in subparagraph (A)(i) 
for the year involved. 
"(D) Notwithstanding subparagraph (C), in no case may the 
conversion factor used to determine payment for services in a fee 
schedule area or locality under this subsection, as adjusted by the 
adjustment factors specified in subparagraphs (A)(iii), exceed the 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-93 
conversion factor used to determine the amount paid for physicians' 
services that are anesthesia services in the area or locality.". 
SEC. 4161. COMMUNITY HEALTH CENTERS AND RURAL HEALTH CLINICS. 
(a) COMMUNITY HEALTH CENTERS.— 
(1) COVERAGE.—Section 1861(s)(2)(E) of the Social Security Act 
(42 U.S.C. 1395x(s)(2)(E)) is amended by inserting "and Federally 
qualified health center services" after "rural health clinic 
services". 
(2) SERVICES DEFINED.—Section 1861(aa) of such Act is 
amended— 
(A) in the heading, by adding at the end the following: 
"and Federally Qualified Health Center Services", 
(B) in paragraph (3), by striking "paragraphs (1) and (2)" 
and inserting "the previous provisions of this subsection" 
and by redesignating such paragraph and paragraph (4) as 
paragraph (5) and (6), respectively, and 
(C) by inserting after paragraph (2) the following new 
paragraphs: 
"(3) The term 'Federally qualified health center services' means— 
"(A) services of the type described in subparagraphs (A) 
through (C) of paragraph (1), and 
"(B) preventive primary health services that a center is re-
quired to provide under sections 329, 330, and 340 of the Public 
Health Service Act, 
when furnished to an individual as an outpatient of a Federally 
qualified health center and, for this purpose, any reference to a 
rural health clinic or a physician described in paragraph (2)(B) is 
deemed a reference to a Federally qualified health center or a 
physician at the center, respectively. 
"(4) The term 'Federally qualified health center' means an entity 
which— 
"(A)(i) is receiving a grant under section 329, 330, or 340 of the 
Public Health Service Act, or 
"(iiXD is receiving funding from such a grant under a contract 
with the recipient of such a grant, and (II) meets the require-
ments to receive a grant under section 329, 330, or 340 of such 
Act; 
"(B) based on the recommendation of the Health Resources 
and Services Administration within the Public Health Service, 
is determined by the Secretary to meet the requirements for 
receiving such a grant; or 
"(C) was treated by the Secretary, for purposes of part B, as a 
comprehensive Federally funded health center as of January 1, 
1990.". 
(3) PAYMENTS.— 
(A) IN GENERAL.—Section 1832(a)(2XD) of such Act (42 
U.S.C. 1395k(a)(2)(D)) is amended by inserting "(i)" after 
"(D)" and by inserting "and (ii) Federally qualified health 
center services" after "rural health clinic services". 
(B) DEDUCTIBLE DOES NOT APPLY.—The first sentence of 
section 1833(b) of such Act (42 U.S.C. 139510))) is amended— 
(i) by striking "and" before "(4)", 
(ii) by inserting before the period at the end the 
following: ", and (5) such deductible shall not apply to 
Federally qualified health center services". 
104 STAT. 1388-94 
PUBLIC LAW 101-508—NOV. 5, 1990 
(C) EXCLUSION FROM PAYMENT REMOVED.—Section 1862(a) 
of such Act (42 U.S.C. 1395y(a)) is amended— 
(i) in paragraph (2), by inserting ", except in the csise 
of Federally qualified health center services" before the 
semicolon at the end, and 
(ii) in paragraph (3), by inserting ", in the case of 
Federally qualified health center services, as defined in 
section 1861(aa)(3)," after "1861(aa)(l),", and 
(iii) by adding at the end the following new sentence: 
"Paragraph (7) shall not apply to Federally qualified health center 
services described in section 1861(aa)(3)(B).". 
(4) 
WAIVER 
OF 
ANTI-KICKBACK 
REQUIREMENT.—Section 
1128B(b)(3) of such Act (42 U.S.C. 1320a-7b(b)(3)) is amended— 
(A) by striking "and" at the end of subparagraph (C), 
(B) by redesignating subparagraph (D) as subparagraph 
(E), and 
(C) by inserting after subparagraph (C) the following new 
subparagraph: 
"(D) a waiver of any coinsurance under part B of title XVIII 
by a Federally qualified health care center with respect to an 
individual who qualifies for subsidized services under a provi-
sion of the Public Health Service Act; and". 
(5) CONFORMING AMENDMENTS.—Section 1861 of such Act (42 
U.S.C. 1395x) is further amended— 
(A) in subsections (s)(2)(H)(i) and (s)(2)(K), by striking 
"subsection (aa)(3)" and "subsection (aa)(4)" each place 
either appears inserting "subsection (aa)(5)" and "subsec-
tion (aa)(6)", respectively, and 
(B) in subsection (aa)(l)(B), by striking "paragraph (3)" 
and inserting "paragraph (5)". 
(6) PRRB REVIEW OF COST REPORTS FOR FEDERALLY QUAUFIED 
HEALTH CENTERS.—Section 1878 of the Social Security Act (42 
U.S.C. 1395oo) is amended by adding at the end the following 
new subsection: 
"(j) In this section, the term 'provider of services' includes a 
Federally qualified health center.". 
42 u s e 254b 
(7) GAO STUDY OF HOSPITAL STAFF PRIVILEGES FOR PHYSICIANS 
PRACTICING IN COMMUNITY HEALTH CENTERS.— 
(A) STUDY.—The Comptroller General shall conduct a 
study of whether physicians practicing in community and 
migrant health centers are able to obtain admitting privi-
leges at local hospitals. The study shall review— 
(i) how many physicians practicing in such centers 
are without hospital admitting privileges or have been 
denied admitting privileges at a local hospital, and 
(i)(I) the criteria hospitals use in deciding whether to 
grant admitting privileges and (II) whether such cri-
teria act as significant barriers to health center physi-
cians obtaining hospital privileges. 
(B) REPORT.—By not later than 18 months after the date 
of the enactment of this Act, the Comptroller General shall 
submit a report on the study under subparagraph (A) to the 
Committees on Ways and Means and Energy and Com-
merce of the House of Representatives and shall include in 
such report such recommendations as the Comptroller Gen-
eral deems appropriate. 
note. 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-95 
(8) EFFECTIVE DATE.—(A) Subject to subparagraphs (B) and (C), 
the amendments made by this section shall apply to services 
furnished on or after October 1,1991. 
(B) In the case of a Federally qualified health care center that 
has elected, as of January 1, 1990, under part B of title XVIII of 
the Social Security Act, to have the amount of payments for 
services under such part determined on a reasonable-charge 
basis, the amendment made by paragraph (3)(A) shall only 
apply on and after such date (not earlier than October 1, 1991) 
as the center may elect. 
(C) The amendment made by paragraph (6) shall apply to cost 
reports for periods beginning on or after October 1,1991. 
(b) RURAL HEALTH CLINIC SERVICES.— 
(1) EXPEDITED CERTIFICATION.—Section 1861(aa)(2) of the Social 
Security Act (42 U.S.C. 1395x(aa)(2)) is amended by adding at 
the end the following: "If a State agency has determined under 
section 1864(a) that a facility is a rural health clinic and the 
facility has applied to the Secretary for certification as such a 
clinic, the Secretary shall notify the facility of the the Sec-
retary's approval or disapproval of the certification not later 
than 60 days after the date of the State agency determination or 
the application (whichever is later).". 
(2) TEMPORARY WAIVER OF STAFFING REQUIREMENTS.—Section 
1861(aa) of such Act, as amended by subsection (a), is further 
amended by adding at the end the following new paragraph: 
"(7XA) The Secretary shall waive for a 1-year period the require-
ments of paragraph (2) that a rural health clinic employ a physician 
assistant, nurse practitioner or certified nurse midwife or that such 
clinic require such providers to furnish services at least 50 percent 
of the time that the clinic operates for any facility that requests 
such waiver if the facility demonstrates that the facility has been 
unable, despite reasonable efforts, to hire a physician assistant, 
nurse practitioner, or certified nurse-midwife in the previous 90-day 
period. 
"(B) The Secretary may not grant such a waiver under subpara-
graph (A) to a facility if the request for the waiver is made less than 
6 months after the date of the expiration of any previous such 
waiver for the facility. 
"(C) A waiver which is requested under this paragraph shall be 
deemed granted unless such request is denied by the Secretary 
within 60 days after the date such request is received.". 
(3) PRODUCTIVITY SCREENS.—In employing any 
screening 
guideline in determining the productivity of physicians, physi-
cian assistants, nurse practitioners, and certified nurse-mid-
wives in a rural health clinic, the Secretary of Health and 
Human Services shall provide that the guideline shall take into 
account the combined services of such staff (and not merely the 
service within each class of practitioner). 
(4) PRRB REVIEW OF COST REPORTS FOR RURAL HEALTH CEN-
TERS.—Section 18780') of the Social Security Act (42 U.S.C. 
1395oo(j)), as added by subsection (a)(6), is amended by inserting 
"a rural health clinic and" after "includes". 
(5) EFFECTIVE DATE.—This subsection shall take effect on Octo-
ber 1, 1991, except that the amendment made by paragraph (4) 
shall apply to cost reports for periods beginning on or after 
October 1,1991. 
42 u s e 1395k 
note. 
42 u s e 1395x 
note. 
42 u s e 1395x 
note. 
104 STAT. 1388-96 
PUBLIC LAW 101-508—NOV. 5, 1990 
SEC. 4162. PARTIAL HOSPITALIZATION IN COMMUNITY MENTAL HEALTH 
CENTERS. 
(a) IN GENERAL.—Section 1861(ff)(3) of the Social Security Act (42 
U.S.C. 1395x(ff)(3)) is amended— 
(1) by striking "(3)" and inserting "(3)(A)"; 
(2) by striking "outpatients" and inserting "outpatients or by 
a community mental health center (as defined in subparagraph 
(B)),"; and 
(3) by adding at the end the following new subparagraph: 
"(B) For purposes of subparagraph (A), the term 'community 
mental health center' means an entity— 
"(i) providing the services described in section 1916(c)(4) of the 
Public Health Service Act; and 
"(ii) meeting applicable licensing or certification require-
ments for community mental health centers in the State in 
which it is located.". 
(b) CONFORMING AMENDMENTS.—(1) Section 1832(a)(2) of such 
Act (42 U.S.C. 1395k(a)(2)) as amended by section 4153(a)(2)(A), is 
amended— 
(A) by striking "and" at the end of subparagraph (H); 
(B) by striking the period at the end of subparagraph (I) 
and inserting "; and"; and 
(C) by adding at the end the following new subparagraph: 
"(J) partial hospitalization services provided by a commu-
nity mental health 
center 
(as described 
in 
section 
1861(ff)(2)(B)).". 
(2) Section 1866(e) of such Act (42 U.S.C. 1395cc(e))) ^^ is 
amended by striking "include a clinic" and all that follows 
through the period and inserting the following: "include— 
"(1) a clinic, rehabilitation agency, or public health agency if, 
in the case of a clinic or rehabilitation agency, such clinic or 
agency meets the requirements of section 1861(p)(4)(A) (or meets 
the requirements of such section through the operation of sec-
tion 1861(g)), or if, in the case of a public health agency, such 
agency meets the requirements of section 1861(p)(4)(B) (or meets 
the requirements of such section through the operation of sec-
tion 1861(g)), but only with respect to the furnishing of out-
patient physical therapy services (as therein defined) or 
(through the operation of section 1861(g)) with respect to the 
furnishing of outpatient occupational therapy services; and 
"(2) a community mental health center (as defined in section 
1861(ff)(3)(B)), but only with respect to the furnishing of partial 
hospitalization services (as described in section 1861(ff)(l)).". 
42 use 1395k 
(c) EFFECTIVE DATE.—The amendments made by subsections (a) 
"°**- 
and (b) shall apply with respect to partial hospitalization services 
provided on or after October 1,1991. 
SEC, 4163. COVERAGE OF SCREENING MAMMOGRAPHY. 
(a) IN GENERAL.—Section 1861 of the Social Security Act (42 U.S.C. 
1395x) is amended— 
(1) in subsection (s)— 
(A) in paragraph (11), by striking all that follows "(bb))" 
and inserting a semicolon, 
(B) in paragraph (12)(C), by striking all that follows 
"area)" and inserting "; and", and 
(C) by inserting after paragraph (12) the following new 
paragraph: 
'• So in original. Probably should be "(e))". 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-97 
"(13) screening mammography (as defined in subsection (jj));"; 
£ind 
(2) by inserting after subsection (ii) the following new sub-
section: 
"Screening Mammography 
"(jj) The term 'screening mammography' mesins a radiologic 
procedure provided to a woman for the purpose of early detection of 
breast cancer and includes a physician's interpretation of the results 
of the procedure.". 
(b) PAYMENT AND COVERAGE.—Section 1834 of such Act (42 U.S.C, 
1395m) is amended— 
(1) in subsection (b)(1)(B), by inserting "and subject to subsec-
tion (c)(1)(A)" after "conversion factors", and 
(2) by inserting after subsection (b) the following new sub-
section: 
"(c) PAYMENTS AND STANDARDS FOR SCREENING MAMMOGRAPHY.— 
"(1) IN GENERAL.—Notwithstanding any other provision of 
this part, with respect to expenses incurred for screening 
mammography (as defined in section 1861(ij))— 
"(A) payment may be made only for screening mammog-
raphy conducted consistent with the frequency permitted 
under paragraph (2); 
"(B) payment may be made only if the screening 
mammography meets the quality standards established 
under paragraph (3); and 
"(C) the amount of the payment under this part shall, 
subject to the deductible established under section 1833(b), 
be equal to 80 percent of the least of— 
"(i) the actual charge for the screening, 
"(ii) the fee schedule established under subsection (b) 
or the fee schedule established under section 1848, 
whichever is applicable, with respect to both the profes-
sional and technical components of the screening 
mammography, or 
"(iii) the limit established under paragraph (4) for the 
screening mammography. 
"(2) FREQUENCY COVERED.— 
"(A) IN GENERAL.—Subject to revision by the Secretary 
under subparagraph (B)— 
"(i) No payment may be made under this part for 
screening mammography performed on a woman under 
35 years of age. 
"(ii) Payment may be made under this part for only 1 
screening mammography performed on a woman over 
34 years of age, but under 40 years of age. 
"(iii) In the case of a woman over 39 years of age, but 
under 50 years of age, who— 
"(I) is at a high risk of developing breast cancer 
(as determined pursuant to factors identified by 
the Secretary), payment may not be made under 
this part for a screening mammography performed 
within the 11 months following the month in 
which a previous screening mammography was 
performed, or 
104 STAT. 1388-98 
PUBLIC LAW 101-508—NOV. 5, 1990 
"(II) is not at a high risk of developing breast 
cancer, payment may not be made under this part 
for a screening mammography performed within 
the 23 months following the month in which a 
previous screening mammography was performed. 
"(iv) In the case of a woman over 49 years of age, but 
under 65 years of age, payment may not be made under 
this part for screening mammography 
performed 
within 11 months following the month in which a 
previous screening mammography was performed. 
"(v) In the case of a woman over 64 years of age, 
payment may not be made for screening mammog-
raphy performed within 23 months following the 
month in which a previous screening mammography 
was performed. 
"(B) REVISION OF FREQUENCY.— 
"(i) REVIEW.—The Secretary, in consultation with the 
Director of the National Cancer Institute, shall review 
periodically the appropriate frequency for performing 
screening mammography, based on age and such other 
factors as the Secretary believes to be pertinent. 
"(ii) REVISION OF FREQUENCY.—The Secretary, taking 
into consideration the review made under clause (i), 
may revise from time to time the frequency with which 
screening mammography may be paid for under this 
subsection, but no such revision shall apply to screen-
ing mammography performed before January 1, 1992. 
"(3) QuAUTY STANDARDS.—The Secretary shall establish 
standards to assure the safety and accuracy of screening 
mammography performed under this part. Such standards shall 
include the requirements that— 
"(A) the equipment used to perform the mammography 
must be specifically designed for mammography and must 
meet radiologic standards established by the Secretary for 
mammography; 
"(B) the mammography must be performed by an individ-
ual who— 
"(i) is licensed by a State to perform radiological 
procedures, or 
"(ii) is certified as qualified to perform radiological 
procedures by such an appropriate organization as the 
Secretary specifies in regulations; 
"(C) the results of the mammography must be interpreted 
by a physician— 
* (i) who is certified as qualified to interpret radiologi-
cal procedures by such an appropriate board as the 
Secretary specifies in regulations, or 
"(ii) who is certified as qualified to interpret screen-
ing mammography procedures by such a program as 
the Secretary recognizes in regulation as assuring the 
qualifications of the individual with respect to such 
interpretation; and 
"(D) with respect to the first screening mammography 
performed on a woman for which payment is made under 
this part, there are satisfactory assurances that the results 
of the mammography will be placed in permanent medical 
records maintained with respect to the woman. 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-99 
"(4) LIMIT.— 
"(A) $55, INDEXED.—Except as provided by the Secretary 
under subparagraph (B), the limit established under this 
paragraph— 
"(i) for screening mammography performed in 1991, 
is $55, and 
"(ii) for screening mammography performed in a 
subsequent year is the limit established under this 
paragraph for the preceding year increased by the 
percentage increase in the MEI for that subsequent 
year. 
"(B) REDUCTION OF LIMIT.—The Secretary shall review 
from time to time the appropriateness of the amount of the 
limit established under this paragraph. The Secretary may, 
with respect to screening mammography performed in a 
year after 1992, reduce the amount of such limit as it 
applies nationally or in any area to the amount that the 
Secretary estimates is required to assure that screening 
mammography of an appropriate quality is readily and 
conveniently available during the year. 
"(C) APPUCATION OF LIMIT IN HOSPITAL OUTPATIENT SET-
TING.—The Secretary shall provide for an appropriate 
allocation of the limit established under this paragraph 
between professional and technical components in the case 
of hospital outpatient screening mammography (and com-
parable situations) where there is a claim for professional 
services separate from the claim for the radiologic proce-
dure. 
"(5) LIMITING CHARGES OF NONPARTICIPATING PHYSICIANS.— 
"(A) IN GENERAL.—In the case of mammography screen-
ing performed on or after January 1, 1991, for which pay-
ment is made under this subsection, if a nonparticipating 
physician or supplier provides the screening to an individ-
ual entitled to benefits under this part, the physician or 
supplier may not charge the individual more than the 
limiting charge (as defined in subparagraph (B), or if less, as 
defined in subsection (b)(5)(B) or as defined in section 
1848(g)(2)). 
"(B) LIMITING CHARGE DEFINED.—In subparagraph (A), the 
term 'limiting charge' means, with respect to screening 
mammography performed— 
"(i) in 1991, 125 percent of the limit established 
under paragraph (4), 
"(ii) in 1992, 120 percent of the limit established 
under paragraph (4), or 
"(iii) after 1992, 115 percent of the limit established 
under paragraph (4). 
"(C) ENFORCEMENT.—If a physician or supplier knowing 
and willfully imposes a charge in violation of subparagraph 
(A), the Secretary may apply sanctions against such physi-
cian or supplier in accordance with section 1842(j)(2).". 
(c) CERTIFICATION OF SCREENING MAMMOGRAPHY QUALITY STAND-
ARDS.— 
(1) Section 1863 of such Act (42 U.S.C. 1395z) is amended by 
inserting "or whether screening mammography meets the 
standards 
established 
under 
section 
1834(c)(3)," 
after 
"1832(a)(2)(F)(i),". 
104 STAT. 1388-100 
PUBLIC LAW 101-508—NOV. 5, 1990 
(2) The first sentence of section 1864(a) of such Act (42 U.S.C. 
1395aa(a)) is amended by inserting before the period the follow-
ing: ", or whether screening mammography meets the stand-
ards established under section 1834(c)(3)". 
(3) Section 1865(a) of such Act (42 U.S.C. 1395bb(a)) is 
amended by inserting "1834(c)(3)," after "1832(a)(2)(F)(i),". 
(d) CONFORMING AMENDMENTS.— 
(1) Section 1833(a)(2)(E) of such Act (42 U.S.C. 13951(a)(2)(E)) is 
amended by inserting ", but excluding screening mammog-
raphy" after "imaging services". 
(2) Section 1862(a) of such Act (42 U.S.C. 1395y(a)) is 
amended— 
(A) in paragraph (1)— 
(i) in subparagraph (A), by striking "subparagraph 
(B), (C), (D), or (E)" and inserting "a succeeding 
subparagraph", 
(ii) in subparagraph (D), by striking "and" at the end, 
(iii) in subparagraph (E), by striking the semicolon at 
the end and inserting ", and", and 
(iv) by adding at the end the following new subpara-
graph: 
"(F) in the case of screening mammography, which is per-
formed more frequently than is covered under section 1834(c)(2) 
or which does not meet the standards established under section 
1834(c)(3), and, in the case of screening pap smear, which is 
performed more frequently than is provided under section 
1861(nn);"; and 
(B) in paragraph (7), by inserting "or under paragraph 
(1)(F)" after "(1)(B)". 
42 use 1395/ 
(e) EFFECTIVE DATE.—The amendments made by this section shall 
^°*®- 
apply to screening mammography performed on or after January 1, 
1991. 
SEC. 4164. MISCELLANEOUS AND TECHNICAL PROVISIONS RELATING TO 
PART B. 
(a) EXTENSION OF DEMONSTRATIONS.— 
(1) 
PREVENTION 
DEMONSTRATIONS.—Section 
9314 
of 
the 
42USC1395b-l 
Consolidated Omnibus Budget Reconciliation Act of 1985, as 
^°^- 
amended by section 9344 of the Omnibus Budget Reconciliation 
Act of 1986, is amended— 
(A) in subsection (a), by striking "4-year" and inserting 
"5-year"; 
(B) in subsection (e)(2), by striking "Not later than five 
years after the date of the enactment of this Act, the 
Secretary shall submit a final report" and inserting "Not 
later than April 1, 1993, the Secretary shall submit an 
interim report"; 
(C) in subsection (e), by adding at the end the following 
new paragraph: 
"(3) Not later than April 1, 1995, the Secretary shall submit a 
final report to those Committees on the demonstration program and 
shall include in the report a comprehensive evaluation of the long-
term effects of the program.". ^'^; 
(D) in subsection (f), by striking "$5,900,000" and insert-
ing "$7,500,000"; and 
'^ So in original. Probably should be "program.";" 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-101 
(E) in subsection (f), by inserting before the period at the 
end the following: "and shall not exceed $3,000,000 for the 
comprehensive evaluation referred to in subsection (e)(3)". 
(2) ALZHEIMER'S DISEASE DEMONSTRATION PROJECTS.—Section 
9342 of the Omnibus Budget Reconciliation Act of 1986 is 42USCl395b-l 
amended— 
"°*®-
(A) in subsection (c)(1), by striking "3 years" and inserting 
"4 years"; 
(B) in subsection (d)(1), by striking "third year" and 
inserting "fourth year"; 
(C) in subsection (f)— 
(i) 
by 
striking 
"$40,000,000" 
and 
inserting 
"$55,000,000", and 
(ii) 
by 
striking 
"$2,000,000" 
and 
inserting 
"$3,000,000". 
(b) DISCLOSURE OF OWNERSHIP.— 
(1) IN GENERAL.—Title XI of the Social Security Act is 
amended by inserting after section 1124 the following new 
section: 
DISCLOSURE REQUIREMENTS FOR OTHER PROVIDERS UNDER PART B OF 
MEDICARE 
"SEC. 1124A. (a) DISCLOSURE REQUIRED TO RECEIVE PAYMENT.—No 
42 use i320a-3. 
payment may be made under part B of title XVIII for items or 
services furnished by any disclosing part B provider unless 
such provider has provided the Secretary with full and complete 
information— 
"(1) on the identity of each person with an ownership or 
control interest in the provider or in any subcontractor (as 
defined by the Secretary in regulations) in which the provider 
directly or indirectly has a 5 percent or more ownership in-
terest; and 
"(2) with respect to any person identified under paragraph (1) 
or any managing employee of the provider— 
"(A) on the identity of any other entities providing items 
or services for which payment may be made under title 
XVIII of the Social Security Act with respect to which such 
person or managing employee is a person with an owner-
ship or control interest at the time such information is 
supplied or at any time during the 3-year period ending on 
the date such information is supplied, and 
"(B) as to whether any penalties, assessments, or exclu-
sions have been assessed against such person or managing 
employee under section 1128,1128A, or 1128B. 
"(b) UPDATES TO INFORMATION SUPPLIED.—A disclosing part B 
provider shall notify the Secretary of any changes or updates to the 
information supplied under subsection (a) not later than 180 days 
after such changes or updates take effect. 
"(c) DEFINITIONS.—For purposes of this section— 
"(1) the term 'disclosing part B provider' means any entity 
receiving payment on an assignment-related basis for furnish-
ing items or services for which payment may be made under 
part B of title XVIII, except that such term does not include an 
entity described in section 1124(a)(2); 
"(2) the term 'managing employee' means, with respect to a 
provider, a person described in section 1126(b); and 
104 STAT. 1388-102 
PUBLIC LAW 101-508—NOV. 5, 1990 
"(3) the term 'person with an ownership or control interest' 
means, with respect to a provider— 
"(A) a person described in section 1124(a)(3), or 
"(B) a person who has one of the 5 largest direct or 
indirect ownership or control interests in the provider.". 
(2) CRIMINAL PENALTY FOR PROVIDING FALSE INFORMATION.— 
Section 1128B(c) of such Act (42 U.S.C. 1320a-7b(c)) is amended 
by striking "health care program" and inserting "health care 
program, or with respect to information required to be provided 
under section 1124A,". 
(3) FAILURE TO PROVIDE INFORMATION AS GROUNDS FOR PERMIS-
SIVE EXCLUSION FROM PROGRAM.—Section 1128(b)(9) of such Act 
(42 U.S.C. 1320a-7(b)(9)) is amended by striking "1124" and 
inserting "1124, section 1124A,". 
(4) EFFECTIVE DATE.—The amendments made by paragraph 
(1), (2), and (3) shall apply with respect to items or services 
furnished on or after— 
(A) January 1, 1993, in the case of items or services 
furnished by a provider who, on or before the date of the 
enactment of this Act, has furnished items or services for 
which payment may be made under part B of title XVIII of 
the Social Security Act; or 
(B) January 1, 1992, in the case of items or services 
furnished by any other provider. 
(c) DIRECTORY OF UNIQUE PHYSICIAN IDENTIFIER NUMBERS.—Not 
later than March 31, 1991, the Secretary of Health and Human 
Services shall publish a directory of the unique physician identifica-
tion numbers of all physicians providing services for which payment 
may be made under part B of title XVIII of the Social Security Act, 
and shall include in such directory the names, provider numbers, 
and billing addressess of all listed physicians. 
42 u s e 1320a-3a 
note. 
42USC1395U 
note. 
PART 3—PROVISIONS RELATING TO PARTS A 
ANDB 
42 u s e 1395rr 
note. 
42 u s e 1395rr 
note. 
SEC. 4201. PROVISIONS RELATING TO END STAGE RENAL DISEASE. 
(a) INCREASE IN COMPOSITE RATES.—Section 9335(a)(1) of the Omni-
bus Budget Reconciliation Act of 1986, as amended by section 
6203(a)(1) of the Omnibus Budget Reconciliation Act of 1989, is 
amended— 
(1) by striking "October 1, 1990," and inserting "December 31, 
1990,"; and 
(2) by inserting after the first sentence the following: "With 
respect to services furnished on or after January 1, 1991, such 
base rate shall be equal to the respective rate in effect as of 
September 30, 1990 (determined without regard to any reduc-
tions imposed pursuant to section 6201 of the Omnibus Budget 
Reconciliation Act of 1989), increased by $1.00.". 
(b) PROP 
AC STUDY ON E S R D COMPOSITE RATES.— 
(1) IN GENERAL.— 
(A) 
STUDY.—The 
Prospective 
Payment 
Assessment 
Commission (in this subsection referred to as the "Commis-
sion") shall conduct a study to determine the costs and 
services and profits associated with various modalities of 
dialysis treatments provided to end stage renal disease 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-103 
patients provided under title XVIII of the Social Security 
Act. 
(B) RECOMMENDATIONS.—Based on information collected 
for the study described in subparagraph (A), the Commis-
sion shall make recommendations to Congress regarding 
the method or methods and the levels at which the pay-
ments made for the facility component of dialysis services 
by providers of service and renal dialysis facilities under 
title XVIII of the Social Security Act should be established 
for dialysis services furnished during fiscal year 1993 and 
the methodology to be used to update such payments for 
subsequent fiscal years. In making 
recommendations 
concerning the appropriate methodology the Commission 
shall consider— 
(i) hemodialysis and other modalities of treatment, 
(ii) the appropriate services to be included in such 
payments, 
(iii) the adjustment factors to be incorporated includ-
ing facility characteristics, such as hospital versus free-
standing facilities, urban versus rural, size and mix of 
services, 
(iv) adjustments for labor and nonlabor costs, 
(v) comparative profit margins for all types of renal 
dialysis providers of service and renal dialysis facilities, 
(vi) adjustments for patient complexity, such as age, 
diagnosis, case mix, and pediatric services, and 
(vii) efficient costs related to high quality of care and 
positive outcomes for all treatment modalities. 
(2) REPORT.—Not later than June 1, 1992, the Commission 
shall submit a report to the Committee on Finance of the 
Senate, and the Committees on Ways and Means and Energy 
and Commerce of the House of Representatives on the study 
conducted under paragraph (1)(A) and shall include in the 
report the recommendations described in paragraph (1)(B), 
taking into account the factors described in paragraph (1)(B). 
(3) ANNUAL REPORT.— The Commission, not later than 
March 1 before the beginning of each fiscal year (beginning with 
fiscal year 1993) shall report its recommendations to the 
Committee on Finance of the Senate and the Committees on 
Ways and Means and Energy and Commerce of the House of 
Representatives on an appropriate change factor which should 
be used for updating payments for services rendered in that 
fiscal year. The Commission in making such report to Congress 
shall consider conclusions and recommendations available from 
the Institute of Medicine. 
(c) PAYMENT RATES FOR ERYTHROPOIETIN.— 
(1) IN GENERAL.—Section 1881(b)(ll) of the Social Security Act 
(42 U.S.C. 1395rr(b)) is amended— 
(A) by striking "(H)" and inserting "(HXA)"; and 
(B) by adding at the end the following new subparagraph: 
"(B) Erythropoietin, when provided to a patient determined to 
have end stage renal disease, shall not be included as a dialysis 
service for purposes of payment under any prospective payment 
amount or comprehensive fee established under this section, and 
payment for such item shall be made separately— 
"(i) in the case of erj^hropoietin provided by a physician, in 
accordance with section 1833; and 
104 STAT. 1388-104 
PUBLIC LAW 101-508—NOV. 5, 1990 
"(ii) in the case of er3d;hropoietin provided by a provider of 
services, renal dialysis facility, or other supplier of home dialy-
sis supplies and equipment— 
"(I) for erythropoietin provided during 1991, in an 
amount equal to $11 per thousand units (rounded to the 
nearest 100 units), and 
"(ID for erythropoietin provided during a subsequent 
year, in an amount determined to be appropriate by the 
Secretary, except that such amount may not exceed the 
amount determined under this clause for the previous year 
increased by the percentage increase (if any) in the implicit 
price deflator for gross national product (as published by 
the Department of Commerce) for the second quarter of the 
preceding year over the implicit price deflator for the 
second quarter of the second preceding year.". 
42 use I395rr 
(2) EFFECTIVE DATE.—The amendments made by paragraph (1) 
°°*®' 
shall apply to er5rthropoietin furnished on or after January 1, 
1991. 
(d) SELF-ADMINISTERED ERYTHROPOIETIN.— 
(1) COVERAGE.—Section 1861(s)(2) (42 U.S.C. 1395x(s)(2)) as 
amended by section 4156(a)(1), is amended— 
(A) by striking "and" at the end of subparagraph (N); 
(B) by adding and" at the end of subparagraph (O); and 
(C) by adding at the end the following new subparagraph: 
"(P) erjrthropoietin for home dialysis patients competent 
to use such drug without medical or other supervision with 
respect to the administration of such drug, subject to meth-
ods and standards established by the Secretary by regula-
tion for the safe and effective use of such drug, and items 
related to the administration of such drug;". 
(2) COVERAGE FOR METHOD II PATIENTS.—Section 1881(b) (42 
U.S.C. 1395rr(b)) is further amended— 
(A) in paragraph (1)— 
(B) by striking "and (B)" and inserting "(B), 18 and 
(C) by striking "equipment." and inserting "equipment, 
and (C) payments to a supplier of home dialysis supplies 
and equipment that is not a provider of services, a renal 
dialysis facility, or a physician for 
self-administered 
erythropoietin as described in section 1861(s)(2)(Q) if the 
Secretary finds that the patient receiving such drug from 
such a supplier can safely and effectively administer the 
drug (in accordance with the applicable methods and stand-
ards established by the Secretary pursuant to such sec-
tion)."; and 
(3) by adding at the end of paragraph (11), as amended by 
subsection (c), the following new subparagraph: 
"(C) The amount payable to a supplier of home dialysis supplies 
and equipment that is not a provider of services, a renal dialysis 
facility, or a physician for erjrthropoietin shall be determined in the 
same manner as the amount payable to a renal dialysis facility for 
such item.". 
42 use 1395x 
(3) EFFECTIVE DATE.—The amendments made by paragraphs 
^°^- 
(1) and (2) shall apply to items and services furnished on or after 
July 1,1991. 
42 use 1395rr 
SEC. 4202. STAFF-ASSISTED HOME DIALYSIS DEMONSTRATION PROJECT. 
(a) ESTABLISHMENT.— 
" So in original. Probably should be " "(B)", ". 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-105 
(1) IN GENERAL.—Not later than 9 months after the date of the 
enactment of this Act, the Secretary of Health and Human 
Services shall establish and carry out a 3-year demonstration 
project to determine whether the services of a home dialysis 
staff 
assistant 
providing 
services 
to 
a 
patient 
during 
hemodialysis treatment at the patient's home may be covered 
under the medicare program in a cost-effective manner that 
ensures patient safety. 
(2) NUMBER OF PARTICIPANTS.—The total number of eligible 
patients receiving services under the demonstration project 
established under paragraph (1) may not exceed 800. 
(b) PAYMENTS TO PARTICIPATING PROVIDERS AND FACILITIES.— 
(1) SERVICES FOR WHICH PAYMENT MAY BE MADE.— 
(A) IN GENERAL.—Under the demonstration project estab-
lished under subsection (a), the Secretary shall make pay-
ments for 3 years under title XVIII of the Social Security 
Act to providers of services (other than a skilled nursing 
facility) or renal dialysis facilities for services of a home 
hemodialysis staff assistant provided to an individual de-
scribed in subsection (c) during hemodialysis treatment at 
the individual's home in an amount determined under 
paragraph (2). 
(B) SERVICES DESCRIBED.—For purposes of subparagraph 
(A), the term "services of a home hemodialysis staff assist-
ant" means— 
(i) technical sissistance with the operation of a 
hemodialysis machine in the patient's home and with 
such patient's care during in-home hemodialysis; and 
(ii) administration of medications within the pa-
tient's home to maintain the patency of the extra 
corporeal circuit. 
(2) AMOUNT OF PAYMENT.— 
(A) IN GENERAL.—Payment to a provider of services or 
renal dialysis facility participating in the demonstration 
project established under subsection (a) for the services 
described in paragraph (1) shall be prospectively deter-
mined by the Secretary, made on a per treatment basis, and 
shall be in an amount determined under subparagraph (B). 
(B) 
DETERMINATION 
OF 
PAYMENT 
AMOUNT.—(i) 
The 
amount of payment made under subparagraph (A) shall be 
the product of— 
(I) the rate determined under clause (ii) with respect 
to a provider of services or a renal dialysis facility; and 
(II) the factor by which the labor portion of the 
composite rate determined under section 1881(b)(7) of 
the Social Security Act is adjusted for differences in 
area wage levels. 
(ii) The rate determined under this clause, with respect to 
a provider of services or renal dialysis facility, shall be 
equal to the difference between— 
(I) two-thirds of the labor portion of the composite 
rate applicable under section 1881(b)(7) of such Act to 
the provider or facility (as adjusted to reflect dif-
ferences in area wage levels), and 
(II) the product of the national median hourly wage 
for a home hemodialysis staff assistant and the na-
tional median time expended in the provision of home 
-194 O - 91 - 17 : QL 3 Part 2 
104 STAT. 1388-106 
PUBLIC LAW 101-508—NOV. 5, 1990 
hemodialysis staff assistant services (taking into ac-
count time expended in travel and predialysis patient 
care), 
(iii) For purposes of clause (ii)(II)— 
(I) the national median hourly wage for a home 
hemodialysis staff assistant and the national median 
average time expended for home hemodialysis staff 
assistant services shall be determined annually on the 
basis of the most recent data available, and 
(II) the national median hourly wage for a home 
hemodialysis staff assistant shall be the sum of 65 
percent of the national median hourly wage for a li-
censed practical nurse and 35 percent of the nationial 
median hourly wage for a registered nurse. 
(C) PAYMENT AS ADD-ON TO COMPOSITE RATE.—The amount 
of payment determined under this paragraph shall be in 
addition to the amount of payment otherwise made to the 
provider of services or renal dialysis facility under section 
1881(b) of such Act. 
(c) INDIVIDUALS EUGIBLE TO RECEIVE SERVICES UNDER PROJECT.— 
(1) IN GENERAL.—An individual may receive services from a 
provider of services or renal dialysis facility participating in the 
demonstration project if— 
(A) the individual is not a resident of a skilled nursing 
facility; 
(B) the individual is an end stage renal disease patient 
entitled to benefits under title XVIII of the Social Security 
Act; 
(C) the individual's physician certifies that the individual 
is confined to a bed or wheelchair and cannot transfer 
themselves from a bed to a chair; 
(D) the individual has a serious medical condition (as 
specified by the Secretary) which would be exacerbated by 
travel to and from a dialysis facility; 
(E) the individual is eligible for ambulance transportation 
to receive routine maintenance dialysis treatments, and, 
based on the individual's medical condition, there is reason-
able expectation that such transportation will be used by 
the individual for a period of at least 6 consecutive months, 
such that the cost of ambulance transportation can reason-
ably be expected to meet or exceed the cost of home 
hemodialysis staff Eissistance as provided under subsection 
(b)(4); and 
(F) no family member or other individual is available to 
provide such assistance to the individual. 
(2) COVERAGE OF INDIVIDUALS CURRENTLY RECEIVING SERV-
ICES.—Any individual who, on the date of the enactment of this 
Act, is receiving staff assistance under the experimental author-
ity provided under section 1881(fX2) of the Social Security Act 
shall be deemed to be an eligible individual for purposes of this 
subsection. 
(3) 
CONTINUATION 
OF COVERAGE 
UPON 
TERMINATION 
OF 
PROJECT.—Notwithstanding any provision of title XVIII of the 
Social Security Act, any individual receiving services under the 
demonstration project established under subsection (a) as of the 
date of the termination of the project shall continue to be 
eligible for home hemodialysis staff assistance after such date 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-107 
under such title on the same terms and conditions as applied 
under the demonstration project. 
(d) QUALIFICATIONS FOR HOME HEMODIALYSIS STAFF ASSISTANTS.— 
For purposes of subsection (b), a home dialysis aide is qualified if the 
aide— 
(1) meets minimum qualifications as specified by the Sec-
retary; and 
(2) meets any applicable qualifications as specified under the 
law of the State in which the home hemodialysis staff assistant 
is providing services. 
(e) REPORTS.— 
(1) INTERIM STATUS REPORT.—Not later than December 1,1992, 
the Secretary shall submit to Congress a preliminary report on 
the status of the demonstration project established under 
subsection (a). 
(2) FINAL REPORT.—Not later than December 31, 1995, the 
Secretary shall submit to Congress a final report evaluating the 
project, and shall include in such report recommendations 
regarding appropriate eligibility criteria and 
cost-control 
mechanisms for medicare coverage of the services of a home 
dialysis aide providing medical assistance to a patient during 
hemodialysis treatment at the patient's home. 
(f) AUTHORIZATION OF APPROPRIATIONS.—The Secretary shall pro-
vide for the transfer from the Federal Supplementary Medical 
Insurance Trust-^und (established under section 1841 of the Social 
Security Act) of not more than the following amounts to carry out 
the demonstration project established under subsection (a) (without 
regard to amounts appropriated in advance in appropriation Acts): 
(1) For fiscal year 1991, $4,000,000. 
(2) For fiscal year 1992, $4,000,000. 
(3) For fiscal year 1993, $3,000,000. 
(4) For fiscal year 1994, $2,000,000. 
(5) For fiscal year 1995, $1,000,000. 
SEC. 4203. EXTENSION OF SECONDARY PAYOR PROVISIONS. 
(a) EXTENSION OF TRANSFER OF DATA.— 
(1) Section 1862(b)(5)(C)(iii) (42 U.S.C. 1395y(b)(5)(C)(iii)) is 
' 
amended by striking "September 30, 1991" and inserting 
"September 30,1995". 
(2) Section 6103(1)(12)(F) of the Internal Revenue Code of 1986 26 USC 6103. 
is amended— 
(A) in clause (i), by striking "September 30, 1991" and 
inserting "September 30,1995'^ 
(B) in clause (ii)(I), by striking "1990" and inserting 
"1994"; and 
(C) in clause (ii)(II), by striking "1991" and inserting 
"1995". 
Qo) EXTENSION OF APPLICATION TO DISABLED BENEFICIARIES.—Sec-
tion 186203)(l)(B)(iii) (42 U.S.C. 1395y(b)(l)(B)(iii)) is amended by 
striking "January 1,1992" and inserting "October 1,1995". 
(c) INDIVIDUALS WITH END STAGE RENAL DISEASE.— 
(1) IN GENERAL.—Section 1862(b)(1)(C) (42 U.S.C. 1395y(b)(l)(C)) 
is amended— 
(A) in clause (i), by striking "during the 12-month period" 
and all that follows and inserting "during the 12-month 
period which begins with the first month in which the 
individual becomes entitled to benefits under part A under 
104 STAT. 1388-108 
PUBLIC LAW 101-508—NOV. 5, 1990 
the provisions of section 226A, or, if earlier, the first month 
in which the individual would have been entitled to benefits 
under such part under the provisions of section 226A if the 
individual had filed an application for such benefits; and" 
(B) in the matter following clause (ii), by adding at the 
end the following: "Effective for items and services fur-
nished on or after February 1, 1991, and on or before 
* 
January 1, 1996, (with respect to periods beginning on or 
after February 1, 1990), clauses (i) and (ii) shall be applied 
by substituting '18-month' for '12-month' each place it 
appears.". 
42 u s e 1395y 
(2) GAO STUDY OF EXTENSION OF SECONDARY PAYER PERIOD.— 
"°*®' 
(A) The Comptroller General shall conduct a study of the impact 
of the application of clause (iii) of section 1862(b)(1)(C) of the 
Social Security Act on individuals entitled to benefits under 
title XVIII of such Act by reason of section 226A of such Act, 
and shall include in such report information relating to— 
(i) the number (and geographic distribution) of such 
individuals for whom medicare is secondary; 
(ii) the amount of savings to the medicare program 
achieved annually by reason of the application of such 
clause; 
(iii) the effect on access to employment, and employment-
based health insurance, for such individuals and their 
family members (including coverage by employment-based 
health insurance of cost-sharing requirements under medi-
care after such employment-based insurance becomes 
secondary); 
(iv) the effect on the amount paid for each dialysis treat-
ment under employment-based health insurance; 
(v) the effect on cost-sharing requirements under employ-
ment-based health insurance (and on out-of-pocket expenses 
of such individuals) during the period for which medicare is 
secondary; 
(vi) the appropriateness of applying the provisions of 
section 1862(b)(1)(C) to all group health plans. 
(B) The Comptroller General shall submit a preliminary 
report on the study conducted under subparagraph (A) to the 
Committees on Ways and Means and Energy and Commerce of 
the House of Representatives and the Committee on Finance of 
the Senate not later than January 1, 1993, and a final report on 
such study not later than January 1,1995. 
26 use 6103 
((J) EFFECTIVE DATE.—The amendments made this subsection shall 
" 
take effect on the date of the enactment of this Act and the 
amendment made by subsection (a)(2)(B) shall apply to requests 
made on or after such date. 
SEC. 4204. HEALTH MAINTENANCE ORGANIZATIONS. 
(a) REGULATION OF INCENTIVE PAYMENTS TO PHYSICIANS.— 
(1) IN GENERAL.—Section 1876(i) (42 U.S.C. 1395mm(i)) is 
amended by adding at the end the following new paragraph: 
"(8)(A) Each contract with an eligible organization under this 
section shall provide that the organization may not operate any 
physician incentive plan (as defined in subparagraph (B)) unless the 
following requirements are met: 
"(i) No specific payment is made directly or indirectly under 
the plan to a physician or physician group as an inducement to 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-109 
reduce or limit medically necessary services provided with re-
spect to a specific individual enrolled with the organization, 
"(ii) If the plan places a physician or physician group at 
substantial financial risk (as determined by the Secretary) for 
services not provided by the physician or physician group, the 
organization— 
"(I) provides stop-loss protection for the physician or 
group that is adequate and appropriate, based on standards 
developed by the Secretary that take into account the 
number of physicians placed at such substantial financial 
risk in the group or under the plan and the number of 
individuals enrolled with the organization who receive serv-
ices from the physician or the physician group, and 
"(II) conducts periodic surveys of both individuals en-
rolled and 
individuals previously enrolled with 
the 
organization to determine the degree of access of such 
individuals to services provided by the organization and 
satisfaction with the quality of such services. 
"(iii) The organization provides the Secretary with descriptive 
information regarding the plan, sufficient to permit the Sec-
retary to determine whether the plan is in compliance with the 
requirements of this subparagraph. 
"(B) In this paragraph, the term 'physician incentive plan' means 
any compensation arrangement between an eligible organization 
and a physician or physician group that may directly or indirectly 
have the effect of reducing or limiting services provided with respect 
to individuals enrolled with the organization.". 
(2) 
PENALTIES.—Section 
1876(i)(6)(A)(vi) 
(42 
U.S.C. 
1395mm(i)(6)(A)(vi)) is amended by striking "(g)(6)(A);" and 
inserting "(g)(6)(A) or paragraph (8);". 
(3) REPEAL OF PROHIBITION.—Section 1128A(b)(l) (42 U.S.C. 
1320a-7a(b)(l)) is amended— 
(A) by striking ", an eligible organization" and all that 
follows through "section 1876,", 
(B) by adding "and" at the end of subparagraph (A), 
(C) by striking subparagraph (B), 
(D) by redesignating subparagraph (C) as subparagraph 
(B), and 
(E) by striking "or organization". 
(4) EFFECTIVE DATE.—The amendments made by paragraphs 
(1) and (2) shall apply with respect to contract years beginning 
on or after January 1, 1992, and the amendments made by 
paragraph (3) shall take effect on the date of the enactment of 
this Act. 
(b) REQUIREMENTS WITH RESPECT TO ACTUARIAL EQUIVALENCE OF 
AAPCC—(1) Not later than January 1, 1992, the Secretary of 
Health and Human Services (in this section referred to as the 
"Secretary") shall submit a proposal to Congress that provides for a 
modified payment method for organizations with a risk contract 
under section 1876(g) of the Social Security Act that is more ac-
curate than the current payment methodology in predicting the 
actual service utilization and annual medical expenditures of the 
beneficiary population enrolled in a specific organization. 
(2) The proposal shall include— 
(A)(i) recommendations on modifying the current adjusted 
average per capita cost formula, by adding predictors of medical 
42 use 1395mm 
note. 
42 u s e 1395mm 
note. 
104 STAT. 1388-110 
PUBLIC LAW 101-508—NOV. 5, 1990 
utilization such as health status adjusters or prior utilization 
measures; or 
(ii) recommendations for a new payment methodology as an 
alternative to the adjusted average per capita cost; 
(B) data to support any recommended changes in payment 
methodology for organizations with risk contracts under section 
1876(g) of the Social Security Act; and 
(C) analysis demonstrating that any proposed or revised pay-
ment methodology under this section is effective in explaining 
at least 15 percent of the variation in health care utilization and 
costs (as determined in consultation with the American Acad-
emy of Actuaries) among individuals enrolled in such organiza-
tions. 
(3) Not later than March 1,1992, the Secretary shall cause to have 
published in the Federal Register a proposed rule providing for the 
implementation of the payment methodology specified in the pro-
posal submitted pursuant to paragraph (1). 
(4) Not later than May 1, 1992, the Comptroller General shall 
review the proposal and recommendations made pursuant to para-
graphs (1) and (2), and shall report to Congress on appropriate 
modifications in such payment methodology. 
(5) Taking into account the recommendations made pursuant to 
paragraph (4), on or after August 1, 1992, the Secretary shall issue a 
final rule implementing a payment methodology that meets the 
requirements of paragraph (1), effective for contract years beginning 
on or after January 1,1993. 
(c) APPLICATION OF NATIONAL COVERAGE DECISIONS.— 
(1) IN GENERAL.—Section 1876(c)(2) (42 U.S.C. 1395mm(c)(2)) is 
amended— 
(A) by redesignating clauses (i) and (ii) and subparagraphs 
(A) and (B) as subclauses (I) and (II) and clauses (i) and (ii), 
respectively; 
(B) by inserting "(A)" after "(2)"; and 
(C) by adding at the end the following new subparagraph: 
"(B) If there is a national coverage determination made in the 
period beginning on the date of an announcement under subsection 
(a)(1)(A) and ending on the date of the next announcement under 
such subsection that the Secretary projects will result in a signif-
cant ^^ change in the costs to the organization of providing the 
benefits that are the subject of such national coverage determina-
tion and that was not incorporated in the determination of the per 
capita rate of payment included in the announcement made at the 
beginning of such period— 
"(i) such determination shall not apply to risk-sharing con-
tracts under this section until the first contract year that begins 
after the end of such period; and 
"(ii) if such coverage determination provides for coverage of 
additional benefits or under additional circumstances, subsec-
tion (a)(3) shall not apply to payment for such additional bene-
fits or benefits provided under such additional circumstances 
until the first contract year that begins after the end of such 
period, 
unless otherwise required by law.". 
(2) CONFORMING AMENDMENT.—Section 1876(a)(6) of such Act 
is amended by striking "subsection (c)(7)" and inserting 
"subsections (c)(2)(B)(ii) and (c)(7)". 
1* So in original. Probably should be "significant". 
*St^'««*' '*" 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-111 
(3) EFFECTIVE DATE.—The amendments made by this subsec-
tion shall apply with respect to national coverage determina-
tions that are not incorporated in the determination of the per 
capita rate of payment for individuals enrolled for 1991 with an 
eligible organization which has entered into a risk-sharing con-
tract under section 1876 of the Social Security Act. 
(d) PAYMENTS FOR SERVICES FURNISHED BY NON-CONTRACT PRO-
VIDERS.— 
(1) IN GENERAL.—Section 1876(j) (42 U.S.C. 1395mm(j)) is 
amended— 
(A) in paragraph (1)(A)— 
(i) by striking "physician" each place it appears and 
inserting "physician or provider of services or renal 
dialysis facility", 
(ii) by striking "physicians' services" and inserting 
"physicians' services or renal dialysis services", and 
(iii) by striking "participation agreement under sec-
tion 1842(h)(1)" and inserting "applicable participation 
agreement", 
(B) in paragraph (2)— 
(i) by striking "physicians' services" each place it 
appears and inserting "physicians' services or renal 
dialysis services", and 
(ii) by striking "which—" and all that follows and 
inserting "which are furnished to an enroUee of an 
eligible organization under this setion ^o by a physi-
cian, provider of services, or renal dialysis facility who 
is not under a contract with the organization.". 
(2) EFFECTIVE DATE.—The amendment made by paragraph (1) 
shall apply with respect to items and services furnished on or 
after January 1,1991. 
(e) RETROACTIVE ENROLLMENT.— 
(1) 
IN 
GENERAL.—Section 
1876(a)(1)(E) 
(42 
U.S.C. 
1395mm(a)(l)(E)) is amended— 
(A) by striking "(E)" and inserting "(E)(i)"; and 
(B) by adding at the end the following new clause: 
"(ii)(I) Subject to subclause (II), the Secretary may make retro-
active adjustments under clause (i) to take into account individuals 
enrolled during the period beginning on the date on which the 
individual enrolls with an eligible organization (which has a risk-
sharing contract under this section) under a health benefit plan 
operated, sponsored, or contributed to, by the individual's employer 
or former employer (or the employer or former employer of the 
individual's spouse) and ending on the date on which the individual 
is enrolled in the plan under this section, except that for purposes of 
making such retroactive adjustments under this clause, such period 
may not exceed 90 days. 
"(II) No adjustment may be made under subclause (I) with respect 
to any individual who does not certify that the organization pro-
vided the individual with the explanation described in subsection 
(c)(3)(E) at the time the individual enrolled with the organization.". 
(2) EFFECTIVE DATE.—The amendments made by paragraph (1) 
shall apply with respect to individuals enrolling with an eligible 
organization (which has a risk-sharing contract under section 
1876 of the Social Security Act) under a health benefit plan 
operated, sponsored, or contributed to, by the individual's em-
42 u s e 1395mm 
note. 
42 u s e 1395mm 
note. 
42 u s e 1395mm 
note. 
^^ So in original. Probably should be "section". 
104 STAT. 1388-112 
PUBLIC LAW 101-508—NOV. 5, 1990 
ployer or former employer (or the employer or former employer 
of the individual's spouse) on or after January 1, 1991. 
42 u s e 1395mm 
(f) S T U D Y OF CHIROPRACTIC SERVICES.— 
^°^- 
(1) The Secretary shall conduct a study of the extent to which 
health maintenance organizations with contracts under section 
1876 of the Social Security Act make available to enroUees 
entitled to benefits under title XVIII of such Act chiropractic 
services that are covered under such title. 
(2) The study shall examine the arrangements under which 
such services are made available and the types of practitioners 
furnishing such services to such enrollees. 
(3) The study shall be based on contracts entered into or 
renewed on or after January 1, 1991, and before January 1, 
1993. 
(4) The Secretary shall issue a final report to the Committees 
on Ways and Means and Energy and Commerce of the House of 
Representatives and the Committee on Finance of the Senate on 
the results of the study not later than January 1, 1993. The 
report shall include recommendations with respect to any legis-
lative and regulatory changes that the Secretary determines are 
necessary to ensure access to such services. 
(g) PROHIBITING CERTAIN EMPLOYER MARKETING ACTIVITIES.— 
(1) IN GENERAL.—Section 1862(b)(3) (42 U.S.C. 1395y(b)(3)) is 
amended by adding at the end the following new subparagraph: 
"(C) PROHIBITION OF FINANCIAL INCENTIVES NOT TO ENROLL 
IN A GROUP HEALTH PLAN.—It is unlawful for an employer or 
other entity to offer any financial or other incentive for an 
individual entitled to benefits under this title not to enroll 
(or to terminate enrollment) under a group health plan 
which would (in the case of such enrollment) be a primary 
plan (as defined in paragraph (2)(A)), unless such incentive 
is also offered to all individuals who are eligible for cov-
erage under the plan. Any entity that violates the previous 
sentence is subject to a civil money penalty of not to exceed 
$5,000 for each such violation. The provisions of section 
1128A (other than the first sentence of subsection (a) and 
other than subsection (b)) shall apply to a civil money 
penalty under the previous sentence in the same manner as 
such provisions apply to a penalty or proceeding under 
section 1128A(a).". 
42 use 1395y 
(2) EFFECTIVE DATE.—The amendment made by paragraph (1) 
"°*®" 
shall apply to incentives offered on or after the date of the 
enactment of this Act. 
SEC. 4205. PEER REVIEW ORGANIZATIONS. 
(a) USE OF CORRECTIVE ACTION PLANS.— 
(1) IN GENERAL.—Section 1156(b)(1) (42 U.S.C. 1320c-5(b)(l)) is 
amended— 
(A) by inserting "and, if appropriate, after the practi-
tioner or person has been given a reasonable opportunity to 
enter into and complete a corrective action plan (which 
may include remedial education) agreed to by the organiza-
tion, and has failed successfully to complete such plan," 
after "concerned,"; and 
(B) by inserting after the second sentence the following: 
"In determining whehter^i a practitioner or person has 
demonstrated an unwillingness or lack of ability substan-
*• So in originid. Probably should be "whether". 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-113 
tially to comply with such obligations, the Secretary shall 
consider the practitioner's or person's willingness or lack of 
ability, during the period before the organization submits 
its report and recommendations, to enter into and success-
fully complete a corrective action plan.". 
(2) EFFECTIVE DATE.—The amendments made by paragraph (1) 
shall apply to initial determinations made by organizations on 
or after the date of the enactment of this Act. 
(b) TREATMENT OF OPTOMETRISTS AND PODIATRISTS.— 
(1) IN GENERAL.—Section 
1154 (42 U.S.C. 1820c-3) is 
amended— 
(A) in subsection (a)(7)(A)(i), by inserting ", optometry, 
and podiatry" after "dentistry"; and 
(B) in 
subsection 
(c), by 
striking 
"or 
dentistry" 
each place it appears and inserting "dentistry, optometry, 
or podiatry". 
(2) EFFECTIVE DATE.—The amendments made by paragraph (1) 
shall apply to contracts entered into or renewed on or after the 
date of the enactment of this Act. 
(c) COORDINATION OF P R O S AND CARRIERS.— 
(1) DEVELOPMENT AND IMPLEMENTATION OF PLAN.—The Sec-
retary of Health and Human Services shall develop and imple-
ment a plan to coordinate the physician review activities of peer 
review organizations and carriers. Such plan shall include— 
(A) the development of common utilization and medical 
review criteria; 
(B) criteria for the targetting of reviews by peer review 
organizations and carriers; and 
(C) improved methods for exchange of information among 
peer review organizations and carriers. 
(2) REPORT.—Not later than January 1, 1992, the Secretary 
shall submit to Congress a report on the development of the 
plan described under paragraph (1) and shall include in the 
report such recommendations for changes in legislation as may 
be appropriate. 
(d) PEER REVIEW NOTICE.— 
(1) NOTICE OF PROPOSED SANCTIONS.— 
(A) REQUIREMENT.—Section 1154(a)(9) (42 U.S.C. 1320c-
3(a)(9)) is amended— 
(i) by inserting "(A)" after "(9)"; and 
(ii) by adding at the end the following: 
"(B) If the organization finds, after notice and hearing, that a 
physician has furnished services in violation of this subsection, 
the organization shall notify the State board or boards respon-
sible for the licensing or disciplining of the physician of its 
finding and decision.". 
(B) DISCLOSURE.—Section 1160(b)(1) (42 U.S.C. 1320c-
9(b)(1)) is amended— 
(i) by striking "and" at the end of subparagraph (B), 
(ii) by adding "and" at the end of subparagraph (C), 
and 
(iii) by adding at the end the following new subpara-
graph: 
"(D) to provide notice to the State medical board in 
accordance with section 1154(a)(9)(B) when the organization 
submits a report and recommendations to the Secretary 
42 u s e 1320C-5 
note. 
42 u s e 1320C-3 
note. 
42 u s e 1320c 
note. 
104 STAT. 1388-114 
PUBLIC LAW 101-508—NOV. 5, 1990 
under section 1156G3)(1) with respect to a physician whom 
the board is responsible for licensing;". 
42 use 1320C-3 
(C) EFFECTIVE DATE.—The amendments made by this 
"°*®- 
paragraph shall apply to notices of proposed sanctions 
issued more than 60 days after the date of the enactment of 
this Act. 
(2) NOTICE TO STATE MEDICAL BOARDS WHEN ADVERSE ACTIONS 
TAKEN BY SECRETARY.— 
(A) IN GENERAL.—Section 1156(b) (42 U.S.C. 1320c-5(b)) is 
amended by adding at the end the following new para-
graph: 
"(6) When the Secretary effects an exclusion of a physician under 
paragraph (2), the Secretary shall notify the State board responsible 
for the licensing of the physician of the exclusion.". 
42 use 1320C-5 
(B) EFFECTIVE DATE.—The amendments made by this 
"°*®- 
paragraph shall apply to sahctions effected more than 60 
days after the date of the enactment of this Act. 
(e) CONFIDENTIALITY OF PEER REVIEW DELIBERATIONS.— 
(1) IN GENERAL.—Section 1160(d) (42 U.S.C. 1320c-9(d)) is 
amended by adding at the end the following: "No document or 
other information produced by such an organization in connec-
tion with its deliberations in making determinations under 
section 1154(a)(1)(B) or 1156(a)(2) shall be subject to subpena or 
discovery in any administrative or civil proceeding; except that 
such an organization shall provide, upon request of a practi-
tioner or other person adversely affected by such a determina-
tion, a summary of the organization's findings and conclusions 
in making the determination.". 
42 use 1320C-9 
(2) EFFECTIVE DATE.—The amendments made by paragraph (1) 
"°**- 
shall apply to all proceedings as of the date of the enactment of 
this Act. 
(f) CLARIFICATION OF LIMITATION ON LIABILITY.—Section 1157(b) (42 
U.S.C. 1320c-6(b)) is amended— 
(1) by inserting "organization having a contract with the 
Secretary under this part and no" after "No", 
(2) by striking "by him", and 
(3) by striking "he has exercised due care" and inserting "due 
care was exercised in the performance of such duty, function, or 
activity". 
(g) MISCELLANEOUS AND TECHNICAL AMENDMENTS RELATING TO 
PEER REVIEW ORGANIZATIONS.— 
(1) CLARIFICATION OF PATIENT NOTIFICATION REQUIREMENTS FOR 
DENIAL OF PAYMENT BY PRO.— 
(A) IN GENERAL.—Section 1154(a)(3)(E) (42 U.S.C. 1320c-
3(a)(3)(E)) is amended— 
(i) by striking "(E)" and inserting "(E)(i)"; 
(ii) by inserting 
after 
"items" the 
following: 
"provided by a physician that were"; 
(iii) by striking "physician and hospital." and insert-
ing "physician."; and 
(iv) by adding at the end the following new clause: 
"(ii) In the case of services or items provided by an entity or 
practitioner other than a physician, the Secretary may sub-
stitute the entity or practitioner which provided the services or 
items for the term 'physician' in the notice described in clause 
(i).". 
note. 
PUBLIC LAW 101-508—NOV. 5,1990 
104 STAT. 1388-115 
(B) EFFECTIVE DATE.—The amendments made by subpara- 
42 USC 1320c-3 
graph (A) shall take effect as if included in the enactment 
°°*®-
of the Omnibus Budget Reconiliation 22 Act of 1989. 
(2) CLARIFICATION OF APPLICATION OF CRITERIA FOR DENIAL OF 
PAYMENT.— 
(A) IN GENERAL.—Section 1154(a)(2) (42 U.S.C. 1320c-
3(a)(2)) is amended by striking the third sentence and 
inserting the following: "The organization shall identify 
cases for which payment should not be made by reason of 
paragraph (1)(B) only through the use of criteria developed 
pursuant to guidelines established by the Secretary.". 
(B) EFFECTIVE DATE.—The amendment made by subpara- f
^ ^SC 1320c-3 
graph (A) shall take effect as if included in the enactment 
of the Consolidated Omnibus Budget Reconciliation Act of 
1985. 
SEC. 4206. MEDICARE PROVIDER AGREEMENTS ASSURING THE IM-
PLEMENTATION OF A PATIENT'S RIGHT TO PARTICIPATE IN 
AND DIRECT HEALTH CARE DECISIONS AFFECTING THE 
PATIENT. 
(a) IN GENERAL.—Section 1866(a)(1) (42 U.S.C. 1395cc(a)(l)) is 
amended— 
(1) in subsection (aXl)— 
(A) by striking "and" at the end of subparagraph (O), 
(B) by striking the period at the end of subparagraph (P) 
and inserting ", and", and 
(C) by inserting after subparagraph (P) the following new 
sulsparagraph: 
"(Q) in the case of hospitals, skilled nursing facilities, home 
health agencies, and hospice programs, to comply with the 
requirement of subsection (f) (relating to maintaining written 
policies and procedures respecting advance directives)."; and 
(2) by inserting after subsection (e) the following new sub-
section: 
"(f)(1) 
For 
purposes 
of subsection 
(a)(l)(Q) and 
sections 
1819(c)(2)(E), 1833(r), 1876(cX8), and 1891(a)(6), the requirement of 
this subsection is that a provider of services or prepaid or eligible 
organization (as the case may be) maintain written policies and 
procedures with respect to all adult individuals receiving medical 
care by or through the provider or organization— 
"(A) to provide written information to each such individual 
concerning— 
"(i) an individual's rights under State law (whether statu-
tory or as recognized by the courts of the State) to make 
decisions concerning such medical care, including the right 
to accept or refuse medical or surgical treatment and the 
right to formulate advance directives (as defined in para-
graph (3)), and 
"(ii) the written policies of the provider or organization 
respecting the implementation of such rights; 
"(B) to document in the individual's medical record whether 
or not the individual has executed an advance directive; 
"(C) not to condition the provision of care or otherwise 
discriminate against an individual based on whether or not the 
individual has executed an advance directive; 
"(D) to ensure compliance with requirements of State law 
(whether statutory or as recognized by the courts of the State) 
** So in original. Probably should be "Reconciliation". 
104 STAT. 1388-116 
PUBLIC LAW 101-508—NOV. 5,1990 
respecting advance directives at facilities of the provider or 
organization; and 
"(E) to provide (individually or with others) for education 
for staff and the community on issues concerning advance 
directives. 
Subparagraph (C) shall not be construed as requiring the provision 
of care which conflicts with an advance directive. 
"(2) The written information described in paragraph (1)(A) shall 
be provided to an adult individual— 
"(A) in the case of a hospital, at the time of the individual's 
admission as an inpatient, 
"(B) in the case of a skilled nursing facility, at the time of the 
individual's admission as a resident, 
"(C) in the case of a home health agency, in advance of the 
individual coming under the care of the agency, 
"(D) in the case of a hospice program, at the time of initial 
receipt of hospice care by the individual from the program, and 
"(E) in the case of an eligible organization (as defined in 
section 1876(b)) or an organization provided payments under 
section 1833(a)(1)(A), at the time of enrollment of the individual 
with the organization. 
"(3) In this subsection, the term 'advance directive' means a 
written instruction, such as a living will or durable power of attor-
ney for health care, recognized under State law (whether statutory 
or as recognized by the courts of the State) and relating to the 
provision of such care when the individual is incapacitated.", 
(b) APPUCATION TO PREPAID ORGANIZATIONS.— 
(1) ELIGIBLE ORGANIZATIONS.—Section 1876(c) of such Act (42 
U.S.C. 1395mm(c)) is amended by adding at the end the follow-
ing new paragraph: 
"(8) A contract under this section shall provide that the eligible 
organization shall meet the requirement of section 1866(f) (relating 
to maintaining written policies and procedures respecting advance 
directives).". 
(2) OTHER PREPAID ORGANIZATIONS.—Section 1833 of such Act 
(42 U.S.C. 13951) is amended by adding at the end the following 
new subsection: 
"(r) The Secretary may not provide for payment under subsection 
(a)(1)(A) with respect to an organization unless the organization 
provides sissurances satisfactory to the Secretary that the organiza-
tion meets the requirement of section 1866(f) (relating to maintain-
ing written policies and procedures respecting advance directives).". 
42 use 1
3
9
5
C
C 
(c) EFFECT ON STATE LAW.—Nothing in subsections (a) and (b) shall 
°°*®- 
be construed to prohibit the application of a State law which allows 
for an objection on the basis of conscience for any health care 
provider or any agent of such provider which, as a matter of 
conscience, cannot implement an advance directive. 
(d) CONFORMING AMENDMENTS.— 
(1) Section 1819(c)(1) of such Act (42 U.S.C. 1395i-3(c)(l)) is 
amended by adding at the end the following new subparagraph: 
"(E) INFORMATION RESPECTING ADVANCE DIRECTIVES.—A 
skilled nursing facility must comply with the requirement 
of section 1866(f) (relating to maintaining written policies 
and procedures respecting advance directives).". 
(2) Section 1891(a) of such Act (42 U.S.C. 1395bbb(a)) is 
amended by adding at the end the following: 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-117 
"(6) The agency complies with the requirement of section 
1866(f) (relating to maintaining written policies and procedures 
respecting advance directives).", 
(e) EFFECTIVE DATES.— 
(1) The amendments made by subsections (a) and (d) shall 
apply with respect to services furnished on or after the first day 
of the first month beginning more than 1 year after the date of 
the enactment of this Act. 
(2) The amendments made by subsection (b) shall apply to 
contracts under section 1876 of the Social Security Act and 
payments under section 1833(a)(1)(A) of such Act as of first day 
of the first month beginning more than 1 year after the date of 
the enactment of this Act. 
SEC. 4027. MISCELLANEOUS AND TECHNICAL PROVISIONS RELATING TO 
PARTS A AND B. 
(a) HOSPITAL AND PHYSICIAN OBUGATIONS WITH RESPECT TO EMER-
GENCY MEDICAL CONDITIONS.— 
(1) PEER REVIEW.—(A) Section 1867(d) (42 U.S.C 1395dd(d)), as 
amended by section 4008(b)(3), is amended by adding at the end 
the following new paragraph: 
"(3) CONSULTATION WITH PEER REVIEW ORGANIZATIONS.—In 
considering allegations of violations of the requirements of this 
section in imposing sanctions under paragraph (1), the Sec-
retary shall request the appropriate utilization and quality 
control peer review organization (with a contract under part B 
of title XI) to assess whether the individual involved had an 
emergency medical condition which had not been stabilized, and 
provide a report on its findings. Except in the case in which a 
delay would jeopardize the health or safety of individuals, the 
Secretary shall request such a review before effecting a sanction 
under paragraph (1) and shall provide a period of at least 60 
days for such review. ^^ 
(B) Section 1154(a) (42 U.S.C. 1320c-4(a)) is amended by adding 
at the end the following new paragraph: 
"(16) The organization shall provide for a review and report to 
the Secretary when requested by the Secretary under section 
1867(d)(3). The organization shall provide reasonable notice of 
the review to the physician and hospital involved. Within the 
time period permitted by the Secretary, the organization shall 
provide a reasonable opportunity for discussion with the physi-
cian and hospital involved, and an opportunity for the physician 
and hospital to submit additional information, before issuing its 
report to the Secretary under such section.". 
(C) The amendment made by subparagraph (A) shall take 
effect on the first day of the first month beginning more than 60 
days after the date of the enactment of this Act. The amend-
ment made by subparagraph (B) shall apply to contracts under 
part B of title XI of the Social Security Act as of the first day of 
the first month beginning more than 60 days after the date of 
the enactment of this Act. 
(2) CIVIL MONETARY PENALTIES.—Section 1867(d)(2)(B) (42 
U.S.C. 1395dd(d)(2)(B)) is amended by striking "knowingly" and 
inserting "negligently". 
(3) 
EXCLUSION.—Section 
1867(d)(2)(B) 
(42 
U.S.C. 
1395dd(d)(2)(B)) is amended by striking "knowing and willful or 
negligent" and inserting "is gross and flagrant or is repeated". 
42 u s e 1395i-3 
note. 
42 use 1395/ 
note. 
42 use 1320C-3 
note. 
42 u s e 1320C-3 
note. 
*' So in original. Probably should be "review.".". 
104 STAT. 1388-118 
PUBLIC LAW 101-508—NOV. 5, 1990 
42 u s e 1395dd 
note. 
42 use 1395WW 
note. 
42 use 1395WW 
note. 
42 u s e 1395pp 
note. 
(4) EFFECTIVE DATE.—The amendments made by this subsec-
tion shall apply to actions occurring on or after the first day of 
the sixth month beginning after the date of the enactment of 
this Act. 
(b) EXTENSIONS OF EXPIRING PROVISIONS.— 
(1) PROHIBITION ON COST SAVINGS POLICIES BEFORE BEGINNING 
OF FISCAL YEAR.—Notwithstanding any other provision of law, 
the Secretary of Health and Human Services may not issue any 
proposed or final regulation, instruction, or other policy which 
is estimated by the Secretary to result in a net reduction in 
expenditures under title XVIII of the Social Security Act in a 
fiscal year (beginning with fiscal year 1991 and ending with 
fiscal year 1993, or, if later, the last fiscal year for which there 
is a maximum deficit amount specified under section 3(7) of the 
Congressional Budget and Impoundment Control Act of 1974) of 
more than $50,000,000, except as follows: 
(A) The Secretary may issue such a proposed regulation, 
instruction, or other policy with respect to the fiscal year 
before the May 15 preceding the beginning of the fiscal 
year. 
(B) The Secretary may issue such a final regulation, 
instruction, or other policy with respect to the fiscal year on 
or after October 15 of the fiscal year. 
(C) The Secretary may, at any time, issue such a proposed 
or final regulation, instruction, or other policy with respect 
to the fiscal year if required to implement specific provi-
sions under statute. 
(2) PROHIBITION OF PAYMENT CYCLE CHANGES.—Notwithstand-
ing any other provision of law, the Secretary of Health and 
Human Services is not authorized to issue, after the date of the 
enactment of this Act, any final regulation, instruction, or other 
policy change which is primarily intended to have the effect of 
slowing down or speeding up claims processing, or delaying 
payment of claims, under title XVIII of the Social Security Act. 
(3) WAIVER OF LIABILITY FOR HOME HEALTH AGENCIES.—Section 
9305(g)(3) of the Omnibus Budget Reconciliation Act of 1986, as 
amended by section 426(d) of the Medicare Catastrophic Cov-
erage Act of 1988, is amended by striking "November 1, 1990" 
and inserting "December 31,1995". 
(4) EXTENSION AND EXPANSION OF WAIVERS FOR SOCIAL HEALTH 
MAINTENANCE ORGANIZATIONS.— 
(A) EXTENSION OF CURRENT WAIVERS.—Section 4018(b) 
of the Omnibus Budget Reconciliation Act of 1987 is 
amended— 
(i) in paragraph (1), by striking "September 30, 1992" 
and inserting "December 31,1995"; and 
(ii) in paragraph (4)— 
(I) by striking "final" and inserting "second in-
terim", and 
(II) by striking the period at the end and insert-
ing the following: ", and shall submit a final report 
on the demonstration projects conducted under sec-
tion 2355 of the Deficit Reduction Act of 1984 not 
later than March 31,1996.". 
(B) EXPANSION OF DEMONSTRATIONS.—Section 2355 of the 
Deficit Reduction Act of 1984 is amended— 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-119 
(i) in subsection (a), by adding at the end the follow-
ing: "Not later than 12 months after the date of the 
enactment of the Omnibus Budget Reconciliation Act 
of 1990, the Secretary shall approve such applications 
or protocols for not more than 4 additional projects 
described in subsection (b)."; 
(ii) by amending paragraph (1) of subsection (b) to 
read as follows: 
"(1) to demonstrate— 
"(A) the concept of a social health maintenance organiza-
tion with the organizations as described in Project No. 18-
P-9 7604/1-04 of the University Health Policy Consortium 
of Brandeis University, or 
"(B) in the case of a project conducted as a result of the 
amendments made by section 12907(c)(4)(A) of the Omnibus 
Budget Reconciliation Act of 1990, the effectiveness and 
feasibilitly ^^ of innovative approaches to refining targeting 
and financing methodologies and benefit design, including 
the effectiveness of feasibility o
f
— 
"(i) the benefits of expanded post-acute and commu-
nity care case management through links between 
chronic care case management services and acute care 
providers; 
"(ii) refining targeting or reimbursement method-
ologies; 
"(iii) the establishment and operation of a rural serv-
ices delivery system; or 
"(iv) the effectiveness of second-generation sites in 
reducing the costs of the commencement and manage-
ment of health care service delivery;"; 
(iii) in subsection (b)— 
(I) by inserting "and" at the end of paragraph (3), 
(II) by striking the semicolon at the end of para-
graph (4) and inserting a period, and 
(III) by striking paragraphs (5), (6), and (7).25 
(iv) in subsection (c)— 
(I) by striking "and" at the end of paragraph (1), 
(II) by striking the period at the end of para-
graph (2) and inserting "; and", and 
(III) by adding at the end the following new 
paragraph: 
"(3) in the case of a project conducted as a result of the 
amendments made by section 12907(c)(4)(A) of the Omnibus 
Budget Reconciliation Act of 1990, any requirements of titles 
XVIII or XIX of the Social Security Act that, if imposed, would 
prohibit such project from being conducted."; and 
(v) by adding at the end the following new subsection: 
"(e) There are authorized to be appropriated $3,500,000 for the 
costs of technical assistance and evaluation related to projects con-
ducted as a result of the amendments made by section 12907(c)(4)(A) 
of the Omnibus Budget Reconciliation Act of 1990.". 
(c) DEVELOPMENT OF PROSPECTIVE PAYMENT SYSTEM FOR HOME 42 use I395x 
HEALTH SERVICES.— 
"°*®-
(1) DEVELOPMENT OF PROPOSAL.—The Secretary of Health and 
Human Services shall develop a proposal to modify the current 
system under which payment is made for home health services 
under title XVIII of the Social Security Act or a proposal to 
** So in original. Probably should be "feasibility". 
*" So in original. Probably should be "(7);". 
104 STAT. 1388-120 
PUBLIC LAW 101-508—NOV. 5, 1990 
replace such system with a system under which such payments 
would be made on the basis of prospectively determined rates. 
In developing any proposal under this paragraph to replace the 
current system with a prospective payment system, the Sec-
retary shall— 
(A) take into consideration the need to provide for appro-
priate limits on increases in expenditures under the 
medicare program; 
(B) provide for adjustments to prospectively determined 
rates to account for changes in a provider's case mix, 
severity of illness of patients, volume of cases, and the 
development of new technologies and standards of medical 
practice; 
(C) take into consideration the need to increase the pay-
ment otherwise made under such system in the case of 
services provided to patients whose length of treatment or 
costs of treatment greatly exceed the length or cost of 
treatment provided for under the applicable prospectively 
determined payment rate; 
(D) take into consideration the need to adjust payments 
under the system to take into account factors such as 
differences in wages and wage-related costs among agencies 
located in various geographic areas and other factors the 
Secretary considers appropriate; and 
(E) analyze the feasibility 
and appropriateness of 
establishing the episode of illness as the basic unit for 
making payments under the system. 
(2) REPORTS.—(A) By not later than April 1, 1993, the Sec-
retary of Health and Human Services shall submit the research 
findings upon which the proposal described in paragraph (1) 
shall be based to the Committee on Finance of the Senate and 
the Committee on Ways and Means of the House of Representa-
tives. 
(B) By not later than September 1, 1993, the Secretary shall 
submit the proposal developed under paragraph (1) to the 
Committee on Finance of the Senate and the Committee on 
Ways and Means of the House of Representatives. 
(C) By not later than March 1, 1994, the Prospective Payment 
Assessment Commission shall submit an analysis of and com-
ments on the proposal developed under paragraph (1) to the 
Committee on Finance of the Senate and the Committee on 
Ways and Means of the House of Representatives. 
(d) HOME HEALTH WAGE INDEX.— 
(1) 
IN 
GENERAL.—Section 
1861(v)(l)(L)(iii) 
(42 
U.S.C. 
1395x(v)(l)(L)(iii)) is amended to read as follows: 
"(iii) Not later than July 1, 1991, and annually thereafter, the 
Secretary shall establish limits under this subparagraph for cost 
reporting periods beginning on or after such date by utilizing the 
area wage index applicable under section 1886(d)(3)(E) as of such 
date to hospitals located in the geographic area in which the home 
health agency is located (determined without regard to whether 
such hospitals have been reclassified to a new geographic area 
pursuant to section 1886(d)(8)(B), a decision of the Medicare Geo-
graphic Classification Review Board under section 1886(d)(10), or a 
decision of the Secretary).", 
^^te 
^^^^* 
^^^ APPLICATION ON BUDGET-NEUTRAL BASIS.—In updating the 
^° ' 
wage index for establishing limits under section 1861(v)(l)(L)(iii) 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-121 
of the Social Security Act, the Secretary shall ensure that 
aggregate payments to home health agencies under title XVIII 
of such Act will be no greater or lesser than such payments 
would have been without regard to such update. 
(3) 
TRANSITION 
PROVISION.—Notwithstanding 
section 
1861(v)(l)(L)(iii) of the Social Security Act, the Secretary of 
Health and Human Services shall, in determining the limits of 
reasonable costs under title XVIII of such Act with respect to 
services furnished by a home health agency, utilize a wage 
index equal to— 
(A) for cost reporting periods beginning on or after July 1, 
1991, and on or before June 30, 1992, a combined area wage 
index consisting o
f
— 
(i) 67 percent of the area wage index applicable under 
section 1861(v)(l)(L)(iii) of such Act to such home health 
agency, determined using the survey of the 1982 wages 
and wage-related costs of hospitals in the United States 
conducted under such section, and 
(ii) 33 percent of the area wage index applicable 
under section 1886(d)(3)(E) of such Act to hospitals 
located in the geographic area in which the home 
health agency is located, determined using the survey 
of the 1988 wages and wage-related costs of hospitals in 
the United States conducted under such section; and 
(B) for cost reporting periods beginning on or after July 1, 
1992, and on or before June 30, 1993, a combined area wage 
index consisting o
f
— 
(i) 33 percent of the area wage index applicable under 
section 1861(v)(l)(L)(iii) of such Act to such home health 
agency, determined using the survey of the 1982 wages 
and wage-related costs of hospitals in the United States 
conducted under such section, and 
(ii) 67 percent of the area wage index applicable 
under section 1886(d)(3)(E) of such Act to hospitals 
located in the geographic area in which the home 
health agency is located, determined using the survey 
of the 1988 wages and wage-related costs of hospitals in 
the United States conducted under such section. 
(3) EFFECTIVE DATE.—The amendment made by paragraph (1) 
shall apply with respect to home health agency cost reporting 
periods beginning on or after July 1,1991. 
(e) CLARIFICATION OF DEFINITIONS AND REPORTING REQUIREMENTS 
RELATING TO PHYSICIAN OWNERSHIP AND REFERRAL.— 
(1) CLARIFYING DEFINITIONS.—Section 1877(h) of the Social 
Security Act (42 U.S.C. 1395nn(h)) is amended— 
(A) in paragraph (6)(A), by striking "in the case o f and 
all that follows through "the service," and inserting "in the 
case of an item or service for which payment may be made 
under part B, the request by a physician for the item or 
service,"; 
(B) in paragraph (6)(B), by striking "in the case of another 
clinical laboratory service,", and 
(C) by redesignating paragraph (6) as paragraph (7) and 
by inserting after paragraph (5) the following new para-
graph: 
42 u s e 1395x 
note. 
42 u s e 1395x 
note. 
104 STAT. 1388-122 
PUBLIC LAW 101-508—NOV. 5, 1990 
42 use 1395nn 
note. 
42 use 1395nn 
note. 
"(6) INVESTOR.—The term 'investor' means, with respect to an 
entity, a person with a financial relationship specified in subsec-
tion (a)(2) with the entity.". 
(2) EXEMPTION FOR FINANCIAL RELATIONSHIPS WITH HOSPITAL 
UNRELATED TO THE PROVISION OF CUNICAL LABORATORY SERV-
ICES.—Section 1877(b) is amended by redesignating paragraph 
(4) as paragraph (5) and by inserting after paragraph (3) the 
following new paragraph: 
"(4) HOSPITAL FINANCIAL RELATIONSHIP UNRELATED TO THE 
PROVISION OF CLINICAL LABORATORY SERVICES.—In t h e CaSO o f a 
financial relationship with a hospital if the financial relation-
ship does not relate to the provision of clinical laboratory 
services.". 
(3) REVISION OF REPORTING REQUIREMENTS.—Section 1877(f) (42 
U.S.C. 1395nn(f)) is amended— 
(A) by amending paragraph (2) to read as follows: 
"(2) the names and unique physician identification numbers 
of all physicians with an ownership or investment interest (as 
described in subsection (a)(2)(A)) in the entity, or whose imme-
diate relatives have such an ownership or investment."; 
(B) in the third sentence, by striking "1 year after the 
date of the enactment of this section" and inserting "Octo-
ber 1,1991"; and 
(C) by adding at the end the following new sentences: 
"The requirement of this subsection shall not apply to 
covered items and services provided outside the United 
States or to entities which the Secretary determines pro-
vides services for which payment may be made under this 
title very infrequently. The Secretary may waive the 
requirements of this subsection (and the requirements of 
chapter 35 of title 44, United States Code, with respect to 
information provided under this subsection) with respect to 
reporting by entities in a State (except for entities provid-
ing clinical laboratory services) so long as such reporting 
occurs in at least 10 States, and the Secretary may waive 
such requirements with respect to the providers in a State 
required to report so long as such requirements are not 
waived with respect to parenteral and enteral suppliers, 
end stage renal disease facilities, suppliers of ambulance 
, 
services, hospitals, entities providing physical therapy serv-
ices, and entities providing diagnostic imaging services of 
any type.". 
(4) DATE OF ISSUANCE OF REPORTS AND REGULATIONS.—(A) Sec-
tion 6204 of the Omnibus Budget Reconciliation Act of 1989 is 
amended by striking subsection (f) and inserting the following: 
"(f) STATISTICAL SUMMARY OF COMPARATIVE UTILIZATION.—Not 
later than June 30, 1992, the Secretary of Health and Human 
Services shall submit to Congress a statistical profile comparing 
utilization of items and sei'vices by medicare beneficiaries served by 
entities in which the referring physician has a direct or indirect 
financial interest and by medicare beneficiaries served by other 
entities, for the States and entities specified in section 1877(f) of the 
Social Security Act (other than entities providing clinical laboratory 
services).". 
(B) Section 6204(d) of the Omnibus Budget Reconciliation Act 
of 1989 is amended by striking "October 1, 1990" and inserting 
"October 1,1991". 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-123 
(5) EFFECTIVE DATE.—The amendments made by this subsec-
tion shall be effective as if included in the enactment of section 
6204 of the Omnibus Budget Reconciliation Act of 1989, 
(f) CASE MANAGEMENT DEMONSTRATION PROJECT.— 
(1) IN GENERAL.—Notwithstanding any other provision of law, 
the Secretary of Health and Human Services shall resume the 3 
case management demonstration projects described in para-
graph (2) and approved under section 425 of the Medicare 
Catastrophic Coverage Act of 1988 (in this subsection referred to 
as "MCCA"). 
(2) PROJECT DESCRIPTIONS.—The demonstration projects re-
ferred to in paragraph (1) are— 
(A) the project proposed to be conducted by Providence 
Hospital for case management of the elderly at risk for 
acute hospitalization as described in Project No. 18-P-
99379/5-01; 
(B) the project proposed to be conducted by the Iowa 
Foundation for Medical Care to study patients with chronic 
congestive conditions to reduce repeated hospitalizations of 
such patients as described in Project No. P-99399/4-01; and 
(C) the project proposed to be conducted by Key Care 
Health Resources, Inc., to examine the effects of case 
management on 2,500 high cost medicare beneficiaries as 
described in Project No. 18-P-99396/5. 
(3) TERMS AND CONDITIONS.—Except as provided in paragraph 
(4), the demonstration projects resumed pursuant to paragraph 
(1) shall be subject to the same terms and conditions established 
under section 425 of MCCA. In determining the 2-year duration 
period of a project resumed pursuant to paragraph (1), the 
Secretary may not take into account any period of time for 
which the project was in effect under section 425 of MCCA. 
(4) AUTHORIZATION OF APPROPRIATIONS.—Notwithstanding sec-
tion 425(g) of MCCA, there are authorized to be appropriated for 
administrative costs in carrying out the demonstration projects 
resumed pursuant to paragraph (1) $2,000,000 in each of fiscal 
years 1991 and 1992. 
(g) PROHIBITION OF USER FEES FOR SURVEY AND CERTIFICATION.— 
Section 1864 (42 U.S.C. 1395aa) is amended by adding at the end the 
following new subsection: 
"(e) Notwithstanding any other provision of law, the Secretary 
may not impose, or require a State to impose, any fee on any facility 
or entity subject to a determination under subsection (a), or any 
renal dialysis facility subject to the requirements of section 
1881(b)(1), for any such determination or any survey relating to 
determining the compliance of such facility or entity with any 
requirement of this title.". 
(h) DELEGATION OF AUTHORITY TO INSPECTOR GENERAL.—Section 
1128A(j) (42 U.S.C. 1320a-7a(j)) is amended— 
(i) by striking "(])" and inserting "CJ)(1)"; and 
(ii) by adding at the end the following new paragraph: 
"(2) The Secretary may delegate authority granted under this 
section and under section 1128 to the Inspector General of the 
Department of Health and Human Services.". 
(i) MODIFICATION OF HOME HEALTH AGENCY DEFICIENCY STAND-
ARDS.— 
(1) IN GENERAL.—Effective as if included in the enactment of 
the Omnibus Budget Reconciliation Act of 1987, section 
42 use 1395nn 
note. 
42 u s e 1395b-l 
note. 
104 STAT. 1388-124 
PUBLIC LAW 101-508—NOV. 5, 1990 
42 use 1395bbb 
note. 
42 u s e 1395hh 
note. 
42 u s e 1395nn. 
42 use 1395dd. 
1891(a)(3)(D)(iii) of the Social 
Security Act (42 U.S.C. 
1395bbb(a)(3)(D)(iii)) is amended by striking "which has been 
determined" and all that follows and inserting the following: 
"which, within the previous 2 years— 
"(I) has been determined to be out of compliance with 
subparagraph (A), (B), or (C); 
"(II) has been subject to an extended (or partial extended) 
survey under subsection (c)(2)(D); 
"(III) has been assessed a civil money penalty described in 
subsection (f)(2)(A)(i) of not less than $5,000; or 
"(IV) has been subject to the remedies described in 
subsection (e)(1) or in clauses (ii) or (iii) of subsection 
(f)(2)(A).". 
(2) EFFECTIVE DATE.—The amendments made by paragraph (1) 
shall take effect as if included in the enactment of the Omnibus 
Budget Reconciliation Act of 1987, except that the Secretary 
may not permit approval of a training and competency evalua-
tion program or a competency evaluation program offered by or 
in a home health agency which, pursuant to any Federal or 
State law within the 2-year period beginning on October 1, 
1988— 
(i) had its participation terminated under title XVIII 
of the Social Security Act; 
(ii) was assessed a civil money penalty not less than 
$5,000 for deficiencies in applicable quality standards 
. for home health agencies; 
(iii) was subject to suspension by the Secretary of all 
or part of the payments to which it would otherwise be 
entitled under such title. ^^ 
(iv) operated under a temporary management ap-
pointed to oversee the operation of the agency and to 
ensure the health and safety of the agency's patients; 
or 
(v) pursuant to State action, was closed or had its 
residents transferred, 
(j) USE OF INTERIM FINAL REGULATIONS.—The Secretary of Health 
and Human Services shall issue such regulations (on an interim or 
other basis) as may be necessary to implement this title and the 
amendments made by this title, 
(k) MISCELLANEOUS TECHNICAL CORRECTIONS.— 
(1) The third sentence of subsections (a) and (b)(1) of section 
1882 of the Social Security Act (42 U.S.C. 1395ss), as amended by 
section 203(a)(1)(A) of the Medicare Catastrophic Coverage 
Repeal Act, is amended by striking "(k)(4),". 
(2) Section 1877(g)(5) of the Social Security Act, as added by 
section 6204(a) of OBRA-1989, is amended by adding at the end 
the following new sentence: "The provisions of section 1128A 
(other than the first sentence of subsection (a) and other than 
subsection (b)) shall apply to a civil money penalty under the 
previous sentence in the same manner as such provisions apply 
to a penalty or proceeding under section 1128A(a).". 
(3) Subsection (i) of section 1867 of the Social Security Act, as 
added by section 6211(f) of the Omnibus Budget Reconciliation 
Act of 1989, is amended to read as follows: 
"(i) WHISTLEBLOWER PROTECTIONS.—A participating hospital may 
not penalize or take adverse action against a qualified medical 
person described in subsection (c)(l)(A)(iii) or a physician because the 
*
"
• So in original. Probably should be ";"• 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-125 
person or physician refuses to authorize the transfer of an indi-
vidual with an emergency medical condition that has not been 
stabilized or against any hospital employee because the employee 
reports a violation of a requirement of this section.". 
(4) Section 6213(d) of the Omnibus Budget Reconciliation Act 
of 1989 is amended by striking "take effect" and inserting 
"apply to services furnished on or after". 
(5) Section 6217(a) of the Omnibus Budget Reconciliation Act 
of 1989 is amended in the matter preceding paragraph (1) by 
inserting after "pa5mients" the following: "out of the Federal 
Hospital Insurance Trust Fund and the Federal Supplementary 
Medical Insurance Trust Fund (in such proportions as the Sec-
retary determines to be appropriate in a year)". 
(6) Section 1139(d) of the Social Security Act, as amended by 
section 6221 of Omnibus Budget Reconciliation Act of 1989, is 
amended by striking "interim report" and all that follows 
through "setting forth" and inserting the following: "interim 
report no later than March 31, 1990, and a final report no later 
than March 31,1991, setting forth". 
PART 4—PROVISIONS RELATING TO MEDICARE 
PART B PREMIUM AND DEDUCTIBLE 
SEC. 4301. PART B PREMIUM. 
Section 1839(e)(1) (42 U.S.C. 1395r(e)(l)) is amended— 
(1) by inserting "(A)" after "(e)(1)", and 
(2) by adding at the end the following new subparagraph: 
"(B) Notwithstanding the provisions of subsection (a), the monthly 
premium for each individual enrolled under this part for each 
month in— 
"(i) 1991 shall be $29.90, 
"(ii) 1992 shall be $31.80, 
"(iii) 1993 shall be $36.60, 
"(iv) 1994 shall be $41.10, and 
"(v) 1995 shall be $46.10.". 
SEC. 4302. PART B DEDUCTIBLE. 
Section 1833(b) (42 U.S.C. 13951) is amended by inserting after 
"$75" the following: "for calendar years before 1991 and $100 for 
1991 and subsequent years". 
PART 5—MEDICARE SUPPLEMENTAL INSURANCE 
POLICIES 
SEC. 4351. SIMPLIFICATION OF MEDICARE SUPPLEMENTAL POLICIES. 
(a) IN GENERAL.—Section 1882 (42 U.S.C. 1395ss) is amended— 
(1) in subsection (b)(1)(B), by striking "through (4)" and insert-
ing "through (5)"; 
(2) in subsection (c)— 
(A) by striking "and" at the end of paragraph (3), 
(B) by striking the period at the end of paragraph (4) and 
inserting "; and", and 
(C) by inserting after paragraph (4) the following new 
paragraph: 
"(5) meets the applicable requirements of subsections (o) 
through (t)."; and 
42 u s e 1395x 
note. 
42 u s e 1395WW 
note. 
42 u s e 1320b-9. 
104 STAT. 1388-126 
PUBLIC LAW 101-508—NOV. 5, 1990 
(3) by adding at the end the following new subsections: 
"(o) The requirements of this subsection are as follows: 
"(1) Each medicare supplemental policy shall provide for 
coverage of a group of benefits consistent with subsection (p). 
"(2) If the medicare supplemental policy provides for coverage 
of a group of benefits other than the core group of basic benefits 
described in subsection (p)(2)(B), the issuer of the policy must 
make available to the individual a medicare supplemental 
policy with only such core group of basic benefits. 
"(3) The issuer of the policy has provided, before the sale of 
the policy, an outline of coverage that uses uniform language 
and format (including layout and print size) that facilitates 
comparison 
among 
medicare 
supplemental 
policies 
and 
comparison with medicare benefits. 
"(p)(l)(A) If, within 9 months after the date of the enactment of 
this subsection, the National Association of Insurance Commis-
sioners (in this subsection referred to as the 'Association') promul-
gates— 
"(i) limitations on the groups or packages of benefits that may 
be offered under a medicare supplemental policy consistent 
with paragraphs (2) and (3) of this subsection, 
"(ii) uniform language and definitions to be used with respect 
to such benefits, 
"(iii) uniform format to be used in the policy with respect to 
such benefits, and 
"(iv) other standards to meet the additional requirements 
imposed by the amendments made by the Omnibus Budget 
Reconciliation Act of 1990, 
(such limitations, language, definitions, format, and standards re-
ferred to collectively in this subsection as 'NAIC standards'), subsec-
tion (g)(2)(A) shall be applied in each State, effective for policies 
issued to policyholders on and after the date specified in subpara-
graph (C), as if the reference to the Model Regulation adopted on 
June 6,1979, included a reference to the NAIC standards. 
"(B) If the Association does not promulgate NAIC standards 
within the 9-month period specified in subparagraph (A), the Sec-
retary shall promulgate, not later than 9 months after the end of 
such period, limitations, language, definitions, format, and stand-
ards described in clauses (i) through (iv) of such subparagraph (in 
this subsection referred to collectively as 'Federal standards') and 
subsection (g)(2)(A) shall be applied in each State, effective for 
policies issued to policyholders on and after the date specified in 
subparagraph (C), as if the reference to the Model Regulation 
adopted on June 6, 1979, included a reference to the Federal 
standards. 
"(C)(i) Subject to clause (ii), the date specified in this subparagraph 
for a State is the date the State adopts the NAIC standards or the 
Federal standards or 1 year after the date the Association or the 
Secretary first adopts such standards, whichever is earlier. 
"(ii) In the case of a State which the Secretary identifies, in 
consultation with the Association, as— 
"(I) requiring State legislation (other than legislation appro-
priating funds) in order for medicare supplemental policies to 
meet the NAIC or Federal standards, but 
"(II) having a legislature which is not scheduled to meet in 
1992 in a legislative session in which such legislation may be 
considered. 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-127 
the date specified in this subparagraph is the first day of the first 
calendar quarter beginning after the close of the first legislative 
session of the State legislature that begins on or after January 1, 
1992. For purposes of the previous sentence, in the case of a State 
that has a 2-year legislative session, each year of such session shall 
be deemed to be a separate regular session of the State legislature. 
"(D) In promulgating standards under this paragraph, the 
Association or Secretary shall consult with a working group com-
posed of representatives of issuers of medicare supplemental poli-
cies, consumer groups, medicare beneficiaries, and other qualified 
individuals. Such representatives shall be selected in a manner so as 
to assure balanced representation among the interested groups. 
"(E) If benefits (including deductibles and coinsurance) under this 
title are changed and the Secretary determines, in consultation with 
the Association, that changes in the NAIC or Federal standards are 
needed to reflect such changes, the preceding provisions of this 
paragraph shall apply to the modification of standards previously 
established in the same manner as they applied to the original 
establishment of such standards. 
"(2) The benefits under the NAIC or Federal standards shall 
provide— 
"(A) for such groups or packages of benefits as may be appro-
priate taking into account the considerations specified in 
paragraph (3) and the requirements of the succeeding subpara-
graphs; 
"(B) for identification of a core group of basic benefits 
common to all policies, and 
"(C) that, subject to paragraph (5)(B), the total number of 
different benefit packages (counting the core group of basic 
benefits described in subparagraph (B) and each other combina-
tion of benefits that may be offered as a separate benefit 
package) that may be established in all the States and by all 
issuers shall not exceed 10. 
"(3) The benefits under paragraph (2) shall, to the extent 
possible— 
"(A) provide for benefits that offer consumers the ability to 
purchase the benefits that are available in the market as of the 
date of the enactment of this subsection; and 
"(B) balance the objectives of (i) simplifying the market to 
facilitate comparisons among policies, (ii) avoiding adverse 
selection, (iii) providing consumer choice, (iv) providing market 
stability, and (v) promoting competition. 
"(4XA)(i) Except as provided in subparagraph (B), no State with a 
regulatory program approved under subsection (b)(1) may provide 
for or permit the grouping of benefits (or language or format with 
respect to such benefits) under a medicare supplemental policy 
unless such grouping meets the applicable standards. 
"(ii) Except as provided in subparagraph (B), the Secretary may 
not provide for or permit the grouping of benefits (or language or 
format with respect to such benefits) under a medicare supple-
mental policy seeking approval by the Secretary unless such group-
ing meets the applicable standards. 
"(B) With the approval of the State (in the case of a policy issued 
in a State with an approved regulatory program) or the Secretary 
(in the case of any other policy), the issuer of a medicare supple-
mental policy may offer new or innovative benefits in addition to 
the benefits provided in a policy that otherwise complies with the 
104 STAT. 1388-128 
PUBLIC LAW 101-508—NOV. 5, 1990 
applicable standards. Any such new or innovative benefits may 
include benefits that are not otherwise available and are cost-
effective and shall be offered in a manner which is consistent with 
the goal of simplification of medicare supplemental policies. 
"(5)(A) Except as provided in subparagraph (B), this subsection 
shall not be construed as preventing a State from restricting the 
groups of benefits that may be offered in medicare supplemental 
policies in the State. 
"(B) A State with a regulatory program approved under subsec-
tion (b)(1) may not restrict under subparagraph (A) the offering of a 
medicare supplemental policy consisting only of the core group of 
benefits described in paragraph (2)(B). 
"(6) The Secretary may waive the application of standards in 
regard to the limitation of benefits described in paragraph (4) in 
those States that on the date of enactment of this subsection had in 
place an alternative simplification program. 
"(7) This subsection shall not be construed as preventing an issuer 
of a medicare supplemental policy who otherwise meets the require-
ments of this section from providing, through an arrangement with 
a vendor, for discounts from that vendor to policyholder or 
certificateholders for the purchase of items or services not covered 
under its medicare supplemental policies. 
"(8) Any person who sells or issues a medicare supplemental 
policy, after the effective date of the NAIC or Federal standards 
with respect to the policy, in violation of the previous requirements 
of this subsection is subject to a civil money penalty of not to exceed 
$25,000 (or $15,000 in the case of a seller who is not an issuer of a 
policy) for each such violation. The provisions of section 1128A 
(other than the first sentence of subsection (a) and other than 
subsection (b)) shall apply to a civil money penalty under the 
previous sentence in the same manner as such provisions apply to a 
penalty or proceeding under section 1128A(a). 
"(9)(A) Anyone who sells a medicare supplemental policy to an 
individual shall make available for sale to the individual a medicare 
supplemental policy with only the core group of basic benefits 
(described in paragraph (2)(B)). 
"(B) Anyone who sells a medicare supplemental policy to an 
individual shall provide the individual, before the sale of the policy, 
an outline of coverage which describes the benefits under the policy. 
Such outline shall be on a standard form approved by the State 
regulatory program or the Secretary (as the case may be) consistent 
with the NAIC or Federal standards under this subsection. 
"(C) Whoever sells a medicare supplemental policy in violation of 
this paragraph is subject to a civil money penalty of not to exceed 
$25,000 (or $15,000 in the case of a seller who is not the issuer of the 
policy) for each such violation. The provisions of section 1128A 
(other than the first sentence of subsection (a) and other than 
subsection (b)) shall apply to a civil money penalty under the 
previous sentence in the same manner as such provisions apply to a 
penalty or proceeding under section 1128A(a). 
"(10) No penalty may be imposed under paragraph (8) or (9) in the 
case of a seller who is not the issuer of a policy until the Secretary 
has published a list of the groups of benefit packages that may be 
sold or issued consistent with this subsection.". 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-129 
SEC. 4352. GUARANTEED RENEW 
ABILITY. 
Section 1882 is amended by adding at the end the following new 42 USC 13958s. 
subsection: 
"(q) The requirements of this subsection are as follows: 
"(1) Each medicare supplemental policy shall be guaranteed 
renewable and— 
"(A) the issuer may not cancel or nonrenew the policy 
solely on the ground of health status of the individual; and 
"(B) the issuer shall not cancel or nonrenew the policy for 
any reason other than nonpayment of premium or material 
misrepresentation. 
"(2) If the medicare supplemental policy is terminated by the 
group policyholder and is not replaced as provided under para-
graph (2), the issuer shall offer certificateholders an individual 
medicare supplemental policy which (at the option of the 
certificateholder)— 
"(A) provides for continuation of the benefits contained in 
the group policy, or 
"(B) provides for such benefits as otherwise meets the 
requirements of this section. 
"(3) If an individual is a certificateholder in a group medicare 
supplemental policy and the individual terminates membership 
in the group, the issuer shall— 
"(A) offer the certificateholder the conversion oppor-
tunity described in paragraph (2), or 
"(B) at the option of the group policyholder, offer the 
certificateholder continuation of coverage under the group 
policy. 
"(4) If a group medicare supplemental policy is replaced by 
another group medicare supplemental policy purchased by the 
same policyholder, the succeeding issuer shall offer coverage to 
all persons covered under the old group policy on its date of 
termination. Coverage under the new group policy shall not 
result in any exclusion for preexisting conditions that would 
have been covered under the group policy being replaced.". 
SEC. 
4
3
5
3
. 
ENFORCEMENT 
OF 
STANDARDS. 
(a) REQUIRING CONFORMITY WITH STANDARDS.—Section 1882 is 
amended— 
(1) in the heading, by striking "VOLUNTARY"; and 
(2) in subsection (a)— 
(A) by inserting "(1)" after "(a)", 
(B) by adding at the end the following new paragraph: 
"(2) No medicare supplemental policy may be issued in a State on 
or after the date specified in subsection (p)(l)(C) unless— 
"(A) the State's regulatory program under subsection (b)(1) 
provides for the application and enforcement of the standards 
and requirements set forth in such subsection (including the 
NAIC standards or the Federal standards (as the case may be)) 
by the date specified'in subsection (p)(l)(C); or 
"(B) if the State's program does not provide for the applica-
tion and enforcement of such standards and requirements, the 
policy has been certified by the Secretary under paragraph (1) 
as meeting the standards and requirements set forth in subsec-
tion (c) (including such applicable standards) by such date. 
Any person who issues a medicare supplemental policy, after the 
effective date of the NAIC or Federal standards with respect to the 
104 STAT. 1388-130 
PUBLIC LAW 101-508—NOV. 5, 1990 
policy, in violation of this paragraph is subject to a civil money 
penalty of not to exceed $25,000 for each such violation. The provi-
sions of section 1128A (other than the first sentence of subsection (a) 
and other than subsection (b)) shall apply to a civil money penalty 
under the previous sentence in the same manner as such provisions 
apply to a penalty or proceeding under section 1128A(a).". 
(b) PERIODIC REVIEW OF STATE REGULATORY PROGRAMS.—Section 
42 use 1395S8. 
1882(b) is amended— 
(1) in paragraph (1), by striking "Supplemental Health Insur-
ance Panel (established under paragraph (2))" and inserting 
"the Secretary", 
(2) in paragraph (1), by striking "the Panel" and inserting 
"the Secretary", 
(3) in subparagraphs (A) and (D) of paragraph (1), by inserting 
"and enforcement" after "application , and 
(4) by amending paragraph (2) to read as follows: 
"(2) The Secretary periodically shall review State regulatory pro-
grams to determine if they continue to meet the standards and 
requirements specified in paragraph (1). If the Secretary finds that a 
State regulatory program no longer meets the standards and 
requirements, before making a final determination, the Secretary 
shall provide the State an opportunity to adopt such a plan of 
correction as would permit the State regulatory program to continue 
to meet such standards and requirements. If the Secretary makes a 
final determination that the State regulatory program, after such 
an opportunity, fails to meet such standards and requirements, the 
program shall no longer be considered to have in operation a 
program meeting such standards and requirements.". 
(c) ENFORCEMENT 
BY STATES.—Section 1882a))(l) (42 U.S.C. 
1395ss(b)(l)) is amended— 
(1) by striking "and" at the end of subparagraph (D); 
(2) by inserting "and" at the end of subparagraph (E); 
(3) by inserting after subparagraph (E) the following: 
"(F) reports to the Secretary on the implementation and 
enforcement of standards and requirements of this para-
graph at intervals established by the Secretary,"; and 
(5) by adding at the end the following new sentence: "The 
report required under subsection (F) shall include information 
on loss ratios of policies sold in the State, frequency and types of 
instances in which policies approved by the State fail to meet 
the standards of this paragraph, actions taken by the State to 
bring such policies into compliance, and information regarding 
State programs implementing consumer protection provisions, 
and such further information as the Secretary in consultation 
with the National Association of Insurance Commissioners, may 
specify.". 
(d) REQUIRING APPROVAL OF STATE FOR SALE IN THE STATE.— 
(1) 
IN 
GENERAL.—Section 
1882(d)(4)(B) 
(42 
U.S.C. 
1395ss(d)(4XB)) is amended by striking the second sentence. 
42 use 1395SS 
(2) EFFECTIVE DATE.—The amendment made by paragraph (1) 
note. 
shall apply to policies mailed, or caused to be mailed, on and 
after July 1, 1991. 
SEC. 4354. PREVENTING DUPLICATION. 
(a) IN GENERAL.—Subsection (d)(3) of section 1882 (42 U.S.C. 
1395ss) is amended— 
(1) in subparagraph (A)— 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-131 
(A) by striking "Whoever knowingly sells" and inserting 
"It is unlawful for a person to sell or issue", 
(B) by striking "substantially", 
(C) by striking ", shall be fined" and inserting ". Whoever 
violates the previous sentence shall be fined", 
(D) in subparagraph (A), by inserting "or title XIX" after 
"other than this title", 
(E) in subparagraph (A), by striking "$5,000" and insert-
ing "$25,000 (or $15,000 in the case of a person other than 
the issuer of the policy)", and 
(F) by adding at the end the following: "A seller (who is 
not the issuer of a health insurance policy) shall not be 
considered to violate the previous sentence if the policy is 
sold in compliance with subparagraph (B) and the state-
ment under such subparagraph indicates on its face that 
the sale of the policy will not duplicate health benefits to 
which the individual is otherwise entitled. This subsection 
shall not apply to such a seller until such date as the 
Secretary publishes a list of the standardized benefit pack-
ages that may be offered consistent with subsection (p)."; 
(2) by amending subparagraph (B) to read as follows: 
"(B)(i) It is unlawful for a person to issue or sell a medicare 
supplemental policy to an individual entitled to benefits under part 
A or enrolled under part B, whether directly, through the mail, or 
otherwise, unless— 
"(I) the person obtains from the individual, as part of the 
application for the issuance or purchase and on a form de-
scribed in clause (ii), a written statement signed by the individual 
stating, to the best of the individual's knowledge, what health 
insurance policies the individual has, from what source, and 
whether the individual is entitled to any medical assistance 
under title XIX, whether as a qualified medicare beneficiary or 
otherwise, and 
"(II) the written statement is accompanied by a written 
acknowledgment, signed by the seller of the policy, of the 
request for and receipt of such statement, 
"(ii) The statement required by clause (i) shall be made on a form 
that— 
"(I) states in substance that a medicare-eligible individual 
does not need more than one medicare supplemental policy, 
"(II) states in substance that individuals 65 years of age or 
older may be eligible for benefits under the State medicaid 
program under title XIX and that such individuals who are 
entitled to benefits under that program usually do not need a 
medicare supplemental policy and that benefits and premiums 
under any such policy shall be suspended upon request of the 
policyholder during the period (of not longer than 24 months) of 
entitlement to benefits under such title and may be reinstituted 
upon loss of such entitlement, and 
"(III) states that counseling services may be available in the 
State to provide advice concerning the purchase of medicare 
supplemental policies and enrollment under the medicaid pro-
gram and may provide the telephone number for such services. 
"(iii)(I) Except as provided in subclauses (II) and (III), if the 
statement required by clause (i) is not obtained or indicates that the 
individual has another medicare supplemental policy or indicates 
that the individual is entitled to any medical assistance under title 
104 STAT. 1388-132 
PUBLIC LAW 101-508—NOV. 5, 1990 
XIX, the sale of such a policy shall be considered to be a violation of 
subparagraph (A). 
"(ID Subclause (I) shall not apply in the case of an individual who 
has another policy, if the individual indicates in writing, as part of 
the application for purchase, that the policy being purchased re-
places such other policy and indicates an intent to terminate the 
policy being replaced when the new policy becomes effective and the 
issuer or seller certifies in writing that such policy will not, to the 
best of the issuer or seller's knowledge, duplicate coverage (taking 
into account any such replacement). 
"(Ill) Subclause (I) also shall not apply if a State medicaid plan 
under title XIX pays the premiums for the policy, or pays less than 
an individual's (who is described in section 1905(p)(l)) full liability 
for medicare cost sharing as defined in section 1905(p)(3)(A). 
"(iv) Whoever issues or sells a medicare supplemental policy in 
violation of this subparagraph shall be fiijed under title 18, United 
States Code, or imprisoned not more than 5 years, or both, and, in 
addition to or in lieu of such a criminal penalty, is subject to a civil 
money penalty of not to exceed $25,000 (or $15,000 in the case of a 
seller who is not the issuer of a policy) for each such violation.". 
(b) SUSPENSION OF POLICY DURING MEDICAID ENTITLEMENT.—Sec-
tion 1882(q), as added by section 4352, is amended by adding at the 
end the following new paragraph: 
"(5)(A) Each medicare supplemental policy shall provide that 
benefits and premiums under the policy shall be suspended at 
the request of the policyholder for the period (not to exceed 24 
months) in which the policyholder has applied for and is deter-
mined to be entitled to medical assistance under title XIX of the 
Social Security Act, but only if the policyholder notifies the 
issuer of such policy within 90 days after the date the individual 
becomes entitled to such assistance. If such suspension occurs 
and if the policyholder or certificate holder loses entitlement to 
such medical assistance, such policy shall be automatically 
reinstituted (effective as of the date of termination of such 
entitlement) under terms described in subsection (n)(6)(A)(ii) as 
of the termination of such entitlement if the policyholder pro-
vides notice of loss of such entitlement within 90 days after the 
date of such loss. 
"(B) Nothing in this section shall be construed as affecting the 
authority of a State, under title XIX of the Social Security Act, 
to purchase a medicare supplemental policy for an individual 
otherwise entitled to assistance under such title. 
"(C) Any person who issues a medicare supplemental policy 
and fails to comply with the requirements of this paragraph is 
subject to a civil money penalty of not to exceed $25,000 for each 
such violation. The provisions of section 1128A (other than the 
first sentence of subsection (a) and other than subsection (b)) 
shall apply to a civil money penalty under the previous sentence 
in the same manner as such provisions apply to a penalty or 
proceeding under section 1128A(a).". 
42 use 1395s8 
(c) EFFECTIVE DATE.—The amendments made by this section shall 
note. 
apply to policies issued or sold more than 1 year after the date of the 
enactment of this Act. 
SEC. 4355. LOSS RATIOS AND REFUND OF PREMIUMS. 
(a) IN GENERAL.—Section 1882 (42 U.S.C. 1395ss) is further 
amended— 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-133 
(1) in subsection (c), by amending paragraph (2) to read as 
follows: 
"(2) meets the requirements of subsection (r);"; 
(2) by striking the sentence following subsection (cX4); and 
(3) by adding at the end the following new subsection: 
"(r)(l) A medicare supplemental policy may not be issued or sold 
in any State unless— 
"(A) the policy can be expected (as estimated for the entire 
period for which rates are computed to provide coverage, on the 
basis of incurred claims experience and earned premiums for 
such periods and in accordance with a uniform methodology, 
including uniform reporting standards, developed by the Na-
tional Association of Insurance Commissioners ^7, to return to 
policyholders in the form of aggregate benefits provided under 
the policy, at least 75 percent of the aggregate amount of 
premiums collected in the case of group policies and at least 65 
percent in the case of individual policies; and 
"(B) the issuer of the policy provides for the issuance of a 
proportional refund, or a credit against future premiums of a 
proportional amount, based on the premium paid and in accord-
ance with paragraph (2), of the amount of premiums received 
necessary to assure that the ratio of aggregate benefits provided 
to the aggregate premiums collected (net of such refunds or 
credits) complies with the expectation required under subpara-
graph (A). 
For purposes of applying subparagraph (A) only, policies issued as a 
result of solicitations of individuals through the mails or by mass 
media advertising (including both print and broadcast advertising) 
shall be deemed to be individual policies. 
"(2)(A) Paragraph (1)(B) shall be applied with respect to each type 
of policy by policy number. Paragraph (1)(B) shall not apply to a 
policy with respect to the first 2 years in which it is in effect. The 
Comptroller General, in consultation with the National Association 
of Insurance Commissioners, shall submit to Congress a report 
containing recommendations on adjustments in the percentages 
under paragraph (1)(A) that may be appropriate in order to apply 
paragraph (1)(B) to the first 2 years in which policies are effective. 
"(B) A refund or credit required under paragraph (1)(B) shall be 
made to each policyholder insured under the applicable policy as of 
the last day of the year involved. 
"(C) Such a refund or credit shall include interest from the end of 
the policy year involved until the date of the refund or credit at a 
rate as specified by the Secretary for this purpose from time to time 
which is not less than the average rate of interest for 13-week 
Treasury notes. 
"(D) For purposes of this paragraph and paragraph (1)(B), refunds 
or credits against premiums due shall be made, with respect to a 
policy year, not later than the third quarter of the succeeding policy 
year. 
"(3) The provisions of this subsection do not preempt a State from 
requiring a higher percentage than that specified in paragraph 
(1)(A). 
"(4) The Secretary shall submit in February of each year (begin-
ning with 1993) a report to the Committees on Energy and Com-
merce and Ways and Means of the House of Representatives and the 
Committee on Finance of the Senate on loss-ratios under medicare 
supplemental policies and the use of sanctions, such as a required 
* ^ ^ in original. Probably should be "Commissioners),". 
104 STAT. 1388-134 
PUBLIC LAW 101-508—NOV. 5, 1990 
rebate or credit or the disUowance ^^ of premium increases, for 
policies that fail to meet the requirements of this subsection (relat-
ing to loss-ratios). Such report shall include a list of the policies that 
failed to comply with such loss-ratio requirements or other require-
ments of this section. 
"(5XA) The Comptroller General shall periodically, not less often 
than once every 3 years, perform audits with respect to the compli-
ance of medicare supplemental policies with the loss ratio require-
ments of this subsection and shall report the results of such audits 
to the State involved and to the Secretary. 
"(B) The Secretary may independently perform such compliance 
audits. 
"(6)(A) A person who issues a policy in violation of the loss ratio 
requirements of this subsection is subject to a civil money penalty of 
not to exceed $25,000 for each such violation. The provisions of 
section 1128A (other than the first sentence of subsection (a) and 
other than subsection (b)) shall apply to a civil money penalty under 
the previous sentence in the same manner as such provisions apply 
to a penalty or proceeding under section 1128A(a). 
"(B) Each issuer of a policy subject to the requirements of para-
graph (IXB) shall be liable to policyholders for credits required 
under such paragraph.". 
(b) ASSURING ACCESS TO Loss RATIO INFORMATION.—Section 
1882(b)(lXC) (42 U.S.C. 1395ss(bXl)(C)) is amended by striking the 
semicolon at the end and inserting a comma and the following: 
"and that a copy of each such policy, the most recent premium 
for each such policy, and a listing of the ratio of benefits 
provided to premiums collected for the most recent 3-year 
period for each su6h policy issued or sold in the State is main-
tained and made available to interested persons;". 
(c) IMPLEMENTATION OF PROCESS TO APPROVE 
PREMIUM IN-
CREASES.—Section 1882(bXl) (42 U.S.C. 1395ss(bXl)) is further 
amended— 
(1) by striking "and" at the end of subparagraph (E); 
(2) by adding "and" at the end of subparagraph (F); 
(3) by adding at the end thereof the following new subpara-
graph: 
"(G) provides for a process for approving or disapproving 
proposed premium increases with respect to such policies, 
and establishes a policy for the holding of public hearings 
prior to approval of a premium increase,". 
42 use 1395SS 
(d) EFFECTIVE DATE.—The amendments made by this section shall 
note. 
apply to policies sold or issued more than 1 year after the date of the 
enactment of this Act. 
SEC. 4356. CLARIFICATION OF TREATMENT OF PLANS OFFERED BY 
HEALTH MAINTENANCE ORGANIZATIONS. 
(a) IN GENERAL.—The first sentence of section 1882(g)(1) is 
amended by inserting before the period at the end the following: 
"and does not include a policy or plan of a health maintenance 
organization or other direct service organization which offers bene-
fits under this title, including such services under a contract under 
under section 1876 or an agreement under section 1833". 
42 use 1395SS 
(b) EFFECTIVE DATE.—The amendment made by subsection (a) 
note. 
shall take effect on the date of the enactment of this Act. 
28 So in original. Probably should be "disallowance" 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-135 
SEC. 4357. PRE-EXISTING CONDITION LIMITATIONS AND LIMITATION ON 
MEDICAL UNDERWRITING. 
(a) IN GENERAL.—Section 1882 is amended— 
(1) in subsection (c), in the matter before paragraph (1), by 
inserting "or the requirement described in subsection (s)" after 
"paragraph (3)", and 
(2) by adding at the end the following new subsection: 
"(sXD If a medicare supplemental policy replaces another medi-
care supplemental policy, the issuer of the replacing policy shall 
waive any time periods applicable to preexisting conditions, waiting 
period, elimination periods and probationary periods in the new 
medicare supplemental policy for similar benefits to the extent such 
time was spent under the original policy. 
"(2)(A) The issuer of a medicare supplemental policy may not deny 
or condition the issuance or effectiveness of a medicare supple-
mental policy, or discriminate in the pricing of the policy, because of 
health status, claims experience, receipt of health care, or medical 
condition for which an application is submitted during the 6 month 
period beginning with the first month in which the individual (who 
is 65 years of age or older) first is enrolled for benefits under part B. 
"(B) Subject to subparagraph (C), subparagraph (A) shall not be 
construed as preventing the exclusion of benefits under a policy, 
during its first 6 months, based on a pre-existing condition for which 
the policyholder received treatment or was otherwise diagnosed 
during the 6 months before it became effective. 
"(C) If a medicare supplemental policy or certificate replaces 
another such policy or certificate which has been in effect for 6 
months or longer, the replacing policy may not provide any time 
period applicable to pre-existing conditions, waiting periods, elimi-
nation periods, and probationary periods in the new policy or certifi-
cate for similar benefits. 
"(3) Any issuer of a medicare supplemental policy that fails to 
meet the requirements of paragraphs (1) and (2) is subject to a civil 
money penalty of not to exceed $5,000 for each such failure. The 
provisions of section 1128A (other than the first sentence of subsec-
tion (a) and other than subsection (b)) shall apply to a civil money 
penalty under the previous sentence in the same manner as such 
provisions apply to a penalty or proceeding under section 1128A(a).". 
(b) EFFECTIVE DATE.—The amendments made by subsection (a) 42 USC 1395s8 
shall take effect 1 year after the date of the enactment of this Act. note. 
SEC. 4358. MEDICARE SELECT POLICIES. 
(a) IN GENERAL.—Section 1882 (42 U.S.C. 1395ss) is further 
amended by adding at the end the following: 
"(t)(l) If a policy meets the NAIC Model Standards and otherwise 
complies with the requirements of this section except that benefits 
under the policy are restricted to items and services furnished by 
certain entities (or reduced benefits are provided when items or 
services are furnished by other entities), the policy shall neverthe-
less be treated as meeting those standards i
f
— 
"(A) full benefits are provided for items and services fur-
nished through a network of entities which have entered into 
contracts with the issuer of the policy; 
"(B) full benefits are provided for items and services furnished 
by other entities if the services are medically necessary and 
immediately required because of an unforeseen illness, injury. 
104 STAT. 1388-136 
PUBLIC LAW 101-508—NOV. 5, 1990 
or condition and it is not reasonable given the circumstances to 
obtain the services through the network; 
"(C) the network offers sufficient access; 
"(D) the issuer of the policy has arrangements for an ongoing 
quality assurance program for items and services furnished 
through the network; 
"(EXi) the issuer of the policy provides to each enroUee at the 
time of enrollment an explanation of (I) the restrictions on 
payment under the policy for services furnished other than by 
or through the network, (II) out of area coverage under the 
policy, (III) the policy's coverage of emergency services and 
urgently needed care, and (IV) the availability of a policy 
through the entity that meets the NAIC standards without 
reference to this subsection and the premium charged for such 
policy, and 
"(ii) each enroUee prior to enrollment acknowledges receipt of 
the explanation provided under clause (i); and 
"(F) the issuer of the policy makes available to individuals, in 
addition to the policy described in this subsection, any policy 
(otherwise offered by the issuer to individuals in the State) that 
meets the NAIC standards and other requirements of this sec-
tion without reference to this subsection. 
"(2) If the Secretary determines that an issuer of a policy ap-
proved under paragraph (1)— 
"(A) fails substantially to provide medically necessary items 
and services to enroUees seeking such items and services 
through the issuer's network, if the failure has adversely af-
fected (or has substantial likelihood of adversely affecting) the 
individual, 
"(B) imposes premiums on enroUees in excess of the pre-
miums approved by the State, 
"(C) acts to expel an enroUee for reasons other than 
nonpayment of premiums, or 
"(D) does not provide the explanation required under para-
graph (l)(E)(i) or does not obtain the acknowledgment required 
under paragraph (l)(E)(ii), 
is subject to a civil money penalty in an amount not to exceed 
$25,000 for each such violation. The provisions of section 1128A 
(other than the first sentence of subsection (a) and other than 
subsection (b)) shall apply to a civil money penalty under the 
previous sentence in the same manner as such provisions apply to a 
penalty or proceeding under section 1128A(a). 
"(3) The Secretary may enter into a contract with an entity whose 
policy has been certified under paragraph (1) or has been approved 
by a State under subsection (b)(1)(H) to determine whether items 
and services (furnished to individuals entitled to benefits under this 
title and under that policy) are not allowable under section 
1862(a)(1). Payments to the entity shall be in such amounts as the 
Secretary may determine, taking into account estimated savings 
under contracts with carriers and fiscal intermediaries and other 
factors that the Secretary finds appropriate. Paragraph (1), the first 
sentence of paragraph (2XA), paragraph (2)(B), paragraph (3)(C), 
paragraph (3)(D), and paragraph (3)(E) of section 1842(b) shall apply 
to the entity.". 
(b) CONFORMING AMENDMENTS.—(1) Section 1882(cXl) (42 U.S.C. 
1395ss(c)(l)) is amended by inserting "(except as otherwise provided 
by subsection (t))" before the semicolon. 
PUBLIC LAW 101-508—NOV. 5,1990 
104 STAT. 1388-137 
42 u s e 1320C-3 
note. 
42 u s e 139588 
note. 
(2) Section 1882(b)(1) (42 U.S.C. 1395ss(b)(l)), as previously 
amended, is amended— 
(A) in subparagraph (A), by inserting ", except as otherwise 
provided by subparagraph (H)" before the semicolon; 
(B) by striking "and" at the end of subparagraph (F); 
(C) by inserting "and" at the end of subparagraph (G); and 
(D) by adding after subparagraph (G) the following: 
"(H) in the case of a policy that meets the standards 
under subparagraph (A) except that benefits under the 
policy are limited to items and services furnished by certain 
entities (or reduced benefits are provided when items or 
services are furnished by other entities), provides for the 
application of requirements equal to or more stringent than 
the requirements under subsection (t),". 
(3) The first sentence of section 1154(a)(4)(B) (42 U.S.C. 1320c-
3(a)(4)(B)) is amended by inserting "(or subject to review under 
section 1882(t))" after "section 1876". 
(c) EFFECTIVE DATE.—The amendments made by this section shall 
only apply in 15 States (as determined by the Secretary of Health 
and Human Services) and only during the 3-year period beginning 
with 1992. 
(d) EVALUATION.—The Secretary of Health and Human Services 
shall conduct an evaluation of the amendments made by this section 
and shall report to Congress on such evaluation by not later than 
January 1,1995. 
SEC. 4359. HEALTH INSURANCE ADVISORY SERVICE FOR MEDICARE 42 USC 1395b-3. 
BENEFICIARIES. 
(a) IN GENERAL.—The Secretary of Health and Human Services 
shall establish a health insurance advisory service program (in this 
section referred to as the "beneficiary assistance program") to assist 
medicare-eligible individuals with the receipt of services under the 
medicare and medicaid programs and other health insurance pro-
grams. 
(b) OUTREACH ELEMENTS.—The beneficiary assistance program 
shall provide assistance— 
(1) through operation using local Federal offices that provide 
information on the medicare program, 
(2) using community outreach programs, and 
(3) using a toll-free telephone information service. 
(c) ASSISTANCE PROVIDED.—The beneficiary assistance program 
shall provide for information, counseling, and assistance for medi-
care-eligible individuals with respect to at least the following: 
(1) With respect to the medicare program— 
(A) eligibility, 
(B) benefits (both covered and not covered), 
(C) the process of payment for services, 
(D) rights and process for appeals of determinations, 
(E) other medicare-related entities (such as peer review 
organizations, fiscal intermediaries, and carriers), and 
(F) recent legislative and administrative changes in the 
medicare program. 
(2) With respect to the medicaid program— 
(A) eligibility, benefits, and the application process, 
(B) linkages between the medicaid and medicare pro-
grams, and 
9-194 O - 91 - 18 : QL 3 Part 2 
104 STAT. 1388-138 
PUBLIC LAW 101-508—NOV. 5, 1990 
(C) referral to appropriate State and local agencies in-
volved in the medicaid program. 
(3) With respect to medicare supplemental policies— 
(A) the program under section 1882 of the Social Security 
Act and standards required under such program, 
(B) how to make informed decisions on whether to pur-
chase such policies and on what criteria to use in evaluat-
ing different policies, 
(C) appropriate Federal, State, and private agencies that 
provide information and assistance in obtaining benefits 
under such policies, and 
(D) other issues deemed appropriate by the Secretary. 
The beneficiary assistance program also shall provide such other 
services as the Secretary deems appropriate to increase beneficiary 
understanding of, and confidence in, the medicare program and to 
improve the relationship between beneficiaries and the program. 
(d) 
EDUCATIONAL 
MATERIAL.—The 
Secretary, 
through 
the 
Administrator of the Health Care Financing Administration, shall 
develop appropriate educational materials and other appropriate 
techniques to assist employees in carrying out this section. 
(e) NOTICE TO BENEFICIARIES.—The Secretary shall take such steps 
as are necessary to assure that medicare-eligible beneficiaries and 
the general public are made aware of the beneficiary assistance 
program. 
(f) REPORT.—The Secretary shall include, in an annual report 
transmitted to the Congress, a report on the beneficiary assistance 
program and on other health insurance informational and counsel-
ing services made available to medicare-eligible individuals. The 
Secretary shall include in the report recommendations for such 
changes as may be desirable to improve the relationship between 
the medicare program and medicare-eligible individuals. 
42 u s e 1395b-4. 
SEC. 4360. HEALTH 
INSURANCE 
INFORMATION, 
COUNSELING, 
AND 
ASSISTANCE GRANTS. 
(a) GRANTS.—The Secretary of Health and Human Services (in 
this section referred to as the "Secretary") shall make grants to 
States, with approved State regulatory programs under section 1882 
of the Social Security Act, that submit applications to the Secretary 
that meet the requirements of this section for the purpose of provid-
ing information, counseling, and assistance relating to the procure-
ment of adequate and appropriate health insurance coverage to 
individuals who are eligible to receive benefits under title XVIII of 
the Social Security Act (in this section referred to as "eligible 
individuals"). The Secretary shall prescribe regulations to establish 
a minimum level of funding for a grant issued under this section. 
(b) GRANT APPLICATIONS.— 
(1) In submitting an application under this section, a State 
may consolidate and coordinate an application that consists of 
parts prepared by more than one agency or department of such 
State. 
(2) As part of an application for a grant under this section, a 
State shall submit a plan for a State-wide health insurance 
information, counseling, and assistance program. Such program 
shall— 
(A) establish or improve upon a health insurance 
information, counseling, and assistance program that pro-
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-139 
vides counseling and assistance to eligible individuals in 
need of health insurance information, including— 
(i) information that may assist individuals in obtain-
ing benefits and filing claims under titles XVIII and 
XIX of the Social Security Act; 
(ii) policy comparison information for medicare 
supplemental policies (as described in section 1882(g)(1) 
of the Social Security Act ^s and information that may 
assist individuals in filing claims under such medicare 
supplemental policies; 
(iii) information regarding long-term care insurance; 
and 
(iv) information regarding other types of health 
insurance benefits that the Secretary determines to be 
appropriate; 
(B) in conjunction with the health insurance information, 
counseling, and assistance program described in subpara-
graph (A), establish a system of referral to appropriate 
Federal or State departments or agencies for assistance 
with problems related to health insurance coverage (includ-
ing legal problems), as determined by the Secretary; 
(C) provide for a sufficient number of staff positions 
(including volunteer positions) necessary to provide the 
services of the health insurance information, counseling, 
and assistance program; 
(D) provide assurances that staff members (including vol-
unteer staff members) of the health insurance information, 
counseling, and assistance program have no conflict of 
interest in providing the services described in subparagraph 
(A); 
(E) provide for the collection and dissemination of timely 
and accurate health care information to staff members; 
(F) provide for training programs for staff members 
(including volunteer staff members); 
(G) provide for the coordination of the exchange of health 
insurance information between the staff of departments 
and agencies of the State government and the staff of the 
health insurance information, counseling, and sissistance 
program; 
(H) make recommendations concerning consumer issues 
and complaints related to the provision of health care to 
agencies and departments of the State government and the 
Federal Government responsible for providing or regulating 
health insurance; 
(I) establish an outreach program to provide the health 
insurance information and counseling described in subpara-
graph (A) and the assistance described in subparagraph (B) 
to eligible individuals; and 
(J) demonstrate, to the satisfaction of the Secretary, an 
ability to provide the counseling and assistance required 
under this section. 
(c) SPECIAL GRANTS.— 
(1) A State that is conducting a health insurance information, 
counseling, and assistance program that is substantially similar 
to a program described in subsection (bX2) shall, as a require-
ment for eligibility for a grant under this section, demonstrate, 
to the satisfaction of the Secretary, that such State shall main-
'• So in original. Probably should be "Act)". 
104 STAT. 1388-140 
PUBLIC LAW 101-508—NOV. 5, 1990 
tain the activities of such program at least at the level that such 
activities were conducted immediately preceding the date of the 
issuance of any grant during the period of time covered by such 
grant under this section and that such activities will continue to 
be maintained at such level. 
(2) If the Secretary determines that the existing health insur-
ance information, counseling, and assistance program is 
substantially similar to a program described in subsection (b)(2), 
the Secretary may waive some or all of the requirements de-
scribed in such subsection and issue a grant to the State for the 
purpose of increasing the number of services offered by the 
health insurance information, counseling, and assistance pro-
gram, experimenting with new methods of outreach in conduct-
ing such program, or expanding such program to geographic 
areas of the State not previously served by the program. 
(d) CRITERIA FOR ISSUING GRANTS.—In issuing a grant under this 
section, the Secretary shall consider— 
(1) the commitment of the State to carrying out the health 
insurance information, counseling, and assistance program de-
scribed in subsection (bX2), including the level of cooperation 
demonstrated— 
(A) by the office of the chief insurance regulator of the 
State, or the equivalent State entity; 
(B) other officials of the State responsible for overseeing 
insurance plans issued by nonprofit hospital and medical 
service associations; and 
(C) departments and agencies of such State responsible 
for— 
(i) administering funds under title XIX of the Social 
Security Act, and 
(ii) administering funds appropriated under the 
Older Americans Act; 
(2) the population of eligible individuals in such State as a 
percentage of the population of such State; and 
(3) in order to ensure the needs of rural areas in such State, 
the relative costs and special problems associated with address-
ing the special problems of providing health care information, 
counseling, and assistance to the rural areas of such State. 
(e) ANNUAL STATE REPORT.—A State that receives a grant under 
subsection (c) or (d) ^° shall, not later than 180 days after receiving 
such grant, and annually thereafter, issue an annual report to the 
Secretary that includes information concerning— 
(1) the number of individuals served by the State-wide health 
insurance information, counseling and assistance program of 
such State; 
(2) an estimate of the amount of funds saved by the State, and 
by eligible individuals in the State, in the implementation of 
such program; and 
(3) the problems that eligible individuals in such State 
encounter in procuring adequate and appropriate health care 
coverage. 
(f) REPORT TO CONGRESS.—Not later than 180 days after the date of 
the enactment of this section, and annually thereafter, the Sec-
retary shall issue a report to the Committee on Finance of the 
Senate, the Special Committee on Aging of the Senate, the Commit-
tee on Ways and Means of the House of Representatives, the 
Committee on Energy and Commerce of the House of Representa-
'° So in original. Probably should be "(a) or (c)". 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-141 
tives, and the Select Committee on Aging of the House of Represent-
atives that— 
(1) summarizes the allocation of funds authorized for grants 
under this section and the expenditure of such funds; 
(2) summarizes the scope and content of training conferences 
convened under this section; 
(3) outlines the problems that eligible individuals encounter 
in procuring adequate and appropriate health care coverage; 
(4) makes recommendations that the Secretary determines to 
be appropriate to address the problems described in paragraph 
(3); and 
(5) in the case of the report issued 2 years after the date of 
enactment of this section, evaluates the effectiveness of counsel-
ing programs established under this program, and makes rec-
ommendations regarding continued authorization of funds for 
these purposes. 
(f) AUTHORIZATION OF APPROPRIATIONS FOR GRANTS.—There 
are 
authorized to be appropriated, in equal parts from the Federal 
Hospital Insurance Trust Fund and from the Federal Supple-
mentary Medical Insurance Trust Fund, $10,000,000 for each of 
fiscal years 1991, 1992, and 1993, to fund the grant programs de-
scribed in this section. 
SEC. 4361. MEDICARE AND MEDIGAP INFORMATION BY TELEPHONE. 
(a) IN GENERAL.—Title XVIII (42 U.S.C. 1395 et seq.) is amended 
by inserting after section 1888 the following: 
MEDICARE AND MEDIGAP INFORMATION BY TELEPHONE 
"SEC. 1889. The Secretary shall provide information via a toll-free 
telephone number on the programs under this title and on medicare 
supplemental policies as defined in section 1882(g)(1) (including the 
relationship of State programs under title XIX to such policies).". 
Oa) DEMONSTRATION PROJECTS.—The Secretary of Health and 
Human Services is authorized to conduct demonstration projects in 
up to 5 States for the purpose of establishing statewide toll-free 
telephone numbers for providing information on medicare benefits, 
medicare supplemental policies available in the State, and benefits 
under the State medicaid program. 
Subtitle B—Medicaid 
PART 1—REDUCTION IN SPENDING 
Sec. 4401. Reimbursement for prescribed drugs. 
Sec. 4402. Requiring medicaid payment of premiums and cost-sharing for enroll-
ment under group health plans where cost-effective. 
PART 2—PROTECTION OF LOW-INCOME MEDICARE BENEFICIARIES 
Sec. 4501. Phased-in extension of medicaid payments for medicare premiums for 
certain individuals with income below 120 percent of the official 
poverty line. 
PART 3—IMPROVEMENTS IN CHILD HEALTH 
Sec. 
4601 
Sec. 
4602 
Sec. 
4603 
Medicaid child health provisions. 
Mandatory use of outreach locations other than welfare offices. 
Mandatory continuation of benefits throughout pregnancy or first year of 
life. 
Sec. 4604. Adjustment in payment for hospital services furnished to low-income 
children under the age of 6 years. 
Presumptive eligibility. 
Role in paternity determinations. 
42 u s e 1395Z2. 
42 u s e 1395ZZ 
note. 
Sec. 4605 
Sec. 4606 
104 STAT. 1388-142 
PUBLIC LAW 101-508—NOV. 5, 1990 
Sec. 4607. Report and transition on errors in eligibility determinations. 
PART 4—MISCELXANEOUS 
SUBPART A—PAYMENTS 
Sec. 4701. State medicaid matching payments through voluntary contributions and 
State taxes. 
Sec. 4702. Disproportionate share hospitals: counting of inpatient days. 
Sec. 4703. Disproportionate share hospitals: alternative State payment adjustments 
and systems. 
Sec. 4704. Federally-qualified health centers. 
Sec. 4705. Hospice payments. 
Sec. 4706. Limitation on disallowances or deferral of Federal financial participation 
for certain inpatient psychiatric hospital services for individuals under 
age 21. 
Sec. 4707. Treatment of interest on Indiana disallowance. 
Sec. 4708. Billing for services of substitute physician. 
SUBPART B—EUGIBIUTY AND COVERAGE 
Sec. 4711. Home and community-based care as optional service. 
Sec. 4712. Community supported living arrangements services. 
Sec. 4713. Providing Federal medical assistance for payments for premiums for 
"COBRA" continuation coverage where cost effective. 
Sec. 4714. Provisions relating to spousal impoverishment. 
Sec. 4715. Disregarding German reparation payments from post-eligibility treat-
ment of income under the medicaid program. 
Sec. 4716. Amendments relating to medicaid transition provision. 
Sec. 4717. Clarifying effect of hospice election. 
Sec. 4718. Medically needy income levels for certain 1-member families. 
Sec. 4719. Codification of coverage of rehabilitation services. 
Sec. 4720. Personal care services for Minnesota. 
Sec. 4721. Medicaid coverage of personal care services outside the home. 
Sec. 4722. Medicaid coverage of alcoholism and drug dependency treatment serv-
ices. 
Sec. 4723. Medicaid spenddown option. 
Sec. 4424. Optional State medicaid disability determinations independent of the 
Social Security Administration. 
SUBPART C—HEALTH MAINTENANCE ORGANIZATIONS 
Sec. 4731. Regulation of incentive payments to physicians. 
Sec. 4732. Special rules. 
Sec. 4733. Extension and expansion of Minnesota prepaid medicaid demonstration 
project. 
Sec. 4734. Treatment of certain county-operated health insuring organizations. 
SUBPART D—DEMONSTRATION PROJECTS AND HOME AND COMMUNITY-BASED WAIVERS 
Sec. 4741. Home and community-based waivers. 
Sec. 4742. Timely payment under waivers of freedom of choice of hospital services. 
Sec. 4744. Provisions relating to frail elderly demonstration project waivers. 
Sec. 4745. Demonstration projects to study the effect of allowing States to extend 
medicaid coverage to certain low-income families not otherwise quali-
fied to receive medicaid benefits. 
Sec. 4746. Medicaid respite demonstration project extended. 
Sec. 4747. Demonstration project to provide medicaid coverage for HIV-positive 
individuals. 
SUBPART E—MISCELLANEOUS 
Sec. 4751. Requirements for advanced directives under State plans for medical 
assistance. 
Sec. 4752. Improvement in quality of physician services. 
Sec. 4753. Clarification of authority of Inspector General. 
Sec. 4754. Notice to State medical boards when adverse actions taken. 
Sec. 4755. Miscellaneous provisions. 
PART 5—PROVISIONS RELATING TO NURSING HOME REFORM 
Sec. 4801. Technical corrections relating to nursing home reform. 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-143 
PART 1—REDUCTIONS IN SPENDING 
SEC. 4401. REIMBURSEMENT FOR PRESCRIBED DRUGS. 
(a) I N GENERAL.— 
(1) DENIAL OF FEDERAL FINANCIAL PARTICIPATION UNLESS 
REBATE AGREEMENTS AND DRUG USE REVIEW IN EFFECT.—Section 
1903(i) (42 U.S.C. 1396b(i)) is amended— 
(A) by striking the period at the end of paragraph (9) and 
inserting "; or", and 
(B) by inserting after paragraph (9) the following new 
paragraph: 
"(10) with respect to covered outpatient drugs of a manufac-
turer dispensed in any State unless, (A) except as provided in 
section 1927(a)(3), the manufacturer complies with the rebate 
requirements of section 1927(a) with respect to the drugs so 
dispensed in all States, and (B) effective January 1, 1993, the 
State provides for drug use review in accordance with section 
1927(g).". 
(2) PROHIBITING STATE PLAN DRUG ACCESS UMITATIONS FOR 
DRUGS COVERED UNDER A REBATE AGREEMENT.—Section 1902(a) of 
such Act (42 U.S.C. 1396a(a)) is amended— 
(A) by striking "and" at the end of paragraph (52), 
(B) by striking the period at the end of paragraph (53) and 
inserting "; and ', and 
(C) by inserting after paragraph (53) the following new 
pargigraph: 
"(54XA) provide that, any formulary or similar restriction 
(except as provided in section 1927(d)) on the coverage of covered 
outpatient drugs under the plan shall permit the coverage of 
covered outpatient drugs of any manufacturer which has en-
tered into and complies with an agreement under section 
1927(a), which are prescribed for a medically accepted indica-
tion (as defined in subsection 1927(k)(6)), and 
"(B) comply with the reporting requirements of section 
1927(bX2XA) and the requirements of subsections (d) and (g) of 
, 
• 
section 1927.". 
(3) REBATE AGREEMENTS FOR COVERED OUTPATIENT DRUGS, DRUG 
USE REVIEW, AND RELATED PROVISIONS.—Title XIX of the Social 
Security Act is amended by redesignating section 1927 as sec-
tion 1928 and by inserting after section 1926 the following new 42 USC 1396s. 
section: 
"PAYMENT FOR COVERED OUTPATIENT DRUGS 
"SEC. 1927. (a) REQUIREMENT FOR REBATE AGREEMENT.— 
42 use i396r-8. 
"(1) IN GENERAL.—In order for payment to be available under 
section 1903(a) for covered outpatient drugs of a manufacturer, 
the manufacturer must have entered into and have in effect a 
rebate agreement described in subsection (b) with the Secretary, 
on behalf of States (except that, the Secretary may authorize a 
State to enter directly into agreements with a manufacturer). 
Any agreement between a State and a manufacturer prior to 
April 1, 1991, shall be deemed to have been entered into on 
January 1, 1991, and payment to such manufacturer shall be 
retroactively calculated as if the agreement between the manu-
facturer and the State had been entered into on January 1, 
1991. If a manufacturer has not entered into such an agreement 
104 STAT. 1388-144 
PUBLIC LAW 101-508—NOV. 5, 1990 
before March 1, 1991, such an agreement, subsequently entered 
into, shall not be effective until the first day of the calendar 
quarter that begins more than 60 days after the date the 
agreement is entered into. 
"(2) EFFECTIVE DATE.—Paragraph (1) shall first apply to drugs 
dispensed under this title on or after January 1, 1991. 
"(3) AUTHORIZING PAYMENT FOR DRUGS NOT COVERED UNDER 
REBATE AGREEMENTS.—Paragraph (1), and section 1903(i)(10)(A), 
shall not apply to the dispensing of a single source drug or 
innovator multiple source drug if (A)(i) the State has made a 
determination that the availability of the drug is essential to 
the health of beneficiaries under the State plan for medical 
assistance; (ii) such drug has been given a rating of 1-A by the 
Food and Drug Administration; and (iiiXD the physician has 
obtained approval for use of the drug in advance of its dispens-
ing in accordance with a prior authorization program described 
in subsection (d), or (II) the Secretary has reviewed and ap-
proved the State's determination under subparagraph (A); or (B) 
the Secretary determines that in the first calendar quarter of 
1991, there were extenuating circumstances. 
"(4) EFFECT ON EXISTING AGREEMENTS.—In the case of a rebate 
agreement in effect between a State and a manufacturer on the 
date of the enactment of this section, such agreement, for the 
initial agreement period specified therein, shall be considered to 
be a rebate agreement in compliance with this section with 
respect to that State, if the State agrees to report to the 
Secretary any rebates paid pursuant to the agreement and such 
agreement provides for a minimum aggregate rebate of 10 
percent of the State's total expenditures under the State plan 
for coverage of the manufacturer's drugs under this title. If, 
after the initial agreement period, the State establishes to the 
satisfaction of the Secretary that an agreement in effect on the 
date of the enactment of this section provides for rebates that 
are at least as large as the rebates otherwise required under 
this section, and the State agrees to report any rebates under 
the agreement to the Secretary, the agreement shall be consid-
ered to be a rebate agreement in compliance with the section for 
the renewal periods of such agreement. 
"(b) TERMS OF REBATE AGREEMENT.— 
"(1) PERIODIC REBATES.— 
"(A) IN GENERAL.—A rebate agreement under this subsec-
tion shall require the manufacturer to provide, to each 
State plan approved under this title, a rebate each calendar 
quarter (or periodically in accordance with a schedule speci-
fied by the Secretary) in an amount specified in subsection 
(c) for covered outpatient drugs of the manufacturer dis-
pensed under the plan during the quarter (or such other 
period as the Secretary may specify). Such rebate shall be 
paid by the manufacturer not later than 30 days after the 
date of receipt of the information described in paragraph (2) 
for the period involved. 
"(B) OFFSET AGAINST MEDICAL ASSISTANCE.—Amounts re-
ceived by a State under this section (or under an agreement 
authorized by the Secretary under subsection (a)(1) or an 
agreement described in subsection (a)(4)) in any quarter 
shall be considered to be a reduction in the amount ex-
PUBLIC LAW 101-508—NOV. 5,1990 
104 STAT. 1388-145 
pended under the State plan in the quarter for medical 
assistance for purposes of section 1903(a)(1). 
"(2) STATE PROVISION OF INFORMATION.— 
"(A) STATE RESPONSIBIUTY.—Each State agency under 
this title shall report to each manufacturer not later than 
60 days after the end of each calendar quarter and in a 
form consistent with a standard reporting format estab-
lished by the Secretary, information on the total number of 
dosage units of each covered outpatient drug dispensed 
under the plan during the quarter, and shall promptly 
transmit a copy of such report to the Secretary. 
"(B) AUDITS.—A manufacturer may audit the information 
provided (or required to be provided) under subparsigraph 
(A). Adjustments to rebates shall be made to the extent that 
information indicates that utilization was greater or less 
than the amount previously specified. 
"(3) MANUFACTURER PROVISION OF PRICE INFORMATION.— 
"(A) IN GENERAL.—Each manufacturer with an agree-
ment in effect under this section shall report to the 
Secretary— 
"(i) not later than 30 days after the last day of each 
quarter (beginning on or after January 1, 1991), on the 
average manufacturer price (as defined in subsection 
(k)(l)) and, (for single source drugs and innovator mul-
tiple source drugs), the manufacturer's best price (as 
defined in subsection (c)(2)(B)) for covered outpatient 
drugs for the quarter, and 
"(ii) not later than 30 days after the date of entering 
into an agreement under this section on the average 
manufacturer price (£is defined in subsection (k)(l)) as 
of October 1, 1990 ^^ for each of the manufacturer's 
covered outpatient drugs. 
"(B) VERIFICATION SURVEYS OF AVERAGE MANUFACTURER 
PRICE.—The Secretary may survey wholesalers and manu-
facturers that directly distribute their covered outpatient 
drugs, when necessary, to verify manufacturer prices re-
ported under subparagraph (A). The Secretary may impose 
a civil monetary penalty in an amount not to exceed 
$100,000 on a wholesaler, manufacturer, or direct seller, if 
the wholesaler, manufacturer, or direct seller of a covered 
outpatient drug refuses a request for information about 
charges or prices by the Secretary in connection with a 
survey under this subparagraph or knowingly provides 
false information. The provisions of section 1128A (other 
than subsections (a) (with respect to amounts of penalties or 
additional assessments) and (b)) shall apply to a civil money 
penalty under this subparagraph in the same manner as 
such provisions apply to a penalty or proceeding under 
section 1128A(a). 
"(C) PENALTIES.— 
"(i) FAILURE TO PROVIDE TIMELY INFORMATION.—In the 
case of a manufacturer with an agreement under this 
section that fails to provide information required under 
subparagraph (A) on a timely basis, the amount of the 
penalty shall be increased by $10,000 for each day in 
which such information has not been provided and 
such amount shall be paid to the Treasury, and, if such 
" So in original. Probably should be "1990,". 
104 STAT. 1388-146 
PUBLIC LAW 101-508—NOV. 5, 1990 
information is not reported within 90 days of the dead-
line imposed, the agreement shall be suspended for 
services furnished after the end of such 90-day period 
and until the date such information is reported (but in 
no case shall such suspension be for a period of less 
than 30 days). 
"(ii) FALSE INFORMATION.—Any manufacturer with 
an agreement under this section that knowingly pro-
vides false information is subject to a civil money 
penalty in an amount not to exceed $100,000 for each 
item of false information. Such civil money penalties 
are in addition to other penalties as may be prescribed 
by law. The provisions of section 1128A (other than 
subsections (a) and (b)) shall apply to a civil money 
penalty under this subparagraph in the same manner 
as such provisions apply to a penalty or proceeding 
under section 1128A(a). 
"(D) CoNFiDENTiAUTY OF INFORMATION.—Notwithstand-
ing any other provision of law, information disclosed by 
manufacturers or wholesalers under this paragraph is con-
fidential and shall not be disclosed by the Secretary or a 
State agency (or contractor therewith) in a form which 
discloses the identity of a specific manufacturer or whole-
saler, prices charged for drugs by such manufacturer or 
wholesaler, except as the Secretary determines to be nec-
essary to carry out this section and to permit the Comp-
troller General to review the information provided. 
"(4) LENGTH OF AGREEMENT.— 
"(A) IN GENERAL.—A rebate agreement shall be effective 
for an initial period of not less than 1 year and shall be 
automatically renewed for a period of not less than one 
year unless terminated under subparagraph (B). 
"(B) TERMINATION.— 
"(i) BY THE SECRETARY.—The Secretary may provide 
for termination of a rebate agreement for violation of 
the requirements of the agreement or other good cause 
shown. Such termination shall not be effective earlier 
than 60 days after the date of notice of such termi-
nation. The Secretary shall provide, upon request, a 
manufacturer with a hearing concerning such a termi-
nation, but such hearing shall not delay the effective 
date of the termination. 
"(ii) BY A MANUFACTURER.—A manufacturer may 
terminate a rebate agreement under this section for 
any reason. Any such termination shall not be effective 
until such period after the date of the notice as the 
Secretary may provide (but not beyond the term of the 
agreement). 
"(iii) EFFECTIVENESS OF TERMINATION.—Any termi-
nation under this subparagraph shall not affect rebates 
due under the agreement before the effective date of its 
termination. 
"(C) DELAY BEFORE REENTRY.—In the case of any rebate 
agreement with a manufacturer under this section which is 
terminated, another such agreement with the manufac-
turer (or a successor manufacturer) may not be entered into 
until a period of 1 calendar quarter has elapsed since the 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-147 
date of the termination, unless the Secretary finds good 
cause for an earlier reinstatement of such an agreement. 
"(c) AMOUNT OF REBATE.— 
"(1) BASIC REBATE FOR SINGLE SOURCE DRUGS AND INNOVATOR 
MULTIPLE SOURCE DRUGS.—With respect to single source drugs 
and innovator multiple source drugs, each manufacturer shall 
remit a hasic rebate to the State medical assistance plan. Except 
as otherwise provided in this subsection, the amount of the 
rebate to a State for a calendar quarter (or other period speci-
fied by the Secretary) with respect to each dosage form and 
strength of single source drugs and innovator multiple source 
drugs shall be equal to the prcduct of^ 
"(A) the total number of units of each dosage form and 
strength dispensed under the plan under this title in the 
quarter (or other period) reported by the State under 
subsection (b)(2); and 
"(B)(i) for quarters (or periods) beginning after Decem-
ber 31, 1990, and before January 1, 1993, the greater of— 
"(I) the difference between the average manufacturer 
price (after deducting customary prompt pajrment dis-
counts) and 87.5 percent of such price for the quarter 
(or other period), or 
"(II) the difference between the average manufac-
turer price for a drug and the best price (as defined in 
paragraph (2XB)) for such quarter (or period) for such 
drug (except that for calendar quarters beginning after 
December 31, 1990, and ending before January 1, 1992, 
the rebate shall not exceed 25 percent of the average 
manufacturer price, and for calendar quarters begin-
ning after December 31, 1991, and ending before Janu-
ary 1, 1993, the rebate shall not exceed 50 percent of 
the average manufacturer price); and 
"(ii) for quarters (or other periods) beginning after 
December 31,1992, the greater of— 
"(I) the difference between the average manufacturer 
price for a drug and 85 percent of such price, or 
"(II) the difference between the average manufac-
turer price for a drug and the best price {as defined in 
paragraph (2XB)) for such quarter (or period) for such 
drug. 
"(C) For the purposes of this paragraph, the term 'best price' 
means, with respect to a single source drug or innovator mul-
tiple source drug of a manufacturer, the lowest price available 
from the manufacturer to any wholesaler, retailer, nonprofit 
entity, or governmental entity within the United States (exclud-
ing depot prices and single award contract prices, as defined by 
the Secretary^of any ^ency of the Federal Government). The 
best price shall be inclusive of cash discounts, free goods, 
volume discounts, and rebates (other than rebates under this 
section) and shall be determined without regard to special 
packaging, labeling, or identifiers on the dosage form or product 
or package, and shall not take into account prices that are 
merely nominal in amount; ^^ 
"(D) In the case of a covered outpatient drug approved for 
marketing after October 1,1990, any reference in this paragraph 
to 'October 1, 1990' shall be a reference to the first day of the 
first month during which the drug was marketed. 
'* So in original. Probably should be "." 
104 STAT. 1388-148 
PUBLIC LAW 101-508—NOV. 5, 1990 
"(2) ADDITIONAL REBATE FOR SINGLE SOURCE AND INNOVATOR 
MULTIPLE SOURCE DRUGS.—(A) Each manufacturer shall remit an 
additional rebate to the State medical assistance plan in an 
amount equal to: 
"(i) For calendar quarters (or other periods) beginning 
after December 31, 1990 and ending before January 1, 
1994— 
"(I) the total number of each dosage form and 
strength of a single source or innovator multiple source 
drug dispensed during the calendar quarter (or other 
period); multiplied by 
"(II)(aa) the average manufacturer price for each 
dosage form and strength, minus 
"(bb) the average manufacturer price for each such 
dosage form and strength in effect on October 1, 1990, 
increased by the percentage increase in the Consumer 
Price Index for all urban C9nsumers (U.S. average) 
from October 1, 1990, to the month before the begin-
ning of the calendar quarter (or other period) in-
volved; 2^ 
"(ii) For calendar quarters (or other periods) beginning 
after December 31,1993— 
"(I) the total number of each dosage form and 
strength of a single source or innovative multiple 
source drug dispensed during the calendar quarter (or 
other period); multiplied by 
"(II) the amount, if any, by which the weighted aver-
age manufacturer price for single source and innovator 
multiple source drugs of a manufacturer exceeds the 
weighted average manufacturer price for the manufac-
turer as of October 1, 1990, increased by the percentage 
increase in the Consumer Price Index for all urban 
consumers (U.S. average) from October 1, 1990, to the 
month before the beginning of the calendar quarter (or 
other period) involved. 
"(BXi) For the purposes of subparagraph (A)(ii), the term 
'weighted average manufacturer price' means (with respect to a 
calendar quarter or other period) the ratio of— 
"(I) the sum of the products (for all covered drugs of the 
manufacturer purchased under a State program under this 
title) of— 
"(aa) the average manufacturer price for each such 
covered drug; and 
"(bb) the number of units of the covered drug sold to 
any State program under this title during such period, 
to 
"(II) the total number of units of all such covered drugs 
sold under a State program under this title in such period, 
except that the Secretary may exclude certain new drugs from 
the calculation of the weighted average if the inclusion of any 
such drug in such calculation has the effect of— 
"(aa) reducing the rebate otherwise calculated pursuant 
to subparagraph (AXii); or 
"(bb) increasing the rebate otherwise calculated pursuant 
to subparagraph (AXii) (in cases where such calculation 
under the conditions outlined in clause (ii).^* 
" So in original. Probably should be ".". 
'* So in original. Probably should be "(ii))". 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-149 
"(iiXD The Secretary may exclude drugs approved by the Food 
and Drug Administration on or after October 1, 1990, from the 
calculation of weighted average manufacturer price if inclus ^^ 
manufacturer demonstrates through a petition, in a form and 
manner prescribed by the Secretary, undue hardship on such 
manufacturer as a result of the inclusion of such drug in such 
calculation).^® 
"(II) The Secretary may promulgate guidelines to restrict the 
conditions under which the Secretary may consider such 
petitions. 
"(C) For each of 8 calendar quarters beginning after Decem-
ber 31, 1991, the Secretary shall compare the aggregate amount 
of the rebates under subparagraph (A)(i) to the aggregate 
amount of rebates under subparagraph (A)(ii). Based on any 
such comparison, the Secretary may propose and utilize an 
alternative formula for the purpose of calculating an aggregate 
rebate. 
"(3) REBATE FOR OTHER DRUGS.—The amount of the rebate to a 
State for a calendar quarter (or other period specified by the 
Secretary) with respect to covered outpatient drugs (other than 
single source drugs and innovator multiple source drugs) shall 
be equal to the product of^ 
"(A) the applicable percentage (as described in paragraph 
(4) 3'^ of the average manufacturer price for each dosage 
form and strength of such drugs (after deducting customary 
prompt payment discounts) for the quarter (or other 
period), and 
"(B) the number of units of such form and dosage dis-
pensed under the plan under this title in the quarter (or 
other period) reported by the State under subsection (b)(2). 
"(4) For the purposes of paragraph (3), the applicable percent- . 
age is— 
"(A) with respect to calendar quarters beginning after 
December 31, 1990, and ending before January 1, 1994, 10 
percent; and 
"(B) with respect to calendar quarters beginning on or 
after December 31,1993,11 percent. 
'(d) LIMITATIONS ON COVERAGE OF DRUGS.— 
"(1) PERMISSIBLE RESTRICTIONS.—(A) Except £is provided in 
parEigraph (6), a State may subject to prior authorization any 
covered outpatient drug. Aiiy such prior authorization program 
shall comply with the requirements of paragraph (5). 
"(B) A State may exclude or otherwise restrict coverage of a 
covered outpatient drug if— 
"(i) the prescribed use is not for a medically accepted 
indication (as defined in (kX6)); 
"(ii) the drug is contained in the list referred to in 
paragraph (2); or 
"(iii) the drug is subject to such restrictions pursuant to 
an agreement between a manufacturer and a State au-
thorized by the Secretary under subsection (aXD or in effect 
pursuant to subsection (aX4). 
"(2) LIST OF DRUGS SUBJECT TO RESTRICTION.—The following 
drugs or classes of drugs, or their medical uses, may be excluded 
from coverage or otherwise restricted: 
"(A) Agents when used for anorexia or weight gain. 
"(B) Agents when used to promote fertility. 
'» So in original. The "inclus" probably should be "the" 
'• So in original. Probably should be "calculation.". 
'^ So in original. Probably should be "(4))". 
104 STAT. 1388-150 
PUBLIC LAW 101-508—NOV. 5, 1990 
"(C) Agents when used for cosmetic purposes or hair 
growth. 
"(D) Agents when used for the symptomatic relief of 
cough and colds. 
"(E) Agents when used to promote smoking cessation. 
"(F) Prescription vitamins and mineral products, except 
prenatal vitamins and fluoride preparations. 
"(G) Nonprescription drugs. 
"(H) Covered outpatient drugs which the manufacturer 
seeks to require as a condition of sale that associated tests 
or monitoring services be purchased exclusively from the 
manufacturer or its designee. 
"(I) Drugs described in section 107(c)(3) of the Drug 
Amendments of 1962 and identical„similar, or related drugs 
(within the meaning of section 310.6(b)(1) of title 21 of the 
Code of Federal Regulations CDESr drugs)). 
"(J) Barbiturates. 
"(K) Benzodiazepines. 
"(3) UPDATE OF DRUG USTINGS.—The Secretary shall (except 
with respect to new drugs approved by the FDA for the first 6 
months following the date of approval of such drugs shall not be 
subject to being listed in paragraph (2) under the provisions of 
this paragraph), by regulation, periodically update the list of 
drugs described in paragraph (2) or classes of drugs, or their 
medical uses, which the Secretary has determined, based on 
data collected by surveillance and utilization review programs 
of State medical assistance programs, to be subject to clinical 
abuse or inappropriate use. 
"(4) INNOVATOR MULTIPLE-SOURCE DRUGS.—Innovator multiple-
source drugs shall be treated under applicable State and Fed-
eral law and regulation, 
"(5) PRIOR AUTHORIZATION PROGRAMS.—A State plan under 
this title may not require, as a condition of coverage or payment 
for a covered outpatient drug for which Federal financial 
participation is available in accordance with this section, the 
approval of the drug before its dispensing for any medically 
accepted indication (as defined in subsection (k)(6)) unless the 
system providing for such approval— 
"(A) provides response by telephone or other tele-
communication device within 24 hours of a request for prior 
authorization; and 
"(B) except with respect to the drugs on the list referred 
to in paragraph (2), provides for the dispensing of at least a 
72-hour supply of a covered outpatient prescription drug in 
an emergency situation (as defined by the Secretary). 
"(6) TREATMENT OF NEW DRUGS.—A State may not exclude for 
coverage, subject to prior authorization, or otherwise restrict 
any new biological or drug approved by the Food and Drug 
Administration after the date of enactment of this section, for a 
period of 6 months after such approval. 
"(7) OTHER PERMISSIBLE RESTRICTIONS.—A State may impose 
limitations, with respect to all such drugs in a therapeutic class, 
on the minimum or maximum quantities per prescription or on 
the number of refills, provided such limitations are necessary to 
discourage waste. Nothing in this section shall restrict the 
ability of a State to address individual instances of fraud or 
abuse in any manner authorized under the Social Security Act. 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-151 
"(8) DELAYED EFFECTIVE DATE.—The provisions of paragraph 
(5) shall become effective with respect to drugs dispensed under 
this title on or after July 1,1991. 
"(e) DENIAL OF FEDERAL FINANCIAL PARTICIPATION IN CERTAIN 
CASES.—The Secretary shall provide that no payment shall be made 
to a State under section 1903(a) for an innovator multiple-source 
drug dispensed on or after July 1, 1991, if, under applicable State 
law, a less expensive noninnovator multiple source drug (other than 
the innovator multiple-source drug) could have been dispensed. 
"(f) PHARMACY REIMBURSEMENT.— 
"(1) No REDUCTIONS IN REIMBURSEMENT UMITS.—(A) During 
the period of time beginning on January 1, 1991, and ending on 
December 31, 1994, the Secretary may not modify by regulation 
the formula used to determine reimbursement limits described 
in the regulations under 42 CFR 447.331 through 42 CFR 
447.334 (as in effect on the date of the enactment of the Omni-
bus Budget Reconciliation Act of 1990) to reduce such limits for 
covered outpatient drugs. 
(B) 3* During the period of time described in subpargigraph 
(A), any State that was in compliance with the regulations 
described in subparagraph (A) may not reduce the limits for 
covered outpatient drugs described in subparsigraph (A) or dis-
pensing fees for such drugs. 
"(2) ESTABLISHMENT OF UPPER PAYMENT LIMITS.—HCFA shall 
establish a Federal upper reimbursement limit for each mul-
tiple source drug for which the FDA has rated three or more 
products therapeutically and pharmaceutically 
equivalent, 
regardless of whether all such additional formulations are rated 
as such and shall use only such formulations when determining 
any such upper limit. 
"(g) DRUG USE REVIEW.— 
"(1) IN GENERAL.— 
"(A) In order to meet the requirement of section 
1903(i)(10XB), a State shall provide, by not later than Janu-
ary 1, 1993, for a drug use review program described in 
paragraph (2) for covered outpatient drugs in order to 
assure that prescriptions (i) are appropriate, (ii) are medi-
cally necessary, and (iii) are not likely to result in adverse 
medical results. The program shall be designed to educate 
physicians and pharmacists to identify and reduce the fre-
quency of patterns of fraud, abuse, gross overuse, or 
inappropriate or medically unnecessary care, among physi-
cians, pharmacists, and patients, or associated with specific 
drugs or groups of drugs, as well as potential and actual 
severe adverse reactions to drugs including education on 
therapeutic appropriateness, overutilization and under-
utilization, appropriate use of generic products, therapeutic 
duplication, 
drug-disease 
contraindications, 
drug-drug 
interactions, incorrect drug dosage or duration of drug 
treatment, drug-allergy interactions, and clinical abuse/ 
misuse. 
"(B) The program shall assess data on drug use against 
predetermined standards, consistent with the following: 
"(i) compendia which shall consist of the following: 
'* So in original. Probably should be " "(B)". 
104 STAT. 1388-152 
PUBLIC LAW 101-508—NOV. 5, 1990 
"(I) American Hospital Formulary Service Drug 
Information; 
"(II) United States Pharmacopeia-Drug Informa-
tion; and 
"(III) 
American 
Medical 
Association 
Drug 
Evaluations; and 
"(ii) the peer-reviewed medical literature. 
"(C) The Secretary, under the procedures established in 
section 1903, shall pay to each State an amount equal to 75 
per centum of so much of the sums expended by the State 
plan during calendar years 1991 through 1993 as the Sec-
retary determines is attributable to the statewide adoption 
of a drug use review program which conforms to the 
requirements of this subsection. 
"(D) States shall not be required to perform additional 
drug use reviews with respect to drugs dispensed to resi-
dents of nursing facilities which are in compliance with the 
drug regimen review procedures prescribed by the Sec-
retary for such facilities in regulations implementing sec-
tion 1919, currently at section 483.60 of title 42, Code of 
Federal Regulations. 
"(2) DESCRIPTION OF PROGRAM.—Each drug use review pro-
gram shall meet the following requirements for covered out-
patient drugs: 
"(A) PROSPECTIVE DRUG REVIEW.—(i) The State plan shall 
provide for a review of drug therapy before each prescrip-
tion is filled or delivered to an individual receiving benefits 
under this title, typically at the point-of-sale or point of 
distribution. The review shall include screening for poten-
tial drug therapy problems due to therapeutic duplication, 
drug-disease 
contraindications, 
drug-drug 
interactions 
(including serious interactions with nonprescription or 
over-the-counter drugs), incorrect drug dosage or duration 
of drug treatment, drug-allergy interactions, and clinical 
abuse/misuse. Each State shall use the compendia and 
literature referred to in paragraph (1)(B) as its source of 
standards for such review. 
"(ii) As part of the State's prospective drug use review 
program under this subparagraph applicable State law 
shall establish standards for counseling of individuals 
receiving benefits under this title by pharmacists which 
includes at least the following: 
"(I) The pharmacist must offer to discuss with each 
individual receiving benefits under this title or 
caregiver of such individual (in person, whenever prac-
ticable, or through access to a telephone service which 
is toll-free for long-distance calls) who presents a 
prescription, matters which in the exercise of the phar-
macist's professional judgment (consistent with State 
law respecting the provision of such information), the 
pharmacist deems significant including the following: 
"(aa) The name and description of the medica-
tion. 
"(bb) The route, dosage form, dosage, route of 
administration, and duration of drug therapy. 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-153 
"(cc) Special directions and precautions for 
preparation, administration and use by the pa-
tient. 
"(dd) Common severe side or adverse effects or 
interactions and therapeutic 
contraindications 
that may be encountered, including their avoid-
ance, and the action required if they occur. 
"(ee) Techniques for self-monitoring drug ther-
apy. 
"(ff) Proper storage, 
"(gg) Prescription refill information, 
"(hh) Action to be taken in the event of a missed 
dose. 
"(11) A reasonable effort must be made by the phar-
macist to obtain, record, and maintain at least the 
following information regarding individuals receiving 
benefits under this title: 
"(aa) Nsmie, address, telephone number, date of 
birth (or age) and gender. 
"(bb) 
Individual 
history 
where 
significant, 
including disease state or states, known allergies 
and drug reactions, and a comprehensive list of 
medications and relevant devices. 
"(cc) Pharmacist comments relevant to the 
individuals drug therapy. 
Nothing in this clause shall be construed as requiring a 
pharmacist to provide consultation when an individual 
receiving benefits under this title or caregiver of such 
individual refuses such consultation. 
"(B) RETROSPECTIVE DRUG USE REVIEW.—The program 
shall provide, through its mechanized drug claims process-
ing and information retrieval systems (approved by the 
Secretary under section 1903(r)) or otherwise, for the on-
going periodic examination of claims data and other records 
in order to identify patterns of fraud, abuse, gross overuse, 
or inappropriate or medically unnecessary care, among 
physicians, pharmacists and individuals receiving benefits 
under this title, or associated with specific drugs or groups 
of drugs. 
"(C) APPUCATION OF STANDARDS.—The program shall, on 
an ongoing basis, assess data on drug use against explicit 
predetermined standards (using the compendia and lit-
erature referred to in subsection (1)(B) as the source of 
standards for such assessment) including but not limited to 
monitoring for therapeutic appropriateness, overutilization 
and underutilization, appropriate use of generic products, 
therapeutic duplication, drug-disease 
contraindications, 
drug-drug interactions, incorrect drug dosage or duration of 
drug treatment, and clinical abuse/misuse and, as nec-
essary, introduce remedial strategies, in order to improve 
the quality of care and to conserve program funds or per-
sonal expenditures. 
"(D) 
EDUCATIONAL 
PROGRAM.—The 
program 
shall, 
through its State drug use review board established under 
paragraph (3), either directly or through contracts with 
accredited health care educational institutions, State medi-
cal societies or State pharmacists associations/societies or 
other organizations as specified by the State, and using data 
104 STAT. 1388-154 
PUBLIC LAW 101-508—NOV. 5, 1990 
provided by the State drug use review board on common 
drug therapy problems, provide for active and ongoing 
educational outreach programs (including the activities de-
scribed in paragraph (SXCXiii) of this subsection) to educate 
practitioners on common drug therapy problems with the 
aim of improving prescribing or dispensing practices. 
"(3) STATE DRUG USE REVIEW BOARD.— 
"(A) EsTABusHMENT.—Each State shall provide for the 
establishment of a drug use review board (hereinafter re-
ferred to £is the 'DUR Board') either directly or through a 
contract with a private organization. 
"(B) MEMBERSHIP.—The membership of the DUR Board 
shall include health care professionals who have recognized 
knowledge and expertise in one or more of the following: 
"(i) The clinically appropriate prescribing of covered 
outpatient drugs. 
"(ii) The clinically appropriate dispensing and mon-
itoring of covered outpatient drugs, 
"(iii) Drug use review, evaluation, and intervention. 
"(iv) Medical quality assurance. 
The membership of the DUR Board shall be made up at 
least V
a but no more than 51 percent licensed and actively 
practicing physicians and at least Va * * * licensed and 
actively practicing pharmacists. 
"(C) ACTIVITIES.—The activities of the DUR Board shall 
include but not be limited to the following: 
"(i) Retrospective DUR as defined in section (2XB). 
"(ii) Application of standards as defined in section 
(2XC). 
"(iii) Ongoing interventions for physicians and phar-
macists, targeted toward therapy problems or individ-
uals identified in the course of retrospective drug use 
reviews performed under this subsection. Intervention 
programs shall include, in appropriate instances, at 
least: 
"(I) information 
dissemination 
sufficient 
to 
ensure the ready availability to physicians and 
pharmacists in the State of information concerning 
its duties, powers, and basis for its standards; 
"(II) written, oral, or electronic 
reminders 
containing patient-specific or drug-specific (or both) 
information and suggested changes in prescribing 
or 
dispensing 
practices, communicated 
in 
a 
manner designed to ensure the privacy of patient-
related information; 
"(III) use of face-to-face discussions between 
health care professionals who are experts in 
rational drug therapy and selected prescribers and 
pharmacists who have been targeted for edu-
cational intervention, including discussion of opti-
mal prescribing, dispensing, or pharmacy care 
practices, and follow-up face-to-face discussions; 
and 
"(IV) intensified review or monitoring of selected 
prescribers or dispensers. 
The Board shall re-evaluate interventions after an appro-
priate period of time to determine if the intervention im-
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-155 
proved the quality of drug therapy, to evaluate the success 
of the interventions and make modifications as necessary. 
"(D) ANNUAL REPORT.—Each State shall require the DUR 
Board to prepare a report on an annual basis. The State 
shall submit a report on an annual basis to the Secretary 
which shall include a description of the activities of the 
Board, including the nature and scope of the prospective 
and retrospective drug use review programs, a summary of 
the interventions used, an assessment of the impact of these 
^ 
educational interventions on quality of care, and an esti-
mate of the cost savings generated as a result of such 
program. The Secretary shall utilize such report in evaluat-
ing the effectiveness of each State's drug use review 
program. 
'(h) ELECTRONIC CLAIMS MANAGEMENT.— 
"(1) IN GENERAL.—In accordance with chapter 35 of title 44, 
United States Code (relating to coordination of Federal informa-
tion policy), the Secretary shall encourage each State agency to 
establish, as its principal means of processing claims for covered 
outpatient drugs under this title, a point-of-sale electronic 
claims management system, for the purpose of performing on-
line, real time eligibility verifications, claims data capture, 
adjudication of claims, and assisting pharmacists (and other 
authorized persons) in applying for and receiving payment. 
"(2) ENCOURAGEMENT.—In order to carry out paragraph (1)— 
"(A) for calendar quarters during fiscal years 1991 and 
1992, expenditures under the State plan attributable to 
development of a system described in paragraph (1) shall 
receive Federal 
financial 
participation 
under 
section 
1903(a)(3)(A)(i) (at a matching rate of 90 percent) if the State 
acquires, through applicable competitive procurement proc-
ess in the State, the most cost-effective telecommunications 
network and automatic data processing services and equip-
ment; and 
"(B) the Secretary may permit, in the procurement de-
scribed in subparagraph (A) in the application of part 433 of 
title 42, Code of Federal Regulations, and parts 95, 205, and 
307 of title 45, Code of Federal Regulations, the substitution 
of the State's request for proposal in competitive procure-
ment for advance planning and implementation documents 
otherwise required. 
*(i) ANNUAL REPORT.— 
"(1) IN GENERAL.—Not later than May 1 of each year the 
Secretary shall transmit to the Committee on Finance of the 
Senate, the Committee on Energy and Commerce of the House 
of Representatives, and the Committees on Aging of the Senate 
and the House of Representatives a report on the the operation 
of this section in the preceding fiscal year. 
"(2) DETAILS.—Each report shall include information on— 
"(A) ingredient costs paid under this title for single 
source drugs, multiple source drugs, and nonprescription 
covered outpatient drugs; 
"(B) the total value of rebates received and number of 
manufacturers providing such rebates; 
"(C) how the size of such rebates compare with the size or 
rebates offered to other purchasers of covered outpatient 
drugs; 
104 STAT. 1388-156 
PUBLIC LAW 101-508—NOV. 5, 1990 
"(D) the effect of inflation on the value of rebates re-
quired under this section; 
"(E) trends in prices paid under this title for covered 
outpatient drugs; and 
"(F) Federal and State administrative costs associated 
with compliance with the provisions of this title, 
"(j) EXEMPTION OF ORGANIZED HEALTH CARE SETTINGS.—(1) Cov-
ered outpatient drugs dispensed by * * * Health Maintenance 
Organizations, including those organizations that contract under 
section 1903(m), are not subject to the requirements of this section. 
"(2) The State plan shall provide that a hospital (providing medi-
cal assistance under such plan) that dispenses covered outpatient 
drugs using drug formulary systems, and bills the plan no more 
than the hospital's purchasing costs for covered outpatient drugs (as 
determined under the State plan) shall not be subject to the require-
ments of this section. 
"(3) Nothing in this subsection shall be construed as providing 
that amounts for covered outpatient drugs paid by the institutions 
described in this subsection should not be taken into account for 
purposes of determining the best price as described in subsection (c). 
"(k) DEFINITIONS.—In this section— 
"(1) AVERAGE MANUFACTURER PRICE.—The term 'average 
manufacturer price' means, with respect to a covered outpatient 
drug of a manufacturer for a calendar quarter, the average 
price paid to the manufacturer for the drug in the United States 
by wholesalers for drugs distributed to the retail pharmacy 
class of trade. 
"(2) COVERED OUTPATIENT DRUG.—Subject to the exceptions in 
paragraph (3), the term 'covered outpatient drug' means— 
"(A) of those drugs which are treated as prescribed drugs 
for purposes of section 1905(a)(12), a drug which may be 
dispensed only upon prescription (except as provided in 
paragraph (5)), and— 
"(i) which is approved for safety and effectiveness as 
a prescription drug under section 505 or 507 of the 
Federal Food, Drug, and Cosmetic Act or which is 
approved under section 505(j) of such Act; 
"(iiXD which was commercially used or sold in the 
United States before the date of the enactment of the 
Drug Amendments of 1962 or which is identical, simi-
lar, or related (within the meaning of section 310.6(bXl) 
of title 21 of the Code of Federal Regulations) to such a 
drug, and (II) which has not been the subject of a final 
determination by the Secretary that it is a 'new drug' 
(within the meaning of section 201(p) of the Federal 
Food, Drug, and Cosmetic Act) or an action brought by 
the Secretary under section 301, 302(a), or 304(a) of 
such Act to enforce section 502(f) or 505(a) of such Act; 
or 
"(iiiXD which is described in section 107(cX3) of the 
Drug Amendments of 1962 and for which the Secretary 
has determined there is a compelling justification for 
its medical need, or is identical, similar, or related 
(within the meaning of section 310.6(b)(1) of title 21 of 
the Code of Federal Regulations) to such a drug, and (II) 
for which the Secretary has not issued a notice of an 
opportunity for a hearing under section 505(e) of the 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-157 
Federal Food, Drug, and Cosmetic Act on a proposed 
order of the Secretary to withdraw approval of an 
application for such drug under such section because 
the Secretary has determined that the drug is less than 
effective for some or all conditions of use prescribed, 
recommended, or suggested in its labeling; and 
"(B) a biological product, other than a vaccine which— 
"(i) may only be dispensed upon prescription, 
"(ii) is licensed under section 351 of the Public Health 
Service Act, and 
"(iii) is produced at an establishment licensed under 
such section to produce such product; and 
"(C) insulin certified under section 506 of the Federal 
Food, Drug, and Cosmetic Act. 
"(3) LIMITING DEFINITION.—The term 'covered outpatient 
drug' does not include any drug, biological product, or insulin 
provided as part of, or as incident to and in the same setting as, 
any of the following (and for which payment may be made 
under this title as part of payment for the following and not as 
direct reimbursement for the drug): 
"(A) Inpatient hospital services. 
"(B) Hospice services. 
"(C) Dental services, except that drugs for which the 
State plan authorizes direct reimbursement to the dispens-
ing dentist are covered outpatient drugs. 
'(D) Physicians'services. 
"(E) Outpatient hospital services * * * * 39 emergency 
room visits. 
"(F) Nursing facility sevices. 
"(G) Other laboratory and x-ray services. 
"(H) Renal dialysis. 
Such term also does not include any such drug or product which 
is used for a medical indication which is not a medically 
accepted indication. 
"(4) NONPRESCRIPTION DRUGS.—If a State plan for medical 
assistance under this title includes coverage of prescribed drugs 
as described in section 1905(aX12) and permits coverage of drugs 
which may be sold without a prescription (commonly referred to 
as 'over-the-counter' drugs), if they are prescribed by a physi-
cian (or other person authorized to prescribe under State law), 
such a drug shall be regarded as a covered outpatient drug. 
"(5) MANUFACTURER.—The term 'manufacturer' means any 
entity which is engeiged in— 
"(A) 
the 
production, 
preparation, 
propagation, 
compounding, conversion, or processing of prescription drug 
products, either directly or indirectly by extraction from 
substances of natural origin, or independently by means of 
chemical synthesis, or by a combination of extraction and 
chemical synthesis, or 
"(B) in the packaging, repackaging, labeling, relabeling, 
or distribution of prescription drug products. 
Such term does not include a wholesale distributor of drugs or a 
retail pharmacy licensed under State law. 
"(6) MEDICALLY ACCEPTED INDICATION.—The term 'medically 
accepted indication' means any use for a covered outpatient 
drug which is approved under the Federal Food, Drug, and 
Cosmetic Act, which appears in peer-reviewed medical lit-
•• So in original. Probably should be "services emergency". 
104 STAT. 1388-158 
PUBLIC LAW 101-508—NOV. 5, 1990 
erature or which is accepted by one or more of the following 
compendia: the American Hospital Formulary Service-Drug 
Information, the American Medical Association Drug Evalua-
tions, and the United States Pharmacopeia-Drug Information. 
"(7) 
MULTIPLE SOURCE DRUG; INNOVATOR MULTIPLE SOURCE 
DRUG; NONINNOVATOR MULTIPLE SOURCE DRUG; SINGLE SOURCE 
DRUG.— 
"(A) DEFINED.— 
"(i) MULTIPLE SOURCE DRUG.—The term 'multiple 
source drug' means, with respect to a calendar quarter, 
a covered outpatient drug (not including any drug de-
scribed in paragraph (5)) for which there are 2 or more 
drug products which— 
"(I) are rated as therapeutically equivalent 
(under the Food and Drug Administration's most 
recent publication of 'Approved Drug Products 
with Therapeutic Equivalence Evaluations'), 
"(II) except as provided in subparagraph (B), are 
pharmaceutically equivalent and bioequivalent, as 
defined in subparagraph (C) and as determined by 
the Food and Drug Administration, and 
"(III) are sold or marketed in the State during 
the period. 
"(ii) INNOVATOR MULTIPLE SOURCE DRUG.—The term 
'innovator multiple source drug' means a multiple 
source drug that was originally marketed under an 
original new drug application approved by the Food 
and Drug Administration. 
"(iii) NONINNOVATOR MULTIPLE SOURCE DRUG.—The 
term 'noninnovator multiple source drug' means a mul-
tiple source drug that is not an innovator multiple 
source drug. 
"(iv) SINGLE SOURCE DRUG.—The term 'single source 
drug' means a covered outpatient drug which is 
produced or distributed under an originsd new drug 
application approved by the Food and Drug Adminis-
tration, including a drug product marketed by any 
cross-licensed producers or distributers *° operating 
under the new drug application. 
"(B) EXCEPTION.—Subpar^aph (AXi)(II) shall not apply 
if the Food and Drug Administration changes by regulation 
the requirement that, for purposes of the publication de-
scribed in subparagraph (AXiXD, in order for drug products 
to be rated as therapeutically equivalent, they must be 
pharmaceutically equivalent and bioequivalent, as defined 
in subparagraph (C). 
"(C) DEFINITIONS.—For purposes of this paragraph— 
"(i) drug products are pharmaceuutically * ^ equiva-
lent if the products contain identical amounts of the 
same active drug ingredient in the same dosage form 
and meet compendial or other applicable standards of 
strength, quality, purity, and identity; 
"(ii) drugs are bioequivalent if they do not present a 
known or potential bioequivalence problem, or, if they 
do present such a problem, they are shown to meet an 
appropriate standard of bioequivalence; and 
«o So in original. Probably should be "distributors". 
*' So in original. Probably should be "pharmaceutically". 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-159 
"(iii) a drug product is considered to be sold or mar-
keted in a State if it appears in a published national 
listing of average wholesale prices selected by the Sec-
retary, provided that the listed product is generally 
available to the public through retail pharmacies in 
that State. 
"(8) STATE AGENCY.—The term 'State agency' means the 
agency designated under section 1902(a)(5) to administer or 
supervise the administration of the State plan for medical 
assistance.". 
(b) FUNDING.— 
(1) DRUG USE REVIEW PROGRAMS.—Section 1903(a)(3) (42 U.S.C. 
1936b(a)(3)) is amended— 
(A) by striking "plus" at the end of subparagraph (C) and 
inserting "and", and 
(B) by adding at the end the following new subparagraph: 
"(D) 75 percent of so much of the sums expended by the 
State plan during a quarter in 1991, 1992, or 1993, as the 
Secretary determines is attributable to the statewide adop-
tion of a drug use review program which conforms to the 
requirements of section 1927(g); plus". 
(2) TEMPORARY INCREASE IN FEDERAL MATCH FOR ADMINISTRA-
TIVE COSTS.—The per centum to be applied under section 
1903(a)(7) of the Social Security Act for amounts expended 
during calendar quarters in fiscal year 1991 which are attrib-
utable to administrative activities necessary to carry out section 
1927 (other than subsection (g)) of such Act shall be 75 percent, 
rather than 50 percent; after fiscal year 1991, the match shall 
revert back to 50 percent. 
(c) DEMONSTRATION PROJECTS.— 
(1) PROSPECTIVE DRUG UTIUZATION REVIEW.— 
(A) The Secretary of Health and Human Services shall 
provide, through competitive procurement by not later than 
January 1, 1992, for the establishment of at least 10 state-
wide demonstration projects to evaluate the efficiency and 
cost-effectiveness of prospective drug utilization review (as 
a component of on-line, real-time electronic point-of-sales 
claims management) in fulfilling patient counseling and in 
reducing costs for prescription drugs. 
(B) Each of such projects shall establish a central elec-
tronic repository for capturing, storing, and updating 
prospective drug utilization review data and for providing 
access to such data by participating pharmacists (and other 
authorized participants). 
(C) Under each project, the pharmacist or other au-
thorized participant shall assess the active drug regimens of 
recipients in terms of duplicate drug therapy, therapeutic 
overlap, allergy and cross-sensitivity reactions, drug inter-
actions, age precautions, 
drug 
regiment 
compliance, 
prescribing limits, and other appropriate elements. 
(D) Not later than January 1, 1994, the Secretary shall 
submit to Congress a report on the demonstration projects 
conducted under this paragraph. 
(2) DEMONSTRATION 
PROJECT ON COST-EFFECTIVENESS OF RE-
IMBURSEMENT FOR PHARMACISTS' COGNITIVE SERVICES.— 
(A) The Secretary of Health and Human Services shall 
conduct a demonstration project to evaluate the impact on 
42 u s e 1396b. 
42 u s e 1396b 
note. 
42 u s e 1396r-8 
note. 
104 STAT. 1388-160 
PUBLIC LAW 101-508—NOV. 5, 1990 
quality of care and cost-effectiveness of paying pharmacists 
under title XIX of the Social Security Act, whether or not a 
drug is dispensed, for drug use review services. For this 
purpose, the Secretary shall provide for no fewer than 5 
demonstration sites in different States and the participa-
tion of a significant number of pharmacists. 
(B) Not later than January 1, 1995, the Secretary shall 
submit a report to the Congress on the results of the 
demonstration project conducted under subparagraph (A). 
42 u s e 1396r-8 
(d) STUDIES.— 
"o**- 
(1) STUDY OF DRUG PURCHASING AND BILLING ACTIVITIES OF 
VARIOUS HEALTH CARE SYSTEMS.— 
(A) The Comptroller General shall conduct a study of the 
drug purchasing and billing practices of hospitals, other 
institutional facilities, and managed care plans which pro-
vide covered outpatient drugs in the medicaid program. The 
study shall compare the ingredient costs of drugs for medic-
aid prescriptions to these facilities and plans and the 
charges billed to medical assistance programs by these 
facilities and plans compared to retail pharmacies. 
(B) The study conducted under this subsection shall in-
clude an assessment of— 
(i) the prices paid by these institutions for covered 
outpatient drugs compared to prices that would be paid 
under this section, 
(ii) the quality of outpatient drug use review provided 
by these institutions as compared to drug use review 
required under this section, and 
(iii) the efficiency of mechanisms used by these 
institutions for billing and receiving payment for cov-
ered outpatient drugs dispensed under this title. 
(C) By not later than May 1, 1991, the Comptroller Gen-
eral shall report to the Secretary of Health and Human 
Services (hereafter in this section referred to as the "Sec-
retary"), the Committee on Finance of the Senate, the 
Committee on Energy and Commerce of the House of Rep-
resentatives, and the Committees on Aging of the Senate 
and the House of Representatives on the study conducted 
under subparagraph (A). 
(2) REPORT ON DRUG PRICING.—By not later than May 1 of each 
year, the Comptroller General shall submit to the Secretary, the 
Committee on Finance of the Senate, the Committee on Energy 
and Commerce of the House of Representatives, and the 
Committees on Aging of the Senate and House of Representa-
tives an annual report on changes in prices charged by manu-
facturers for prescription drugs to the Department of Veterans 
Affairs, other Federal programs, retail and hospital pharmacies, 
and other purchasing groups and managed care plans. 
(3) STUDY ON PRIOR APPROVAL PROCEDURES.— 
(A) The Secretary, acting in consultation with the 
Comptroller General, shall study prior approval procedures 
utilized by State medical assistance programs conducted 
under title XIX of the Social Security Act, including— 
(i) the appeals provisions under such programs; and 
(ii) the effects of such procedures on beneficiary and 
provider access to medications covered under such 
programs. 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-161 
(B) By not later than December 31, 1991, the Secretary 
and the Comptroller General shall report to the Committee 
on Finance of the Senate, the Committee on Energy and 
Commerce of the House of Representatives, and the 
Committees on Aging of the Senate and the House of 
Representatives on the results of the study conducted under 
subparagraph (A) and shall make recommendations with 
respect to which procedures are appropriate or inappropri-
ate to be utilized by State plans for medical assistance. 
(4) STUDY ON REIMBURSEMENT RATES TO PHARMACISTS.— 
(A) The Secretary shall conduct a study on (i) the ade-
quacy of current reimbursement rates to pharmacists under 
each State medical assistance programs conducted under 
title XIX of the Social Security Act; and (ii) the extent to 
which reimbursement rates under such programs have an 
effect on beneficiary access to medications covered and 
pharmacy services under such programs. 
, 
(B) By not later than December 31, 1991, the Secretary 
shall report to the Committee on Finance of the Senate, the 
Committee on Energy and Commerce of the House of Rep-
resentatives, and the Committees on Aging of the Senate 
and the House of Representatives on the results of the 
study conducted under subparagraph (A). 
(5) STUDY OF PAYMENTS FOR VACCINES.—The Secretary of 
Health and Human Services shall undertake a study of the 
relationship between State medical assistance plans and Fed-
eral and State acquisition and reimbursement policies for vac-
cines and the accessibility of vaccinations and immunization to 
children provided under this title. The Secretary shall report to 
the Congress on the Study not later than one year after the date 
of the enactment of this Act. 
(6) STUDY ON APPLICATION OF DISCOUNTING OF DRUGS UNDER 
MEDICARE.—The Comptroller General shall conduct a study 
examining methods to encourage providers of items and services 
under title XVIII of the Social Security Act to negotiate dis-
counts with suppliers of prescription drugs to such providers. 
The Comptroller General shall submit to Congress a report on 
such study no later than 1 year after the date of enactment of 
this subsection. 
SEC. 4402. REQUIRING MEDICAID PAYMENT OF PREMIUMS AND COST-
SHARING FOR ENROLLMENT UNDER GROUP HEALTH PLANS 
WHERE COST-EFFECTIVE. 
(a) IN GENERAL.—Title XIX (42 U.S.C. 1396 et seq.) is amended— 
(1) in section 1902(a)(25) (42 U.S.C 1396a(a)(25))— 
(A) by striking "and" at the end of subparagraph (E), 
(B) by adding "and" at the end of subparagraph (F), and 
(C) by adding at the end the following new subparagraph: 
"(G) that the State plan shall meet the requirements of 
section 1906 (relating to enrollment of individuals under 
group health plans in certain cases);"; and 
(2) by inserting after section 1905 the following new section: 
"ENROLLMENT OF INDIVIDUALS UNDER GROUP HEALTH PLANS 
"SEC. 1906. (a) For purposes of section 1902(a)(25)(G) and subject to 
42 USC 1396e. 
subsection (d), each State plan— 
104 STAT. 1388-162 
PUBLIC LAW 101-508—NOV. 5, 1990 
"(1) shall implement guidelines established by the Secretary, 
consistent with subsection (b), to identify those cases in which 
enrollment of an individual otherwise entitled to medical assist-
ance under this title in a group health plan (in which the 
individual is otherwise eligible to be enrolled) is cost-effective 
(as defined in subsection (eX2)); 
"(2) shall require, in case of an individual so identified and as 
a condition of the individual being or remaining eligible for 
medical assistance under this title and subject to subsection 
(b)(2), notwithstanding any other provision of this title, that the 
individual (or in the case of a child, the child's parent) apply for 
enrollment in the group health plan; and 
"(3) in the case of such enrollment (except as provided in 
subsection (c)(1)(B)), shall provide for payment of all enroUee 
premiums for such enrollment and all deductibles, coinsurance, 
and other cost-sharing obligations for items and services other-
wise covered under the State plaA under this title (exceeding 
• the amount otherwise permitted under section 1916), and shall 
treat coverage under the group health plan as a third party 
liability (under section 1902(a)(25)). 
"(bXD In establishing guidelines under subsection (aXD, the Sec-
retary shall take into account that an individual may only be 
eligible to enroll in group health plans at limited times and only if 
other individuals (not entitled to medical assistance under the plan) 
are also enrolled in the plan simultaneously. 
"(2) If a parent of a child fails to enroll the child in a group health 
plan in accordance with subsection (a)(2), such failure shall not 
affect the child's eligibility for benefits under this title. 
"(cXlXA) In the case of pa5niients of premiums, deductibles, co-
insurance, and other cost-sharing obligations under this section 
shall be considered, for purposes of section 1903(a), to be payments 
for medical assistance. 
"(B) If all members of a family are not eligible for medical 
assistance under this title and enrollment of the members so eligible 
in a group health plan is not possible without also enrolling mem-
bers not so eligible— 
"(i) payment of premiums for enrollment of such other mem-
bers shall be treated as payments for medical assistance for 
eligible individuals, if it would be cost-effective (taking into 
account payment of all such premiums), but 
"(ii) payment of deductibles, coinsurance, and other cost-
sharing obligations for such other members shall not be treated 
as payments for medical assistance for eligible individuals. 
"(2) The fact that an individual is enrolled in a group health plan 
under this section shall not change the individual's eligibility for 
benefits under the State plan, except insofar as section 1902(a)(25) 
provides that payment for such benefits shall first be made by such 
plan. 
"(d)(1) In the case of any State which is providing medical assist-
ance to its residents under a waiver granted under section 1115, the 
Secretary shall require the State to meet the requirements of this 
section in the same manner as the State would be required to meet 
such requirement if the State had in effect a plan approved under 
this title. 
"(2) This section, and section 1902(aX25)(G), shall only apply to a 
State that is one of the 50 States or the District of Columbia. 
"(e) In this section: 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-163 
"(1) The term 'group health plan' has the meaning given such 
term in section 5000(b)(1) of the Internal Revenue Code of 1986, 
and includes the provision of continuation coverage by such a 
plan pursuant to title XXII of the Public Health Service Act, 
section 4980B of the Internal Revenue Code of 1986, or title VI 
of the Employee Retirement Income Security Act of 1974. 
"(2) The term 'cost-effective' means, as established by the 
Secretary, that the reduction in expenditures under this title 
with respect to an individual who is enrolled in a group health 
plan is likely to be greater than the additional expenditures for 
premiums and cost-sharing required under this section with 
respect to such enrollment.". 
03) TREATMENT OF ERRONEOUS EXCESS PAYMENTS FOR MEDICAL 
ASSISTANCE.—Section 1903(u)(l)(C)(iv) (42 U.S.C. 1396b(u)(l)(C)(iv)) is 
amended by inserting before the period at the end the following: "or 
with respect to payments made in violation of section 1906". 
(c) OPTIONAL MINIMUM 6-MONTH ELIGIBILITY.—Section 1902(e) (42 
U.S.C. 1396a(e)) is amended by adding at the end the following new 
paragraph: 
"(11)(A) In the case of an individual who is enrolled with a group 
health plan under section 1906 and who would (but for this para-
graph) lose eligibility for benefits under this title before the end of 
the minimum enrollment period (defined in subparagraph (B)), the 
State plan may provide, notwithstanding any other provision of this 
title, that the individual shall be deemed to continue to be eligible 
for such benefits until the end of such minimum period, but only 
with respect to such benefits provided to the individual as an 
enrollee of such plan. 
"(B) For purposes of subparagraph (A), the term 'minimum enroll-
ment period' means, with respect to an individual's enrollment with 
a group health plan, a period established by the State, of not more 
than 6 months beginning on the date the individual's enrollment 
under the plan becomes effective.". 
(d) CONFORMING AMENDMENTS.— 
(1) Section 1902(a)(10) (42 U.S.C. 1396a(a)(10)) is amended in 
the matter following subparagraph (E)— 
(A) by striking "and' at the end of subdivision (IX); 
(B) by inserting "and" at the end of subdivision (X); and 
(C) by adding at the end the following new subdivision: 
"(XI) the making available of medical assistance to cover 
the costs of premiums, deductibles, coinsurance, and other 
cost-sharing obligations for certain individuals for private 
health coverage as described in section 1906 shall not, by 
reason of paragraph (10), require the making available of 
any such benefits or the making available of services of the 
same amount, duration, and scope of such private coverage 
to any other individuals;". 
(2) Section 1905(a) (42 U.S.C. 1396d(a)) is amended by adding 
at the end the following: "The payment described in the first 
sentence may include expenditures for medicare cost-sharing 
and for premiums under part B of title XVIII for individuals 
who are eligible for medical assistance under the plan and (A) 
are receiving aid or assistance under any plan of the State 
approved under title I, X, XIV, or XVI, or part A of title IV, or 
with respect to whom supplemental security income benefits 
are being paid under title XVI, or (B) with respect to whom 
104 STAT. 1388-164 
PUBLIC LAW 101-508—NOV. 5, 1990 
42 use 1396a 
note. 
there is being paid a State supplementary payment and are 
eligible for medical assistance equal in amount, duration, and 
scope to the medical assistance made available to individuals 
described in section 1902(a)(10)(A), and, except in the case of 
individuals 65 years of age or older and disabled individuals 
entitled to health insurance benefits under title XVIII who are 
not enrolled under part B of title XVIII, other insurance pre-
miums for medical or any other type of remedial care or the cost 
thereof.". 
(3) Section 1903(aXl) (42 U.S.C. 1396b(a)(l)) is amended by 
striking "(including expenditures for" and all that follows 
through "or the cost thereof)". 
(e) EFFECTIVE DATE.—(1) The amendments made by this section 
apply (except as provided under paragraph (2)) to payments under 
title XIX of the Social Security Act for calendar quarters beginning 
on or after January 1, 1991, without regard to whether or not final 
regulations to carry out such amendments have been promulgated 
by such date. 
(2) In the case of a State plan for medical assistance under title 
XIX of the Social Security Act which the Secretary of Health and 
Human Services determines requires State legislation (other than 
legislation authorizing or appropriating funds) in order for the plan 
to meet the additional requirements imposed by the amendments 
made by subsection (a), the State plan shall not be regarded as 
failing to comply with the requirements of such title solely on the 
basis of its failure to meet this additional requirement before the 
first day of the first calendar quarter beginning after the close of the 
first regular session of the State legislature that begins after the 
date of the enactment of this Act. For purposes of the previous 
sentence, in the case of a State that has a 2-year legislative session, 
each year of such session shall be deemed to be a separate regular 
session of the State legislature. 
PART 2—PROTECTION OF LOW-INCOME 
MEDICARE BENEFICIARIES 
42 use 1396a. 
SEC. 4501. PHASED-IN EXTENSION OF MEDICAID PAYMENTS FOR MEDI-
CARE PREMIUMS FOR CERTAIN INDIVIDUALS WITH INCOME 
BELOW 120 PERCENT OF THE OFFICIAL POVERTY LINE. 
(a) 1-YEAR ACCELERATION OF BUY-IN OF PREMIUMS AND COST SHAR-
ING FOR QUAUFIED MEDICARE BENEFICIARIES UP T
O 100 PERCENT OF 
POVERTY LINE.—Section 1905(p)(2) (42 U.S.C. 1396d(p)(2)) is further 
amended— 
(1) in subparagraph (B)— 
(A) by adding "and" at the end of clause (ii); 
(B) in clause (iii), by striking "95 percent, and" and 
inserting "100 percent."; and 
(C) by striking clause (iv); and 
(2) in subparagraph (C)— 
(A) in clause (iii), by striking "90" and inserting "95"; 
(B) by adding "and" at the end of clause (iii); 
(C) in clause (iv), bv striking "95 percent, and" and 
inserting "100 percent.'; and 
(D) by striking clause (v). 
(b) 
ENTITLEMENT.—Section 
1902(a)(10)(E) 
(42 
U.S.C. 
1395b(aX10XEXii)) is amended— 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-165 
(1) by striking ", and" at the end of clause (i) and inserting a 
semicolon; 
(2) by adding "and" at the end of clause (ii); and 
(3) by adding at the end the following new clause: 
"(iii) for making medical assistance available for medi-
care cost sharing described in section 1905(p)(3)(A)(ii) sub-
ject to section 1905(p)(4), for individuals who would be 
qualified 
medicare beneficiaries 
described in section 
1905(p)(l) but for the fact that their income exceeds the 
income level established by the State under section 
' 
1905(p)(2) but is less than 110 percent in 1993 and 1994, and 
120 percent in 1995 and years thereafter of the official 
poverty line (referred to in such section) for a family of the 
size involved;". 
(c) APPLICATION IN CERTAIN STATES AND TERRITORIES.—Section 
1905(pX4) (42 U.S.C. 1396d(p)(4)) is amended— 
(1) in subparagraph (B), by inserting "or 1902(a)(10)(E)(iii)" 
, 
after "subparagraph (B)", and 
(2) by adding at the end the following: 
"In the case of any State which is providing medical assistance to its 
residents under a waiver granted under section 1115, the Secretary 
shall require the State to meet the requirement of section 
1902(a)(10)(E) in the same manner as the State would be required to 
meet such requirement if the State had in effect a plan approved 
under this title." 
(d) 
CONFORMING 
AMENDMENT.—Section 
1843(h) 
(42 
U.S.C. 
1395v(h)) is amended by adding at the end the following new para-
graph: 
"(3) In this subsection, the term 'qualified medicare beneficiary' 
also includes an individual described in section 1902(a)(10)(E)(iii).". 
(e) DELAY IN COUNTING SOCIAL SECURITY COLA INCREASES UNTIL 
NEW POVERTY GUIDELINES PUBUSHED.— 
(1) IN GENERAL.—Section 1905(p) is amended— 
(A) in paragraph (IXB), by inserting ", except as provided 
in paragraph (2XD)" after "supplementary social security 
income program", and 
(B) by adding at the end of paragraph (2) the following 
new subparagraph: 
"(D)(i) In determining under this subsection the income of an 
individual who is entitled to monthly insurance benefits under title 
II for a transition month (as defined in clause (ii)) in a year, such 
income shall not include any amounts attributable to an increase in 
the level of monthly insurance benefits payable under such title 
which have occurred pursuant to section 215(i) for benefits payable 
for months beginning with December of the previous year. 
"(ii) For purposes of clause (i), the term 'transition month' means 
each month in a year through the month following the month in 
which the annual revision of the official poverty line, referred to in 
subparsigraph (A), is published.". 
(2) CONFORMING AMENDMENTS.—Section 1902(m) (42 U.S.C. 
1396a(m)) is amended— 
(A) in paragraph (IXB), by inserting ", except as provided 
in paragraph (2X0" after "supplemental security income 
program", and 
(B) by adding at the end of paragraph (2) the following 
new subparagraph: 
104 STAT. 1388-166 
PUBLIC LAW 101-508—NOV. 5, 1990 
"(C) The provisions of section 1905(p)(2)(D) shall apply to deter-
minations of income under this subsection in the same manner £is 
they apply to determinations of income under section 1905(p).". 
42 use 1396a 
(f) EFFECTIVE DATE.—The amendments made by this section shall 
"
*
*
*
*
• 
apply to calendar quarters beginning on or after January 1, 1991, 
without regard to whether or not regulations to implement such 
amendments are promulgated by such date; except that the amend-
ments made by subsection (e) shall apply to determinations of 
income for months beginning with January 1991. 
PART 3—IMPROVEMENTS IN CHILD HEALTH 
SEC. 4601. MEDICAID CHILD HEALTH PROVISIONS. 
(a) PHASED-IN MANDATORY COVERAGE OF CHILDREN UP TO 100 
PERCENT OF POVERTY LEVEL.— 
(1) IN GENERAL.—Section 1902 (42 U.S.C. 1396a) is amended— 
« 
(A) in subsection (a)(10)(AXi)— 
(i) by striking "or" at the end of subclause (V), 
(ii) by striking the semicolon at the end of subclause 
(VI) and inserting ", or", and 
(iii) by adding at the end the following new subclause: 
(VII) who are described in subparagraph (D) of 
subsection (IXD and whose family income does not 
exceed the income level the State is required to 
establish under subsection (1)(2)(C) for such a 
family;"; 
(B) in subsection (aX10XA)(ii)(IX), by striking "or clause 
(i)(VI)" and inserting ", clause (iXVI), or clause (iXVII)"; 
(C) in subsection (1)— 
(i) in subparagraph (C) of paragraph (1) by inserting 
"children" after "(C)"; 
(ii) by striking subparagraph (D) of paragraph (1) and 
inserting the following: 
"(D) children born after September 30, 1983, who have at-
tained 6 years of age but have not attained 19 years of age,"; 
(iii) by striking subparagraph (C) of paragraph (2) and 
inserting the following: 
"(C) For purposes of paragraph (1) with respect to individuals 
described in subparagraph (D) of that paragraph, the State shall 
establish an income level which is equal to 100 percent of the income 
official poverty line described in subparagraph (A) applicable to a 
family of the size involved."; 
(iv) 
in 
paragraph 
(3) 
by 
inserting 
", (aX10)(AXiXVII)," after "(aXlOXAXiXVI)"; 
(v) in paragraph (4XA), by inserting "or subsection 
(aXlOXAXiXVII)" after "(aXlOXAXiXVI)'^; and 
(vi) 
in 
paragraph 
(4XB), 
by 
striking 
"or 
(aX10XAXi)(VI)" ", and inserting "(aXlOXAXiXVI), or 
(aXlOXAXiXVII)"; and 
(D) in subsection (rX2XA), by inserting "(aXlOXAXiXVII)," 
after "(aXlOXAXiXVI),". 
(2) CONFORMING AMENDMENT TO QUAUFIED CHILDREN.—Sec-
tion 1905(nX2) (42 U.S.C. 1396d(nX2)) is amended by striking 
"age of 7 (or any age designated bv the State that exceeds 7 but 
does not exceed 8)" and inserting age of 19". 
(3) ADDITIONAL CONFORMING AMENDMENTS.— 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-167 
(A) Section 1903(f)(4) of such Act (42 U.S.C. 1396b(f)(4)) is 
amended— 
(i) by striking "1902(a)(10)(A)(i)(IV)," and inserting 
"1902(a)(10)(A)(i)(III), 
1902(a)(10)(A)(i)(IV), 
1902(a)(10)(A)(i)(V),", and 
(ii) 
by 
inserting 
"1902(a)(10)(A)(i)(VII)," 
after 
"1902(a)(10)(A)(i)(VI),". 
(B) Subsections (a)(3)(C) and (b)(3)(C)(i) of section 1925 of 
such Act (42 U.S.C. 1396r-6), as amended by section 
6411(i)(3) of the Omnibus Budget ReconciUation Act of 1989, 
are each amended by inserting "(i)(VII)," after "(i)(VI)". 
(b) EFFECTIVE DATE.—(1) The amendments made by this subsection 
42 USC 1396a 
apply (except as otherwise provided in this subsection) to payments "o^e-
under title XIX of the Social Security Act for calendar quarters 
beginning on or after July 1, 1991, without regard to whether or not 
final regulations to carry out such amendments have been promul-
gated by such date. 
(2) In the case of a State plan for medical assistance under title 
XIX of the Social Security Act which the Secretary of Health and 
Human Services determines requires State legislation (other than 
legislation authorizing or appropriating funds) in order for the plan 
to meet the additional requirements imposed by the amendments 
made by this subsection, the State plan shall not be regarded as 
failing to comply with the requirements of such title solely on the 
basis of its failure to meet these additional requirements before the 
first day of the first calendar quarter beginning after the close of the 
first regular session of the State legislature that begins after the 
date of the enactment of this Act. For purposes of the previous 
sentence, in the case of a State that has a 2-year legislative session, 
each year of such session shall be deemed to be a separate regular 
session of the State legislature. 
SEC. 4602. MANDATORY USE OF OUTREACH LOCATIONS OTHER THAN 
WELFARE OFFICES. 
(a) IN GENERAL.—Section 1902(a) of the Social Security Act (42 
U.S.C. 1396a(a)), as amended by section 4401(a)(2) of this title, is 
amended— 
(1) by striking "and" at the end of paragraph (53), 
(2) by striking the period at the end of paragraph (54) and 
inserting "; and", and 
(3) by inserting after paragraph (54) the following new para-
graph: 
"(55) provide for receipt and initial processing of applications 
of 
individuals 
for 
medical 
assistance 
under 
subsection 
(a)(10)(A)(i)(IV), 
(a)(10)(A)(i)(VI), 
(a)(10)(A)(i)(VII), 
or 
(aX10)(A)(ii)(IX)-
"(A) at locations which are other than those used for the 
receipt and processing of applications for aid under part A 
of title IV and which include facilities defined as dispropor-
tionate share hospitals under section 1923(a)(1)(A) and Fed-
erally-qualified 
health 
centers 
described 
in 
section 
1905(1)(2)(B), and 
"(B) using applications which are other than those used 
for applications for aid under such part.". 
(b) EFFECTIVE DATE.—The amendments made by subsection (a) 
42 USC 1396a 
apply to payments under title XIX of the Social Security Act for J
^
o
*
®
. 
calenar *^ quartern beginning on or after July 1, 1991, without 
** So in original. Probably should be "calendar". 
note. 
104 STAT. 1388-168 
PUBLIC LAW 101-508—NOV. 5, 1990 
regard to whether or not final regulations to carry out such amend-
ments have been promulgated by such date. 
SEC. 4603. MANDATORY CONTINUATION OF BENEFITS THROUGHOUT 
PREGNANCY OR FIRST YEAR OF LIFE. 
(a) IN GENERAL.—Section 1902(e) (42 U.S.C. 1396a(e)) is amended— 
(1) in the first sentence of paragraph (4), by inserting "(or 
would remain if pregnant)" after "remains"; and 
(2) in paragraph (6)— 
(A) by striking "At the option of a State, in" and inserting 
"In"; 
(B) by striking "the State plan may nonetheless treat the 
woman £is being" and inserting 
the woman shall be 
deemed to continue to be"; and 
(C) by adding at the end the following new sentence: "The 
preceding sentence shall not apply in the case of a woman 
who has been provided ambulatory prenatal care pursuant 
to section 1920 during a presumptive eligibility period and 
is then, in accordance with such section, determined to be 
ineligible for medical assistance under the State plan.". 
42 u s e 1396a 
(b) EFFECTIVE D A T E . — 
(1) INFANTS.—The amendment made by subsection (aXD shall 
apply to individuals born on or after January 1, 1991, without 
regard to whether or not final regulations to carry out such 
amendment have been promulgated by such date. 
(2) PREGNANT WOMEN.—The amendments made by subsection 
(a)(2) shall apply with respect to determinations to terminate 
the eligibility of women, based on change of income, made on or 
after January 1, 1991, without regard to whether or not final 
regulations to carry out such amendments have been promul-
gated by such date. 
SEC. 4604. ADJUSTMENT IN PAYMENT FOR HOSPITAL SERVICES FUR-
NISHED TO LOW-INCOME CHILDREN UNDER THE AGE OF 6 
YEARS. 
(a) IN GENERAL.—Section 1902 (42 U.S.C. 1396a) is amended by 
adding at the end the following new subsection: 
"(s) In order to meet the requirements of subsection (a)(55), the 
State plan must provide that payments to hospitals under the plan 
for inpatient hospital services furnished to infants who have not 
attained the age of 1 year, and to children who have not attained the 
age of 6 years and who receive such services in a disproportionate 
share hospital described in section 1923(b)(1), shall— 
"(1) if made on a prospective basis (whether per diem, per 
case, or otherwise) provide for an outlier adjustment in payment 
amounts for medically necessary inpatient hospital services 
involving exceptionally high costs or exceptionally long lengths 
of stay, 
"(2) not be limited by the imposition of day limits with respect 
to the delivery of such services to such individuals, and 
"(3) not be limited by the imposition of dollar limits (other 
than such limits resulting from prospective payments as 
adjusted pursuant to paragraph (1)) with respect to the delivery 
of such services to any such individual who has not attained 
their first birthday (or in the case of such an individual who is 
an inpatient on his first birthday until such individual is dis-
charged).". 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-169 
(b) 
CONFORMING 
AMENDMENT.—Section 
1902(a) 
(42 
U.S.C. 
1396a(a)), as amended by section 4401(a)(2), is further amended— 
(1) by striking "and" at the end of paragraph (53); 
(2) by striking the period at the end of paragraph (54) and 
by inserting "; and"; and 
(3) by inserting after paragraph (54) and before the end 
matter the following new paragraph: 
"(55) provide, in accordance with subsection (s), for adjusted 
payments for certain inpatient hospital services.". 
(c) PROHIBITION ON WAIVER.—Section 1915(b) (42 U.S.C. 1396n(b)) 
is amended in the matter preceding paragraph (1) by inserting 
"(other than subsection (s))" after "Section 1902". 
(d) EFFECTIVE DATE.—(1) The amendments made by this subsection 
shall become effective with respect to payments under title XIX of 
the Social Security Act for calendar quarters beginning on or after 
July 1, 1991, without regard to whether or not final regulations to 
carry out such amendments have been promulgated by such date. 
(2) In the case of a State plan for medical assistance under title 
XIX of the Social Security Act which the Secretary of Health and 
Human Services determines requires State legislation (other than 
legislation authorizing or appropriating funds) in order for the plan 
to meet the additional requirements imposed by the amendments 
made by this subsection, the State plan shall not be regarded as 
failing to comply with the requirements of such title solely on the 
basis of its failure to meet these additional requirements before the 
first day of the first calendar quarter beginning after the close of the 
first regular session of the State legislature that begins after the 
date of the enactment of this Act. For purposes of the previous 
sentence, in the case of a State that has a 2-year legislative session, 
each year of such session shall be deemed to be a separate regular 
session of the State legislature. 
SEC. 4605. PRESUMPTIVE ELIGIBILITY. 
(a) EXTENSION OF PRESUMPTIVE ELIGIBILITY PERIOD.—Section 1920 
(42 U.S.C. 1396r-l) is amended— 
(1) in subsection (b)(1)(B)— 
(A) by adding "or" at the end of clause (i), 
(B) by striking clause (ii), and 
(C) by amending clause (iii) to read as follows: 
"(ii) in the case of a woman who does not file an 
application by the last day of the month following the 
month during which the provider makes the deter-
mination referred to in subparagraph (A), such last 
day; and"; and 
(2) in subsections (c)(2)(B) and (c)(3), by striking "within 14 
calendar days after the date on which" and inserting "by not 
later than the last day of the month following the month during 
which".] 4 3 
(b) FLEXIBILITY IN APPLICATION.—Section 1920(c)(3) (42 U.S.C. 
1396r-l(c)(3)) is amended by inserting before the period at the end 
the following: ", which application may be the application used for 
the receipt of medical assistance by individuals described in section 
1902(1)(1)(A)". 
(c) EFFECTIVE DATES.— 
(1) The amendments made by subsection (a) apply to pay-
ments under title XIX of the Social Security Act for calendar 
quarters beginning on or after July 1, 1991, without regard to 
** So in original. Probably should be "which". ". 
42 use 1396a 
note. 
42 use 1396r-l 
note. 
39-194 O - 91 - 19 : QL 3 Part 2 
104 STAT. 1388-170 
PUBLIC LAW 101-508—NOV. 5, 1990 
whether or not final regulations to carry out such amendments 
have been promulgated by such date. 
(2) The amendment made by subsection (b) shall be effective 
as if included in the enactment of section 9407(b) of the Omni-
bus Budget Reconciliation Act of 1986. 
SEC. 4606. ROLE IN PATERNITY DETERMINATIONS. 
(a) IN GENERAL.—Section 1912(aXl)(B) (42 U.S.C. 1396k(a)(lXB)) is 
amended by inserting "the individual is described in section 
1902(1)(1)(A) or" after "unless (in either case)". 
42 use 1396k 
(b) EFFECTIVE DATE.—The amendment made by subsection (a) 
note. 
shall take effect on the date of the enactment of this Act. 
42 u s e 1396b 
SEC. 4607. REPORT AND TRANSITION ON ERRORS IN ELIGIBILITY DETER-
note. 
MINATIONS. 
(a) REPORT.—The Secretary of Health and Human Services shall 
report to Congress, by not later than July 1, 1991, on error rates by 
States in determining eligibility of individuals described in subpara-
graph (A) or (B) of section 1902(1)(1) of the Social Security Act for 
medical assistance under plans approved under title XIX of such 
Act. Such report may include data for medical assistance provided 
before July 1,1989. 
(b) ERROR RATE TRANSITION.—There shall not be taken into ac-
count, for purposes of section 1903(u) of the Social Security Act, 
payments and expenditures for medical assistance which— 
(1) are attributable to medical assistance for individuals de-
scribed in subparagraph (A) or (B) of section 1902(1)(1) of such 
Act, and 
(2) are made on or after July 1, 1989, and before the first 
calendar quarter that begins more than 12 months after the 
date of submission of the report under subsection (a). 
PART 4—MISCELLANEOUS 
Subpart A—Payments 
SEC. 4701. STATE MEDICAID MATCHING PAYMENTS THROUGH VOL-
UNTARY CONTRIBUTIONS AND STATE TAXES. 
(a) EXTENSION OF PROVISION ON VOLUNTARY CONTRIBUTIONS AND 
PROVIDER-SPECIFIC TAXES.—Section 8431 of the Technical and Mis-
cellaneous Revenue Act of 1988 is amended by striking "Decem-
ber 31,1990" and inserting "December 31,1991". 
(b) STATE TAX CONTRIBUTIONS.—(1) Section 1902 (42 U.S.C. 1396a) 
as amended by section 4604, is further amended by adding at the 
end the following new subsection: 
"(t) Except as provided in section 1903(i), nothing in this title 
(including sections 1903(a) and 1905(a)) shall be construed as au-
thorizing the Secretary to deny or limit pa5mients to a State for 
expenditures, for medical assistance for items or services, attrib-
utable to taxes (whether or not of general applicability) imposed 
with respect to the provision of such items or services.". 
(2) Section 1903(i) (42 U.S.C. 1396b(i)) is amended— 
(A) by striking the period at the end of paragraph (9) and 
inserting "; or"; and 
(B) by adding at the end the following new paragraph: 
"(10) with respect to any amount expended for medical assist-
ance for care or services furnished by a hospital, nursing facil-
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-171 
ity, or intermediate care facility for the mentally retarded to 
reimburse the hospital or facility for the costs attributable to 
taxes imposed by the State soley ^^ with respect to hospitals or 
facilities.". 
(c) EFFECTIVE DATES.—The amendment made by subsection (b) 42 USC 1396b 
shall take effect on January 1,1991. 
note. 
SEC, 4702. DISPROPORTIONATE SHARE HOSPITALS: COUNTING OF IN-
PATIENT DAYS. 
(a) CLARIFICATION OF MEDICAID DISPROPORTIONATE SHARE ADJUST-
MENT CALCULATION.—Section 1923(b)(2) (42 U.S.C. 1396r-4(b)(2)) is 
amended by adding at the end the following new sentence: "In this 
paragraph, the term 'inpatient day' includes each day in which an 
individual (including a newborn) is an inpatient in the hospital, 
whether or not the individual is in a specialized ward and whether 
or not the individual remains in the hospital for lack of suitable 
placement elsewhere.". 
(b) EFFECTIVE DATE.—The amendment made by subsection (a) 42 USC l396r-4 
shall take effect on July 1,1990. 
''°^-
SEC. 4703. DISPROPORTIONATE SHARE HOSPITALS: ALTERNATIVE STATE 
PAYMENT ADJUSTMENTS AND SYSTEMS. 
(a) ALTERNATIVE STATE PAYMENT ADJUSTMENTS.—Section 1923(c) 
(42 U.S.C. 1396r-4(c)) is amended— 
(1) by striking "or" at the end of paragraph (1); 
(2) by adding "or" at the end of paragraph (2); and 
(3) by inserting after paragraph (2) the following new para-
graph: 
"(3) provide for a minimum specified additional payment 
amount (or increased percentage payment) that varies accord-
ing to type of hospital under a methodology that— 
"(A) applies equally to all hospitals of each type; and 
"(B) results in an adjustment for each type of hospital 
that is reasonably related to the costs, volume, or propor-
tion of services provided to patients eligible for medical 
assistance under a State plan approved under this title or to 
low-income patients.". 
(b) CLARIFICATION OF SPECIAL RULE FOR STATE USING HEALTH 
INSURING ORGANIZATION.—Section 1923(e)(2) (42 U.S.C. 1396r-4(e)(2)) 
is amended by striking "during the 3-year period". 
(c) CONFORMING AMENDMENT.—Section 1923(c)(2) (42 U.S.C. 1396r-
4(c)(2)) is amended by inserting after "State" "or the hospital's low-
income utilization rate (as defined in paragraph (b)(3))". 
(d) EFFECTIVE DATE.—The amendments made by this section shall 42 USC l396r-4 
take effect as if included in the enactment of section 412(a)(2) of the »
<
>
*
»
. 
Omnibus Budget Reconciliation Act of 1987. 
SEC. 4704. FEDERAILY 45 QUALIFIED HEALTH CENTERS. 
(a) CLARIFICATION OF USE OF MEDICARE PAYMENT METHODOLOGY.— 
Section 1902(a)(13)(E) (42 U.S.C. 1396a(a)(13)(E)) is amended— 
(1) by striking "may prescribe" the first place it appears and 
inserting "prescribes", and 
(2) by striking "on such tests of reasonableness as the Sec-
retary may prescribe in regulations under this subparagraph" 
and inserting "on the same methodology used under section 
1833(a)(3)". 
' So in original. Probably should be "solely". 
' So in original. Probably should be "FEDERALLY" 
104 STAT. 1388-172 
PUBLIC LAW 101-508—NOV. 5, 1990 
42 u s e 1396a, 
1396d. 
42 u s e 1396a 
note. 
42 u s e 1396a 
note. 
(b) 
MINIMUM 
PAYMENT 
RATES 
BY 
HEALTH 
MAINTENANCE 
ORGANIZATIONS.—(1) Section 1903(m)(2)(A) (42 U.S.C. 1396b(m)(2XA)) 
is amended— 
(A) by striking "and" at the end of clause (vii), 
(B) by striking the period at the end of clause (viii) and 
inserting ", and", and 
(C) bv adding at the end the following new clause: 
(ix) such contract provides, in the case of an entity that 
has entered into a contract for the provision of services of 
such center with a federally qualified health center, that (I) 
rates of prepayment from the State are adjusted to reflect 
fully the rates of payment specified in section 1902(a)(13)(E), 
and (II) at the election of such center pajrments made by the 
entity to such a center for services described in 1905(a)(2XC) 
are made at the rates of payment specified in section 
1902(a)(13)(E).". 
(2) Section 1903(m)(2)(B) (42 U.S.C. 1396b(m)(2)(A)) is amended by 
striking "(A)" and inserting "(A) except with respect to clause (ix) of 
subparagraph (A),". 
(3) Section 1915(b) (42 U.S.C. 1396n(b)) is amended by inserting 
after 
"section 1902" "(other than sections 1902(aX13XE) and 
1902(a)(10)(A) insofar as it requires provision of the care and services 
described in section 1905(aX2XC))". 
(c) 
CLARIFICATION IN 
TREATMENT OF OUTPATIENTS.—Section 
1905(1)(2) (42 U.S.C. 1396d(lX2)) is amended— 
(1) in subparagraph (A), by striking "outpatient" and insert-
ing "patient", 
(2) in subparagraph (B), by striking "facility" and inserting 
"entity", and 
(3) by redesignating clause (ii) as clause (iii) and by inserting 
after clause (i) the following new clause: 
"(iiXD is receiving funding from such a grant under a 
contract with the recipient of such a grant, and 
"(II) meets the requirements to receive a grant under 
section 329, 330, or 340 of such Act;". 
(d) TREATMENT OF INDIAN TRIBES.—The first sentence of section 
1905(1)(2)(B) (42 U.S.C. 1396d(lX2XB)) is amended— 
(1) by striking the period at the end and inserting a comma, 
and 
(2) by adding, after and below clause (ii), the following: 
"and includes an outpatient health program or facility operated by a 
tribe or tribal organization under the Indian Self-Determination Act 
(Public Law 93-638).". 
(e) TECHNICAL CORRECTION.—Section 6402 of the Omnibus Budget 
Reconciliation Act of 1989 is amended— 
(1) by striking subsection (c), and 
(2) by amending subsection (d) to read as follows: 
"(c) EFFECTIVE DATE.—The amendments made by this section 
(except as otherwise provided in such amendments) shall take effect 
on the date of the enactment of this Act.". 
(f) EFFECTIVE DATE.^The amendments made by this section shall 
be effective as if included in the enactment of the Omnibus Budget 
Reconciliation Act of 1989. 
SEC. 4705. HOSPICE PAYMENTS. 
(a) IN GENERAL. 
amended— 
-Section 1905(oX3) (42 U.S.C. 1396d(oX3)) is 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-173 
(1) by striking "a State which elects" and all that follows 
through "with respect to" the first place it appears, 
(2) by striking "skilled nursing or intermediate care facility" 
in subparagraphs (A) and (C) and inserting "nursing facility or 
intermediate care facility for the mentally retarded"; 
(3) by striking "the amounts allocated under the plan for 
room and board in the facility, in accordance with the rates 
established under section 1902(a)(13)," and inserting "the addi-
tional amount described in section 1902(a)(13)(D)", and 
(4) by striking the last sentence. 
(b) EFFECTIVE DATE.—The amendments made by subsection (a) 42 USC I396d 
shall be effective as if included in the amendments made by section note. 
6408(c)(1) of the Omnibus Budget Reconciliation Act of 1989. 
SEC. 4706. LIMITATION ON DISALLOWANCES OR DEFERRAL OF FEDERAL 42 USC 1396d 
FINANCIAL PARTICIPATION FOR CERTAIN INPATIENT PSY- note. 
CHIATRIC HOSPITAL SERVICES FOR INDIVIDUALS UNDER 
AGE 21. 
(a) IN GENERAL.—(1) If the Secretary of Health and Human Serv-
ices makes a determination that a psychiatric facility has failed to 
comply with certification of need requirements for inpatient psy-
chiatric hospital services for individuals under age 21 pursuant to 
section 1905(h) of the Social Security Act, and such determination 
has not been subject to a final judicial decision, any disallowance or 
deferral of Federal financial participation under such Act based on 
such determination shall only apply to the period of time beginning 
with the first day of noncompliance and ending with the date by 
which the psychiatric facility develops documentation (using plan of 
care or utilization review procedures) of the need for inpatient care 
with respect to such individuals. 
(2) Any disallowance of Federal financial participation under title 
XIX of the Social Security Act relating to the failure of a psychiatric 
facility to comply with certification of need requirements— 
(A) shall not exceed 25 percent of the amount of Federal 
financial participation for the period described in paragraph (1); 
and 
(B) shall not apply to any fiscal year before the fiscal year 
that is 3 years before the fiscal year in which the determination 
of noncompliance described in paragraph (1) is made. 
(b) EFFECTIVE DATE.—Subsection (a) shall apply to disallowance 
actions and deferrals of Federal financial participation with respect 
to services provided before the date of enactment of this Act. 
SEC. 4707. TREATMENT OF INTEREST ON INDIANA DISALLOWANCE. 
With respect to any disallowance of Federal financial participa-
tion under section 1903(a) of the Social Security Act for intermediate 
care facility services, intermediate care facility services for the 
mentally retarded, or skilled nursing facility services on the ground 
that the facilities in the State of Indiana were not certified in 
accordance with law during the period beginning June 1, 1982, and 
ending September 30, 1984, payment of such disallowance may be 
deferred without interest that would otherwise accrue without 
regard to this subsection, until every opportunity to appeal has been 
exhausted. 
SEC. 4708. BILLING FOR SERVICES OF SUBSTITUTE PHYSICIAN. 
(a) UNDER MEDICAID.—Section 1902(a)(32) (42 U.S.C. 1396a(a)(32))— 
104 STAT. 1388-174 
PUBLIC LAW 101-508—NOV. 5, 1990 
42 u s e 1396a 
note. 
(1) by striking "and" before "(B)", 
(2) by inserting "and" at the end of subparagraph (B), and 
(3) by adding at the end the following: 
"(C) in the case of services furnished (during a period that 
does not exceed 14 continuous days in the case of an 
informal reciprocal arrangement or 90 continuous days (or 
such longer period as the Secretary may provide) in the 
case of an arrangement involving per diem or other fee-for-
time compensation) by, or incident to the services of, one 
physician to the patients of another physician who submits 
the claim for such services, payment shall be made to the 
physician submitting the claim (as if the services were 
furnished by, or incident to, the physician's services), but 
only if the claim identifies (in a manner specified by the 
Secretary) the physician who furnished the services.", 
(b) EFFECTIVE DATE.—The amendments made by this section shall 
apply to services furnished on or after the date of the enactment of 
this Act. 
Subpart B—Eligibility and Coverage 
SEC. 4711. HOME AND COMMUNITY-BASED CARE AS OPTIONAL SERVICE. 
(a) PROVISION AS OPTIONAL SERVICE.—Section 1905(a) (42 U.S.C. 
1396d(a)), as amended by section 6201, is further amended— 
(1) by striking "and" at the end of paragraph (22); 
(2) by redesignating paragraph (23) as paragraph (24); and 
(3) by inserting after paragraph (22) the following new 
paragraph: 
"(23) home and community care (to the extent allowed and as 
defined in section 1929) for functionally disabled elderly individ-
uals; and". 
(b) HOME AND COMMUNITY CARE FOR FUNCTIONALLY DISABLED 
ELDERLY INDIVIDUALS.—Title XIX (42 U.S.C. 1396 et seq.) as 
amended by section 4402 is further amended— 
(1) by redesignating section 1929 as section 1930; and 
(2) by inserting after section 1928 the following new section: 
HOME AND COMMUNITY CARE FOR FUNCTIONALLY DISABLED ELDERLY 
INDIVIDUALS 
42 use I396t. 
"SEC. 1929. (a) HOME AND COMMUNITY CARE DEFINED.—In this 
title, the term 'home and community care' means one or more of the 
following services furnished to an individual who has been deter-
mined, after an assessment under subsection (c), to be a functionally 
disabled elderly individual, furnished in accordance with an individ-
ual community care plan (established and periodically reviewed and 
revised by a qualified community care case manager under subsec-
tion (d)): 
"(1) Homemaker/home health aide services. 
"(2) Chore services. 
"(3) Personal care services. 
"(4) Nursing care services provided by, or under the super-
vision of, a registered nurse. 
"(5) Respite care. 
"(6) Training for family members in managing the individual. 
"(7) Adult day care. 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-175 
"(8) In the case of an individual with chronic mental illness, 
day treatment or other partial hospitalization, psychosocial 
rehabilitation services, and clinic services (whether or not fur-
nished in a facility). 
"(9) Such other home and community-based services (other 
than room and board) as the Secretary may approve. 
"(b) FUNCTIONALLY DISABLED ELDERLY INDIVIDUAL DEFINED.— 
"(1) IN GENERAL.—In this title, the term 'functionally disabled 
elderly individual' means an individual who— 
"(A) is 65 years of age or older, 
"(B) is determined to be a functionally disabled individual 
under subsection (c), and 
"(C) subject to section 1902(f) (as applied consistent with 
section 1902(r)(2)), is receiving supplemental 
security 
income benefits under title XVI (or under a State plan 
approved under title XVI) or, at the option of the State, is 
described in section 1902(a)(10)(C). 
"(2) TREATMENT OF CERTAIN INDIVIDUALS PREVIOUSLY COVERED 
UNDER A WAIVER.—(A) In the case of a State which— 
"(i) at the time of its election to provide coverage for 
home and community care under this section has a waiver 
approved under section 1915(c) or 1915(d) with respect to 
individuals 65 years of age or older, and 
"(ii) subsequently discontinues such waiver, individuals 
who were eligible for benefits under the waiver as of the 
date of its discontinuance and who would, but for income or 
resources, be eligible for medical assistance for home and 
community care under the plan shall, notwithstanding any 
other provision of this title, be deemed a functionally dis-
abled elderly individual for so long as the individual would 
have remained eligible for medical assistance under such 
waiver. 
"(B) In the case of a State which used a health insuring 
organization before January 1, 1986, and which, as of Decem-
ber 31, 1990, had in effect a waiver under section 1115 that 
provides under the State plan under this title for personal care 
services for functionally disabled individuals, the term 'func-
tionally disabled elderly individual' may include, at the option 
of the State, an individual who— 
"(i) is 65 years of age or older or is disabled (as deter-
mined under the supplemental security income program 
under title XVI); 
"(ii) is determined to meet the test of functional disability 
applied under the waiver as of such date; and 
"(iii) meets the resource requirement and income stand-
ard that apply in the State to individuals described in 
section 1902(a)(10)(A)(ii)(V). 
"(3) USE OF PROJECTED INCOME.—In applying section 1903(f)(1) 
in determining the eligibility of an individual (described in 
section 1902(a)(10)(C)) for medical assistance for home and 
community care, a State may, at its option, provide for the 
determination of the individual's anticipated medical expenses 
(to be deducted from income) over a period of up to 6 months. 
"(c) DETERMINATIONS OF FUNCTIONAL DISABILITY.— 
"(1) IN GENERAL.—In this section, an individual is 'function-
ally disabled' if the individual— 
104 STAT. 1388-176 
PUBLIC LAW 101-508—NOV. 5, 1990 
"(A) is unable to perform without substantial assistance 
from another individual at least 2 of the following 3 activi-
ties of daily living: toileting, transferring, and eating; or 
"(B) has a primary or secondary diagnosis of Alzheimer's 
disease and is (i) unable to perform without substantial 
human assistance (including verbal reminding or physical 
cueing) or supervision at least 2 of the following 5 activities 
of daily living: bathing, dressing, toileting, transferring, 
and eating; or (ii) cognitively impaired so as to require 
substantial supervision from another individual because he 
or she engages in inappropriate behaviors that pose serious 
health or safety hazards to himself or herself or others. 
"(2) ASSESSMENTS OF FUNCTIONAL DISABILITY.— 
"(A) REQUESTS FOR ASSESSMENTS.—If a State has elected to 
provide home and community care under this section, upon 
the request of an individual who is 65 years of age or older 
and who meets the requirements of subsection (b)(1)(C) (or 
another person on such individual's behalf), the State shall 
provide for a comprehensive functional assessment under 
this subparagraph which— 
"(i) is used to determine whether or not the individ-
ual is functionally disabled, 
"(ii) is based on a uniform minimum data set speci-
fied by the Secretary under subparagraph (C)(i), and 
"(iii) uses an instrument which has been specified by 
the State under subparagraph (B). 
No fee may be charged for such an assessment. 
"(B) 
SPECIFICATION OF ASSESSMENT INSTRUMENT.—The 
State shall specify the instrument to be used in the State in 
complying with the requirement of subparagraph (A)(iii) 
which instrument shall be— 
"(i) one of the instruments designated under subpara-
graph (C)(ii); or 
"(ii) an instrument which the Secretary has approved 
as being consistent with the minimum data set of core 
elements, common definitions, and utilization guide-
lines specified by the Secretary in subparagraph (C)(i). 
"(C) 
SPECIFICATION OF ASSESSMENT DATA SET AND IN-
STRUMENTS.—The Secretary shall— 
"(i) not later than July 1,1991— 
"(I) specify a minimum data set of core elements 
and common definitions for use in conducting the 
assessments required under subparagraph (A); and 
"(II) establish guidelines for use of the data set; 
and 
"(ii) by not later than July 1, 1991, designate one or 
more instruments which are consistent with the speci-
fication made under subparagraph (A) and which a 
State may specify under subparagraph (B) for use in 
complying with the requirements of subparagraph (A). 
"(D) PERIODIC REVIEW.—Each individual who qualifies as 
a functionally disabled elderly individual shall have the 
individual's assessment periodically reviewed and revised 
not less often than once every 12 months. 
"(E) 
CONDUCT OF ASSESSMENT BY INTERDISCIPLINARY 
TEAMS.—An assessment under subparagraph (A) and a 
review under subparagraph (D) must be conducted by an 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-177 
interdisciplinary team designated by the State. The Sec-
retary shall permit a State to provide for assessments and 
reviews through teams under contracts— 
"(i) with public organizations; or 
"(ii) with nonpublic organizations which do not 
provide home and community care or nursing facil-
ity services and do not have a direct or indirect 
ownership or control interest in, or direct or in-
direct affiliation or relationship with, an entity 
that provides, community care or nursing facility 
services. 
"(F) CONTENTS OF ASSESSMENT.—The interdisciplinary 
team must— 
"(i) identify in each such assessment or review each 
individual's functional disabilities and need for home 
and community care, including information about the 
individual's health status, home and 
community 
environment, and informal support system; and 
"(ii) based on such assessment or review, determine 
whether the individual is (or continues to be) function-
ally disabled. 
The results of such an assessment or review shall be used in 
establishing, reviewing, and revising the individual's ICCP 
under subsection (d)(1). 
"(G) APPEAL PROCEDURES,—Each State which elects to 
provide home and community care under this section must 
have in effect an appeals process for individuals adversely 
affected by determinations under subparagraph (F). 
'(d) INDIVIDUAL COMMUNITY CARE PLAN (ICCP).— 
"(1) INDIVIDUAL COMMUNITY CARE PLAN DEFINED.—In this sec-
tion, the terms 'individual community care plan' and 'ICCP' 
mean, with respect to a functionally disabled elderly individual, 
a written plan which— 
"(A) is established, and is periodically reviewed and re-
vised, by a qualified case manager after a face-to-face inter-
view with the individual or primary caregiver and based 
upon the most recent comprehensive functional assessment 
of such individual conducted under subsection (c)(2); 
"(B) specifies, within any amount, duration, and scope 
limitations imposed on home and community care provided 
under the State plan, the home and community care to be 
provided to such individual under the plan, and indicates 
the individual's preferences for the types and providers of 
services; and 
"(C) may specify other services required by such indi-
vidual. 
An ICCP may also designate the specific providers (qualified to 
provide home and community care under the State plan) which 
will provide the home and community care described in 
subparagraph (B). Nothing in this section shall be construed as 
authorizing an ICCP or the State to restrict the specific persons 
or individuals (who are competent to provide home and commu-
nity care under the State plan) who will provide the home and 
community care described in subparagraph (B). 
"(2) QUALIFIED COMMUNITY CARE CASE MANAGER DEFINED.—In 
this section, the term 'qualified community care case manager' 
means a nonprofit or public agency or organization which— 
104 STAT. 1388-178 
PUBLIC LAW 101-508—NOV. 5, 1990 
"(A) has experience or has been trained in establishing, 
and in periodically reviewing and revising, individual 
community care plans and in the provision of case manage-
ment services to the elderly; 
"(B) is responsible for (i) assuring that home and commu-
nity care covered under the State plan and specified in the 
ICCP is being provided, (ii) visiting each individual's home 
or community setting where care is being provided not less 
often than once every 90 days, and (iii) informing the 
elderly individual or primary caregiver on how to contact 
the case manager if service providers fail to properly pro-
vide services or other similar problems occur; 
"(C) in the case of a nonpublic agency, does not provide 
home and community care or nursing facility services and 
does not have a direct or indirect ownership or control 
interest in, or direct or indirect affiliation or relationship 
with, an entity that provides, home and community care or 
nursing facility services; 
"(D) has procedures for assuring the quality of case 
management services that includes a peer review process; 
"(E) completes the ICCP in a timely manner and reviews 
and discusses new and revised ICCPs with elderly individ-
uals or primary caregivers; and 
"(F) meets such other standards, established by the Sec-
retary, as to assure that— 
"(i) such a manager is competent to perform case 
management functions; 
"(ii) individuals whose home and community care 
they mangige are not at risk of financial exploitation 
due to such a manager; and 
"(iii) meets such other standards £is the State may 
establish. 
The Secretary may waive the requirement of subparagraph (C) 
in the case of a nonprofit agency located in a rural area. 
"(3) APPEALS PROCESS.—Each State which elects to provide 
home and community care under this section must have in 
effect an appeals process for individuals who disagree with the 
ICCP established. 
"(e) CEIUNG ON PAYMENT AMOUNTS AND MAINTENANCE OF 
EFFORT.— 
"(1) CEIUNG ON PAYMENT AMOUNTS.—Payments may not be 
made under section 1903(a) to a State for home and community 
care provided under this section in a quarter to the extent that 
the medical assistance for such care in the quarter exceeds 50 
percent of the product of— 
"(A) the avergige number of individuals in the quarter 
receiving such care under this section; 
"(B) the average per diem rate of payment which the 
Secretary has determined (before the beginning of the 
quarter) will be payable under title XVIII (without regard 
to coinsurance) for extended care services to be provided in 
the State during such quarter; and 
"(C) the number of days in such quarter. 
"(2) MAINTENANCE OF EFFORT.— 
"(A) ANNUAL REPORTS.—As a condition for the receipt of 
payment under section 1903(a) with respect to medical 
assistance provided by a State for home and community 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-179 
care (other than a waiver under section 1915(c) and other 
than home health care services described in section 
1905(a)(7) and personal care services specified under regula-
tions under section 1905(a)(23)), the State shall report to the 
Secretary, with respect to each Federal fiscal year (begin-
ning with fiscal year 1990) and in a format developed or 
approved by the Secretary, the amount of funds obligated 
by the State with respect to the provision of home and 
community care to the functionally disabled elderly in that 
fiscal year. 
"(B) REDUCTION IN PAYMENT IF FAILURE TO MAINTAIN 
EFFORT.—If the amount reported under subparagraph (A) 
by a State with respect to a fiscal year is less than the 
amount reported under subparagraph (A) with respect to 
fiscal year 1989, the Secretary shall provide for a reduction 
in payments to the State under section 1903(a) in an 
amount equal to the difference between the amounts so 
reported. 
'(f) MINIMUM REQUIREMENTS FOR HOME AND COMMUNITY CARE.— 
"(1) REQUIREMENTS.—Home and Community care provided 
under this section must meet such requirements for individuals' 
rights and quality as are published or developed by the Sec-
retary under subsection (k). Such requirements shall include— 
"(A) the requirement that individuals providing care are 
competent to provide such care; and 
"(B) the rights specified in paragraph (2). 
"(2) SPECIFIED RIGHTS.—The rights specified in this paragraph 
are as follows: 
"(A) The right to be fully informed in advance, orally and 
in writing, of the care to be provided, to be fully informed in 
advance of any changes in care to be provided, and (except 
with respect to an individual determined incompetent) to 
participate in planning care or changes in care. 
"(B) The right to voice grievances with respect to services 
that are (or fail to be) furnished without discrimination or 
reprisal for voicing grievances, and to be told how to com-
plain to State and local authorities. 
"(C) The right to confidentiality of personal and clinical 
records. 
"(D) The right to privacy and to have one's property 
treated with respect. 
"(E) The right to refuse all or part of any care and to be 
informed of the likely consequences of such refusal. 
"(F) The right to education or training for oneself and for 
members of one's family or household on the management 
of care. 
"(G) The right to be free from physical or mental abuse, 
corporal punishment, and any physical or chemical re-
straints imposed for purposes of discipline or convenience 
and not included in an individual's ICCP. 
"(H) The right to be fully informed orally and in writing 
of the individual's rights. 
"(I) Guidelines for such minimum compensation for 
individuals providing such care as will assure the availabil-
ity and continuity of competent individuals to provide such 
care for functionally disabled individuals who have func-
tional disabilities of varying levels of severity. 
104 STAT. 1388-180 
PUBLIC LAW 101-508—NOV. 5, 1990 
"(J) Any other rights established by the Secretary. 
"(g) MINIMUM REQUIREMENTS FOR SMALL COMMUNITY CARE SET-
TINGS.— 
"(1) SMALL COMMUNITY CARE SETTINGS DEFINED.—In this sec-
tion, the term 'small community care setting' means— 
"(A) a nonresidential setting that serves more than 2 and 
less than 8 individuals; or 
"(B) a residential setting in which more than 2 and less 
than 8 unrelated adults reside and in which personal serv-
ices (other than merely board) are provided in conjunction 
with residing in the setting. 
"(2) MINIMUM REQUIREMENTS.—A small community care set-
ting in which community care is provided under this section 
must— 
"(A) meet such requirements as are published or devel-
oped by the Secretary under subsectiofi (k); 
"(B) meet the requirements of paragraphs (1)(A), (1)(C), 
(1)(I)), (3), and (6) of section 1919(c), to the extent applicable 
to such a setting; 
"(C) inform each individual receiving community care 
under this section in the setting, orally and in writing at 
the time the individual first receives community care in the 
setting, of the individual's legal rights with respect to such 
a setting and the care provided in the setting; 
"(D) meet any applicable State or local requirements 
regarding certification or licensure; 
"(E) meet any applicable State and local zoning, building, 
and housing codes, and State and local fire and safety 
regulations; and 
"(F) be designed, constructed, equipped, and maintained 
in a manner to protect the health and safety of residents. 
"(h) MINIMUM REQUIREMENTS FOR LARGE COMMUNITY CARE SET-
TINGS.— 
"(1) LARGE COMMUNITY CARE SETTING DEFINED.—In this sec-
tion, the term 'large community care setting' means— 
"(A) a nonresidential setting in which more than 8 
individuals are served; or 
"(B) a residential setting in which more than 8 unrelated 
adults reside and in which personal services are provided in 
conjunction with residing in the setting in which home and 
community care under this section is provided. 
"(2) MINIMUM REQUIREMENTS.—A large community care set-
ting in which community care is provided under this section 
must— 
"(A) meet such requirements as are published or devel-
oped by the Secretary under subsection (k); 
"(B) meet the requirements of paragraphs (1)(A), (1)(C), 
(1)(D), (3), and (6) of section 1919(c), to the extent applicable 
to such a setting; 
"(C) inform each individual receiving community care 
under this section in the setting, orally and in writing at 
the time the individual first receives home and community 
care in the setting, of the individual's legal rights with 
respect to such a setting and the care provided in the 
setting; and 
"(D) meet the requirements of paragraphs (2) and (3) of 
section 1919(d) (relating to administration and other mat-
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-181 
ters) in the same manner as such requirements apply to 
nursing facilities under such section; except that, in apply-
ing the requirement of section 1919(d)(2) (relating to life 
safety code), the Secretary shall provide for the application 
of such life safety requirements (if any) that are appro-
priate to the setting. 
"(3) DISCLOSURE OF OWNERSHIP AND CONTROL INTERESTS AND 
EXCLUSION OF REPEATED VIOLATORS.—A Community care set-
ting— 
"(A) must disclose persons with an ownership or control 
interest (including such persons as defined in section 
1124(a)(3)) in the setting; and 
"(B) may not have, as a person with an ownership or 
control interest in the setting, any individual or person who 
has been excluded from participation in the program under 
this title or who has had such an ownership or control 
interest in one or more community care settings which 
have been found repeatedly to be substandard or to have 
failed to meet the requirements of paragraph (2). 
'(i) SURVEY AND CERTIFICATION PROCESS.— 
"(1) CERTIFICATIONS.— 
"(A) RESPONSIBILITIES OF THE STATE.—Under each State 
plan under this title, the State shall be responsible for 
certifying the compliance of providers of home and commu-
nity care and community care settings with the applicable 
requirements of subsections (f), (g) and (h). The failure of 
the Secretary to issue regulations to carry out this subsec-
tion shall not relieve a State of its responsibility under this 
subsection. 
"(B) RESPONSIBILITIES OF THE SECRETARY.—The Secretary 
shall be responsible for certifying the compliance of State 
providers of home and community care, and of State 
community care settings in which such care is provided, 
with the requirements of subsections (f), (g) and (h). 
"(C) 
FREQUENCY OF CERTIFICATIONS.—Certification 
of 
providers and settings under this subsection shall occur no 
less frequently than once every 12 months. 
"(2) REVIEWS OF PROVIDERS.— 
"(A) IN GENERAL.—The certification under this subsection 
with respect to a provider of home or community care must 
be based on a periodic review of the provider's performance 
in providing the care required under ICCP's in accordance 
with the requirements of subsection (f). 
"(B) SPECIAL REVIEWS OF COMPLIANCE.—Where the Sec-
retary has reason to question the compliance of a provider 
of home or community care with any of the requirements of 
subsection (f), the Secretary may conduct a review of the 
provider and, on the basis of that review, make independent 
and binding determinations concerning the extent to which 
the provider meets such requirements. 
"(3) SURVEYS OF COMMUNITY CARE SETTINGS.— 
"(A) IN GENERAL.—The certification under this subsection 
with respect to community care settings must be based on a 
survey. Such survey for such a setting must be conducted 
without prior notice to the setting. Any individual who 
notifies (or causes to be notified) a community care setting 
of the time or date on which such a survey is scheduled to 
104 STAT. 1388-182 
PUBLIC LAW 101-508—NOV. 5, 1990 
be conducted is subject to a civil money penalty of not to 
exceed $2,000. The provisions of section 1128A (other than 
subsections (a) and O^)) shall apply to a civil money penalty 
under the previous sentence in the same manner as such 
provisions apply to a penalty or proceeding under section 
1128A(a). The Secretary shall review each State's proce-
dures for scheduling and conducting such surveys to assure 
that the State has taken all reasonable steps to avoid giving 
notice of such a survey through the scheduling procedures 
and the conduct of the surveys themselves. 
"(B) SURVEY PROTOCOL.—Surveys under this paragraph 
shall be conducted based upon a protocol which the Sec-
retary has provided for under subsection (k). 
"(C) PROHIBITION OF CONFUCT OF INTEREST IN SURVEY 
TEAM MEMBERSHIP.—A State and the Secretary may not use 
as a member of a survey team under this paragraph an 
individual who is serving (or has served within the previous 
2 years) as a member of the staff of, or as a consultant to, 
the community care setting being surveyed (or the person 
responsible for such setting) respecting compliance with the 
requirements of subsection (g) or (h) or who has a personal 
or familial financial interest in the setting being surveyed. 
"(D) 
VALIDATION SURVEYS OF COMMUNITY CARE SET-
TINGS.—The Secretary shall conduct onsite surveys of a 
representative sample of community care settings in each 
State, within 2 months of the date of surveys conducted 
under subparagraph (A) by the State, in a sufficient 
number to allow inferences about the adequacies of each 
State's surveys conducted under subparagraph (A). In 
conducting such surveys, the Secretary shall use the same 
survey protocols as the State is required to use under 
subparagraph (B). If the State has determined that an 
individual setting meets the requirements of subsection (g), 
but the Secretary determines that the setting does not meet 
such requirements, the Secretary's determination as to the 
setting's noncompliance with such requirements is binding 
and supersedes that of the State survey. 
"(E) SPECIAL SURVEYS OF COMPLIANCE.—Where the Sec-
retary has reason to question the compliance of a commu-
nity care setting with any of the requirements of subsection 
(g) or (h), the Secretary may conduct a survey of the setting 
and, on the basis of that survey, make independent and 
binding determinations concerning the extent to which the 
setting meets such requirements. 
"(4) 
INVESTIGATION OF COMPLAINTS AND MONITORING OF 
PROVIDERS AND SETTINGS.—Each State and the Secretary shall 
maintain procedures and adequate staff to investigate com-
plaints of violations of applicable requirements imposed on 
providers of community care or on community care settings 
under subsections (f), (g) and (h). 
"(5) INVESTIGATION OF ALLEGATIONS OF INDIVIDUAL NEGLECT 
AND ABUSE A N D MISAPPROPRIATION OF INDIVIDUAL PROPERTY.— 
The State shall provide, through the agency responsible for 
surveys and certification of providers of home or community 
care and community care settings under this subsection, for a 
process for the receipt, review, and investigation of allegations 
of individual neglect and abuse (including injuries of unknown 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-183 
source) by individuals providing such care or in such setting and 
of misappropriation of individual property by such individuals. 
The State shall, after notice to the individual involved and a 
reasonable opportunity for hearing for the individual to rebut 
allegations, make a finding as to the accuracy of the allegations. 
If the State finds that an individual has neglected or abused an 
individual receiving community care or misappropriated such 
individual's property, the State shall notify the individual 
against whom the finding is made. A State shall not make a 
finding that a person has neglected an individual receiving 
community care if the person demonstrates that such neglect 
was caused by factors beyond the control of the person. The 
State shall provide for public disclosure of findings under this 
paragraph upon request and for inclusion, in any such disclo-
sure of such findings, of any brief statement (or of a clear and 
accurate summary thereof) of the individual disputing such 
findings. 
"(6) DISCLOSURE OF RESULTS OF INSPECTIONS AND ACTIVITIES.— 
"(A) PUBLIC INFORMATION.—Each State, and the Sec-
retary, shall make available to the public— 
"(i) information respecting all surveys, reviews, and 
certifications made under this subsection respecting 
providers of home or community care and community 
care settings, including statements of deficiencies, 
"(ii) copies of cost reports (if any) of such providers 
and settings filed under this title, 
"(iii) copies of statements of ownership under section 
1124, and 
"(iv) information disclosed under section 1126. 
"(B) NOTICES OF SUBSTANDARD CARE.—If a State finds 
that— 
"(i) a provider of home or community care has pro-
vided care of substandard quality with respect to an 
individual, the State shall make a reasonable effort to 
notify promptly (I) an immediate family member of 
each such individual and (II) individuals receiving 
home or community care from that provider under this 
title, or 
"(ii) a community care setting is substandard, the 
State shall make a reasonable effort to notify promptly 
(I) individuals receiving community care in that set-
ting, and (II) immediate family members of such 
individuals. 
"(C) ACCESS TO FRAUD CONTROL UNITS.—Each State shall 
provide its State medicaid fraud and abuse control unit 
(established under section 1903(q)) with access to all 
information of the State agency responsible for surveys, 
reviews, and certifications under this subsection. 
'(j) ENFORCEMENT PROCESS FOR PROVIDERS OF COMMUNITY CARE.— 
"(1) STATE AUTHORITY.— 
"(A) IN GENERAL.—If a State finds, on the basis of a 
review under subsection (i)(2) or otherwise, that a provider 
of home or community care no longer meets the require-
ments of this section, the State may terminate the 
provider's participation under the State plan and may pro-
vide in addition for a civil money penalty. Nothing in this 
subparagraph shall be construed as restricting the remedies 
104 STAT. 1388-184 
PUBLIC LAW 101-508—NOV. 5, 1990 
available to a State to remedy a provider's deficiencies. If 
the State finds that a provider meets such requirements 
but, as of a previous period, did not meet such require-
ments, the State may provide for a civil money penalty 
under paragraph (2)(A) for the period during which it finds 
that the provider was not in compliance with such require-
ments. 
"(B) CIVIL MONEY PENALTY.— 
"(i) IN GENERAL.—Each State shall establish by law 
(whether statute or regulation) at least the following 
remedy: A civil money penalty assessed and collected, 
with interest, for each day in which the provider is or 
was out of compliance with a requirement of this sec-
tion. Funds collected by a State as a result of imposi-
tion of such a penalty (or as a result of the imposition 
by the State of a civil money penalty under subsection 
(i)(3)(A)) may be applied to reimbursement of individ-
uals for personal funds lost due to a failure of home or 
community care providers to meet the requirements of 
this section. The State also shall specify criteria, as to 
when and how this remedy is to be applied and the 
amounts of any penalties. Such criteria shall be 
designed so as to minimize the time between the identi-
fication of violations and final imposition of the 
penalties and shall provide for the imposition of 
incrementally more severe penalties for repeated or 
uncorrected deficiencies. 
"(ii) DEADLINE AND GUIDANCE.—Each State which 
elects to provide home and community care under this 
section must establish the civil money penalty remedy 
described in clause (i) applicable to all providers of 
community care covered under this section. The Sec-
retary shall provide, through regulations or otherwise 
by not later than July 1, 1990, guidance to States in 
establishing such remedy; but the failure of the Sec-
retary to provide such guidance shall not relieve a 
State of the responsibility for establishing such remedy. 
"(2) SECRETARIAL AUTHORITY.— 
"(A) FOR STATE PROVIDERS.—With respect to a State pro-
vider of home or community care, the Secretary shall have 
the authority and duties of a State under this subsection, 
except that the civil money penalty remedy described in 
subparagraph (C) shall be substituted for the civil money 
remedy described in paragraph (l)(B)(i). 
"(B) OTHER PROVIDERS.—With respect to any other pro-
vider of home or community care in a State, if the Sec-
retary finds that a provider no longer meets a requirement 
of this section, the Secretary may terminate the provider's 
participation under the State plan and may provide, in 
addition, for a civil money penalty under subparagraph (C). 
If the Secretary finds that a provider meets such require-
ments but, as of a previous period, did not meet such 
requirements, the Secretary may provide for a civil money 
penalty under subparagraph (C) for the period during which 
the Secretary finds that the provider was not in compliance 
with such requirements. 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-185 
"(C) CIVIL MONEY PENALTY.—If the Secretary finds on the 
basis of a review under subsection (i)(2) or otherwise that a 
home or community care provider no longer meets the 
requirements of this section, the Secretary shall impose a 
civil money penalty in an amount not to exceed $10,000 for 
each day of noncompliance. The provisions of section 1128A 
(other than subsections (a) and (b)) shall apply to a civil 
money penalty under the previous sentence in the same 
manner as such provisions apply to a penalty or proceeding 
under section 1128A(a). The Secretary shall specify criteria, 
as to when and how this remedy is to be applied and the 
amounts of any penalties. Such criteria shall be designed so 
as to minimize the time between the identification of viola-
tions and final imposition of the penalties and shall provide 
for the imposition of incrementally more severe penalties 
for repeated or uncorrected deficiencies. 
'(k) SECRETARIAL RESPONSIBILITIES.— 
"(1) PUBLICATION OF INTERIM REQUIREMENTS.— 
"(A) IN GENERAL.—The Secretary shall publish, by 
December 1, 1991, a proposed regulation that sets forth 
interim requirements, consistent with subparagraph (B), for 
the provision of home and community care and for commu-
nity care settings, including— 
"(i) the requirements of subsection (c)(2) (relating to 
comprehensive functional assessments, including the 
use of assessment instruments), of subsection (d)(2)(E) 
(relating to qualifications for qualified case managers), 
of subsection (f) (relating to minimum requirements for 
home and community care), of subsection (g) (relating 
to minimum requirements for small community care 
settings), and of subsection (h) (relating to minimum 
requirements for large community care settings, "
^
^ and 
"(ii) survey protocols (for use under subsection 
(i)(3)(A)) which relate to such requirements. 
"(B) 
MINIMUM 
PROTECTIONS.—Interim 
requirements 
under subparagraph (A) and final requirements under para-
graph (2) shall assure, through methods other than reliance 
on State licensure processes, that individuals receiving 
home and community care are protected from neglect, phys-
ical and sexual abuse, financial exploitation, inappropriate 
involuntary restraint, and the provision of health care 
services by unqualified personnel in community care set-
tings. 
"(2) DEVELOPMENT OF FINAL REQUIREMENTS.—The Secretary 
shall develop, by not later than October 1,1992— 
"(A) final requirements, consistent with paragraph (1)(B), 
respecting the provision of appropriate, quality home and 
community care and respecting community care settings 
under this section, and including at least the requirements 
referred to in paragraph (l)(A)(i), and 
"(B) survey protocols and methods for evaluating and 
assuring the quality of community care settings. 
The Secretary may, from time to time, revise such require-
ments, protocols, and methods. 
"(3) No DELEGATION TO STATES.—The Secretary's authority 
under this subsection shall not be delegated to States. 
•
*
* So in original. Probably should be "settings),' 
104 STAT. 1388-186 
PUBLIC LAW 101-508—NOV. 5, 1990 
"(4) N o PREVENTION OF MORE STRINGENT REQUIREMENTS BY 
STATES.—Nothing in this section shall be construed as prevent-
ing States from imposing requirements that are more stringent 
than the requirements published or developed by the Secretary 
under this subsection. 
"(1) WAIVER OF STATEWIDENESS.—States may waive the require-
ment of section 1902(a)(1) (related to State wideness)'*'^ for a pro-
gram of home and community care under this section. 
"(m) LIMITATION ON AMOUNT OF EXPENDITURES AS MEDICAL ASSIST-
ANCE.— . 
"(1) LIMITATION ON AMOUNT.—The amount of funds that may 
be expended as medical assistance to carry out the purposes of 
this section shall be for fiscal year 1991, $40,000,000, for fiscal 
year 1992, $70,000,000, for fiscal year 1993, $130,000,000, for 
fiscal year 1994, $160,000,000, and for fiscal year 1995, 
$180,000,000. 
"(2) ASSURANCE OF ENTITLEMENT TO SERVICE.—A State which 
receives Federal medical assistance for expenditures for home 
and community care under this section must provide home and 
community care specified under the Individual Community 
Care Plan under subsection (d) to individuals described in 
subsection (b) for the duration of the election period, without 
regard to the amount of funds available to the State under 
paragraph (1). For purposes of this paragraph, an election 
period is the period of 4 or more calendar quarters elected by 
the State, and approved by the Secretary, for the provision of 
home and community care under this section, 
"(3) LIMITATION ON ELIGIBILITY.—The State may limit eligi-
bility for home and community care under this section during 
an election period under paragraph (2) to reasonable classifica-
tions (based on age, degree of functional disability, and need for 
services). 
"(4) ALLOCATION OF MEDICAL ASSISTANCE.—The Secretary shall 
establish a limitation on the amount of Federal medical assist-
ance available to any State during the State's election period 
under paragraph (2). The limitation under this paragraph shall 
take into account the limitation under paragraph (1) and the 
number of elderly individuals age 65 or over residing in such 
State in relation to the number of such elderly individuals in 
the United States during 1990. For purposes of the previous 
sentence, elderly individuals shall, to the maximum extent 
practicable, be low-income elderly individuals.". 
(c) PAYMENT FOR HOME AND COMMUNITY CARE.— 
(1) REASONABLE AND ADEQUATE PAYMENT RATES.—Section 1902 
(42 U.S.C. 1396a) is amended— 
(A) in subsection (a)(13)— 
(i) by striking "and" at the end of subparagraph (D), 
(ii) by inserting "and" at the end of subparagraph (E), 
and 
(iii) by adding at the end the following new subpara-
graph: 
"(F) for payment for home and community care (as de-
fined in section 1929(a) and provided under such section) 
through rates which are reasonable and adequate to meet 
the costs of providing care, efficiently and economically, in 
conformity with applicable State and Federal laws, regula-
tions, and quality and safety standards;"; and 
*'' So in original. Probably should be "Statewideness)". 
PUBLIC LAW 101-508—NOV. 5,1990 
104 STAT. 1388-187 
(B) in subsection (h), by adding before the period at the 
end the following: "or to limit the amount of payment that 
may be made under a plan under this title for home and 
community care''. 
(2) DENIAL OF PAYMENT FOR CIVIL MONEY PENALTIES, ETC.— 
Section 1903(i)(8) of such Act (42 U.S.C. 1396b(i)(8)) is amended 
by inserting "(A)" after "medical assistance" and by inserting 
before the semicolon at the end the following: "or (B) for home 
and community care to reimburse (or otherwise compensate) a 
provider of such care for payment of a civil money penalty 
imposed under this title or title XI or for legal expenses in 
defense of an exclusion or civil money penalty under this title or 
title XI if there is no reasonable legal ground for the provider's 
case". 
(d) CONFORMING AMENDMENTS.— 
(1) Section 1902(j) (42 U.S.C. 1396a(j)) is amended by striking 
"(21)" and inserting "(22)". 
(2) Section 1902(a)(10)(C)(iv) (42 U.S.C. 1396a(a)(10)(C)(iv)) is 
amended by striking "through (20)" and inserting "through 
(21)". 
(e) EFFECTIVE DATES.— 
(1) Except as provided in this subsection, the amendments 
made by this section shall apply to home and community care 
furnished on or after July 1, 1991, without regard to whether or 
not final regulations to carry out such amendments have been 
promulgated by such date. 
(2)(A) The amendments made by subsection (c)(1) shall apply 
to home and community care furnished on or after July 1, 1991, 
or, if later, 30 days after the date of publication of interim 
regulations under section 1929(k)(l). 
(B) The amendment made by subsection (c)(2) shall apply to 
civil money penalties imposed after the date of the enactment of 
this Act. 
(f) WAIVER OF PAPERWORK REDUCTION, ETC.—Chapter 35 of title 
44, United States Code, and Executive Order 12291 shall not apply 
to information and regulations required for purposes of carrying out 
this Act and implementing the amendments made by this Act. 
SEC. 4712. COMMUNITY SUPPORTED LIVING ARRANGEMENTS SERVICES. 
(a) PROVISION AS OPTIONAL SERVICE.—Section 1905(a) (42 U.S.C. 
1396d(a)) as amended by section 4711 is further amended— 
(1) by striking "and" at the end of paragraph (23); 
(2) by redesignating paragraph (24) as paragraph (25); and 
(3) by inserting after paragraph (23) the following new para-
graph: 
"(24) community supported living arrangements services (to 
the extent allowed and as defined in section 1930).". 
(b) COMMUNITY SUPPORTED LIVING ARRANGEMENTS.—Title XIX (42 
U.S.C. 1396 et seq.) as amended by sections 4402 and 4711 is further 
amended— 
(1) by redesignating section 1930 as section 1931; and 
(2) by inserting after section 1929 the following new section: 
42 u s e 1396a 
note. 
44 u s e 3501 
note. 
COMMUNITY SUPPORTED LIVING ARRANGEMENTS SERVICES 
"SEC. 
1930. 
(a) COMMUNITY SUPPORTED LIVING ARRANGEMENTS 
SERVICES.—In this title, the term 'community supported living 
42 u s e 1396U. 
104 STAT. 1388-188 
PUBLIC LAW 101-508—NOV. 5, 1990 
arrangements services' means one or more of the following services 
meeting the requirements of subsection (h) provided in a State 
eligible to provide services under this section (as defined in subsec-
tion (d)) to assist a developmentally disabled individual (as defined 
in subsection (b)) in activities of daily living necessary to permit 
such individual to live in the individual's own home, apartment, 
family home, or rental unit furnished in a community supported 
living arrangement setting: 
"(1) Personal assistance. 
"(2) Training and habilitation services (necessary to assist the 
individual in achieving increased integration, independence and 
productivity). 
"(3) 24-hour emergency assistance (as defined by the Sec-
retary). 
"(4) Assistive technology. 
"(5) Adaptive equipment. 
"(6) Other services (as approved by the Secretary, except those 
services described in subsection (g)). 
"(7) Support services necessary to aid an individual to partici-
pate in community activities. 
"(b) DEVELOPMENTALLY DISABLED INDIVIDUAL DEFINED.—In this 
title the term, 'developmentally disabled individual' means an 
individual who as defined by the Secretary is described within the 
term 'mental retardation and related conditions' as defined in regu-
lations as in effect on July 1, 1990, and who is residing with the 
individual's family or legal guardian in such individual's own home 
in which no more than 3 other recipients of services under this 
section are residing and without regard to whether or not such 
individual is at risk of institutionalization (as defined by the Sec-
retary). 
"(c) CRITERIA FOR SELECTION OF PARTICIPATING STATES.—The Sec-
retary shall develop criteria to review the applications of States 
submitted under this section to provide community supported living 
arrangement services. The Secretary shall provide in such criteria 
that during the first 5 years of the provision of services under this 
section that no less than 2 and no more than 8 States shall be 
allowed to receive Federal financial participation for providing the 
services described in this section. 
"(d) QUALITY ASSURANCE.—A State selected by the Secretary to 
provide services under this section shall in order to continue to 
receive Federal financial participation for providing services under 
this section be required to establish and maintain a quality assur-
ance program, that provides that— 
"(1) the State will certify and survey providers of services 
under this section (such surveys to be unannounced and average 
at least 1 a year); 
"(2) the State will adopt standards for survey and certification 
that include— 
"(A) minimum qualifications and training requirements 
for provider staff; 
"(B) financial operating standards; and 
"(C) a consumer grievance process; 
"(3) the State will provide a system that allows for monitoring 
boards consisting of providers, family members, consumers, and 
neighbors; 
"(4) the State will establish reporting procedures to make 
available information to the public; 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-189 
"(5) the State will provide ongoing monitoring of the health 
and well-being of each recipient; 
"(6) the State will provide the services defined in subsection 
(a) in accordance with an individual support plan (as defined by 
the Secretary in regulations); and 
"(1) the State plan amendment under this section shall be 
reviewed by the State Planning Council established under sec-
tion 124 of the Developmental Disabilities Assistance and Bill of 
Rights Act, and the Protection and Advocacy System estab-
lished under section 142 of such Act.".*® 
The Secretary shall not approve a quality assurance plan under this 
subsection and allow a State to continue to receive Federal financial 
participation under this section unless the State provides for public 
hearings on the plan prior to adoption and implementation of its 
plan under this subsection. 
"(e) MAINTENANCE OF EFFORT.—States selected by the Secretary to 
receive Federal financial participation to provide services under this 
section shall maintain current levels of spending for such services in 
order to be eligible to continue to receive Federal financial partici-
pation for the provision of such services under this section. 
"(f) EXCLUDED SERVICES.—No Federal financial participation shall 
be allowed for the provision of the following services under this 
section: 
"(1) Room and board. 
"(2) Cost of prevocational, vocational and supported employ-
ment. 
"(g) WAIVER OF REQUIREMENTS.—The Secretary may waive such 
provisions of this title as necessary to carry out the provisions of this 
section including the following requirements of this title— 
"(1) comparability of amount, duration, and scope of services; 
and 
"(2) statewideness. 
"(h) MINIMUM PROTECTIONS.— 
"(1) PUBLICATION OF INTERIM AND FINAL REQUIREMENTS.— 
"(A) IN GENERAL.—The Secretary shall publish, by July 1, 
1991, a regulation (that shall be effective on an interim 
basis pending the promulgation of final regulations), and by 
October 1, 1992, a final regulation, that sets forth interim 
and 
final 
requirements, respectively, consistent 
with 
subparagraph (B), to protect the health, safety, and welfare 
of individuals receiving community 
supported 
living 
arrangements services. 
"(B) MINIMUM PROTECTIONS.—Interim and final require-
ments under subparagraph (A) shall assure, through 
methods other than reliance on State licensure processes or 
the State quality assurance programs under subsection (d), 
that— 
"(i) individuals receiving community supported living 
arrangements services are protected from neglect, 
physical and sexual abuse, and financial exploitation; 
"(ii) a provider of community supported living 
arrangements services may not use individuals who 
have been convicted of child or client abuse, neglect, or 
mistreatment or of a felony involving physical harm to 
an individual and shall take all reasonable steps to 
determine whether applicants for employment by the 
provider have histories indicating involvement in child 
** So in original. Probably should be "Act.". 
104 STAT. 1388-190 
PUBLIC LAW 101-508—NOV. 5, 1990 
or client abuse, neglect, or mistreatment or a criminal 
record involving physical harm to an individual; 
"(iii) individuals or entities delivering such services 
are not unjustly enriched as a result of abusive finan-
cial arrangements (such as owner lease-backs); and 
"(iv) individuals or entities delivering such services 
to clients, or relatives of such individuals, are prohib-
ited from being named beneficiaries of life insurance 
policies purchased by (or on behalf of) such clients, 
"(2) SPECIFIED REMEDIES,—If the Secretary finds that a pro-
vider has not met an applicable requirement under subsection 
(h), the Secretary shall impose a civil money penalty in an 
amount not to exceed $10,000 for each day of noncompliance. 
The provisions of section 1128A (other than subsections (a) and 
(b)) shall apply to a civil money penalty under the previous 
sentence in the same manner as such provisions apply to a 
penalty or proceeding under section 1128A(a), 
"(i) TREATMENT OF FUNDS.—Any funds expended under this sec-
tion for medical assistance shall be in addition to funds expended for 
any existing services covered under the State plan, including any 
waiver services for which an individual receiving services under this 
program is already eligible. 
"Q) LIMITATION ON AMOUNTS OF EXPENDITURES AS MEDICAL ASSIST-
ANCE.—The amount of funds that may be expended as medical 
assistance to carry out the purposes of this section shall be for fiscal 
year 1991, $5,000,000, for fiscal year 1992, $10,000,000, for fiscal year 
1993, $20,000,000, for fiscal year 1994, $30,000,000, for fiscal year 
1995, $35,000,000, and for fiscal years thereafter such sums as 
provided by Congress.". 
42 u s e 1396u 
(c) EFFECTIVE D A T E . — 
note. 
(1) IN GENERAL.—The amendments made by this section shall 
apply to community supported living arrangements services 
furnished on or after the later of July 1, 1991, or 30 days after 
the publication of regulations setting forth interim require-
ments under subsection (h) without regard to whether or not 
final regulations to carry out such amendments have been 
promulgated by such date, 
(2) APPLICATION PROCESS,—The Secretary of Health and 
Human Services shall provide that the applications required to 
be submitted by States under this section shall be received and 
approved prior to the effective date specified in paragraph (1). 
SEC, 4713, PROVIDING FEDERAL MEDICAL ASSISTANCE FOR PAYMENTS 
FOR PREMIUMS FOR "COBRA" CONTINUATION COVERAGE 
WHERE COST EFFECTIVE, 
(a) OPTIONAL PAYMENT OF COBRA PREMIUMS FOR QUALIFIED 
COBRA CONTINUATION BENEFICIARIES,—Section 1902 (42 U,S,C, 
1396a) is amended— 
(1) in subsection (a)(10)— 
(A) by striking "and" at the end of subparagraph (D), 
(B) by adding "and" at the end of subparagraph (E), 
(C) by inserting after subparagraph (E) the following new 
subparagraph: 
"(F) at the option of a State, for making medical assist-
ance available for COBRA premiums (as defined in subsec-
tion (u)(2)) for qualified COBRA continuation beneficiaries 
described in section 1902(u)(l);", and 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-191 
(D) in the matter following subparagraph (E), by striking 
"and" before "(X)" and by inserting before the semicolon at 
the end the following: , and (XI) the medical assistance 
made available to an individual described in subsection 
(u)(l) who is eligible for medical assistance only because of 
subparagraph (F) shall be limited to medical assistance for 
COBRA continuation premiums (as defined in subsection 
(uX2))"; and 
(2) by adding after the subsections added by section 4604 and 
4701(b) the following new subsection: 
"(u)(l) Individuals described in this paragraph are individuals— 
"(A) who are entitled to elect COBRA continuation coverage 
(as defined in paragraph (3)), 
"(B) whose income (as determined under section 1612 for 
purposes of the supplemental security income program) does not 
exceed 100 percent of the official poverty line (as defined by the 
Office of Management and Budget, and revised annually in 
accordance with section 673(2) of the Omnibus Budget Reconcili-
ation Act of 1981) applicable to a family of the size involved, 
"(C) whose resources (as determined under section 1613 for 
purposes of the supplemental security income program) do not 
exceed twice the maximum amount of resources that an 
individual may have and obtain benefits under that program, 
and 
"(D) with respect to whose enrollment for COBRA continu-
ation coverage the State has determined that the savings in 
expenditures under this title resulting from such enrollment is 
likely to exceed the amount of payments for COBRA premiums 
made. 
"(2) For purposes of subsection (a)(10)(F) and this subsection, the 
term 'COBRA premiums' means the applicable premium imposed 
with respect to COBRA continuation coverage. 
"(3) In this subsection, the term 'COBRA continuation coverage' 
means coverage under a group health plan provided by an employer 
with 75 or more employees provided pursuant to title XXII of the 
Public Health Service Act, section 4980B of the Internal Revenue 
Code of 1986, or title VI of the Employee Retirement Income Secu-
rity Act of 1974. 
"(4) Notwithstanding subsection (a)(17), for individuals described 
in paragraph (1) who are covered under the State plan by virtue of 
subsection (aX10)(AXii)(XI)— 
"(A) the income standard to be applied is the income standard 
described in paragraph (IXB), and 
"(B) except as provided in section 1612(b)(4XBXii), costs in-
curred for medical care or for any other type of remedial care 
shall not be taken into account in determining income. 
Any different treatment provided under this paragraph for such 
individuals shall not, because of subsection (a)(10)(B) or (aX17), re-
quire or permit such treatment for other individuals.". 
(h) CONFORMING AMENDMENT.—Section 1905(a) (42 U.S.C. 1396d(a)) 
is amended— 
(1) by striking "or" at the end of clause (viii), 
(2) by adding "or" at the end of clause (ix), and 
(3) by inserting after clause (ix) the following new clause: 
"(x) individuals described in section 1902(uXl),". 
(c) EFFECTIVE DATE.—The amendments made by this section shall 42 USC 1396a 
apply to medical assistance furnished on or after January 1, 1991. note. 
104 STAT. 1388-192 
PUBLIC LAW 101-508—NOV. 5, 1990 
SEC. 4714. PROVISIONS RELATING TO SPOUSAL IMPOVERISHMENT. 
(a) CLARIFICATION OF NON-APPLICATION OF STATE COMMUNITY 
42 use 1396r-5. 
PROPERTY LAWS.—Section 1924(b)(2) (42 U.S.C. 1396r-l(b)(2)) as 
amended by subsection (a), is further amended by striking ", after 
the institutionahzed spouse has been determined or redetermined to 
be eligible for medical assistance" and inserting "for purposes of the 
post-eligibility income determination described in subsection (d)". 
(b) CLARIFICATION OF TRANSFER OF RESOURCES TO COMMUNITY 
SPOUSE.—Section 1924(f)(1) (42 U.S.C. 1396r-5(f)(l)) is amended by 
striking "section 1917" and inserting "section 1917(c)(1)". 
(c) CLARIFICATION OF PERIOD OF CONTINUOUS EUGIBILITY.—Section 
42 use 1396r-5. 
1924(c)(1) (42 U.S.C. 1396r-l(c)(l)) is amended by striking "the 
beginning of a continuous period of institutionalization of the 
institutionalized spouse" each place it appears and inserting "the 
beginning of the first continuous period of institutionalization 
(beginning on or after September 30, 1989) of the institutionalized 
spouse". 
42 use 1396r-5 
(d) EFFECTIVE DATE.—The amendments made this section shall 
^°*®- 
take effect as if included in the enactment of section 303 of the 
Medicare Catastrophic Coverage Act of 1988. 
SEC. 4715. DISREGARDING GERMAN REPARATION PAYMENTS FROM POST-
ELIGIBILITY TREATMENT OF INCOME UNDER THE MEDICAID 
PROGRAM. 
(a) IN GENERAL.—Section 1902(r)(l) (42 U.S.C. 1396a(r)(l)) is 
amended by inserting "there shall be disregarded reparation pay-
ments made by the Federal Republic of Germany and" after "under 
such a waiver". 
(b) EFFECTIVE DATE.—The amendment made by subsection (a) 
shall apply to treatment of income for months beginning more than 
30 days after the date of the enactment of this Act. 
SEC. 4716. AMENDMENTS RELATING TO MEDICAID TRANSITION PROVI-
SION. 
(a) AMENDMENTS.—Subsection (f) of section 1925 (42 U.S.C. 1396s) 
is amended— 
(1) in subsection (b)(2)(B)(i), by inserting at the end the follow-
ing: "A State may permit such additional extended assistance 
under this subsection notwithstanding a failure to report under 
this clause if the family has established, to the satisfaction of 
the State, good cause for the failure to report on a timely 
basis."; 
(2) in subsection (b)(2)(B), by adding at the end the following 
new clause: 
"(iii) CLARIFICATION ON FREQUENCY OF REPORTING.—A 
State may not require that a family receiving extended 
assistance under this subsection or subsection (a) report 
more frequently than as required under clause (i) or 
(ii)."; and 
(3) in subsection (b)(3)(B), by adding at the end the following: 
"No such termination shall be effective earlier than 10 days 
after the date of mailing of such notice.". 
42 use 1396r-6 
(b) EFFECTIVE DATE.—The amendments made by subsection (a) 
note. 
shall be effective as if included in the enactment of the Family 
Support Act of 1988. 
42 u s e 1396a 
note. 
42 u s e 1396r-6. 
•••• 
- ' ^ % r J . 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-193 
SEC. 4717. CLARIFYING EFFECT OF HOSPICE ELECTION. 
Section 1905(o)(l)(A) (42 U.S.C. 1396d(o)(l)(A)) is amended by 
inserting "and for which payment may otherwise be made under 
title XVIII" after "described in section 1812(d)(2)(A)". 
SEC. 4718. MEDICALLY NEEDY INCOME LEVELS FOR CERTAIN 1-MEMBER 
42 USC 1396b 
FAMILIES. 
note 
(a) IN GENERAL.—For purposes of section 1903(f)(1)(B), for pay-
ments made before, on, or after the date of the enactment of this 
Act, a State described in subparagraph (B) may use, in determining 
the "highest amount which would ordinarily be paid to a family of 
the same size" (under the State's plan approved under part A of title 
IV of such Act) in the case of a family consisting only of one 
individual and without regard to whether or not such plan provides 
for aid to families consisting only of one individual, an amount 
reasonably related to the highest money payment which would 
ordinarily be made under such a plan to a family of two without 
income or resources. 
(b) STATES COVERED.—Subsection (a) shall only apply to a State the 
State plan of which (under title XIX of the Social Security Act) as of 
June 1, 1989, provided for the policy described in such paragraph. 
For purposes of the previous sentence, a State plan includes all the 
matter included in a State plan under section 2373(c)(5) of the 
Deficit Reduction Act of 1984 (as amended by section 9 of the 
Medicare and Medicaid Patient and Program Protection Act of 
1987). 
SEC. 4719. CODIFICATION OF COVERAGE OF REHABILITATION SERVICES. 
(a) IN GENERAL.—Section 1905(a)(13) (42 U.S.C. 1396d(a)(13)) is 
amended by inserting before the semicolon at the end the following: 
", including any medical or remedial services (provided in a facility, 
a home, or other setting) recommended by a physician or other 
licensed practitioner of the healing arts within the scope of their 
practice under State law, for the maximum reduction of physical or 
mental disability and restoration of an individual to the best pos- 
• 
sible functional level". 
(b) EFFECTIVE DATE.—The amendment made by subsection (a) 
shall take effect on the date of the enactment of this Act. 
SEC. 4720. PERSONAL CARE SERVICES FOR MINNESOTA. 
(a) CLARIFICATION OF COVERAGE.—In applying section 1905 of the 
Social Security Act with respect to Minnesota, medical assistance 
shall include payment for personal care services described in subsec-
tion (b). 
(b) PERSONAL CARE SERVICES DEFINED.—For purposes of this sec- 
42 use I396d 
tion, the term "personal care services" means services— 
^°*®-
(1) prescribed by a physician for an individual in accordance 
with a plan of treatment, 
(2) provided by a person who is qualified to provide such 
services who is not a member of the individual's family, 
(3) supervised by a registered nurse, and 
(4) furnished in a home or other location; 
but does not include such services furnished to an inpatient or 
resident of a hospital or nursing facility. 
(c) EFFECTIVE DATE.—This section shall take effect on the date of 
the enactment of this Act and shall apply with respect to— 
note. 
104 STAT. 1388-194 
PUBLIC LAW 101-508—NOV. 5, 1990 
(1) personal care services furnished before such date pursuant 
to regulations in effect as of July 1,1989; and 
(2) such services furnished before October 1,1994. 
SEC. 4721. MEDICAID COVERAGE OF PERSONAL CARE SERVICES OUTSIDE 
THE HOME. 
(a) IN GENERAL.—Section 1905(a)(7) (42 U.S.C. 1396d(a)(7)) is 
amended by striking "services" and inserting "services including 
personal care services (A) prescribed by a physician for an individual 
in accordance with a plan of treatment, (B) provided by an individ-
ual who is qualified to provide such services and who is not a 
member of the individual's family, (C) supervised by a registered 
nurse, and (D) furnished in a home or other location; but not 
including such services furnished to an inpatient or resident of a 
nursing facility", 
fLY^ ^^^^ 
(b) EFFECTIVE DATE.—The amendment made by this section shall 
become effective with respect to personal care services provided on 
or after October 1,1994. 
SEC. 4722. MEDICAID COVERAGE OF ALCOHOLISM AND DRUG DEPEND-
ENCY TREATMENT SERVICES. 
Section 1905(a) of the Social Security Act is amended by adding at 
the end the following new sentence: No service (including counsel-
ing) shall be excluded from the definition of 'medical assistance' 
solely because it is provided as a treatment service for alcoholism or 
drug dependency.". 
SEC. 4723. MEDICAID SPENDDOWN OPTION. 
(a) IN GENERAL.—Section 1903(f)(2) (42 U.S.C. 1396b(f)(2)) is 
amended by— 
(1) inserting "(A)" after "(2)"; and 
(2) by adding before the period at the end the following: "or, 
(B) notwithstanding section 1916 at State option, an amount 
paid by such family, at the family's option, to the State, pro-
vided that the amount, when combined with costs incurred in 
prior months, is sufficient when excluded from the family's 
income to reduce such family's income below the applicable 
income limitation described in paragraph (1). The amount of 
State expenditures for which medical assistance is available 
under subsection (a)(1) will be reduced by amounts paid to the 
State pursuant to this subparagraph." 
0)) CONFORMING AMENDMENT.—Section 1902(a)(17) (42 U.S.C. 
1396a(a)(17)) is amended by inserting after "insurance premiums" 
", payments made to the State under section 1903(f)(2)(B),". 
SEC, 4724. OPTIONAL STATE MEDICAID DISABILITY DETERMINATIONS 
INDEPENDENT OF THE SOCIAL SECURITY ADMINISTRATION. 
(a) IN GENERAL.—Section 1902 (42 U.S.C. 1396a) as amended by 
this title, is further amended by adding at the end the following new 
subsection: 
"(v)(l) A State plan may provide for the making of determinations 
of disability or blindness for the purpose of determining eligibility 
for medical assistance under the State plan by the single State 
agency or its designee, and make medical assistance available to 
individuals whom it finds to be blind or disabled and who are 
determined otherwise eligible for such assistance during the period 
of time prior to which a final determination of disability or blind-
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-195 
ness is made by the Social Security Administration with respect to 
such an individual. In making such determinations, the State must 
apply the definitions of disability and blindness found in section 
1614(a) of the Social Security Act.". 
Subpart C—Health Maintenance Organizations 
SEC. 4731. REGULATION OP INCENTIVE PAYMENTS TO PHYSICIANS. 
(a) PHYSICIAN PAYMENT PLAN.—Section 1903(m)(2)(A) (42 U.S.C. 
1396b(m)(2)(A)) as amended by this title is further amended— 
(1) by striking ", and" at the end of clause (viii) and inserting 
a semicolon; 
(2) by striking the period at the end of clause (ix) and insert-
ing "; and"; and 
(3) by adding at the end the following new clause: 
"(x) any physician incentive plan that it operates meets the 
requirements described in section 1876(i)(8).". 
(b) REPEAL OF PROHIBITION AGAINST PHYSICIAN INCENTIVE PAY-
MENTS.—Section 1128A(b)(l) (42 U.S.C. 1320a-7a(b)(l)) is— 
(1) REPEAL OF PROHIBITION.—Section 1128A(b)(l) (42 U.S.C. 
1320a-7a(b)(l)) is amended by striking "or an entity with a 
contract under section 1903(m)". 
(2) 
PENALTIES.—Section 
1903(m)(5)(A) 
(42 
U.S.C. 
1396b(m)(5)(A)) is amended— 
(A) by striking "or" at the end of clause (iii); 
(B) by adding "or" at the end of clause (iv); and 
(C) by adding at the end the following new clause: 
"(v) fails to comply with the requirements of section 
1876(1X8),". 
(c) EFFECTIVE DATE.—The amendments made by subsections (a) 42 USC 1396b 
and (b)(2) shall apply with respect to contract years beginning on or 
^°^-
after January 1, 1992, and the amendments made by subsection 
(b)(1) shall take effect on the date of the enactment of this Act. 
SEC. 4732. SPECIAL RULES. 
(a) WAIVER OF 75 PERCENT RULE FOR PUBLIC ENTITIES,—Section 
1903(m)(2)(D) (42 U.S.C. 1396b(m)(2)(D)) is amended by striking "(i) 
special circumstances warrant such modification or waiver, and (ii)". 
(b) EXTENDING SPECIAL TREATMENT TO MEDICARE COMPETITIVE 
MEDICAL PLANS.— 
(1) 6-MONTH MINIMUM ENROLLMENT PERIOD OPTION.—Section 
1902(e)(2)(A) (42 U.S.C. 1396a(e)(2)(A)) is amended by inserting 
"or with an eligible organization with a contract under section 
1876" after "1903(m)(2)(A)". 
(2) ENROLLMENT LOCK-IN.—Section 1903(m)(2)(F)(i) (42 U.S.C. 
1396b(m)(2)(F)(i)) is amended— 
(A) by striking "(G) or" and inserting "(G),", and 
(B) adding at the end the following: "or with an eligible 
organization with a contract under section 1876 which 
meets the requirement of subparagraph (A)(ii), or". 
(c) AUTOMATIC 1-MONTH REENROLLMENT FOR SHORT PERIODS OF 
INELIGIBILITY.—Section 1903(m)(2) is amended by adding at the end 
the following new subparagraph: 
"(H) In the case of an individual who— 
"(i) in a month is eligible for benefits under this title and 
enrolled with a health maintenance organization with a con-
tract under this paragraph, 
104 STAT. 1388-196 
PUBLIC LAW 101-508—NOV. 5, 1990 
42 use 1396b. 
42 use 1396a 
note. 
42 use 1396b 
note. 
"(ii) in the next month (or in the next 2 months) is not eligible 
for such benefits, but 
"(iii) in the succeeding month is again eligible for such 
benefits, 
the State plan, subject to subparagraph (A)(vi), may enroll the 
individual for that succeeding month with the health maintenance 
organization described in clause (i) if the organization continues to 
have a contract under this paragraph with the State.". 
(d) ELIMINATION OF PROVISIONAL QUAUFICATION FOR HMOS.— 
Section 1903(m) is amended— 
(1) in paragraph (2)(A)(i), by striking "(or the State as au-
thorized by paragraph (3))", and 
(2) by striking paragraph (3). 
(e) EFFECTIVE DATE.—The amendments made by this section shall 
take effect on the date of the enactment of this Act. 
SEC. 4733. EXTENSION AND EXPANSION OF MINNESOTA PREPAID MEDIC-
AID DEMONSTRATION PROJECT. 
Section 507 of the Family Support Act of 1988 is amended— 
(1) by striking "1991" and inserting "1996"; and 
(2) by striking the period at the end and inserting the follow-
ing: ", and shall amend such waiver to permit the State to 
expand such demonstration project to other counties if the 
amount of medical assistance provided under title XIX of such 
Act after such expansion will not exceed the amount of medical 
assistance provided under such title had the project not been 
expanded to other counties.". 
SEC. 4734. TREATMENT OF CERTAIN COUNTY-OPERATED HEALTH INSUR-
ING ORGANIZATIONS. 
Section 9517(c) of the Consolidated Omnibus Budget Reconcili-
ation Act of 1985 is amended— 
(1) in paragraph (2)(A), by inserting "and in paragraph (3)" 
after "subparagraph (B)", and 
(2) by adding at the end the following new paragraph: 
"(3)(A) Subject to subparagraph (C), in the case of up to 3 health 
insuring organizations which are described in subparagraph (B), 
which first become operational on or after January 1, 1986, and 
which are designated by the Governor, and approved by the Legisla-
ture, of California, the amendments made by paragraph (1) shall not 
apply. 
"(B) A health insuring organization described in this subpara-
graph is one that— 
"(i) is operated directly by a public entity established by a 
county government in the State of California under a State 
enabling statute; 
"(ii) enrolls all medicaid beneficiaries residing in the county 
in which it operates; 
"(iii) meets the requirements for health 
maintenance 
organizations under the Knox-Keene Act (Cal. Health and 
Safety Code, section 1340 et seq.) and the Waxman-Duffy Act 
(Cal. Welfare and Institutions Code, section 14450 et seq.); 
"(iv) assures a reasonable choice of providers, which includes 
providers that have historically served medicaid beneficiaries 
and which does not impose any restriction which substantially 
impairs access to covered services of adequate quality where 
medically necessary; 
*A^i^i<^-3ic 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-197 
"(v) provides for a payment adjustment for a disproportionate 
share hospital (as defined under State law consistent with 
section 1923 of the Social Security Act) in a manner consistent 
with the requirements of such section; and 
"(vi) provides for payment, in the case of childrens' hospital 
services provided to medicaid beneficiaries who are under 21 
years of age, who are children with special health care needs 
under title V of the Social Security Act, and who are receiving 
care coordination services under such title, at rates determined 
by the California Medical Assistance Commission. 
"(C) Subparagraph (A) shall not apply with respect to any period 
for which the Secretary of Health and Human Services determines 
that the number of medicaid beneficiaries enrolled with health 
insuring organizations described in subparagraph (B) exceeds 10 
percent of the number of such beneficiaries in the State of 
California. 
"(D) In this paragraph, the term 'medicaid beneficiary' means an 
individual who is entitled to medical assistance under the State plan 
under title XIX of the Social Security Act, other than a qualified 
medicare beneficiary who is only entitled to such assistance because 
of section 1902(a)(10)(E) of such title.". 
Subpart D—Demonstration Projects and Home and 
Community-Based Waivers 
SEC. 4741. HOME AND COMMUNITY-BASED WAIVERS. 
(a) TREATMENT OF ROOM AND BOARD.—(1) Subsections (c)(1) and 
(d)(1) of section 1915 (42 U.S.C. 1396n) are each amended by adding 
at the end the following: "For purposes of this subsection, the term 
'room and board' shall not include an amount established under a 
method determined by the State to reflect the portion of costs of 
rent and food attributable to an unrelated personal caregiver who is 
residing in the same household with an individual who, but for the 
assistance of such caregiver, would require admission to a hospital, 
nursing facility, or intermediate care facility for the mentally re-
tarded.". 
(b) ADJUSTMENT TO 1915(d) CEILING TO TAKE INTO ACCOUNT THE 
ADDED COSTS OF O B R A 87.—Section 1915(d)(5)(B)(iv) (42 U.S.C. 
1396n(d)(5)(B)(iv)) is amended by striking "this title" the first place it 
appears and inserting "this title whose provisions become effective 
on or after such date . 
SEC. 4742. TIMELY PAYMENT UNDER WAIVERS OF FREEDOM OF CHOICE 
OF HOSPITAL SERVICES. 
(a) IN GENERAL.—Section 1915(b)(4) (42 U.S.C. 1396n(b)(4)) is 
amended by inserting before the period at the end the following: 
"and if providers under such restriction are paid on a timely basis in 
the same manner as health care practitioners must be paid under 
section 1902(a)(37)(A)". 
(b) EFFECTIVE DATE.—The amendment made by subsection (a) 42 USC 1396n 
shall take effect as of the first calendar quarter beginning more "°*®-
than 30 days after the date of the enactment of this Act. 
(c) TREATMENT OF PERSONS WITH MENTAL RETARDATION OR A RE-
LATED CONDITION IN A DECERTIFIED FACIUTY.— 
(1) IN GENERAL.—Section 1915(c)(7) (42 U.S.C. 1396n(c)(7)) is 
amended by adding at the end the following new subparagraph: 
104 STAT. 1388-198 
PUBLIC LAW 101-508—NOV. 5, 1990 
42 use 1396n 
note. 
42 use 1396n. 
42 use 1396n 
note. 
42 use 1396n 
note. 
"(C) In making estimates under paragraph (2)(D) in the case of a 
waiver to the extent that it applies to individuals with mental 
retardation or a related condition who are resident in an intermedi-
ate care facility for the mentally retarded the participation of which 
under the State plan is terminated, the State may determine the 
average per capita expenditures that would have been made in a 
fiscal year for those individuals without regard to any such termi-
nation.". 
(2) EFFECTIVE DATE.—The amendment made by paragraph (1) 
shall apply as if included in the enactment of the Omnibus 
Budget Reconciliation Act of 1981, but shall only apply to 
facilities the participation of which under a State plan under 
title XIX of the Social Security Act i§ terminated on or after the 
date of the enactment of this Act. 
(d) SCOPE OF RESPITE CARE.— 
(1) IN GENERAL.—Section 1915(c)(4) is amended by adding at 
the end the following: 
"Except as provided under paragraph (2)(D), the Secretary may not 
restrict the number of hours or days of respite care in any period 
which a State may provide under a waiver under this subsection.". 
(2) EFFECTIVE DATE.—The amendment made by paragraph (1) 
shall apply as if included in the enactment of the Omnibus 
Budget Reconciliation Act of 1981. 
(e) PERMITTING ADJUSTMENT IN ESTIMATES TO TAKE INTO ACCOUNT 
PREADMISSION SCREENING REQUIREMENT.—In the case of a waiver 
under section 1915(c) of the Social Security Act for individuals with 
mental retardation or a related condition in a State, the Secretary of 
Health and Human Services shall permit the State to adjust the 
estimate of average per capita expenditures submitted under para-
graph (2)(D) of such section, with respect to such expenditures made 
on or after January 1, 1989, to take into account increases in 
expenditures for, or utilization of, intermediate care facilities for the 
mentally retarded resulting from 
implementation 
of section 
1919(e)(7)(A) of such Act. 
SEC. 4744. PROVISIONS RELATING TO FRAIL ELDERLY DEMONSTRATION 
PROJECT WAIVERS. 
(a) EXPANSION OF WAIVERS.—Section 9412(b) of the Omnibus 
Budget Reconciliation Act of 1986 is amended— 
(1) in paragraph (1), by striking "10" and inserting "15"; and 
(2) by adding at the end the following new paragraph: 
"(3) In the case of an organization receiving an initial waiver 
under this subsection on or after October 1, 1990, the Secretary 
(at the request of the organization) shall not require the 
organization to provide services under title XVIII of the Social 
Security Act on a capitated or other risk basis during the first 2 
years of the waiver.". 
(b) APPLICATION OF SPOUSAL IMPOVERISHMENT RULES.—(1) Section 
1924(a) (42 U.S.C. 1396r-5(a)) is amended by adding at the end the 
following new paragraph: 
"(5) APPLICATION TO INDIVIDUALS RECEIVING SERVICES FROM 
ORGANIZATIONS RECEIVING CERTAIN WAIVERS.—This section ap-
plies to individuals receiving institutional or noninstitutional 
services from any organization receiving a frail elderly dem-
onstration project waiver under section 9412(b) of the Omnibus 
Budget Reconciliation Act of 1986.". 
s*(§*i^ ''*'-. '^ tf''-
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-199 
(2) Section 9412(b) of the Omnibus Budget Reconciliation Act of 
1986, as amended by subsection (a), is amended by adding at the end 
the following new paragraph: 
"(4) Section 1924 of the Social Security Act shall apply to any 
individual receiving services from an organization receiving a 
waiver under this subsection.". 
SEC. 4745. DEMONSTRATION PROJECTS TO STUDY THE EFFECT OF 
42 USC 1396a 
ALLOWING STATES TO EXTEND MEDICAID COVERAGE TO 
»o*e. 
CERTAIN LOW-INCOME FAMILIES NOT OTHERWISE QUALI-
FIED TO RECEIVE MEDICAID BENEFITS. 
(a) DEMONSTRATION PROJECTS.— 
(1) IN GENERAL.—(A) The Secretary of Health and Human 
Services (hereafter in this section referred to as the "Sec-
retary") shall enter into agreements with 3 and no more than 4 
States submitting applications under this section for the pur-
pose of conducting demonstration projects to study the effect on 
access to, and costs of, health care of eliminating the categorical 
eligibility requirement for medicaid benefits for certain low-
income individuals. 
(B) In entering into agreements with States under this section 
the Secretary shall provide that at least 1 and no more than 2 of 
the projects are conducted on a substate basis. 
(2) REQUIREMENTS.—(A) The Secretary may not enter into an 
agreement with a State to conduct a project unless the Sec-
retary determines that— 
(i) the project can reasonably be expected to improve 
access to health insurance coverage for the uninsured; 
(ii) with respect to projects for which the statewideness 
requirement has not been waived, the State provides, under 
its plan under title XIX of the Social Security Act, for 
eligibility for medical assistance for all individuals de-
scribed in subparagraphs (A), (B), (C), and (D) of paragraph 
(1) of section 1902(1) of such Act (based on the State's 
election of certain eligibility options the highest income 
standards and, based on the State's waiver of the applica-
tion of any resource standard); 
(iii) eligibility for benefits under the project is limited to 
individuals in families with income below 150 percent of the 
income official poverty line and who are not individuals 
receiving benefits under title XIX of the Social Security 
Act; 
(iv) if the Secretary determines that it is cost-effective for 
the project to utilize employer coverage (as described in 
section 1925(bX4)(D) of the Social Security Act), the project 
must require an employer contribution and benefits under 
the State plan under title XIX of such Act will continue to 
be made available to the extent they are not available 
under the employer coverage; 
(v) the project provides for coverage of benefits consistent 
with subsection (b); and 
(vi) the project only imposes premiums, coinsurance, and 
other cost-sharing consistent with subsection (c). 
(B) The Secretary may waive the requirements of clause (ii) of 
this paragraph with respect to those projects described in 
subparagraph (B) of paragraph (1), 
104 STAT. 1388-200 
PUBLIC LAW 101-508—NOV. 5, 1990 
(3) PERMISSIBLE RESTRICTIONS.—A project may limit eligibility 
to individuals whose assets are valued below a level specified by 
the State. For this purpose, any evaluation of such assets shall 
be made in a manner consistent with the standards for valu-
ation of assets under the State plan under title XIX of the Social 
Security Act for individuals entitled to assistance under part A 
of title IV of such Act. Nothing in this section shall be construed 
as requiring a State to provide for eligibility for individuals for 
months before the month in which such eligibility is first 
established. 
(4) EXTENSION OF ELIGIBIUTY.—A project may provide for 
extension of eligibility for medical assistance for individuals 
covered under the project in a manner similar to that provided 
under section 1925 of the Social Security Act to certain families 
receiving aid pursuant to a plan of the State approved under 
part A of title IV of such Act. 
(5) WAIVER OF REQUIREMENTS.— 
(A) IN GENERAL.—Subject to subparagraph (B), the Sec-
retary may waive such requirements of title XIX of the 
Social Security Act (except section 1903(m) of the Social 
Security Act) as may be required to provide for additional 
coverage of individuals under projects under this section. 
(B) NoNWAivABLE PROVISIONS.—Exccpt with rcspcct to 
those projects described in subparagraph (B) of paragraph 
(1), the Secretary may not waive, under subparagraph (A), 
the statewideness requirement of section 1902(a)(1) of the 
Social Security Act or the Federal medical assistance 
percentage specified in section 1905(b) of such Act. 
(b) BENEFITS.— 
(1) IN GENERAL.—Except as provided in this subsection, the 
amount, duration, and scope of medical assistance made avail-
able under a project shall be the same as the amount, duration, 
and scope of such assistance made available to individuals 
entitled to medical assistance under the State plan under sec-
tion 1902(a)(10)(A)(i) of the Social Security Act. 
(2) LIMITS ON BENEFITS.— 
(A) REQUIRED.—Except with respect to those projects de-
scribed in subparagraph (B) of paragraph (1), no medical 
assistance shall be made available under a project for 
nursing facility services or community-based long-term care 
services (as defined by the Secretary) or for pregnancy-
related services. No medical assistance shall be made avail-
able under a project to individuals confined to a State 
correctional facility, county jail, local or county detention 
center, or other State institution. 
(B) PERMISSIBLE.—A State, with the approval of the Sec-
retary, may limit or otherwise deny eligibility for medical 
assistance under the project and may limit coverage of 
items and services under the project, other than early and 
periodic screening, diagnostic, and treatment services for 
children under 18 years of age. 
(3) USE OF UTILIZATION CONTROLS.—Nothing in this subsection 
shall be construed as limiting a State's authority to impose 
controls over utilization of services, including preadmission 
requirements, managed care provisions, use of preferred provid-
ers, and use of second opinions before surgical procedures. 
(c) PREMIUMS AND COST-SHARING.— 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-201 
(1) NONE FOR THOSE WITH INCOME BELOW THE POVERTY UNE.— 
Under a project, there shall be no premiums, coinsurance, or 
other cost-sharing for individuals whose family income level 
does not exceed 100 percent of the income official poverty line 
(as defined in subsection (g)(1)) applicable to a family of the size 
involved. 
(2) LIMIT FOR THOSE WITH INCOME ABOVE THE POVERTY UNE.— 
Under a project, for individuals whose family income level 
exceeds 100 percent, but is less than 150 percent, of the income 
official poverty line applicable to a family of the size involved, 
the monthly average amount of premiums, coinsurance, and 
other cost-sharing for covered items and services shall not 
exceed 3 percent of the family's average gross monthly earn-
ings. 
(3) INCOME DETERMINATION.—Each project shall provide for 
determinations of income in a manner consistent with the 
methodology used for determinations of income under title XIX 
of the Social Security Act for individuals entitled to benefits 
under part A of title IV of such Act. 
(d) DURATION.—Each project under this section shall commence 
not later than July 1, 1991 and shall be conducted for a 3-year 
period; except that the Secretary may terminate such a project if the 
Secretary determines that the project is not in substantial compli-
ance with the requirements of this section. 
(e) LIMITS ON EXPENDITURES AND FUNDING.— 
(1) IN GENERAL.—(A) The Secretary in conducting projects 
shall limit the total amount of the Federal share of benefits 
paid and expenses incurred under title XIX of the Social Secu-
rity Act to no more than $12,000,000 in each of fiscal years 1991, 
1992, and 1993, and to no more than $4,000,000 in fiscal year 
1994. 
(B) Of the amounts appropriated under subparagraph (A), the 
Secretary shall provide that no more than one-third of such 
amounts shall be used to carry out the projects described in 
paragraph (IXB) of subsection (a) (for which the statewideness 
requirement has been waived). 
(2) N o FUNDING OF CURRENT BENEFICIARIES.—No funding shall 
be available under a project with respect to medical assistance 
provided to individuals who are otherwise eligible for medical 
assistance under the plan without regard to the project. 
(3) No INCREASE IN FEDERAL MEDICAL ASSISTANCE PERCENT-
AGE.—Pajnnents to a State under a project with respect to 
expenditures made for medical assistance made available under 
the project may not exceed the Federal medical assistance 
percentage (as defined in section 19050)) of the Social Security 
Act) of such expenditures. 
(f) EVALUATION AND REPORT.— 
(1) EVALUATIONS.—For each project the Secretary shall pro-
vide for an evaluation to determine the effect of the project with 
respect to— 
(A) access to, and costs of, health care, 
(B) private health care insurance coverage, and 
(C) premiums and cost-sharing. 
(2) REPORTS.—The Secretary shall prepare and submit to Con-
gress an interim report on the status of the projects not later 
than January 1, 1993, and a final report containing such sum-
mary together with such further recommendations as the Sec-
-194 O - 91 - 20 : QL 3 Part 2 
104 STAT. 1388-202 
PUBLIC LAW 101-508—NOV. 5, 1990 
retary may determine appropriate not later than January 1, 
1995. 
(g) DEFINITIONS.—In this section: 
(1) The term "income official poverty line" means such line as 
defined by the Office of Management and Budget and revised 
annually in accordance with section 673(2) of the Omnibus 
Budget Reconciliation Act of 1981. 
(2) The term "project" refers to a demonstration project under 
subsection (a). 
SEC. 4746. MEDICAID RESPITE DEMONSTRATION PROJECT EXTENDED. 
Section 9414 of the Omnibus Budget Reconciliation Act of 1986 is 
amended— 
(1) by amending subsection (e) to read as follows: 
"(e) DURATION.—The project under this section may continue until 
September 30,1992."; and 
(2) in subsection (d), by striking the last sentence and insert-
ing in lieu thereof the following new sentence: "For the period 
beginning October 1, 1990, and ending September 30, 1992, 
Federgd payments for the project shall not exceed amounts 
expended under the project in the preceding fiscal year.". 
42 use 1396a 
SEC. 4747. DEMONSTRATION PROJECT TO PROVIDE MEDICAID COVERAGE 
note. 
FOR HIV-POSITIVE INDIVIDUALS. 
(a) IN GENERAL.—Not later than 3 months after the date of the 
enactment of this Act, the Secretary of Health and Human Services 
(hereafter in this section referred to as the "Secretary") shall pro-
vide for 2 demonstration projects to be administered by States that 
submit an application under this section, through programs 
administered by the States under title XIX of the Social Security 
Act. Such demonstration projects shall provide coverage for the 
services described in subsection (c) to individuals whose income and 
resources do not exceed the maximum allowable amount for eligi-
bility for any individual in any category of disability under the State 
plan under section 1902 of the Social Security Act, and who have 
tested positive for the presence of HIV virus (without regard to the 
presence of any symptoms of AIDS or opportunistic diseases related 
to AIDS). 
(b) SERVICES AVAILABLE UNDER A DEMONSTRATION PROJECT.—(1) 
The medical assistance made available to individuals described in 
section 1902(aX10)(A) of the Social Security Act shall be made 
available to individuals described in subsection (a) who receive 
services under a demonstration project under such paragraph. 
(2) A demonstration project under subsection (a) shall provide 
services in addition to the services described in paragraph (1) which 
shall be limited only on the basis of medical necessity or the 
appropriateness of such services. To the extent not provided as 
described in paragraph (1), such additional services shall include— 
(A) general and preventative ^^ medical care services (includ-
ing inpatient, outpatient, residential care, physician visits, 
clinic visits, and hospice care); 
(B) prescription drugs, including drugs for the purposes of 
preventative health care services; 
(C) counseling and social services; 
(D) substance abuse treatment services (including services for 
multiple substances abusers); 
*" So in original. Probably should be "preventive". 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-203 
(E) home care services (including assistance in carrying out 
activities of daily living); 
(F) case management; 
(G) health education services; 
(H) respite care for caregivers; 
(I) dental services; and 
(J) diagnostic and laboratory services ^° 
(c) AGREEMENTS WITH STATES.—(1) Each State conducting a dem-
onstration project under subsection (a) shall enter into an agree-
ment with a hospital and at least one other nonprofit organization 
submitting applications to the State. The State shall require that 
such hospital and other entity have a demonstrated record of case 
management of patients who have tested positive for the presence of 
HIV virus and have access to a control group of such type of patients 
who are not receiving State or Federal payments for medical serv-
ices (or other payments from private insurance coverage) before 
developing symptoms of AIDS. Under such agreement, the State 
shall agree to pay each such entity for the services provided under 
subsection (b) and not later than 12 months after the commence-
ment of a demonstration project, institute a system of monthly 
payment to each such entity based on the average per capita cost of 
the services described in subsection (c) provided to individuals de-
scribed in paragraphs (1) and (2) of subsection (a). 
(2) A demonstration project described in subsection (a) shall be 
limited to an enrollment of not more than 200 individuals. 
(3) A demonstration project conducted under subsection (a) shall 
commence not later than 9 months after the date of the enactment 
of this Act and shall terminate on the date that is 3 years after the 
date of commencement. 
(4)(A) The Secretary shall provide for an evaluation of the 
comparative costs of providing services to individuals who have 
tested positive for the presence of HIV virus at an early stage after 
detection of such virus and those that are treated at a later stage 
after such detection. 
(B) The Secretary shall report to Congress on the results of the 
evaluation conducted under subparagraph (A) no later than 6 
months after the date of termination of the demonstration projects 
described in this section. 
(d) FEDERAL SHARE OF COSTS.—The Federal share of the cost of 
services described in paragraph (3) furnished under a demonstration 
project conducted under paragraph (1) shall be determined by the 
otherwise applicable Federal matching assistance percentage pursu-
ant to section 1905(b) of the Social Security Act. 
(e) WAIVER OF REQUIREMENTS OF THE SOCIAL SECURITY ACT.—The 
Secretary may waive such requirements of the Social Security Act 
as the Secretary determines to be necessary to carry out the pur-
poses of this section. 
(f) LIMITATION ON AMOUNT OF EXPENDITURES.—The amount of 
funds that may be expended as medical assistance to carry out the 
purposes of this section shall be $5,000,000 for fiscal year 1991, 
$12,000,000 for fiscal year 1992, and $13,000,000 for fiscal year 1993. 
'° So in original. Probably should be "services.". 
104 STAT. 1388-204 
PUBLIC LAW 101-508—NOV. 5, 1990 
Subpart E—Miscellaneous 
SEC. 4751. REQUIREMENTS FOR ADVANCED DIRECTIVES UNDER STATE 
PLANS FOR MEDICAL ASSISTANCE. 
(a) IN GENERAL.—Section 1902 (42 U.S.C. 1396a(a)), as amended by 
sections 4401(a)(2), 4601(d), 4701(a), 4711(a), and 4722 of this title, is 
amended— 
(1) in subsection (a)— 
(A) by striking "and" at the end of paragraph (55), 
(B) by striking the period at the end of paragraph (56) and 
inserting "; and", and 
(C) by inserting after paragraph (56) the following new 
paragraphs: 
"(57) provide that each hospital, nursing facility, provider of 
home health care or personal care services, hospice program, or 
health 
maintenance 
organization 
(as defined 
in 
section 
1903(m)(l)(A)) receiving funds under the plan shall comply with 
the requirements of subsection (w); 
"(58) provide that the State, acting through a State agency, 
association, or other private nonprofit entity, develop a written 
description of the law of the State (whether statutory or as 
recognized by the courts of the State) concerning advance direc-
tives that would be distributed by providers or organizations 
under the requirements of subsection (w)."; and 
(2) by adding at the end the following new subsection: 
"(w)(l) For purposes of subsection (a)(57) and sections 1903(m)(l)(A) 
and 1919(c)(2)(E), the requirement of this subsection is that a pro-
vider or organization (as the case may be) maintain written policies 
and procedures with respect to all adult individuals receiving medi-
cal care by or through the provider or organization— 
"(A) to provide written information to each such individual 
concerning— 
"(i) an individual's rights under State law (whether statu-
tory or as recognized by the courts of the State) to make 
decisions concerning such medical care, including the right 
to accept or refuse medical or surgical treatment and the 
right to formulate advance directives (as defined in para-
graph (3)), and 
"(ii) the provider's or organization's written policies 
respecting the implementation of such rights; 
"(B) to document in the individual's medical record whether 
or not the individual has executed an advance directive; 
"(C) not to condition the provision of care or otherwise 
discriminate against an individual based on whether or not the 
individual has executed an advance directive; 
"(D) to ensure compliance with requirements of State law 
(whether statutory or as recognized by the courts of the State) 
respecting advance directives; and 
"(E) to provide (individually or with others) for education for 
staff and the community on issues concerning advance direc-
tives. 
Subparagraph (C) shall not be construed as requiring the provision 
of care which conflicts with an advance directive. 
"(2) The written information described in paragraph (IXA) shall 
be provided to an adult individual— 
.J'^s^l?*'^-""•, . 
PUBLIC LAW 101-508—NOV. 5,1990 
104 STAT. 1388-205 
"(A) in the case of a hospital, at the time of the individual's 
admission £is an inpatient, 
"(B) in the case of a nursing facility, at the time of the 
individual's admission as a resident, 
"(C) in the case of a provider of home health care or personal 
care services, in advance of the individual coming under the 
care of the provider, 
"(D) in the case of a hospice program, at the time of initial 
receipt of hospice care by the individual from the program, and 
"(E) in the case of a health maintenance organization, at the 
time of enrollment of the individual with the organization. 
"(3) Nothing in this section shall be construed to prohibit the 
application of a State law which allows for an objection on the basis 
of conscience for any health care provider or any agent of such 
provider which as a matter of conscience cannot implement an 
advance directive.". ^^ 
"(4) In this subsection, the term 'advance directive' means a 
written instruction, such as a living will or durable power of 
attorney for health care, recognized under State law (whether statu-
tory or as recognized by the courts of the State) and relating to the 
provision of such care when the individual is incapacitated. ^^ 
(b) CONFORMING AMENDMENTS.— 
(1) Section 
1903(mXl)(A) (42 U.S.C. 
1396b(mXlXA)) is 
amended— 
(A) by inserting "meets the requirement of section 
1902(w)' after "which" the first place it appears, and 
(B) by inserting "meets the requirement of section 1902(a) 
and" after "which" the second place it appears. 
(2) Section 1919(cX2) of such Act (42 U.S.C. 1396r(cX2)) is 
amended by adding at the end the following new subparagraph: 
"(E) INFORMATION RESPECTING ADVANCE DIRECTIVES.—A 
nursing facility must comply with the requirement of sec-
tion 1902(w) (relating to maintaining written policies and 
procedures respecting advance directives).". 
(c) EFFECTIVE DATE.—The amendments made by this section shall 
apply with respect to services furnished on or after the first day of 
the first month beginning more than 1 year after the date of the 
enactment of this Act. 
(d) PuBuc EDUCATION CAMPAIGN.— 
(1) IN GENERAL.—The Secretary, no later than 6 months after 
the date of enactment of this section, shall develop and imple-
ment a national campaign to inform the public of the option to 
execute advance directives and of a patient's right to participate 
and direct health care decisions. 
(2) DEVELOPMENT AND DISTRIBUTION OF INFORMATION.—The 
Secretary shall develop or approve nationwide informational 
materials that would be distributed by providers under the 
requirements of this section, to inform the public and the 
medical and legal profession of each person's right to make 
decisions concerning medical care, including the right to accept 
or refuse medical or surgical treatment, and the existence of 
advance directives. 
(3) PROVIDING ASSISTANCE TO STATES.—The Secretary shall 
assist appropriate State agencies, associations, or other private 
entities in developing the State-specific documents that would 
be distributed by providers under the requirements of this 
section. The Secretary shall further assist appropriate State 
*' So in original. Probably should be "directive.". 
** So in original. Probably should be "incapacitated.".". 
42 u s e 1396a 
note. 
42 u s e 1396a 
note. 
104 STAT. 1388-206 
PUBLIC LAW 101-508—NOV. 5,1990 
agencies, associations, or other private entities in ensuring that 
providers are provided a copy of the documents that are to be 
distributed under the requirements of the section. 
(4) DUTIES OF SECRETARY,—The Secretary shall mail informa-
tion to Social Security recipients, add a page to the medicare 
handbook with respect to the provisions of this section. 
SEC. 4752. IMPROVEMENT IN QUALITY OF PHYSICIAN SERVICES. 
(a) USE OF UNIQUE PHYSICIAN IDENTIFIERS.— 
(1) ESTABUSHMENT OF SYSTEM.— 
(A) IN GENERAL.—Section 1902 (42 U.S.C. 1396a) as 
amended by sections 4601(d), 4701(a), 4711(a), 4722(a), and 
4751(a) is further amended by adding at the end the follow-
ing new subsection: 
"(x) The Secretary shall establish a system, for implementation by 
not later than July 1,1991, which provides for a unique identifier for 
each physician who furnishes services for which payment may be 
made under a State plan approved under this title.". 
42 use 1396a 
(B) DEADUNE AND CONSIDERATIONS.—The System estab-
"°*®- 
lished under the amendment made by subparagraph (A) 
may be the same as, or different from, the system estab-
lished under section 9202(g) of the Consolidated Omnibus 
Budget Reconciliation Act of 1985. 
(2) REQUIRING INCLUSION WITH CLAIMS.—Section 1903(i) (42 
U.S.C. 1396b(i)), as amended by this title, is amended— 
(A) by striking the period at the end of paragraph (11) and 
inserting "; or", and 
(B) by inserting after paragraph (11) the following new 
paragraph: 
"(12) with respect to any amount expended for physicians' 
services furnished on or after the first day of the first quarter 
beginning more than 60 days after the date of establishment of 
the physician identifier system under section 1902(x), unless the 
claim for the services includes the unique physician identifier 
provided under such system.". 
(b) MAINTENANCE OF ENCOUNTER DATA BY HEALTH MAINTENANCE 
ORGANIZATIONS.— 
(1) 
IN 
GENERAL.—Section 
1903(mX2)(A) 
(42 
U.S.C. 
1396b(mX2)(A)), as amended by this title, is amended— 
(A) by striking "and" at the end of clause (ix), 
(B) by striking the period at the end of clause (x) and 
inserting "; and", and 
(C) by adding at the end the following new clause: 
"(xi) such contract provides for maintenance of sufficient 
patient encounter data to identify the physician who delivers 
services to patients.". 
42 use 1396a 
(2) EFFECTIVE DATE.—The amendments made by paragraph (1) 
"
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shall apply to contract years beginning after the date of the 
establishment of the system described in section 1902(x) of the 
Social Security Act. 
(c) MAINTENANCE OF LIST OF PHYSICIANS BY STATES.— 
(1) IN GENERAL.—Section 1902(a) (42 U.S.C. 1396a(a)), as 
amended by this title, is further amended— 
(A) by striking "and" at the end of paragraph (56), 
(B) by striking the period at the end of paragraph (57) and 
inserting "; and", and 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-207 
(C) by inserting after paragraph (57) the following new 
paragraph: 
"(58) maintain a list (updated not less often than monthly, 
and containing each physician's unique identifier provided 
under the system established under subsection (v)) of all physi-
cians who are certified to participate under the State plan.". 
(2) EFFECTIVE DATE.—The amendments made by paragraph (1) 
shall apply to medical £issistance for calendar quarters begin-
ning more than 60 days after the date of establishment of the 
physician identifier system under section 1902(x) of the Social 
Security Act. 
(d) FOREIGN MEDICAL GRADUATE CERTIFICATION.— 
(1) PASSAGE OF FMGEMS EXAMINATION IN ORDER TO OBTAIN 
IDENTIFIER.—The Secretary of Health and Human Service '^^ 
shall provide, in the identifier system established under section 
1902(x) of the Social Security Act, that no foreign medical 
graduate (as defined in section 1886(hX5XD) of such Act) shall be 
issued an identifier under such system unless the individual— 
(A) has passed the FMGEMS examination (as defined in 
section 1886(hX5XE) of such Act); 
(B) has previously received certification from, or has 
previously passed the examination of, the Elducational 
Commission for Foreign Medical Graduates; or 
(C) has held a license from 1 or more States continuously 
since 1958. 
(2) EFFECTIVE DATE.—Paragraph (1) shall apply with respect to 
issuance of an identifier applicable to services furnished on or 
after January 1,1992. 
(e) MINIMUM QUAUFICATIONS FOR BILLING FOR PHYSICIANS' SERV-
ICES TO CHILDREN AND PREGNANT WOMEN.—Section 1903(i) (42 U.S.C. 
1396b(i)), as amended by this title and subsection (aX2) of this 
section, is further amended— 
(1) by striking the period at the end of paragraph (13) and 
inserting "; or"; and 
(2) by inserting after paragraph (13) the following new para-
graph: 
"(14) with respect to any amount expended for physicians' 
services furnished by a physician on or after January 1, 1992, 
to— 
"(A) a child under 21 years of age, unless the physician— 
"(i) is certified in family practice or pediatrics by the 
medical specialty board recognized by the American 
Board of Medical Specialties for family practice or 
pediatrics, 
"(ii) is employed by, or affiliated with, a Federally-
qualified 
health 
center 
(as 
defined 
in 
section 
1905(1X2XB)), 
"(iii) holds admitting privileges at a hospital partici-
pating in a State plan approved under this title, 
"(iv) is a member of the National Health Service 
Corps, 
"(v) documents a current, formal, consultation and 
referral arrangement with a pediatrician or family 
practitioner who has the certification described in 
clause (i) for purposes of specialized treatment and 
admission to a hospital, or 
42 use 1396a 
note. 
42 use 1396a 
note. 
" So in original. Probably should be "Services". 
104 STAT. 1388-208 
PUBLIC LAW 101-508—NOV. 5, 1990 
"(vi) has been certified by the Secretary as qualified 
to provide physicians' services to a child under 21 years 
of age; or 
"(B) to a pregnant woman (or during the 60 day period 
beginning on the date of termination of the pregnancy) 
unless the physician— 
"(i) is certified in family practice or obstetrics by the 
medical specialty board recognized by the American 
Board of Medical Specialties for family practice or 
obstetrics, 
"(ii) is employed by, or affiliated with, a Federally-
qualified 
health 
center 
(as 
defined 
in 
section 
1905(1)(2)(B)), 
"(iii) holds admitting privileges at a hospital partici-
pating in a State plan approved under this title, 
"(iv) is a member of the National Health Service 
Corps, 
"(v) documents a current, formal, consultation and 
referral arrangement with an obstetrician or family 
practitioner who has the certification described in 
clause (i) for purposes of specialized treatment and 
admission to a hospital, or 
"(vi) has been certified by the Secretary as qualified 
to provide physicians' services to pregnant women.". 
(f) REPORTING OF MISCONDUCT OR SUBSTANDARD CARE.— 
(1) IN GENERAL.—Section 1921(a) (42 U.S.C. 1396r-2(a)) is 
amended— 
(A) in paragraph (1), in the matter before subparagraph 
(A), by inserting "(or any peer review organization or pri-
vate accreditation entity reviewing the services provided by 
health care practitioners)" after "health care practition-
ers"; and 
(B) in paragraph (1), by adding at the end the following 
new subparagraph: 
"(D) Any negative action or finding by such authority, 
organization, or entity regarding the practitioner or 
entity.". 
42 use 1396r-2 
(2) EFFECTIVE DATE.—The amendments made by paragraph (1) 
note. 
shall apply to State information reporting systems as of Janu-
ary 1, 1992, without regard to whether or not the Secretary of 
Health and Human Services has promulgated any regulations 
to carry out such amendments by such date. 
SEC. 4753. CLARIFICATION OF AUTHORITY OF INSPECTOR GENERAL. 
Section 1128A(j) (42 U.S.C. 1320a-7a0*)) is amended— 
(1) by striking "0')" and inserting "(j)(l)"; and 
(2) by adding at the end the following new paragraph: 
"(2) The Secretary may delegate authority granted under this 
section and under section 1128 to the Inspector General of the 
Department of Health and Human Services.". 
SEC. 4754. NOTICE TO STATE MEDICAL BOARDS WHEN ADVERSE ACTIONS 
TAKEN. 
(a) IN GENERAL.—Section 1902(a)(41) (42 U.S.C. 1396a(a)(41)) is 
amended by inserting "and, in the case of a physician and notwith-
standing paragraph (7), the State medical licensing board" after 
"shall promptly notify the Secretary". 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-209 
(b) EFFECTIVE DATE.—The amendment made by subsection (a) 42 USC 1396a 
shall apply to sanctions effected more than 60 days after the date of "
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the enactment of this Act. 
SEC. 4755. MISCELLANEOUS PROVISIONS. 
(a) PSYCHIATRIC HOSPITALS.— 
(1) CLARIFICATION OF COVERAGE OF INPATIENT PSYCHIATRIC HOS-
PITAL SERVICES 
(A) IN' GENERAL.—Section 
1905(h)(1)(A) 
(42 
U.S.C. 
1396d(h)(l)(A)), as amended by section 2340(b) of the Deficit 
Reduction Act of 1984, is amended by inserting "or in 
another inpatient setting that the Secretary has specified in 
regulations" after "1861(f)". 
(B) EFFECTIVE DATE.—The amendment made by subpara- 42 USC I396d 
graph (A) shall be effective as if included in the enactment note. 
of the Deficit Reduction Act of 1984. 
(2) INTERMEDIATE SANCTIONS FOR PSYCHIATRIC HOSPITALS.—Sec-
tion 1902 (42 U.S.C. 1396a) as amended by this title is further 
amended by adding at the end the following new subsection: 
"(y)(l) In addition to any other authority under State law, where a 
State determines that a psychiatric hospital which is certified for 
participation under its plan no longer meets the requirements for a 
psychiatric hospital (referred to in section 1905(h)) and further finds 
that the hospital's deficiencies— 
"(A) immediately jeopardize the health and safety of its pa-
tients, the State shall terminate the hospital's participation 
under the State plan; or 
"(B) do not immediately jeopardize the health and safety of its 
patients, the State may terminate the hospital's participation 
under the State plan, or provide that no payment will be made 
under the State plan with respect to any individual admitted to 
such hospital after the effective date of the finding, or both. 
"(2) Except as provided in paragraph (3), if a psychiatric hospital 
described in paragraph (1)(B) has not complied with the require-
ments for a psychiatric hospital under this title— 
"(A) within 3 months after the date the hospital is found to be 
out of compliance with such requirements, the State shall pro-
vide that no payment will be made under the State plan with 
respect to any individual admitted to such hospital after the end 
of such 3-month period, or 
"(B) within 6 months after the date the hospital is found to be 
out of compliance with such requirements, no Federal financial 
participation shall be provided under section 1903(a) with re-
spect to further services provided in the hospital until the State 
finds that the hospital is in compliance with the requirements 
of this title. 
"(3) The Secretary may continue payments, over a period of not 
longer than 6 months from the date the hospital is found to be out of 
compliance with such requirements, if— 
"(A) the State finds that it is more appropriate to take 
alternative action to assure compliance of the hospital with the 
requirements than to terminate the certification of the hospital, 
"(B) the State has submitted a plan and timetable for correc-
tive action to the Secretary for approval and the Secretary 
approves the plan of corrective action, and 
'(C) the State agrees to repay to the Federal Government 
payments received under this paragraph if the corrective action 
104 STAT. 1388-210 
PUBLIC LAW 101-508—NOV. 5, 1990 
42 use 1396a 
note. 
42 u s e 1396a. 
is not taken in accordance with the approved plan and time-
table.". 
(b) STATE UTIUZATION REVIEW SYSTEMS.—Section 9432 of the 
Omnibus Budget Reconciliation Act of 1986 is amended— 
(1) in subsection (a)— 
(A) by inserting "(D" after "IN GENERAL.—", 
(B) by striking ", during the period" and all that follows 
through "Congress,", and 
(C) by adding at the end the following new paragraph: 
"(2) The Secretary may not, during the period beginning on the 
date of the enactment of the Omnibus Budget Reconciliation Act of 
1990 and ending on the date that is 180 days after the date on which 
the report required by subsection (d) is submitted to the Congress, 
publish final or interim final regulations requiring a State plan 
approved under title XIX of the Social Security Act to include a 
program for ambulatory surgery, preadmission testing, or same-day 
surgery."; 
(2) in subsection (b)(4), by inserting "and subsection (d)" after 
"In this subsection"; and 
(3) by adding at the end the following new subsection: 
"(d) REPORT.—The Secretary shall report to Congress, by not later 
than January 1, 1993, for each State in a representative sample of 
States— 
"(1) an analysis of the procedures for which programs for 
ambulatory surgery, preadmission testing, and same-day sur-
gery are appropriate for patients who are covered under the 
State medicaid plan, and 
"(2) the effects of such programs on access of such patients to 
necessary care, quality of care, and costs of care. 
In selecting such a sample of States, the Secretary shall include 
some States with medicaid plans that include such programs.". 
(c) ADDITIONAL MISCELLANEOUS PROVISIONS.— 
(1) Effective July 1,1990— 
(A) section 1902(a)(10)(C)(iv) of the Social Security Act is 
amended by striking "through (20)" and inserting "through 
(21)", and 
(B) section 1902(j) of such Act is amended by striking 
"through (21)" and inserting "through (22)". 
(2) Effective as if included in subtitle D of title VI of the 
Omnibus Budget Reconciliation Act of 1989, section 301(j) of the 
Federal Food, Drug, and Cosmetic Act (21 U.S.C. 331(j)) is 
amended by adding at the end the following: "This paragraph 
does not authorize the withholding of information from either 
House of Congress or from, to the extent of matter within its 
jurisdiction, any committee or subcommittee of such committee 
or any joint committee of Congress or any subcommittee of such 
joint committee.". 
(3) Section 505(b) (42 U.S.C. 7050?)) is amended in the matter 
preceding pargigraph (1) by striking "requirement" and insert-
ing "requirements". 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-211 
PART 5—PROVISIONS RELATING TO NURSING 
HOME REFORM 
SEC. 4801. TECHNICAL CORRECTIONS RELATING TO NURSING HOME 
REFORM. 
(a) NURSE AIDE TRAINING AND COMPETENCY EVALUATION.— 
(1) N o COMPLIANCE ACTIONS BEFORE EFFECTIVE DATE OF GUIDE- 42 USC 1396r 
LINES.—The Secretary of Health and Human Services shall not note-
take (and shall not continue) any action against a State under 
section 1904 of the Social Security Act on the basis of the State's 
failure to meet the requirement of section 1919(e)(1)(A) of such 
Act before the effective date of guidelines, issued by the Sec-
retary, establishing requirements under section 1919(f)(2)(A) of 
such Act, if the State demonstrates to the satisfaction of the 
Secretary that it has made a good faith effort to meet such 
requirement before such effective date. 
(2) PART-TIME NURSE AIDES NOT ALLOWED DELAY IN TRAINING.— 
Section 1919(b)(5)(A) (42 U.S.C. 1396r(b)(5)(A)) is amended— 
(i) by striking "A nursing facility" and inserting "(i) 
Except as provided in clause (ii), a nursing facility"; 
(ii) by striking "(on a full-time, temporary, per diem, 
or other basis) ^'^ and inserting "on a full-time basis"; 
(iii) by striking "(i)" and "(ii)" and inserting "(I)" and 
"(II)"; and 
(iv) by adding at the end the following: 
"(ii) A nursing facility must not use on a temporary, per 
diem, leased, or on any other basis other than as a perma-
nent employee any individual as a nurse aide in the facility 
on or after January 1, 1991, unless the individual meets the 
requirements described in clause (i).". 
(3) REQUIREMENT TO OBTAIN INFORMATION FROM NURSE AIDE 
REGISTRY.—Section 1919(b)(5)(C) (42 U.S.C. 1396r(b)(5)(C)) is 
amended by striking "the State registry established under 
subsection (e)(2)(A) as to information in the registry" and insert-
ing "any State registry established under subsection (e)(2)(A) 
that the facility believes will include information". 
(4) RETRAINING OF NURSE AIDES.—Section 1919(b)(5)(D) (42 
U.S.C. 1396r(b)(5)(D)) is amended by striking the period at the 
end and inserting ", or a new competency evaluation program.". 
(5) CLARIFICATION OF NURSE AIDES NOT SUBJECT TO CHARGES.— 
Section 1919(f)(2)(A)(iv) (42 U.S.C. 1396r(f)(2)(A)(iv)) is amended— 
(A) in subclause (I), by striking "and" at the end; 
(B) in subclause (II), by inserting after "nurse aide" the 
following: "who is employed by (or who has received an 
offer of employment from) a facility on the date on which 
the aide begins either such program '; 
(C) in subclause (II), by striking the period at the end and 
inserting ", and"; and 
(D) by adding at the end the following new subclause: 
"(III) in the case of a nurse aide not described in 
subclause (II) who is employed by (or who has 
received an offer of employment from) a facility 
not later than 12 months after completing either 
such program, the State shall provide for the re-
imbursement of costs incurred in completing such 
"* So in original. Probably should be "basis)" ". 
104 STAT. 1388-212 
PUBLIC LAW 101-508—NOV. 5, 1990 
program on a prorata basis during the period in 
which the nurse aide is so employed.". 
(6) MODIFICATION OF NURSING FACILITY DEFICIENCY STAND-
ARDS.— 
(A) IN GENERAL.—Section 1919(f)(2)(B)(iii)(I) (42 U.S.C. 
1396r(f)(2)(B)(iii)(I)) is amended to read as follows: 
"(I) offered by or in a nursing facility which, 
within the previous 2 years— 
"(a) has operated under a waiver under 
subsection (b)(4)(C)(ii) that was granted on the 
basis of a demonstration that the facility is 
unable to provide the nursing care required 
under subsection (b)(4)(C)(i) for a period in 
excess of 48 hours during a week; 
"(b) has been subject to an extended (or 
partial 
extended) 
survey 
under 
section 
1819(g)(2)(B)(i) or subsection (g)(2)(B)(i); or 
"(c) has been assessed a civil money penalty 
described in section 1819(h)(2)(BXii) or subsec-
tion (h)(2)(AXii) of not less than $5,000, or has 
been subject to a remedy described in subsec-
tion (h)(l)(B)(i), clauses (i), (iii), or (iv) of subsec-
tion (h)(2)(A), clauses (i) or (iii) of section 
1819(h)(2)(B), or section 1819(h)(4), or". 
42 use 1396r 
(B) EFFECTIVE DATE.—TTie amendments made by subpara-
^ote. 
graph (A) shall take effect as if included in the enactment 
of the Omnibus Budget Reconciliation Act of 1987, except 
that a State may not approve a training and competency 
evaluation program or a competency evaluation program 
offered by or in a nursing facility which, pursuant to any 
Federal or State law within the 2-year period beginning on 
October 1,1988— 
(i) had its participation terminated under title XVIII 
of the Social Security Act or under the State plan 
under title XIX of such Act; 
(ii) was subject to a denial of payment under either 
such title; 
(iii) was assessed a civil money penalty not less than 
$5,000 for deficiencies in nursing facility standards; 
(iv) operated under a temporary management ap-
pointed to oversee the operation of the facility and to 
ensure the health and safety of the facility's residents; 
or 
(v) pursuant to State action, was closed or had its 
residents transferred. 
(7) CLARIFICATION OF STATE RESPONSIBIUTY TO DETERMINE COM-
PETENCY.—Section 1919(f)(2)(B) (42 U.S.C. 1396r(f)(2)(B)) is 
amended in the second sentence by inserting "(through sub-
contract or otherwise)" after "may not delegate '. 
(8) EXTENSION OF ENHANCED MATCH RATE UNTIL OCTOBER i, 
1990.—Section 1903(aX2XB) (42 U.S.C. 1396b(aX2XB)) is amended 
by striking "July 1, 1990" and inserting "October 1, 1990". 
42 use 1396b 
(9) EFFECTIVE DATE.—Except as provided in paragraph (6), the 
note. 
amendments made by this subsection shall take effect as if they 
were included in the enactment of the Omnibus Budget Rec-
onciliation Act of 1987. 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-213 
(b) PREADMISSION SCREENING AND ANNUAL RESIDENT REVIEW.— 
(1) No COMPLIANCE ACTIONS BEFORE EFFECTIVE DATE OF GUIDE- 42 use 1396r 
UNES.—The Secretary of Health and Human Services shall not note. 
take (and shall not continue) any action against a State under 
section 1904 or section 1919(e)(7XD) of the Social Security Act on 
the basis of the State's failure to meet the requirement of 
section 1919(eX7XA) of such Act before the effective date of 
guidelines, issued by the Secretary, establishing minimum cri-
teria under section 1919(f)(8XA) of such Act, if the State dem-
onstrates to the satisfaction of the Secretary that it has made a 
good faith effort to meet such requirement before such effective 
date. 
(2) CLARIFICATION WITH RESPECT TO ADMISSIONS AND READMIS-
sioN FROM A HOSPITAL.—Section 1919 of the Social Security Act 
(42 U.S.C. 1396r) is amended— 
(A) in subsection (bX3XF), by striking "A nursing facility" 
and by inserting "Except as provided in clauses (ii) and (iii) 
of subsection (eXTXA), a nursing facility"; and 
(B) in subsection (eXTXA)— 
(i) by redesignating the first 2 sentences as clause (i) 
with the following heading (and appropriate indenta-
tion): 
"(i) IN GENERAL.—", and 
(ii) by adding at the end the following: 
"(ii) 
CLARIFICATION 
WITH 
RESPECT TO CERTAIN 
READMissiONS.—The preadmission screening program 
under clause (i) need not provide for determinations in 
the case of the readmission to a nursing facility of an 
individual who, after being admitted to the nursing 
facility, was transferred for care in a hospital. 
"(iii) EXCEPTION FOR CERTAIN HOSPITAL DISCHARGES.— 
The preadmission screening program under clause (i) 
shall not apply to the admission to a nursing facility of 
an individual— 
"(I) who is admitted to the facility directly from 
a hospital after receiving acute inpatient care at 
the hospital, 
"(II) who requires nursing facility services for 
the condition for which the individual received 
care in the hospital, and 
"(III) whose attending physician has certified, 
before admission to the facility, that the individual 
is likely to require less than 30 days of nursing 
facility services.". 
(3) DENIAL OF PAYMENTS FOR CERTAIN RESIDENTS NOT REQUIR-
ING NURSING FACIUTY SERVICES.—Section 1919(eX7) (42 U.S.C. 
1395r(eX'7)) is amended— 
42 USC 1396r. 
(A) in subparagraph (D)— 
(i) in the heading, by striking "WHERE FAILURE TO 
CONDUCT PREADMISSION SCREENING", 
(ii) by designating the first sentence as clause (i) with 
the following heading (and appropriate indentation): 
"(i) FOR FAILURE TO CONDUCT PREADMISSION SCREEN-
ING O
R ANNUAL REVIEW.—", and 
(iii) by adding at the end the following new clause: 
"(ii) FOR CERTAIN RESIDENTS NOT REQUIRING NURSING 
FACIUTY LEVEL OF SERVICES.—No payment may be made 
104 STAT. 1388-214 
PUBLIC LAW 101-508—NOV. 5, 1990 
under section 1903(a) with respect to nursing facility 
services furnished to an individual (other than an 
individual described in subparagraph (C)(i)) who does 
not require the level of services provided by a nursing 
facility."; and 
(B) in subparagraph (E), by striking "the requirement of 
this paragraph" and inserting "the requirements of sub-
paragraphs (A) through (C) of this paragraph". 
(4) N o DELEGATION OF AUTHORITY TO CONDUCT SCREENING AND 
REVIEWS.—Section 1919 is further amended— 
(A) in subsection (b)(3)(F), by adding at the end the follow-
ing: "A State mental health authority and a State mental 
retardation or developmental disability authority may not 
delegate (by subcontract or otherwise) their responsibilities 
under this subparagraph to a nursing facility (or to an 
entity that has a direct or indirect affiliation or relation-
ship with such a facility)."; and 
(B) in subsection (e)(7)(B), by adding at the end the follow-
ing new clause: 
"(iv) PROHIBITION OF DELEGATION.—A State mental 
health authority, a State mental retardation or devel-
opmental disability authority, and a State may not 
delegate (by subcontract or otherwise) their responsibil-
ities under this subparagraph to a nursing facility (or 
to an entity that has a direct or indirect affiliation or 
relationship with such a facility).". 
(5) ANNUAL REPORTS.— 
(A) STATE REPORTS.—Section 1919(eX7)(C) (42 U.S.C. 
1396r(eX7)(C)) is amended by adding at the end the follow-
ing new clause: 
"(iv) ANNUAL REPORT.—Each State shall report to the 
Secretary annually concerning the number and disposi-
tion of residents described in each of clauses (ii) and 
(iii).". 
(B) SECRETARIAL REPORT.—Section 4215 of the Omnibus 
42 use 1396r 
Budget Reconciliation Act of 1987 is amended by adding at 
"
*
*
*
*
• 
the end the following new sentence: "Each such report shall 
also include a summary of the information reported by 
States under section 1919(e)(7XC)(iv) of such Act.". 
(6) REVISION OF ALTERNATIVE DISPOSITION PLANS.—Section 
1919(eX7XE) (42 U.S.C. 1396r(eX7XE)) is amended by adding at 
the end the following: "The State may revise such an agree-
ment, subject to the approval of the Secretary, before October 1, 
1991, but only if, under the revised agreement, all residents 
subject to the agreement who do not require the level of services 
of such a facility are discharged from the facility by not later 
than April 1,1994.". 
(7) DEFINITION OF MENTALLY ILL.—Section 1919(eX7XG)(i) (42 
U.S.C. 1396r(eX7)(GXi)) is amended— 
(A) by striking "primary or secondary" and all that fol-
lows through "3rd edition)" and inserting "serious mental 
illness (as defined by the Secretary in consultation with the 
National Institute of Mental Health)", 
(B) by inserting before the period "or a diagnosis (other 
than a primary diagnosis) of dementia and a primary diag-
nosis that is not a serious mental illness". 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-215 
(8) SUBSTITUTION OF "SPECIALIZED SERVICES" FOR "ACTIVE 
TREATMENT".—Sections 1919(b)(3)(F) and 1919(e)(7) (42 U.S.C. 
1396r(b)(3)(F), 1396r(e)(7)) are each amended by striking "active 
treatment" and "ACTIVE TREATMENT" each place either appears 
and inserting "specialized services" and "SPECIALIZED SERVICES", 
respectively. 
(9) EFFECTIVE DATES.— 
(A) IN GENERAL.—Except as provided in subparagraph (B), 
the amendments made by this subsection shall take effect 
as if they were included in the enactment of the Omnibus 
Budget Reconciliation Act of 1987. 
(B) EXCEPTION.—The amendments made by paragraphs 
(4), (6), and (8) shall take effect on the date of the enactment 
of this Act, without regard to whether or not regulations to 
implement such amendments have been promulgated. 
(c) ENFORCEMENT PROCESS.—The Secretary of Health and Human 
Services shall not take (and shall not continue) any action against a 
State under section 1904 of the Social Security Act on the basis of 
the State's failure to meet the requirements of section 1919(hX2) of 
such Act before the effective date of guidelines, issued by the 
Secretary, regarding the establishment of remedies by the State 
under such section, if the State demonstrates to the satisfaction of 
the Secretary that it has made a good faith effort to meet such 
requirements before such effective date. 
(d) SUPERVISION OF HEALTH CARE OF RESIDENTS OF NURSING 
FACIUTIES BY NURSE PRACTITIONERS, CLINICAL NURSE SPECIAUSTS, 
AND PHYSICIAN ASSISTANTS ACTING IN COLLABORATION WITH PHYSI-
CIANS.— 
(1) 
IN 
GENERAL.—Section 
1919(bX6XA) 
(42 
U.S.C. 
1396r(bX6XA)) is amended by inserting "(or, at the option of a 
State, under the supervision of a nurse practitioner, clinical 
nurse specialist, or physician assistant who is not an employee 
of the facility but who is working in collaboration with a 
physician)" after "physician". 
(2) EFFECTIVE DATE.—The amendment made by paragraph (1) 
applies with respect to nursing facility services furnished on or 
after October 1, 1990, without regard to whether or not final 
regulations to carry out such amendment have been promul-
gated by such date. 
(e) OTHER AMENDMENTS.— 
(1) ASSURANCE OF APPROPRIATE PAYMENT AMOUNTS.— 
(A) IN GENERAL.—Section 
1902(aX13XA) (42 U.S.C. 
1396a(aX13XA)) is amended by inserting "(including the 
costs of services required to attain or maintain the highest 
practicable physical, mental, and psychosocial well-being of 
each resident eligible for benefits under this title)" after 
"take into account the costs". 
(B) DETAILS IN PLAN AMENDMENT.—Section 4211(bX2) of 
the Omnibus Budget Reconciliation Act of 1987 is amended 
by inserting after the first sentence the following: "Each 
such amendment shall include a detailed description of the 
specific methodology to be used in determining the appro-
priate adiustment in pa3rment amounts for nursing facility 
services.'. 
(2) DISCLOSURE OF INFORMATION OF QUAUTY ASSESSMENT AND 
ASSURANCE 
COMMITTEES.—Section 
1919(bXlXB) 
(42 U.S.C. 
1396r(bXlXB)) is amended by adding at the end the following 
42 use 1396r 
note. 
42 use 13%r 
note. 
42 use 1396r 
note. 
42 use 1396a 
note. 
104 STAT. 1388-216 
PUBLIC LAW 101-508—NOV. 5, 1990 
new sentence: "A State or the Secretary may not require disclo-
- 
sure of the records of such committee except insofar as such 
disclosure is related to the compliance of such committee with 
the requirements of this subparagraph.". 
(3) 
PERIOD 
FOR 
RESIDENT 
ASSESSMENT.—Section 
1919(b)(3)(C)(i)(I) (42 U.S.C. 1396r(b)(3)(C)(i)(I)) is amended by 
striking "4 days" and inserting "not later than 14 days". 
(4) CLARIFICATION OF RESPONSIBILITY FOR SERVICES FOR MEN-
TALLY 
ILL 
AND 
MENTALLY 
RETARDED 
RESIDENTS.—Section 
1919(b)(4)(A) (42 U.S.C. 1396r(b)(4)(A)) is amended— 
(A) by striking "and" at the end of clause (v), 
(B) by striking the period at the end of clause (vi) and 
inserting "; and", and 
(C) by inserting after clause (vi) the following new clause: 
'(vii) treatment and services required by mentally ill 
and mentally retarded residents not otherwise provided 
or arranged for (or required to be provided or arranged 
for) by the State.". 
(5) CLARIFICATION OF EXTENT OF STATE WAIVER AUTHORITY; 
NOTIFICATION OF WAIVERS.—Section 1919(b)(4)(C)(ii) (42 U.S.C. 
1396r(b)(4)(C)(ii)) is amended— 
(A) by striking "A State" and all that follows through "a 
facility i f and inserting "To the extent that a facility is 
unable to meet the requirements of clause (i), a State may 
waive such requirements with respect to the facility if ; 
(B) by striking "and" at the end of subclause (II); 
(C) by striking the period at the end of subclause (III) and 
inserting a comma; and 
(D) by adding at the end the following new subclauses: 
"(IV) the State agency granting a waiver of such 
requirements provides notice of the waiver to the 
State long-term care ombudsman 
(established 
under section 307(a)(12) of the Older Americans 
Act of 1965) and the protection and advocacy 
system in the State for the mentally ill and the 
mentally retarded, and 
^ 
"(V) the nursing facility that is granted such a 
waiver by a State notifies residents of the facility 
(or, where appropriate, the guardians or legal rep-
resentatives of such residents) and members of 
their immediate families of the waiver.". 
(6) CLARIFICATION OF DEFINITION OF NURSE AIDE.—Section 
1919(b)(5)(F)(i) (42 U.S.C. 1396r(b)(5)(F)(i)) is amended by striking 
"(G))," and inserting "(G)) or a registered dietician,". 
(7) CHARGES APPLICABLE IN CASES OF CERTAIN MEDICAID-
ELIGIBLE INDIVIDUALS.— 
(A) IN GENERAL.—Section 1919(c) (42 U.S.C. 1396r(c)) is 
amended— 
(i) by redesignating paragraph (7) as paragraph (8); 
and 
(ii) by inserting after paragraph (6) the following new 
paragraph: 
"(7) LIMITATION ON CHARGES IN CASE OF MEDICAID-ELIGIBLE 
INDIVIDUALS.— 
"(A) IN GENERAL.—A nursing facility may not impose 
charges, for certain medicaid-eligible individuals for nurs-
ing fecility services covered by the State under its plan 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-217 
under this title, that exceed the payment amounts estab-
lished by the State for such services under this title. 
"(B) 
CERTAIN 
MEDICAID 
INDIVIDUALS 
DEFINED.—In 
subparagraph (A), the term 'certain 
medicaid-eligible 
individual' means an individual who is entitled to medical 
assistance for nursing facility services in the facility under 
this title but with respect to whom such benefits are not 
being paid because, in determining the amount of the 
individual's income to be applied monthly to payment for 
the costs of such services, the amount of such income 
exceeds the payment amounts established by the State for 
such services under this title.". 
(B) EFFECTIVE DATE.—The amendments made by subpara- 42 USC 1396r 
graph (A) shall take effect on the date of the enactment of note, 
this Act, without regard to whether or not regulations to 
implement such amendments have been promulgated. 
(8) RESIDENTS' RIGHTS TO REFUSE INTRA-FACILITY TRANSFERS TO 
MOVE THE RESIDENT TO A MEDICARE-QUALIFIED PORTION.—Section 
1919(c)(1)(A) (42 U.S.C. 1396r(c)(l)(A)) is amended— 
(A) by redesignating clause (x) as clause (xi) and by 
inserting after clause (ix) the following new clause: 
"(x) REFUSAL OF CERTAIN TRANSFERS.—The right to 
refuse a transfer to another room within the facility, if 
a purpose of the transfer is to relocate the resident 
from a portion of the facility that is not a skilled 
nursing facility (for purposes of title XVIII) to a portion 
of the facility that is such a skilled nursing facility."; 
and 
(B) by adding at the end the following: "A resident's 
exercise of a right to refuse transfer under clause (x) shall 
not affect the resident's eligibility or entitlement to medical 
assistance under this title or a State's entitlement to Fed-
eral medical assistance under this title with respect to 
services furnished to such a resident.". 
(9) RESIDENT ACCESS TO CUNICAL RECORDS.—Section section ^^ 
1919(c)(l)(A)(iv) (42 U.S.C. 1396r(c)(l)(A)(iv)) is amended by 
inserting before the period at the end the following: "and to 
access to current clinical records of the resident upon request by 
the resident or the resident's legal representative, within 24 
hours (excluding hours occurring during a weekend or holiday) 
after making such a request". 
(10) INCLUSION OF STATE NOTICE OF RIGHTS IN FACIUTY NOTICE 
OF RIGHTS.—Section 1919(c)(l)(B)(ii) (42 U.S.C. 1396r(c)(l)(B)(ii)) is 
amended by inserting "including the notice (if any) of the State 
developed under subsection (e)(6)" after "in such rights)". 
(11) REMOVAL OF DUPLICATIVE REQUIREMENT FOR QUALIFICA-
TIONS OF NURSING HOME ADMINISTRATORS.—Effective on the date 
on which the Secretary promulgates standards regarding the 
qualifications of nursing facility administrators under section 
1919(f)(4) of the Social Security Act— 
(A) paragraph (29) of section 1902(a) of such Act (42 U.S.C. 
1396a(a)) is repealed; and 
(B) section 1908 of such Act (42 U.S.C. 1396g) is repealed. 
(12) CLARIFICATION OF NURSE AIDE REGISTRY REQUIREMENTS.— 
Section 1919(e)(2) (42 U.S.C. 1396r(e)(2)) is amended— 
(A) in subparagraph (A), by striking the period and insert-
ing the following: ", or any individual described in subsec-
" So in original. Probably should be "Section 1919(cXlXAXiv)". 
104 STAT. 1388-218 
PUBLIC LAW 101-508—NOV. 5, 1990 
tion (fX2XBXii) or in subparagraph (B), (C), or (D) of section 
6901(bX4) of the Omnibus Budget Reconciliation Act of 
1989."; and 
(B) by adding at the end the following new subparagraph: 
"(C) PROHIBITION AGAINST CHARGES.—A State may not 
impose any charges on a nurse aide relating to the registry 
established and maintained under subparagraph (A).". 
(13) 
CLARIFICATION 
ON 
FINDINGS 
OF 
NEGLECT.—Section 
1919(gXlXC) (42 U.S.C. 1396r(gXl)(C)) is amended by adding at 
the end the following: "A State shall not make a finding that an 
individual has neglected a resident if the individual dem-
onstrates that such neglect was caused by factors beyond the 
control of the individual.". 
(14) TIMING OF PUBUC DISCLOSURE OF SURVEY RESULTS.—Sec-
tion 1919(gX5XAXi) (42 U.S.C. 1396r(gX5XAXi)) is amended by 
striking "deficiencies and plans" and inserting "deficiencies, 
within 14 calendar days after such information is made avail-
able to those facilities, and approved plans". 
(15) OMBUDSMAN PROGRAM COORDINATION WITH STATE SURVEY 
AND CERTIFICATION AGENCIES.—SectioD 1919(gX5XB) (42 U.S.C. 
1396r(gX5XB)) is amended by striking "with respect" and insert-
ing "or of any adverse action taken against a nursing facility 
under paragraphs (1), (2), or (3) of subsection (h), with respect'. 
(16) DENIAL OF PAYMENT OF LEGAL FEES FOR FRIVOLOUS UTIGA-
TION.— 
(A) IN GENERAL.—Section 1903(i) (42 U.S.C. 1396b(i)), [[as 
amended by section X???(aXlXB) of this Act]], is amended— 
(i) by striking "or" at the end of paragraph (9); 
(ii) by striking the period at the end of paragraph (10) 
and inserting "; or"; and 
(iii) by inserting after paragraph (10) the following 
new paragraph: 
"(11) with respect to any amount expended to reimburse (or 
otherwise compensate) a nursing facility for pa3maent of legal 
expenses associated with any action initiated by the facility that 
is dismissed on the basis that no reasonable legal ground existed 
for the institution of such action." 
42 use 1396b 
(B) EFFECTIVE DATE.—The amendments made by subpara-
•*<>**• 
graph (A) shall apply with respect to actions initiated on or 
after the date of the enactment of this Act. 
42USC1396r 
(17) PROVISIONS RELATING TO STAFFING REQUIREMENTS.— 
"
<
*
*
*
• 
(A) MAINTAINING REGULATORY STANDARDS FOR CERTAIN 
SERVICES.—Any regulations promulgated and applied by the 
Secretary of Health and Human Services after the date of 
the enactment of the Omnibus Budget Reconciliation Act of 
1987 with respect to services described in clauses (ii), (iv), 
and (v) of section 1919(bX4XA) of the Social Security Act 
shall include requirements for providers of such services 
that are at least as strict as the requirements applicable to 
providers of such services prior to the enactment of the 
Omnibus Budget Reconciliation Act of 1987. 
(B) STUDY ON STAFFING REQUIREMENTS IN NURSING FACIU-
TiES.—The Secretary shall conduct a study and report to 
Congress no later than January 1, 1992, on the appropriate-
ness of establishing minimum caregiver to resident ratios 
and minimum supervisor to caregiver ratios for skilled 
nursing facilities serving as providers of services under title 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-219 
42 u s e 1396a 
note. 
XVIII of the Social Security Act and nursing facilities 
receiving payments under a State plan under title XIX of 
the Social Security Act, and shall include in such study 
recommendations regarding appropriate minimum ratios. 
(18) 
STATE REQUIREMENTS RELATING TO PROGRAMS.—Amend 
1919(eXlXA) to strike "under clause (i) or (ii) of subsection 42 USC I396r 
(fX2XA) and insert "under subsection (fK2)". 
(19) EFFECTIVE DATES.—Except as provided in paragraphs (7), 
(11), and (16), the amendments made by this subsection shall 
take effect as if they were included in the enactment of the 
Omnibus Budget Reconciliation Act of 1987. 
TITLE V—INCOME SECURITY, HUMAN 
RESOURCES, AND RELATED PROGRAMS 
Subtitle A—Human Resource and Family 
Policy Amendments 
SEC. 5001. TABLE OF CONTENTS. 
Sec. 5001. Table of contents. 
Sec. 5002. Amendment of Social Security Act. 
CHAPTER 1—CHILD SUPPORT ENFORCEMENT 
Sec. 5011. Extension of IRS intercept for non-AFDC families. 
Sec. 5012. Extension of Commission on Interstate Child Support. 
Sec. 5013. Child support enforcement waiver. 
CHAPTER 2—UNEMPLOYMENT COMPENSATION 
Sec. 5021. "Reed Act" provisions made permanent. 
' 
CHAPTER 3—SUPPLEMENTAL SECURITY INCOME 
Sec. 5031. Exclusion from income and resources of victims' compensation payments. 
Sec. 5032. Attainment of age 65 not to serve as basis for termination of eligibility 
under section 1619(b). 
Sec. 5033. Exclusion from income of impairment-related work expenses. 
Sec. 5034. Treatment of royalties and honoraria as earned income. 
Sec. 5035. Certain State relocation assistance excluded from SSI income and 
resources. 
Sec. 5036. Evaluation of child's disability by pediatrician or other qualified 
specialist. 
Sec. 5037. Reimbursement for vocational rehabilitation services furnished during 
certain months of nonpayment of SSI benefits. 
Sec. 5038. Extension of period of presumptive eligibility for benefits. 
Sec. 5039. Continuing disability or blindness reviews not required more than once 
annually. 
Sec. 5040. Concurrent SSI and food stamp applications by institutionalized 
individuals. 
Sec. 5041. Notification of certain individuals eligible to receive retroactive benefits. 
CHAPTER 4—AID TO FAMIUES wrrn DEPENDENT CHILDREN 
Sec. 5051. Optional monthly reporting and retrospective budgeting. 
Sec. 5052. Children receiving foster care maintenance or adoption assistance pay-
ments not treated as member of family unit for purposes of determin-
ing eligibility for, or amount of, AFDC benefit. 
Sec. 5053. Elimination of term "legal guardian". 
Sec. 5054. Reporting of child abuse and neglect. 
104 STAT. 1388-220 
PUBLIC LAW 101-508—NOV. 5, 1990 
Sec. 5055. Disclosure of information about AFDC applicants and recipients author-
ized for purposes directly connected to State foster care and adoption 
assistance programs. 
Sec. 5056. Repatriation. 
Sec. 5057. Technical amendment to National Commission on Children. 
Sec. 5058. Extension of prohibition against implementation of proposed regulations 
on emergency assistance and AFDC special needs. 
Sec. 5059. Amendments to Minnesota Family Investment Plan demonstration. 
Sec. 5060. Good cause exception to required cooperation for transitional child care 
benefits. 
Sec. 5061. Technical corrections regarding penalty for failure to participate in 
JOBS program. 
Sec. 5062. Technical corrections regarding AFDC-UP eligibility requirements. 
Sec. 5063. Family Support Act demonstration projects. 
Sec. 5064. Study of JOBS programs operated by Indian Tribes and Alaska Native 
organizations. 
CHAPTER 5—CHILD WELFARE AND FOSTER CARE 
Sec. 5071. Accounting for administrative costs. 
Sec. 5072. Section 427 triennial reviews. 
Sec. 5073. Independent living initiatives. 
CHAPTER 6—CHILD CARE 
Sec. 5081. Grants to States for child care. 
Sec. 5082. Child care and development block grant. 
SEC. 502. AMENDMENT OF SOCIAL SECURITY ACT. 
Except as otherwise expressly provided, wherever in this subtitle 
an amendment or repeal is expressed in terms of an amendment to, 
or repeal of, a section or other provision, the reference shall be 
considered to be made to a section or other provision of the Social 
Security Act. 
CHAPTER 1—CHILD SUPPORT ENFORCEMENT 
SEC. 5011. EXTENSION OF IRS INTERCEPT FOR NON-AFDC FAMILIES. 
(a) AUTHORITY OF STATES To REQUEST WITHHOLDING OF FEDERAL 
TAX REFUNDS FROM PERSONS OWING PAST DUE CHILD SUPPORT.— 
Section 464(aX2XB) (42 U.S.C. 664(a)(2XB)) is amended by striking 
", and before January 1,1991". 
O
t
)
) WITHHOLDING OF FEDERAL TAX REFUNDS AND COLLECTION OF 
PAST DUE CHILD SUPPORT ON BEHALF OF DISABLED CHILD OF ANY 
AGE, AND OF SPOUSAL SUPPORT INCLUDED IN ANY CHILD SUPPORT 
ORDER.—Section 464(c) (42 U.S.C. 664(c)) is amended— 
(1) in paragraph (2), by striking "minor child." and inserting 
"qualified child (or a qualified child and the parent with whom 
the child is living if the same support order includes support for 
the child and the parent)."; and 
(2) by adding at the end the following: 
"(3) For purposes of paragraph (2), the term 'qualified child' 
means a child— 
"(A) who is a minor; or 
"(BXi) who, while a minor, was determined to be disabled 
under title II or XVI; and 
"(ii) for whom an order of support is in force.". 
42 use 664 note. 
(c) EFFECTIVE DATE.—The amendments made by subsection (b) 
shall take effect on January 1,1991. 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-221 
SEC. 5012. EXTENSION OF COMMISSION ON INTERSTATE CHILD SUPPORT. 
(a) REAUTHORIZATION.—Section 126 of the Family Support Act of 
1988 (42 U.S.C. 666 note; Public Law 100-485) is amended— 
(1) in subsection (d)— 
(A) in paragraph (1), by striking "1990" and inserting 
"1991"; and 
(B) in paragraph (2), by striking "1991" and inserting 
"1992"; 
(2) in subsection (e), by adding at the end the following: 
"(5)(A) Individuals may be appointed to serve the Commission 
without regard to the provisions of title 5 that govern appointments 
in the competitive service, without regard to the competitive service, 
and without regard to the classification system in chapter 53 of title 
5, United States Code. The chairman of the Commission may fix the 
compensation of the Executive Director at a rate that shall not 
exceed the maximum rate of the basic pay payable under GS-18 of 
the General Schedule as contained in title 5, United States Code. 
"(B) The Executive Director may appoint and fix the compensa-
tion of such additional personnel as the Executive Director considers 
necessary to carry out the duties of the Commission. Such personnel 
may be appointed without regard to the provisions of title 5, United 
States Code, governing appointments in the competitive service, and 
may be paid without regard to the provisions of chapter 51 and 
subchapter III of chapter 53 of such title relating to classification 
and General Schedule pay rates. 
"(C) On the request of the chairman, the head of any Federal 
department or agency may detail, on a reimbursable basis, any of 
the personnel of such agency to the Commission to assist the 
Commission in carrying out its duties under this section without 
regard to section 3341 of title 5, United States Code."; and 
(3) in subsection (fKD, by striking "1991" and inserting 
"1992". 
(b) EFFECTIVE DATE.—The amendments made by subsection (a) 42 USC 666 note, 
shall take effect on the date of the enactment of this Act. 
SEC. 5013. CHILD SUPPORT ENFORCEMENT WAIVER. 
(a) IN GENERAL.—The Secretary of Health and Human Services (in 
this section referred to as the "Secretary") shall enter into an 
agreement with the State of Texas waiving (with respect to cases 
where a court has issued an order for child support) the following 
requirements under the State plan for child and spousal support 
that are described in subparagraphs (A) and (B) of section 454(6) of 
the Social Security Act, with respect to a project, based in the 
county of Bexar, of delinquency monitoring for child support 
enforcement: 
(1) The submission of a written application by an individual 
requesting child support collection services. 
(2) The payment of an application fee with respect to an 
application for such services. 
(b) CONTENTS OF WAIVER AGREEMENT.—In the agreement between 
the Secretary and the State of Texas described in subsection (a), the 
waiver granted under such agreement shall provide the following: 
(1) The waiver shall apply only with respect to the provision 
of child support collection services. 
(2) Before the provision of any child support collection serv-
ices, the organizational unit designated under section 454(3) of 
the Social Security Act (in this section referred to as the "State 
104 STAT. 1388-222 
PUBLIC LAW 101-508—NOV. 5, 1990 
agency") shall provide written notification to each custodial 
parent of the right of such parent to refuse such services. 
(3) The State shall ensure that, to the extent possible, each 
parent of the child on behalf of whom such services are provided 
(regardless of whether such parent is a custodial parent) is to 
receive written notice at the time such services are provided, 
explaining— 
(A) the legal rights of parents with respect to the child 
support collection services provided; and 
(B) the responsibilities of the State agency in providing 
such child support collection services (including the mon-
itoring of delinquent child support payments). 
(4) A case record shall be deemed to have been established by 
the State agency upon notification of a custodial parent of the 
option to receive the child support enforcement services de-
scribed in this subsection. 
(5) Any period of enforcement by the State agency under this 
section with respect to the collection of delinquent child support 
payments shall be deemed to begin on the first day of any such 
delinquency. 
(d) STUDY AND REPORT.— 
(1) STUDY REQUIRED.—As a condition precedent to granting 
the waiver described in subsection (a), the State agency shall 
agree to conduct a study of the cost-effectiveness to the Federal 
Government and to the State of Texas of the monitoring of 
delinquent child support payments under the State plan under 
section 454 of the Social Security Act. 
(2) CONDUCT OF STUDY.— 
(A) IN GENERAL.—The study required by paragraph (1) 
shall be conducted in accordance with the criteria estab-
lished by the Secretary in accordance with subparagraph 
(B). 
(B) CRITERIA.—Not later than February 1, 1991, the Sec-
retary shall establish the criteria required by subparagraph 
(A), in consultation with— 
(i) 1 or more representatives of organizations rep-
resenting child support administrators; 
(ii) 1 or more representatives of the General Account-
ing Office; 
(iii) 1 or more representatives of the State of Texas; 
and 
(iv) such other individuals or organizations with 
experience in the evaluation of child support programs, 
as the Secretary may designate. 
(3) REPORT.—Not later than 3 months after the expiration of 
the waiver described in subsection (a), the State agency shall 
submit to the Secretary and to the Congress a report that 
includes the findings of the study required by this subsection. 
(e) DURATION OP WAIVER.—The waiver described in subsection (a) 
shall be effective for not more than 2 years. 
(f) MATCHING PAYMENTS.— 
(1) GENERAL EXPENDITURES.—In lieu of any payment under 
section 455 of the Social Security Act with respect to expendi-
tures of the State of Texas to carry out child support enforce-
ment programs with respect to which the waiver described in 
subsection (a) applies, the Secretary shall pay the State an 
amount equal to the lesser of— 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-223 
(A) 66 percent of such expenditures; or 
(B) $500,000. 
(2) STUDY EXPENDITURES.—In lieu of any payment under sec-
tion 455 of the Social Security Act with respect to expenditures 
of the State of Texas to carry out the study required by subsec-
tion (d), the Secretary shall pay the State an amount equal to 66 
percent of such expenditures. 
CHAPTER 2—UNEMPLOYMENT COMPENSATION 
SEC. 5021. AMOUNTS TRANSFERRED TO STATE UNEMPLOYMENT COM-
PENSATION PROGRAM ACCOUNTS. 
(a) ALLOCATION OF AMOUNTS.—Paragraph (2) of section 903(a) (42 
U.S.C. 1103(a)(2)) is amended to read as follows: 
"(2) Each State's share of the funds to be transferred under this 
subsection as of any October 1— 
"(A) shall be determined by the Secretary of Labor and 
certified by such Secretary to the Secretary of the Treasury 
before such date, and 
"(B) shall bear the same ratio to the total amount to be so 
transferred as— 
"(i) the amount of wages subject to tax under section 3301 
of the Internal Revenue CJode of 1986 during the preceding 
calendar year which are determined by the Secretary of 
Labor to be attributable to the State, bears to 
"(ii) the total amount of wages subject to such tax during 
such year." 
(b) USE OF TRANSFERRED AMOUNTS.—Paragraph (2) of section 
903(c) (42 U.S.C. 1103(c)(2)) is amended— 
(1) by striking "and" at the end of subparagraph (C), and 
(2) by striking so much of such paragraph as follows subpara-
graph (C) and inserting the following: 
"(DXi) the appropriation law limits the total amount which 
may be obligated under such appropriation at any time to an 
amount which does not exceed, at any such time, the amount by 
which— 
"(I) the aggregate of the amounts transferred to the 
account of such State pursuant to subsections (a) and (b), 
exceeds 
"(II) the aggregate of the amounts used by the State 
pursuant to this subsection and charged against the 
amounts transferred to the account of such State, and 
"(ii) for purposes of clause (i), amounts used by a State for 
administration shall be chargeable against transferred amounts 
at the exact time the obligation is entered into, and 
"(E) the use of the money is accounted for in accordance with 
standards established by the Secretary of Labor." 
(c) EFFECTIVE DATE.—The amendments made by this section shall 42 USC 1103 
apply to fiscal years beginning after the date of the enactment of "°*®' 
this Act. 
104 STAT. 1388-224 
PUBLIC LAW 101-508—NOV. 5, 1990 
CHAPTER 3—SUPPLEMENTAL SECURITY INCOME 
SEC. 5031. EXCLUSION FROM INCOME AND RESOURCES OF VICTIMS' COM-
PENSATION PAYMENTS. 
(a) EXCLUSION FROM INCOME.—Section 1612(b) (42 U.S.C. 1382a(b)) 
is amended— 
(1) by striking "and" at the end of paragraph (15); 
(2) by striking the period at the end of parsigraph (16) and 
inserting "; and"; and 
(3) by adding at the end the following: 
"(17) any amount received by such individual (or such spouse) 
from a fund established by a State to aid victims of crime.". 
(b) EXCLUSION FROM RESOURCES.—Section 1613(a) (42 U.S.C. 
1382b(a)) is amended— 
(1) by striking "and" at the end of paragraph (7); 
(2) by striking the period at the end of paragraph (8) and 
inserting "; and"; and 
(3) by adding at the end the following: 
"(9) for the 9-month period beginning after the month in 
which received, any amount received by such individual (or 
such spouse) from a fund established by a State to aid victims of 
crime, to the extent that such individual (or such spouse) dem-
onstrates that such amount w£is paid as compensation for ex-
penses incurred or losses suffered as a result of a crime.". 
(c) VICTIMS COMPENSATION AWARD NOT REQUIRED TO BE ACCEPTED 
AS CONDITION OF RECEIVING BENEFITS.—Section 1631(a) (42 U.S.C. 
1383(a)) is amended by adding at the end the following: 
"(9) Benefits under this title shall not be denied to any individual 
solely by reason of the refusal of the individual to accept an amount 
offered as compensation for a crime of which the individual was a 
victim,". 
(d) EFFECTIVE DATE.—The amendments made by this section shall 
apply with respect to benefits for months beginning on or after the 
first day of the 6th calendar month following the month in which 
this Act is enacted. 
42 use 1382a 
note. 
42 use 1382h. 
42 use 1382h 
note. 
42 use 1382a 
note. 
SEC. 5032. ATTAINMENT OF AGE 65 NOT TO SERVE AS BASIS FOR TERMI-
NATION OF ELIGIBILITY UNDER SECTION 1619(b). 
(a) IN GENERAL.—Section 1619(bXl) (42 U.S.C. 1392h(b)(l)) is 
amended by striking "under age 65". 
(b) EFFECTIVE DATE.—The amendment made by subsection (a) 
shall apply with respect to benefits for months beginning on or after 
the first day of the 6th calendar month following the month in 
which this Act is enacted. 
SEC. 5033. EXCLUSION FROM INCOME OF IMPAIRMENT-RELATED WORK 
EXPENSES. 
(a) 
IN 
GENERAL.—Section 
1612(b)(4)(B)(ii) 
(42 
U.S.C. 
1382a(b)(4XBXii)) is amended by striking "(for purposes of determin-
ing the amount of his or her benefits under this title and of 
determining his or her eligibility for such benefits for consecutive 
months of eligibility after the initial month of such eligibility)". 
(b) EFFECTIVE DATE.—The amendment made by subsection (a) 
shall apply to benefits payable for calendar months beginning after 
the date of the enactment of this Act. 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-225 
SEC. 5034. TREATMENT OF ROYALTIES AND HONORARIA AS EARNED 
INCOME. 
(a) IN GENERAL.—Section 1612(a) (42 U.S.C. 1382a(a)) is amended— 
(1) in paragraph (1)— 
(A) by striking "and" at the end of subparagraph (C); and 
(B) by adding at the end the following: 
"(E) any royalty earned by an individual in connection with 
any publication of the work of the individual, and that portion 
of any honorarium which is received for services rendered; 
and"; and 
(2) in paragraph (2)(F), by inserting "not described in para-
graph (1)(E)" before the period. 
(b) EFFECTIVE DATE.—The amendments made by subsection (a) 42 USC 1382a 
shall apply with respect to benefits for months beginning on or after "°*®-
the first day of the 13th calendar month following the month in 
which this Act is enacted. 
SEC. 5035. CERTAIN STATE RELOCATION ASSISTANCE EXCLUDED FROM 
SSI INCOME AND RESOURCES. 
(a) EXCLUSION FROM INCOME.—Section 1612(b) (42 U.S.C. 1382a(b)), 
as amended by section 5031(a) of this Act, is amended^ 
(1) by striking "and" at the end of paragraph (16); 
(2) by striking the period at the end of paragraph (17) and 
inserting a semicolon; and 
(3) by inserting after paragraph (17) the following: 
"(18) relocation assistance provided by a State or local govern-
ment to such individual (or such spouse), comparable to assist-
ance provided under title II of the Uniform 
Relocation 
Assistance and Real Property Acquisitions Policies Act of 1970 
which is subject to the treatment required by section 216 of such 
Act". 
(b) EXCLUSION FROM RESOURCES.—Section 1613(a) (42 U.S.C. 
1382b(a)), as amended by section 5031(b) of this Act, is amended— 
(1) by striking "and" at the end of paragraph (8); 
(2) by striking the period at the end of paragraph (9) and 
inserting "; and"; and 
(3) by inserting after paragraph (9) the following: 
"(10) for the 9-month period beginning after the month in 
which received, relocation assistance provided by a State or 
local government to such individual (or such spouse), com-
parable to assistance provided under title II of the Uniform 
Relocation Assistance and Real Property Acquisitions Policies 
Act of 1970 which is subject to the treatment required by section 
216 of such Act.". 
(c) EFFECTIVE DATE.—The amendments made by this section shall 42 USC 1382a 
apply with respect to benefits for calendar months beginning in the "o**-
3-year period that begins on the first day of the 6th calendar month 
following the month in which this Act is enacted. 
SEC. 5036. EVALUATION OF CHILD'S DISABILITY BY PEDIATRICIAN OR 
OTHER QUALIFIED SPECIALIST. 
(a) IN GENERAL.—Section 1614(a)(3) (42 U.S.C. 1382c(a)(3)) is 
amended by adding at the end the following: 
"(H) In making any determination under this title with respect to 
the disability of a child who has not attained the age of 18 years and 
to whom section 221(h) does not apply, the Secretary shall make 
reasonable efforts to ensure that a qualified pediatrician or other 
104 STAT. 1388-226 
PUBLIC LAW 101-508—NOV. 5, 1990 
42 use 1382c 
note. 
42 use 1382d 
note. 
42 use 1383 
note. 
42 use 1382h 
note. 
individual who specializes in a field of medicine appropriate to the 
disability of the child (as determined by the Secretary) evaluates the 
case of such child.". 
(b) EFFECTIVE DATE.—The amendment made by subsection (a) 
shall apply to determinations made 6 or more months after the date 
of the enactment of this Act. 
SEC. 5037. REIMBURSEMENT FOR VOCATIONAL REHABILITATION SERV-
ICES 
FURNISHED 
DURING 
CERTAIN 
MONTHS 
OF 
NONPAYMENT OF SSI BENEFITS. 
(a) IN GENERAL.—Section 1615 (42 U.S.C. 1382d) is amended by 
adding at the end the following: 
"(e) The Secretary may reimburse the State agency described in 
subsection (d) for the costs described therein incurred in the provi-
sion of rehabilitation services— 
"(1) for any month for which an individual received— 
"(A) benefits under section 1611 or 1619(a); 
"(B) assistance under section 1619(b); or 
"(C) a federally administered State supplementary pay-
ment under section 1616 of this Act or section 212(b) of 
Public Law 93-66; and 
"(2) for any month before the 13th consecutive month for 
which an individual, for a reason other than cessation of disabil-
ity or blindness, was ineligible for— 
"(A) benefits under section 1611 or 1619(a); 
"(B) assistance imder section 1619(b); or 
"(C) a federally administered State supplementary pay-
ment under section 1616 of this Act or section 212(b) of 
Public Law 93-66.". 
(b) EFFECTIVE DATE.—The amendment made by subsection (a) 
shall take effect on the date of the enactment of this Act and shall 
apply to claims for reimbursement pending on or after such date. 
SEC. 5038. EXTENSION OF PERIOD OF PRESUMPTIVE ELIGIBILITY FOR 
BENEFITS. 
(a) IN GENERAL.—Section 1631(aX4XB) (42 U.S.C. 1383(aX4XB)) is 
amended by striking "3" and inserting "6". 
(b) EFFECTIVE DATE.—The amendment made by subsection (a) 
shall apply with respect to benefits for months beginning on or after 
the first day of the 6th calendar month following the month in 
which this Act is enacted. 
SEC. 5039. CONTINUING DISABILITY OR BLINDNESS REVIEWS NOT RE-
QUIRED MORE THAN ONCE ANNUALLY. 
(a) IN GENERAL ««—Section 1619 (42 U.S.C. 1382h) is amended— 
(1) by redesignating subsection (c) as subsection (d); and 
(2) by inserting after subsection (b) the following: 
"(c) Subsection (aX2) and section 1631(jX2XA) shall not be con-
strued, singly or jointly, to require more than 1 determination 
during any 12-month period with respect to the continuing disability 
or blindness of an individual.". 
(b) CONFORMING AMENDMENT.—Section 1631(jX2XA) (42 U.S.C. 
1383(jX2XA)) is amended by inserting "(other than subsection (c) 
thereof)" after "1619" the 1st place such term appears. 
(c) EFFECTIVE DATE.—The amendments made by this section shall 
take effect on the date of the enactment of this Act. 
' So in original. Probably should be "GKNERAL.—". 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-227 
SEC. 5040. CONCURRENT SSI AND FOOD 
STAMP APPLICATIONS BY 
INSTITUTIONALIZED INDIVIDUALS. 
Section 1631 (42 U.S.C. 1383) is amended— 
(1) in subsection (m), by striking the second sentence; and 
(2) by adding at the end the following: 
"CONCURRENT SSI AND FOOD STAMP APPLICATIONS BY 
INSTITUTIONALIZED INDIVIDUALS 
"(n) The Secretary and the Secretary of Agriculture shall develop 
a procedure under which an individual who applies for supple-
mental security income benefits under this subsection shall also be 
permitted to apply at thp same time for participation in the food 
stamp program authorized under the Food Stamp Act of 1977 (7 
U.S.C. 2011 et seq.).". 
SEC. 5041. NOTIFICATION OF CERTAIN INDIVIDUALS ELIGIBLE TO RE-
CEIVE RETROACTIVE BENEFITS. 
In notifying individuals of their eligibility to receive retroactive 
supplemental security income benefits as a result of Sullivan v. 
Zebley, 110 S. Ct. 2658 (1990), the Secretary shall include written 
notice, in language that is easily understandable, explaining— 
(1) the 6-month limitation on the exclusion from resources 
under section 1613(a)(7) of the Social Security Act (42 U.S.C. 
1382b(a)(7)); 
(2) the potential effects under title XVI of the Social Security 
Act, attributable to the receipt of such payment, including— 
(A) potential discontinuation of eligibility; and 
(B) potential reductions in the amount of benefits; 
(3) the possibility of establishing a trust account that would 
not be considered as income or resources for the purposes of 
such title if the trust met certain conditions; and 
(4) that legal assistance in establishing such a trust may be 
available through legal referral services offered by a State or 
local bar association, or through the Legal Services Corporation. 
CHAPTER 4—AID TO FAMILIES WITH DEPENDENT 
CHILDREN 
SEC. 5051. OPTIONAL 
MONTHLY 
REPORTING 
AND 
RETROSPECTIVE 
BUDGETING. 
4 
(a) OPTIONAL MONTHLY REPORTING.—Section 402(a)(14) (42 U.S.C. 
602(aX14)) is amended--
(1) by striking "with respect to" and all that follows through 
"(A) provide" and insert "provide, at the option of the State and 
with respect to such category or categories as the State may 
select and identify in its State plan (A)"; 
(2) by striking "(with the prior approval of the Secretary in 
recent work history and earned income cases)"; and 
(3) by striking "upon a determination" and all that follows 
through "paragraph . 
(b) OPTIONAL RETROSPECTIVE BUDGETING.—Section 402(a)(13) (42 
U.S.C. 602(a)(13)) is amended by striking all that precedes subpara-
graph (A) and inserting the following: 
"(13) at the option of the State, but only with respect to any 
one or more categories of families required to report monthly to 
the State agency pursuant to paragraph (14), provide that—". 
104 STAT. 1388-228 
PUBLIC LAW 101-508—NOV. 5, 1990 
42 use 602 note. 
(c) EFFECTIVE DATE.—The amendments made by this section shall 
take effect with respect to reports pertaining to, or aid payable for, 
months beginning in or after October 1990. 
SEC. 5052. CHILDREN RECEIVING FOSTER CARE MAINTENANCE OR ADOP-
TION ASSISTANCE PAYMENTS NOT TREATED AS MEMBER OF 
FAMILY UNIT FOR PURPOSES OF DETERMINING ELIGIBILITY 
FOR, OR AMOUNT OF, AFDC BENEFIT. 
(a) IN GENERAL.—Part A of title IV (42 U.S.C. 601 et seq.) is 
amended by inserting after section 408 the following: 
"EXCLUSION FROM AFDC UNIT OF CHILD FOR WHOM FEDERAL, STATE, OR 
LOCAL FOSTER CARE MAINTENANCE OR ADOPTION ASSISTANCE PAY-
MENTS ARE MADE 
42 use 609. 
"SEC. 409. (a) Notwithstanding anyt other provision of this title 
(other than subsection Qo))— 
"(1) a child with respect to whom foster care maintenance 
payments or adoption assistance payments are made under part 
E or under State or local law shall not, for the period for which 
such payments are made, be regarded as a member of a family 
for purposes of determining the amount of benefits of the family 
under this part; and 
"(2) the income and resources of such child shall be excluded 
from the income and resources of a family under this part. 
"(b) Subsection (a) shall not apply in the case of a child with 
respect to whom adoption assistance payments are made under part 
E or under State or local law, if application of such subsection would 
reduce the benefits under this part of the family of which the child 
would otherwise be regarded as a member.". 
(h) CONFORMING REPEAL.—Section 478 (42 U.S.C. 678) is hereby 
repealed. 
42 use 609 note. 
(c) EFFECTIVE DATE.—The amendment made by subsection (a) and 
the repeal made by subsection (b) shall apply with respect to benefits 
for months beginning on or after the first day of the 6th calendar 
month following the month in which this Act is enacted. 
SEC. 5053. ELIMINATION OF TERM "LEGAL GUARDIAN". 
(a) IN GENERAL.—Section 402(aX39) (42 U.S.C. 602(a)(39)) is 
amended— 
(1) by striking "or legal guardian"; and 
(2) by striking "or legal guardians". 
42 use 602 note. 
(b) EFFECTIVE DATE.—The amendments made by subsection (a) 
shall take effect on the date of the enactment of this Act. 
SEC. 5054. REPORTING OF CHILD ABUSE AND NEGLECT. . 
(a) CONCERNING AFDC APPUCANTS AND RECIPIENTS.— 
(1) IN GENERAL.—Section 402(a)(16) (42 U.S.C. 602(a)(16)) is 
amended to read £is follows: 
"(16) provide that the State agency will— 
"(A) report to an appropriate agency or official, known or 
suspected instances of physical or mental injury, sexual 
abuse or exploitation, or negligent treatment or maltreat-
ment of a child receiving aid under this part under cir-
cumstances which indicate that the child's health or 
welfare is threatened thereby; and 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-229 
"(B) provide such information with respect to a situation 
described in subparagraph (A) as the State agency may 
have;". 
(2) CONFORMING AMENDMENTS.—Section 402(a)(9) (42 U.S.C. 
602(a)(9)) is amended— 
(A) in subparagraph (C), by striking "and"; and 
(B) by inserting ", and (E) reporting and providing 
information pursuant to paragraph (16) to appropriate 
authorities with respect to known or suspected child abuse 
or neglect" before the 1st semicolon. 
(b) CONCERNING RECIPIENTS OF FOSTER CARE OR ADOPTION 
ASSISTANCE 
(1) IN GENERAL.—Section 471(a)(9) (42 U.S.C. 671(a)(9)) is 
amended to read as follows: 
"(9) provides that the State agency will— 
"(A) report to an appropriate agency or official, known or 
suspected instances of physical or mental injury, sexual 
abuse or exploitation, or negligent treatment or maltreat-
ment of a child receiving aid under part B or this part 
under circumstances which indicate that the child's health 
or welfare is threatened thereby; and 
"(B) provide such information with respect to a situation 
described in subparagraph (A) as the State agency may 
have;". 
(2) CONFORMING AMENDMENTS.—Section 471(a)(8) (42 U.S.C. 
671(a)(8)) is amended— 
(A) in subparagraph (C), by striking "and"; and 
(B) by inserting ", and (E) reporting and providing 
information pursuant to paragraph (9) to appropriate 
authorities with respect to known or suspected child abuse 
or neglect" before the 1st semicolon. 
(c) EFFECTIVE DATE.—The amendments made by this section shall 42 USC 602 note, 
apply with respect to benefits for months beginning on or after the 
first day of the 6th calendar month following the month in which 
this Act is enacted. 
SEC. 5055. DISCLOSURE OF INFORMATION ABOUT AFDC APPLICANTS AND 
RECIPIENTS AUTHORIZED FOR PURPOSES DIRECTLY CON-
NECTED TO STATE FOSTER CARE AND ADOPTION ASSIST-
ANCE PROGRAMS. 
(a) IN GENERAL.—Section 402(a)(9)(A) (42 U.S.C. 602(a)(9)(A)) is 
amended by striking "or D" and inserting ", D, or E". 
(b) EFFECTIVE DATE.—The amendment made by subsection (a) 42 USC 602 note, 
shall take effect on the date of the enactment of this Act. 
SEC. 5056. REPATRIATION. 
(a) IN GENERAL.—Section 1113 (42 U.S.C. 1313) is amended— 
(1) in subsection (d), by striking "on or after October 1, 1989" 
and inserting "after September 30,1991"; and 
(2) by adding at the end the following: 
"(e)(1) The Secretary may accept on behalf of the United States 
gifts, in cash or in kind, for use in carrying out the program 
established under this section. Gifts in the form of cash shall be 
credited to the appropriation account from which this program is 
funded, in addition to amounts otherwise appropriated, and shall 
remain available until expended. 
104 STAT. 1388-230 
PUBLIC LAW 101-508—NOV. 5, 1990 
"(2) Gifts accepted under paragraph (1) shall be available for 
obligation or other use by the United States only to the extent and 
in the amounts provided in appropriation Acts.". 
42 use 1313 
(b) EFFECTIVE DATE.—The amendments made by subsection (a) 
note. 
shall be effective for fiscal years beginning after September 30,1989. 
SEC. 5057. TECHNICAL AMENDMENT TO NATIONAL COMMISSION ON 
CHILDREN. 
Section 1139(d) (42 U.S.C. 1320b-9(d)) is amended in the matter 
preceding paragraph (1), by striking "an interim report no later 
than March 31, 1991, and a final report no later than September 30, 
1990" and inserting "an interim report no later than September 30, 
1990, and a final report no later than March 31,1991". 
SEC. 5058. EXTENSION OF PROHIBITION AGAINST IMPLEMENTATION OF 
PROPOSED REGULATIONS ON EMERGENCY ASSISTANCE AND 
AFDC SPECIAL NEEDS. 
Section 8005 of the Omnibus Budget Reconciliation Act of 1989 (42 
U.S.C. 606 note) is amended in each of subsections (a)(2) and (c) by 
striking "1990" and inserting "1991". 
SEC. 5059. AMENDMENTS TO MINNESOTA FAMILY INVESTMENT PLAN 
DEMONSTRATION. 
Section 8015 of the Omnibus Budget Reconciliation Act of 1989 (42 
U.S.C. 602 note) is amended— 
(1) in subsection (a), by striking "part A" and inserting "parts 
A and F"; 
(2) in subsection 03)(3), by striking "(e)" and inserting "(d)"; 
(3) in subsection (b)(6), by inserting "or that is assigned to and 
found eligible for the project" after "in the project"; 
(4) in subsection (b)(8)(B)(ii), by inserting "(except that the age 
of the youngest child may he age 1 under the project even if the 
State plan specifies age 3)" after "such compliance"; 
(5) in subsection (b)(8)(B)(ii)(I), by inserting "and" after the 
semicolon; 
(6) in subsection (b)(8)(B)(ii), by striking "; and" after "age of 1 
year" and all that follows through the end of subclause (III) and 
inserting "(except that, in a 2-parent family, this clause applies 
only to 1 parent)."; 
(7) by amending subsection (b)(9) to read as follows: 
"(9) AVAILABILITY OF EDUCATION, EMPLOYMENT, AND TRAINING 
SERVICES.—The State will make available education, employ-
ment, and training services equivalent to those services avail-
able under the State plan approved under part F of title IV of 
the Social Security Act to families required to enter into and 
comply with a contract with a county agency under the 1989 
Minnesota Laws, section 10 of article 5 of chapter 282."; 
(8) in subsection (b)(10)(A)— 
(A) by inserting ", except when a sanction is implemented 
under the 1989 Minnesota Laws, subdivision 3 of section 10 
of article 5 of chapter 282," after "ensure that"; and 
(B) by striking "cash"; 
(9) in subsection (b), by adding at the end the following: 
"(12) LIABILITY FOR COSTS.—For each fiscal year, the Secretary 
shall not be liable for any costs related to carrying out the 
project in excess of those that the Secretary would have been 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-231 
liable for had the project not been implemented, except for costs 
for evaluating the project."; 
(10) in subsection (c)(1)(B), by striking "50" and inserting "25"; 
(11) in subsection (c)(2), by striking "part A" and inserting 
"parts A and F"; 
(12) in subsection (dXl)(B)(ii)— 
(A) by inserting "except when a sanction is implemented 
under the 1989 Minnesota Laws, subdivision 3 of section 10 
of article 5 of chapter 282," before "permit"; and 
(B) by striking "cash"; 
(13) in subsection (d)(l)(BXiii), by striking "section 402(aX19)(C) 
of such Act" and inserting "subparagraph (C), (D), or (E) of 
section 402(a)(19) of such Act (except that the exemption for a 
parent with a child under 1 year of age need not be specified in 
the State plan)"; and 
(14) by adding at the end the following: 
"(i) CONSTRUCTION.—For purposes of any Federal, State, or local 
law other than part A of title IV of the Social Security Act, the Food 
Stamp Act of 1977, or this section— 
"(1) families participating in the project shall be considered to 
be recipients of aid under such part; and 
"(2) cash assistance provided under the project to any such 
family and not designated by the State as food assistance shall 
be treated as if such assistance were aid received under such 
part.". 
SEC. 5060. GOOD CAUSE EXCEPTION TO REQUIRED COOPERATION FOR 
TRANSITIONAL CHILD CARE BENEFITS. 
(a) 
IN 
GENERAL.—Section 
402(gXlXAXviXII) 
(42 
U.S.C. 
602(gXlXAXvi)(II)) is amended to read as follows: 
"(II) refused to cooperate with the State in establishing and 
enforcing his or her child support obligations, without good cause as 
determined by the State agency in accordance with standards pre-
scribed by the Secretary which shall take into consideration the best 
interests of the child for whom child care is to be provided.". 
(b) EFFECTIVE DATE.—The amendment made by subsection (a) 
42 USC 602 note, 
shall take effect on the date of the enactment of this Act. 
SEC. 5061. TECHNICAL CORRECTIONS REGARDING PENALTY FOR FAIL-
URE TO PARTICIPATE IN JOBS PROGRAM. 
(a) IN GENERAL.—Section 407(bXlXB) (42 U.S.C. 607(bXl)(B))) " i s 
amended— 
(1) in clause (iii)— 
(A) by striking "—" and all that follows through "(II)"; 
and 
(B) by striking "and " at the end; 
(2) in clause (iv), by striking the period and inserting "; and"; 
and 
(3) by adding at the end the following: 
"(v) that, if and for so long as the child's parent described 
in subparagraph (AXi), unless meeting a condition of section 
402(a)(19XC), is, without good cause, not participating (or 
available for participation) in a program under part F, or if 
exempt under such section by reason of clause (vii) thereof 
or because there has not been established or provided under 
part F a program in which such parent can effectively 
participate, is not registered with the public employment 
' So in original. Probably should be "607(bXlXB))". 
104 STAT. 1388-232 
PUBLIC LAW 101-508—NOV. 5, 1990 
offices in the State, the needs of such parent shall not be 
taken into account in determining the need of such parent's 
family under section 402(a)(7), and the needs of such par-
ent's spouse shall not be so taken into account unless such 
spouse is participating in such a program, or if not partici-
pating solely by reason of section 402(a)(19)(C)(vii) or be-
cause there has not been established or provided under part 
F a program in which such spouse can effectively partici-
pate, is registered with the public employment offices of the 
State; and if neither parents' needs are so taken into ac-
count, the payment provisions of section 402(aX19)(G)(iXI) 
shall apply.". 
42 use 607 note. 
(b) EFFECTIVE DATE.—The amendments made by subsection (a) 
shall take effect at the same time and in the same manner as the 
amendments made by title II of the Family Support Act of 1988 take 
effect. 
SEC. 5062. TECHNICAL CORRECTIONS REGARDING AFDC-UP ELIGIBILITY 
REQUIREMENTS. 
(a) IN GENERAL.—Section 407(dXl) (42 U.S.C. 607(dXl)) is 
amended— 
(1) by striking "a calendar quarter (A)" and inserting "(A) a _ 
calendar quarter"; 
(2) by striking "or" at the end of subparagraph (A); and 
(3) by inserting ", and (C) a calendar quarter ending before 
October 1990 in which such individual participated in a commu-
nity work experience program under section 409 (as in effect for 
a State immediately before the effective date for that State of 
the amendments made by title II of the Family Support Act of 
1988) or the work incentive program established under part C 
(as in effect for a State immediately before such effective date)" 
before the semicolon. 
42 use 607 note. 
(b) EFFECTIVE DATE,—The amendments made by subsection (a) 
shall take effect on the date of the enactment of this Act. 
SEC. 5063. FAMILY SUPPORT ACT DEMONSTRATION PROJECTS. 
42 use 1315 
Section 505 of the Family Support Act of 1988 (42 U.S.C. 1315; P.L. 
note. 
100-385) is amended— 
(1) in subsection (a), by inserting "in each of the fiscal years 
1990,1991, and 1992," before "shall"; and 
(2) in subsection (e), by striking "September 30, 1989" and 
inserting "September 30 of the fiscal year specified in the 
agreement described in subsection (a)". 
SEC. 5064. STUDY OF JOBS PROGRAMS OPERATED BY INDIAN TRIBES AND 
ALASKA NATIVE ORGANIZATIONS. 
(a) IN GENERAL.—Within 180 days after the date of the enactment 
of this Act, the Comptroller General of the United States (in this 
section referred to as the "Comptroller") shall conduct a study of the 
implementation of section 482(i) of the Social Security Act (42 U.S.C. 
682(i)) relating to job opportunities and basic skills training pro-
grams (in this section referred to as "JOBS programs") operated by 
Indian tribes and Alaska Native organizations (as defined in para-
graph (5) of such section 482(i)). 
(b) REQUIREMENTS FOR STUDY.—In conducting the study described 
in subsection (a), the Comptroller shall— 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-233 
(1) identify any problems associated with the implementation 
of section 482(i) of the Social Security Act; and 
(2) assess (to the extent practicable) the effectiveness of the 
JOBS programs operated by Indian tribes and Alaska Native 
organizations. 
(c) REPORT.—Upon completion of the study described in subsection 
(a), the Comptroller shall submit a report to the appropriate commit-
tees of the Congress that includes— 
(1) a summary of the findings of the study; and 
(2) recommendations with respect to proposed legislation or 
changes in administrative policy to improve the effectiveness of 
JOBS programs conducted pursuant to section 482(i) of the 
Social Security Act. 
CHAPTER 
5—CHILD 
WELFARE 
AND 
FOSTER 
CARE 
SEC. 5071. ACCOUNTING FOR ADMINISTRATIVE COSTS. 
(a) RECLASSIFICATION.—Section 474(a)(3) (42 U.S.C. 674(a)(3)) is 
amended by inserting "provision of child placement services and for 
the" before "proper and efficient". 
(b) EFFECTIVE DATE.—The amendment made by subsection (a) 
42 USC 674 note, 
shall take effect on the date of the enactment of this Act. 
SEC. 5072. SECTION 427 TRIENNIAL REVIEWS. 
(a) AMENDMENTS TO SECTION 10406 OF O B R A 1989.—Section 10406 
of the Omnibus Budget Reconciliation Act of 1989 (42 U.S.C. 627 
note) is amended— 
(1) by striking "1991" and inserting "1992"; 
(2) by striking "1990" and inserting "1991"; and 
(3) in the section heading, by striking "1990" and inserting 
"1991". 
(b) CONFORMING AMENDMENT.—The item relating to section 10406 
in the table of contents appearing immediately after section 10000 of 
such Act is amended by striking "1990" and inserting "1991". 
SEC. 5073. INDEPENDENT LIVING INITIATIVES. 
(a) IN GENERAL.—Section 477(a)(2)(C) (42 U.S.C. 677(a)(2)(C)) is 
amended— 
(1) by inserting "who has not attained age 21" after "may at 
the option of the State also include any child"; and 
(2) by striking ", but such child" and all that follows through 
"care". 
(b) EFFECTIVE DATE.—The amendments made by subsection (a) 
42 USC 677 note, 
shall apply to payments made under part E of title IV of the Social 
Security Act for fiscal years beginning in or after fiscal year 1991. 
CHAPTER 6~CHILD CARE 
SEC. 5081. GRANTS TO STATES FOR CHILD CARE. 
(a) RULES GOVERNING PROVISION OF CHILD CARE TO ELIGIBLE FAMI-
LIES.—Section 402 (42 U.S.C. 602) is amended by adding at the end 
the following: 
"(i)(l) Each State agency may, to the extent that it determines 
that resources are available, provide child care in accordance with 
paragraph (2) to any low income family that the State determines— 
"(A) is not receiving aid under the State plan approved under 
this part; 
9-194 O - 91 - 21 : QL 3 Part 2 
104 STAT. 1388-234 
PUBLIC LAW 101-508—NOV. 5, 1990 
"(B) needs such care in order to work; and 
"(C) would be at risk of becoming eligible for aid under the 
State plan approved under this part if such care were not 
provided. 
"(2) The State agency may provide child care pursuant to para-
graph (1) by— 
"(A) providing such care directly; 
"(B) arranging such care through providers by use of pur-
chase of service contracts or vouchers; 
"(C) providing cash or vouchers in advance to the family; 
"(D) reimbursing the family; or 
"(E) adopting such other arrangements as the agency deems 
appropriate. 
"(3)(A) A family provided with child care under paragraph (1) 
shall contribute to such care in accordance with a sliding scale 
formula established by the State agency based on the family's 
ability to pay. 
"(B) The State agency shall make payment for the cost of child 
care provided under paragraph (1) with respect to a family in an 
amount that is the lesser of— 
"(i) the actual cost of such care; and 
"(ii) the applicable local market rate (as determined by the 
State in accordance with regulations issued by the Secretary). 
"(4) The value of any child care provided or arranged (or any 
amount received £is payment for such care or reimbursement for 
costs incurred for the care) under this subsection— 
"(A) shall not be treated as income or as a deductible expense 
for purposes of any other Federal or federally assisted program 
that bases eligibility for or amount of benefits upon need; and 
"(B) may not be claimed as an employment-related expense 
for purposes of the credit under section 21 of the Internal 
Revenue Code of 1986. 
"(5) Amounts expended by the State agency for child care under 
paragraph (1) shall be treated as amounts for which payment may 
be made to a State under section 403(n) only to the extent that— 
"(A) such amounts are paid in accordance with paragraph 
(3)(B); 
"(B) the care involved meets applicable standards of State and 
local law; 
"(C) the provider of the care— 
"(i) in the case of a provider who is not an individual that 
provides such care solely to members of the family of the 
individual, is licensed, regulated, or registered by the State 
or locality in which the care is provided; and 
"(ii) allows parental access; and 
"(D) such amounts are not used to supplant any other Federal 
or State funds used for child care services. 
"(6)(AXi) Each State shall prepare reports annually, beginning 
with fiscal year 1993, on the activities of the State carried out with 
funds made available under section 403(n). 
"(ii) The State shall make available for public inspection within 
the State copies of each report required by this paragraph, shall 
transmit a copy of each such report to the Secretary, and shall 
provide a copy of each such report, on request, to any interested 
public agency. 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-235 
"(iii) The Secretary shall annually compile, and submit to the 
Congress, the State reports transmitted to the Secretary pursuant to 
clause (ii). 
"(B) Each report prepared and transmitted by a State under 
subparagraph (A) shall set forth with respect to child care services 
provided under this subsection— 
"(i) showing separately for center-based child care services, 
group home child care services, family child care services, and 
relative care services, the number of children who received such 
services and the average cost of such services; 
"(ii) the criteria applied in determining eligibility or priority 
for receiving services, and sliding fee schedules; 
"(iii) the child care licensing and regulatory (including reg-
istration) requirements in effect in the State with respect to 
each type of service specified in clause (i); and 
"(iv) the enforcement policies and practices in effect in the 
State which apply to licensed and regulated child care providers 
(including providers required to register). 
"(C) Within 12 months after the date of the enactment of this 
subsection, the Secretary shall establish uniform reporting require-
ments for use by the States in preparing the information required 
by this paragraph, and make such other provision as may be nec-
essary or appropriate to ensure that compliance with this subsection 
will not be unduly burdensome on the States. 
"(D) Not later than July 1, 1992, the Secretary shall issue a report 
on the implementation of this subsection, based on such information 
as as has ^^ been made available to the Secretary by the States.". 
(b) PAYMENTS TO STATES.—Section 403 (42 U.S.C. 603) is amended 
by adding at the end the following: 
"(n)(l) In addition to any payment under subsection (a) or (1), each 
State shall be entitled to payment from the Secretary of an amount 
equal to the lesser o
f
— 
"(A) the Federal medical assistance percentage (as defined in 
section 1905(b)) of the expenditures by the State in providing 
child care services pursuant to section 402(i), and in administer-
ing the provision of such child care services, for any fiscal year; 
and 
"(B) the limitation determined under paragraph (2) with re-
spect to the State for the fiscal year. 
"(2)(A) The limitation determined under this paragraph with 
respect to a State for any fiscal year is the amount that bears the 
same ratio to the amount specified in subparagraph (B) for such 
fiscal year as the number of children residing in the State in the 
second preceding fiscal year bears to the number of children resid-
ing in the United States in the second preceding fiscal year. 
"(B) The amount specified in this subparagraph is— 
"(i) $300,000,000 for fiscal year 1991; 
"(ii) $300,000,000 for fiscal year 1992; 
"(iii) $300,000,000 for fiscal year 1993; 
"(iv) $300,000,000 for fiscal year 1994; and 
"(v) $300,000,000 for fiscal year 1995, and for each fiscal year 
thereafter. 
"(C) If the limitation determined under subparagraph (A) with 
respect to a State for a fiscal year exceeds the amount paid to the 
State under this subsection for the fiscal year, the limitation deter-
mined under this paragraph with respect to the State for the 
** So in original. Probably should be "information as has". 
104 STAT. 1388-236 
PUBLIC LAW 101-508—NOV. 5, 1990 
immediately succeeding fiscal year shall be increased by the amount 
of such excess. 
"(3) Amounts appropriated for a fiscal year to carry out this part 
shall be made available for payments under this subsection for such 
fiscal year.". 
(c) AMENDMENTS TO GRANTS TO STATES TO IMPROVE CHILD CARE 
LICENSING AND REGISTRATION REQUIREMENTS, AND TO MONITOR 
CHILD CARE PROVIDED TO CHILDREN RECEIVING AFDC.— 
(1) GRANTS INCREASED AND EXTENDED.—Section 402(gX6)(D) (42 
U.S.C. 602(g)(6)(D)) is amended by inserting ", and $50,000,000 
for each of fiscal years 1992, 1993, and 1994" before the period. 
(2) NEW PURPOSES FOR GRANTS.—Section 402(g)(6)(A) (42 U.S.C. 
602(g)(6)(A)) is amended by striking "and to monitor child care 
provided to children receiving aid under the State plan ap-
proved under subsection (a)" and inserting "to enforce stand-
ards with respect to child care provided to children under this 
part, and to provide for the training of child care providers". 
(3) HALF OF GRANT REQUIRED TO BE EXPENDED FOR TRAINING OF 
CHILD CARE PROVIDERS.—Section 402(g)(6) (42 U.S.C. 602(g)(6)) is 
amended by adding at the end the following: 
"(E) Each State to which the Secretary makes a grant under this 
paragraph shall expend not less than 50 percent of the amount of 
the grant to provide for the training of child care providers.". 
(d) COORDINATION WITH OTHER PROGRAMS FOR CHILDREN.—Section 
402(g)(7) (42 U.S.C 602(g)(7)) is amended by inserting "and subsec-
tion (i)" after "this subsection". 
42 use 602 note. 
(e) EFFECTIVE DATE.—Except as otherwise expressly provided, the 
amendments made by this section shall take effect on October 1, 
1990. 
SEC. 5082. CHILD CARE AND DEVELOPMENT BLOCK GRANT. 
Chapter 8 of subtitle A of title IV of the Omnibus Budget Rec-
onciliation Act of 1981 (Public Law 97-35) is amended— 
(1) by redesignating subchapters C, D, and E, as subchapters 
D, E, and F, respectively; and 
(2) by inserting after subchapter B the following new 
subchapter: 
Child Care and 
Development 
Block Grant Act 
of 1990. 
42 u s e 9801 
note. 
42 u s e 9858. 
42 u s e 9858a. 
42 u s e 9858b. 
"Subchapter C—Child Care and Development Block Grant 
"SEC. 658A. SHORT TITLE. 
"This subchapter may be cited as the 'Child Care and Develop-
ment Block Grant Act of 1990'. 
"SEC. 658B, AUTHORIZATION OF APPROPRIATIONS. 
"There are authorized to be appropriated to carry out this sub-
chapter, $750,000,000 for fiscal year 1991, $825,000,000 for fiscal year 
1992, $925,000,000 for fiscal year 1993, and such sums as may be 
necessary for each of the fiscal years 1994 and 1995. 
"SEC. 658C. ESTABLISHMENT OF BLOCK GRANT PROGRAM. 
"The Secretary is authorized to make grants to States in accord-
ance with the provisions of this subchapter. 
"SEC. 658D. LEAD AGENCY. 
"(a) DESIGNATION.—The chief executive officer of a State desiring 
to receive a grant under this subchapter shall designate, in an 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-237 
application submitted to the Secretary under section 658E, an appro-
priate State agency that complies with the requirements of subjec-
tion (b) to act as the lead agency. 
"(b) DUTIES.— 
"(1) IN GENERAL.—The lead agency shall— 
"(A) administer, directly or through other State agencies, 
the financial assistance received under this subchapter by 
the State; 
"(B) develop the State plan to be submitted to the Sec-
retary under section 658E(a); 
"(C) in conjunction with the development of the State 
plan as required under subparagraph (B), hold at least one 
hearing in the State to provide to the public an opportunity 
to comment on the provision of child care services under 
the State plan; and 
"(D) coordinate the provision of services under this sub-
chapter with other Federal, State and local child care and 
early childhood development programs. 
"(2) DEVELOPMENT OF PLAN.—In the development of the State 
plan described in paragraph (1)(B), the lead agency shall consult 
with appropriate representatives of units of general purpose 
local government. Such consultations may include consideration 
of local child care needs and resources, the effectiveness of 
existing child care and early childhood development services, 
and the methods by which funds made available under this 
subchapter can be used to effectively address local shortages. 
"SEC. 658E. APPLICATION AND PLAN. 
42 USC 9858c. 
"(a) APPLICATION.—To be eligible to receive assistance under this 
subchapter, a State shall prepare and submit to the Secretary an 
application at such time, in such manner, and containing such 
information as the Secretary shall by rule require, including— 
"(1) an assurance that the State will comply with the require-
ments of this subchapter; and 
"(2) a State plan that meets the requirements of subsection 
(0. 
"(b) PERIOD COVERED BY PLAN.—The State plan contained in the 
application under subsection (a) shall be designed to be imple-
mented— 
"(1) during a 3-year period for the initial State plan; and 
"(2) during a 2-year period for subsequent State plans. 
"(c) REQUIREMENTS OF A PLAN.— 
"(1) LEAD AGENCY.—The State plan shall identify the lead 
agency designated under section 658D. 
"(2) PouciES AND PROCEDURES.—The State plan shall: 
"(A) PARENTAL CHOICE OF PROVIDERS.—Provide assurances 
that— 
"(i) the parent or parents of each eligible child within 
the State who receives or is offered child care services 
for which financial assistance is provided under this 
subchapter, other than through assistance provided 
under paragraph (3XC), are given the option either— 
' (I) to enroll such child with a child care pro-
vider that has a grant or contract for the provision 
of such services; or 
"(II) to receive a child care certificate as defined 
in section 658P(2); 
104 STAT. 1388-238 
PUBLIC LAW 101-508—NOV. 5, 1990 
"(ii) in cases in which the parent selects the option 
described in clause (i)(I), the child will be enrolled with 
the eligible provider selected by the parent to the 
maximum extent practicable; and 
"(iii) child care certificates offered to parents select-
ing the option described in clause (i)(II) shall be of a 
value commensurate with the subsidy value of child 
care services provided under the option described in 
clause (i)(I); 
except that nothing in this subparagraph shall require a 
State to have a child care certificate program in operation 
prior to October 1,1992. 
"(B) UNLIMITED PARENTAL ACCESS.—Provide Eissurances 
that procedures are in effect within the State to ensure that 
child care providers who provide services for which assist-
ance is made available under this subchapter afford parents 
unlimited access to their children and to the providers 
caring for their children, during the normal hours of oper-
ation of such providers and whenever such children are in 
the care of such providers. 
"(C) PARENTAL COMPLAINTS.—Provide assurances that the 
State maintains a record of substantiated parental com-
plaints and makes information regarding such parental 
complaints available to the public on request. 
"(D) CONSUMER EDUCATION.—Provide assurances that 
consumer education information will be made available to 
parents and the general public within the State concerning 
licensing and regulatory requirements, complaint proce-
dures, and policies and practices relative to child care 
services within the State. 
"(E) COMPUANCE WITH STATE AND L
O
C
A
L REGULATORY 
REQUIREMENTS.—Provide assurances that— 
"(i) all providers of child care services within the 
State for which assistance is provided under this sub-
chapter comply with all licensing or regulatory require-
ments (including registration requirements) applicable 
under State and local law; and 
"(ii) providers within the State that are not required 
to be licensed or regulated under State or local law are 
required to be registered with the State prior to pay-
ment being made under this subchapter, in accordance 
with procedures designed to facilitate appropriate pay-
ment to such providers, and to permit the State to 
furnish 
information 
to such providers, including 
information on the availability of health and safety 
training, 
technical 
assistance, 
and 
any 
relevant 
information pertaining to regulatory requirements in 
the State, and that such providers shall be permitted to 
register with the State after selection by the parents of 
eligible children and before such pajrment is made. 
This subparagraph shall not be construed to prohibit a 
State from imposing more stringent standards and licens-
ing or regulatory requirements on child care providers 
within the State that provide services for which assistance 
is provided under this subchapter than the standards or 
requirements imposed on other child care providers in the 
State. 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-239 
"(F) ESTABUSHMENT OF HEALTH AND SAFETY REQUIRE-
MENTS.—Provide assurances that there are in effect within 
the State, under State or local law, requirements designed 
to protect the health and safety of children that are ap-
plicable to child care providers that provide services for 
which assistance is made available under this subchapter. 
Such requirements shall include— 
"(i) the prevention and control of infectious diseases 
(including immunization); 
"(ii) building and physical premises safety; and 
"(iii) minimum health and safety training appro-
priate to the provider setting. 
Nothing in this subparagraph shall be construed to require 
the establishment of additional health and safety require-
ments for child care providers that are subject to health 
and safety requirements in the categories described in this 
subparagraph on the date of enactment of this subchapter 
under State or local law. 
"(G) COMPUANCE WITH STATE AND LOCAL HEALTH AND 
SAFETY REQUIREMENTS.—Provide assurances that proce-
dures are in effect to ensure that child care providers 
within the State that provide services for which assistance 
is provided under this subchapter comply with all ap-
plicable State or local health and safety requirements as 
described in subparagraph (F). 
"(H) REDUCTION IN STANDARDS.—Provide assurances that 
if the State reduces the level of standards applicable to 
child care services provided in the State on the date of 
enactment of this subchapter, the State shall inform the 
Secretary of the rationale for such reduction in the annual 
report of the State described in section 658K. 
(I) 
REVIEW OF STATE 
LICENSING AND REGULATORY 
REQUIREMENTS.—Provide assurances that not later than 18 
months after the jdate of the submission of the application 
under section 658E, the State will complete a full review of 
the law applicable to, and the licensing and regulatory 
requirements and policies of, each licensing agency that 
regulates child care services and programs in the State 
unless the State has reviewed such law, requirements, and 
policies in the 3-year period ending on the date of the 
enactment of this subchapter. 
"(J) SUPPLEMENTATION.—Provide assurances that funds 
received under this subchapter by the State will be used 
only to supplement, not to supplant, the amount of Federal, 
State, and local funds otherwise expended for the support of 
child care services and related programs in the State. 
*(3) USE OF BLOCK GRANT FUNDS.— 
"(A) GENERAL REQUIREMENT.—The State plan shall pro-
vide that the State will use the amounts provided to the 
State for each fiscal year under this subchapter as required 
under subparagraphs (B) and (C). 
"(B) CHILD CARE SERVICES.—Subject to the reservation 
contained in subparagraph (C), the State shall use amounts 
provided to the State for each fiscal year under this sub-
chapter for— 
"(i) child care services, that meet the requirements of 
this subchapter, that are provided to eligible children 
104 STAT. 1388-240 
PUBLIC LAW 101-508—NOV. 5, 1990 
in the State on a sliding fee scale basis using funding 
methods provided for in section 658E(c)(2)(A), with 
priority being given for services provided to children of 
families with very low family incomes (taking into 
consideration family size) and to children with special 
/ 
needs; and 
"(ii) activities designed to improve the availability 
and quality of child care. 
"(C) ACTIVITIES TO IMPROVE THE QUALITY OF CHILD CARE 
AND TO INCREASE THE AVAILABILITY OF EARLY CHILDHOOD 
DEVELOPMENT AND BEFORE- AND AFTER-SCHOOL CARE SERV-
ICES.—The State shall reserve 25 percent of the amounts 
provided to the State for each fiscal year under this sub-
chapter to carry out activities designed to improve the 
quality of child care (as described in section 658G) and to 
provide before- and after-school aVid early childhood devel-
opment services (as described in section 658H). 
"(4) PAYMENT RATES.— 
"(A) IN GENERAL.—The State plan shall provide assur-
ances that payment rates for the provision of child care 
services for which assistance is provided under this sub-
chapter are sufficient to ensure equal access for eligible 
children to comparable child care services in the State or 
substate area that are provided to children whose parents 
are not eligible to receive assistance under this subchapter 
or for child care assistance under any other Federal or 
State programs. Such payment rates shall take into account 
the variations in the costs of providing child care in dif-
ferent settings and to children of different age groups, and 
the additional costs of providing child care for children with 
special needs. 
"(B) CONSTRUCTION.—Nothing in this paragraph shall be 
construed to create a private right of action. 
"(5) SLIDING FEE SCALE.—The State plan shall provide that the 
State will establish and periodically revise, by rule, a sliding fee 
scale that provides for cost sharing by the families that receive 
child care services for which assistance is provided under this 
subchapter. 
"(d) APPROVAL OF APPUCATION.—The Secretary shall approve an 
application that satisfies the requirements of this section. 
42 use 9858d. 
SEC. 658F.59 LIMITATIONS ON STATE ALLOTMENTS. 
"(a) No ENTITLEMENT TO CONTRACT OR GRANT.—Nothing in this 
subchapter shall be construed— 
"(1) to entitle any child care provider or recipient of a child 
care certificate to any contract, grant or benefit; or 
"(2) to limit the right of any State to impose additional 
limitations or conditions on contracts or grants funded under 
this subchapter. 
"(b) CONSTRUCTION OF FACILITIES.— 
"(1) IN GENERAL.—No funds made available under this sub-
chapter shall be expended for the purchase or improvement of 
land, or for the purchase, construction, or permanent improve-
ment (other than minor remodeling) of any building or facility. 
"(2) SECTARIAN AGENCY OR ORGANIZATION.—In the case of a 
sectarian agency or organization, no funds made available 
under this subchapter may be used for the purposes described in 
"* So in original. Probably should be " "SEC. 658F.". 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-241 
paragraph (1) except to the extent that renovation or repair is 
necessary to bring the facility of such agency or organization 
into compliance with health and safety requirements referred to 
in section 658E(c)(2)(F). 
"SEC. 658G. ACTIVITIES TO IMPROVE THE QUALITY OF CHILD CARE. 
42 USC 9858e. 
"A State that receives financial assistance under this subchapter 
shall use not less than 20 percent of the amounts reserved by such 
State under section 658E(c)(3)(C) for each fiscal year for one or more 
of the following: 
"(1) RESOURCE AND REFERRAL PROGRAMS.—Operating directly 
or providing financial assistance to private nonprofit organiza-
tions or public organizations (including units of general purpose 
local government) for the development, establishment, expan-
sion, operation, and coordination of resource and referral pro-
grams specifically related to child care. 
"(2) GRANTS OR LOANS TO ASSIST IN MEETING STATE AND LOCAL 
STANDARDS.—Making grants or providing loans to child care 
providers to assist such providers in meeting applicable State 
and local child care standards. 
"(3) MONITORING OF COMPUANCE WITH LICENSING AND REGU-
LATORY REQUIREMENTS.—Improving the monitoring of compli-
ance with, and enforcement of, State and local licensing and 
regulatory requirements (including registration requirements). 
"(4) TRAINING.—Providing training and technical assistance 
in areas appropriate to the provision of child care services, such 
as training in health and safety, nutrition, first aid, the recogni-
tion of communicable diseases, child abuse detection and 
prevention, and the care of children with special needs. 
"(5) COMPENSATION.—Improving salaries and other compensa-
tion paid to full- and part-time staff who provide child care 
services for which assistance is provided under this subchapter. 
"SEC. 658H. EARLY CHILDHOOD DEVELOPMENT AND BEFORE- AND 
42 USC 9858f. 
AFTER-SCHOOL SERVICES. 
"(a) IN GENERAL.—A State that receives financial assistance 
under this subchapter shall use not less than 75 percent of the 
amounts reserved by such State under section 658E(c)(3)(C) for each 
fiscal year to establish or expand and conduct, through the provision 
of grants or contracts, early childhood development or before- and 
after-school child care programs, or both. 
"(b) PROGRAM DESCRIPTION.—Programs that receive assistance 
under this section shall— 
"(1) in the case of early childhood development programs, 
consist of services that are not intended to serve as a substitute 
for a compulsory academic programs but that are intended to 
provide an environment that enhances the educational, social, 
cultural, emotional, and recreational development of children; 
and 
"(2) in the case of before- and after-school child care pro-
grams— 
"(A) be provided Monday through Friday, including 
school holidays and vacation periods other than legal public 
holidays, to children attending early childhood develop-
ment programs, kindergarten, or elementary or secondary 
school classes during such times of the day and on such 
104 STAT. 1388-242 
PUBLIC LAW 101-508—NOV. 5,1990 
days that regular instructional services are not in session; 
and 
"(B) not be intended to extend or replace the regular 
academic program. 
"(c) PRIORITY FOR ASSISTANCE.—In awarding grants and contracts 
under this section, the State shall give the highest priority to 
geographic areas within the State that are eligible to receive grants 
under section 1006 of the Elementary and Secondary EJducation Act 
of 1965, and shall then give priority to— 
"(1) any other areas with concentrations of poverty; and 
"(2) any areas with very high or very low population densities. 
42USC9858g. 
"SEC. 6581. ADMINISTRATION AND ENFORCEMENT. 
"(a) ADMINISTRATION.—The Secretary shall— 
"(1) coordinate all activities of the Department of Health and 
Human Services relating to child care, and, to the maximum 
extent practicable, coordinate such activities with similar activi-
ties of other Federal entities; 
"(2) collect, publish and make available to the public a listing 
of State child care standards at least once every 3 years; and 
"(3) provide technical assistance to assist States to carry out 
this subchapter, including assistance on a reimbursable basis. 
"(b) ENFORCEMENT.— 
"(1) REVIEW OF COMPUANCE WITH STATE PLAN.—The Secretary 
shall review and monitor State compliance with this subchapter 
and the plan approved under section 658E(c) for the State, and 
shall have the power to terminate pa3anents to the State in 
accordance with paragraph (2). 
"(2) NONCOMPUANCE.— 
"(A) IN GENERAL.—If the Secretary, after reasonable 
notice to a State and opportunity for a hearing, finds that— 
"(i) there has been a failure by the State to comply 
substantially with any provision or requirement set 
forth in the plan approved under section 658E(c) for the 
State; or 
"(ii) in the operation of any program for which assist-
ance is provided under this subchapter there is a fail-
ure by the State to comply substantially with any 
provision of this subchapter; 
the Secretary shall notify the State of the finding and that 
no further pajmients may be made to such State under this 
subchapter (or, in the case of noncompliance in the oper-
ation of a program or activity, that no further payments to 
the State will be made with respect to such program or 
activity) until the Secretary is satisfied that there is no 
longer any such failure to comply or that the noncompli-
ance will be promptly corrected. 
"(B) ADDITIONAL SANCTIONS.—In the case of a finding of 
noncompliance made pursuant to subparagraph (A), the 
Secretary may, in addition to imposing the sanctions de-
scribed in such subparagraph, impose other appropriate 
sanctions, including recoupment of money improperly ex-
pended for purposes prohibited or not authorized by this 
subchapter, and disqualification from the receipt of finan-
cial assistance under this subchapter. 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-243 
"(C) NOTICE.—The notice required under subparagraph 
(A) shall include a specific identification of any additional 
sanction being imposed under subparagraph (B). 
"(3) ISSUANCE OF RULES.—The Secretary shall establish by 
rule procedures for— 
"(A) receiving, processing, and determining the validity of 
complaints concerning any failure of a State to comply with 
the State plan or any requirement of this subchapter; and 
"(B) imposing sanctions under this section. 
"SEC. 658J. PAYMENTS. 
42 USC 9858h. 
"(a) IN GENERAL.—Subject to the availability of appropriations, a 
State that has an application approved by the Secretary under 
section 658E(d) shall be entitled to a payment under this section for 
each fiscal year in an amount equal to its allotment under section 
6580 for such fiscal year. 
"(b) METHOD OP PAYMENT.— 
"(1) IN GENERAL.—Subject to paragraph (2), the Secretary may 
make payments to a State in installments, and in advance or by 
way of reimbursement, with necessary adjustments on account 
of overpayments or underpayments, as the Secretary may deter-
mine. 
"(2) LIMITATION.—The Secretary may not make such pay-
ments in a manner that prevents the State from complying with 
the requirement specified in section 658E(c)(3). 
"(c) SPENDING OF FUNDS BY STATE.—Payments to a State from the 
allotment under section 6580 for any fiscal year may be expended 
by the State in that fiscal year or in the succeeding fiscal year. 
"SEC. 658K. ANNUAL REPORT AND AUDITS. 
42 USC 98581. 
"(a) ANNUAL REPORT.—Not later than December 31, 1992, and 
annually thereafter, a State that receives sissistance under this 
subchapter shall prepare and submit to the Secretary a report— 
"(1) specifjdng the uses for which the State expended funds 
specified under paragraph (3) of section 658E(c) and the amount 
of funds expended for such uses; 
"(2) containing available data on the manner in which the 
child care needs of families in the State are being fulfilled, 
including information concerning— 
"(A) the number of children being assisted with funds 
provided under this subchapter, and under other Federal 
child care and pre-school programs; 
"(B) the type and number of child care programs, child 
care providers, caregivers, and support personnel located in 
the State; 
"(C) salaries and other compensation paid to full- and 
part-time staff who provide child care services; and 
"(D) activities in the State to encourage public-private 
partnerships that promote business involvement in meeting 
child care needs; 
"(3) describing the extent to which the affordability and 
availability of child care services heis increased; 
"(4) if applicable, describing, in either the first or second such 
report, the findings of the review of State licensing and regu-
latory requirements and policies described in section 658E(c), 
including a description of actions taken by the State in response 
to such reviews; 
104 STAT. 1388-244 
PUBLIC LAW 101-508—NOV. 5, 1990 
"(5) containing an explanation of any State action, in 
accordance with section 658E, to reduce the level of child care 
standards in the State, if applicable; and 
"(6) describing the standards and health and safety require-
ments applicable to child care providers in the State, including 
a description of State efforts to improve the quality of child 
care; 
during the period for which such report is required to be submitted. 
"(b) AUDITS.— 
"(1) REQUIREMENT.—A State shall, after the close of each 
program period covered by a ^° application approved under 
section 658E(d) audit its expenditures during such program 
period from amounts received under this subchapter. 
"(2) INDEPENDENT AUDITOR.—Audits under this subsection 
shall be conducted by an entity that is independent of emy 
agency administering activities that receive assistance under 
this subchapter and be in accordance with generally accepted 
auditing principles. 
"(3) SUBMISSION.—Not later than 30 days after the completion 
of an audit under this subsection, the State shall submit a copy 
of the audit to the legislature of the State and to the Secretary. 
"(4) REPAYMENT OF AMOUNTS.—Each State shall repay to the 
United States any amounts determined through an audit under 
this subsection not to have been expended in accordance with 
this subchapter, or the Secretary may offset such amounts 
against any other amount to which the State is or may be 
entitles under this subchapter. 
42 use 9858J. 
"SEC. 658L. REPORT BY SECRETARY. 
"Not later than July 31, 1993, and annually thereafter, the Sec-
retary shall prepare and submit to the Committee on Education and 
Labor of the House of Representatives and the Committee on Labor 
and Human Resources of the Senate a report that contains a 
summary and analysis of the data and information provided to the 
Secretary in the State reports submitted under section 658K. Such 
report shall include an assessment, and where appropriate, rec-
ommendations for the Congress concerning efforts that should be^ 
undertaken to improve the access of the public to quality and 
affordable child care in the United States. 
42 use 9858k. 
"SEC. 658M. LIMITATIONS ON USE OF FINANCIAL ASSISTANCE FOR CER-
TAIN PURPOSES. 
"(a) SECTARIAN PURPOSES AND ACTIVITIES.—No financial assist-
ance provided under this subchapter, pursuant to the choice of a 
parent under section 658E(c)(2)(A)(i)(I) or through any other grant or 
contract under the State plan, shall be expended for any sectarian 
purpose or activity, including sectarian worship or instruction. 
"(b) TUITION.—With regard to services provided to students en-
rolled in grades 1 through 12, no financial assistance provided under 
this subchapter shall be expended for— 
"(1) any services provided to such students during the regular 
school day; 
"(2) any services for which such students receive academic 
credit toward graduation; or 
"(3) any instructional services which supplant or duplicate 
the academic program of any public or private school. 
"" So in original. Probably should be "an" 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-245 
"SEC. 658N. NONDISCRIMINATION. 
42 USC 9858/. 
"(a) REUGIOUS NONDISCRIMINATION.— 
"(1) CONSTRUCTION.— 
"(A) IN GENERAL.—Except £is provided in subparagraph 
(B), nothing in this section shall be construed to modify or 
affect the provisions of any other Federal law or regulation 
that relates to discrimination in employment on the basis of 
religion. 
"(B) EXCEPTION.—A sectarian organization may require 
that employees adhere to the religious tenets and teachings 
of such organization, and such organization may require 
that employees adhere to rules forbidding the use of drugs 
or alcohol. 
"(2) DISCRIMINATION AGAINST CHILD.— 
"(A) IN GENERAL.—A child care provider (other than a 
family child care provider) that receives assistance under 
this subchapter shall not discriminate against any child on 
the basis of religion in providing child care services. 
"(B) NON-FUNDED CHILD CARE SLOTS.—Nothing in this sec-
tion shall prohibit a child care provider from selecting 
children for child care slots that are not funded directly 
with assistance provided under this subchapter because 
such children or their family members participate on a 
regular bsisis in other activities of the organization that 
owns or operates such provider. 
"(3) EMPLOYMENT IN GENERAL.— 
"(A) PROHIBITION.—A child care provider that receives 
assistance under this subchapter shall not discriminate in 
I 
employment on the basis of the religion of the prospective 
I 
employee if such employee's primary responsibility is or 
will be working directly with children in the provision of 
child care services. 
"(B) QUALIFIED APPLICANTS.—If two or more prospective 
employees are qualified for any position with a child care 
provider receiving assistance under this subchapter, noth-
ing in this section shall prohibit such child care provider 
from employing a prospective employee who is already 
participating on a regular basis in other activities of the 
organization that owns or operates such provider. 
"(C) PRESENT EMPLOYEES.—This paragraph shall not 
apply to employees of child care providers receiving assist-
ance under this subchapter if such employees are employed 
with the provider on the date of enactment of this sub-
chapter. 
"(4) EMPLOYMENT AND ADMISSION PRACTICES.—Notwithstand-
ing paragraphs (IXB), (2), and (3), if assistance provided under 
this subchapter, and any other Federal or State program, 
amounts to 80 percent or more of the operating budget of a child 
care provider that receives such assistance, the Secretary shall 
not permit such provider to receive any further assistance 
under this subchapter unless the grant or contract relating to 
the financial assistance, or the employment and admissions 
policies of the provider, specifically provides that no person with 
responsibilities in the operation of the child care program, 
project, or activity of the provider will discriminate against any 
individual in emplo3rment, if such employee's primary respon-
104 STAT. 1388-246 
PUBLIC LAW 101-508—NOV. 5, 1990 
sibility is or will be working directly with children in the 
provision of child care, or admissions because of the religion of 
such individual. 
"(b) EFFECT ON STATE LAW.—Nothing in this subchapter shall be 
construed to supersede or modify any provision of a State constitu-
tion or State law that prohibits the expenditure of public funds in or 
by sectarian institutions, except that no provision of a State con-
stitution or State law shall be construed to prohibit the expenditure 
in or by sectarian institutions of any Federal funds provided under 
this subchapter. 
42 u s e 9858m. 
"SEC. 6580. AMOUNTS RESERVED; ALLOTMENTS. 
"(a) AMOUNTS RESERVED.— 
"(1) TERRITORIES AND POSSESSIONS.—The Secretary shall re-
serve not to exceed one half of 1 perctent of the amount appro-
priated under this subchapter in each fiscal year for payments 
to Guam, American Samoa, the Virgin Islands of the United 
States, the Commonwealth of the Northern Mariana Islands, 
and the Trust Territory of the Pacific Islands to be allotted in 
accordance with their respective needs. 
"(2) INDIANS TRIBES.—The Secretary shall reserve not more 
than 3 percent of the amount appropriated under section 658B 
in each fiscal year for payments to Indian tribes and tribal 
organizations with applications approved under subsection (c). 
"(b) STATE ALLOTMENT.— 
"(1) GENERAL RULE.—From the amounts appropriated under 
section 658B for each fiscal year remaining after reservations 
under subsection (a), the Secretary shall allot to each State an 
amount equal to the sum o
f
— 
"(A) an amount that bears the same ratio to 50 percent of 
such remainder as the product of the young child factor of 
the State and the allotment percentage of the State bears to 
the sum of the corresponding products for all States; and 
"(B) an amount that bears the same ratio to 50 percent of 
such remainder as the product of the school lunch factor of 
the State and the allotment percentage of the State bears to 
the sum of the corresponding products for all States. 
"(2) YOUNG CHILD FACTOR.—The term 'young child factor' 
means the ratio of the number of children in the State under 5 
years of age to the number of such children in all States as 
provided by the most recent annual estimates of population in 
the States by the Census Bureau of the Department of Com-
merce. 
"(3) SCHOOL LUNCH FACTOR.—The term 'school lunch factor' 
means the ratio of the number of children in the State who are 
receiving free or reduced price lunches under the school lunch 
program established under the National School Lunch Act (42 
U.S.C. 1751 et seq.) to the number of such children in all the 
States as determined annually by the Department of Agri-
culture. 
"(4) ALLOTMENT PERCENTAGE.— 
"(A) IN GENERAL.—The allotment percentage for a State 
is determined by dividing the per capita income of all 
individuals in the United States, by the per capita income 
of all individuals in the State. 
"(B) LIMITATIONS.—If an allotment percentage deter-
mined under subparagraph (A)— 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-247 
"(i) exceeds 1.2 percent, then the allotment percent-
age of that State shall be considered to be 1.2 percent; 
and 
"(ii) is less than 0.8 percent, then the allotment 
percentage of the State shall be considered to be 0.8 
percent. 
"(C) PER CAPITA INCOME.—For purposes of subparagraph 
(A), per capita income shall be— 
"(i) determined at 2-year intervals; 
"(ii) applied for the 2-year period beginning on Octo-
ber 1 of the first fiscal year beginning on the date such 
determination is made; and 
"(iii) equal to the average of the annual per capita 
incomes for the most recent period of 3 consecutive 
years for which satisfactory data are available from the 
Department of Commerce at the time such determina-
tion is made. 
"(c) PAYMENTS FOR THE BENEFIT OF INDIAN CHILDREN.— 
"(1) GENERAL AUTHORITY.—From amounts reserved under 
subsection (aX2), the Secretary may make grants to or enter into 
contracts with Indian tribes or tribal organizations that submit 
applications under this section, for the planning and carrying 
out of programs or activities consistent with the purposes of this 
subchapter. 
"(2) APPUCATIONS AND REQUIREMENTS.—An application for a 
grant or contract under this section shall provide that: 
"(A) COORDINATION.—The applicant will coordinate, to 
the maximum extent feasible, with the lead gigency in the 
State or States in which the applicant will carry out pro-
grams or activities under this section. 
"(B) SERVICES ON RESERVATIONS.—In the case of an ap-
plicant located in a State other than Alaska, California, or 
Oklahoma, programs and activities under this section will 
be carried out on the Indian reservation for the benefit of 
Indian children. 
"(C) REPORTS AND AUDITS.—The applicant will make such 
reports on, and conduct such audits of, programs and activi-
ties under a grant or contract under this section as the 
Secretary may require. 
"(3) CONSIDERATION OF SECRETARIAL APPROVAL.—In determin-
ing whether to approve an application for a grant or contract 
under this section, the Secretary shall take into consideration— 
"(A) the availability of child care services provided in 
accordance with this subchapter by the Slate or States in 
which the applicant proposes to carry out a program to 
provide child care services; and 
"(B) whether the applicant has the ability (including 
skills, personnel, resources, community support, and other 
necessary components) to satisfactorily carry out the pro-
posed program or activity. 
"(4) THREE-YEAR UMIT.—Grants or contracts under this sec-
tion shall be for periods not to exceed 3 years. 
"(5) DUAL EUGIBILITY OF INDIAN CHILDREN.—The awarding of 
a grant or contract under this section for programs or activities 
to be conducted in a State or States shall not affect the eligi-
bility of any Indian child to receive services provided or to 
104 STAT. 1388-248 
PUBLIC LAW 101-508—NOV. 5, 1990 
participate in programs and activities carried our ^ ^ under a 
grant to the State or States under this subchapter. 
"(d) DATA AND INFORMATION.—The Secretary shall obtain from 
each appropriate Federal agency, the most recent data and informa-
tion necessary to determine the allotments provided for in 
subsection (b). 
"(e) REALLOTMENTS.— 
"(1) IN GENERAL.—Any portion of the allotment under subsec-
tion (b) to a State that the Secretary determines is not required 
to carry out a State plan approved under section 658E(d), in the 
period for which the allotment is made available, shall be 
reallotted by the Secretary to other States in proportion to the 
original allotments to the other States. 
"(2) LIMITATIONS.— 
"(A) REDUCTION.—The amount of any reallotment to 
which a State is entitled to under paragraph (1) shall be 
reduced to the extent that it exceeds the amount that the 
Secretary estimates will be used in the State to carry out a 
State plan approved under section 658E(d). 
"(B) REALLOTMENTS.—The amount of such reduction shall 
be similarly reallotted among States for which no reduction 
in an allotment or reallotment is required by this sub-
section. 
"(3) AMOUNTS REALLOTTED.—For purposes of any other section 
of this subchapter, any amount reallotted to a State under this 
subsection shall be considered to be part of the allotment made 
under subsection (b) to the State. 
"(f) DEFINITION.—For the purposes of this section, the term 'State' 
includes only the 50 States, the District of Columbia, and the 
Commonwealth of Puerto Rico. 
42 u s e 9858n. 
"SEC. 658P. DEFINITIONS. 
"As used in this subchapter: 
"(1) CAREGIVER.—The term 'caregiver' means an individual 
who provides a service directly to an eligible child on a person-
to-person basis. 
"(2) CHILD CARE CERTIFICATE.—The term 'child care certificate' 
means a certificate (that may be a check or other disbursement) 
that is issued by a State or local government under this sub-
chapter directly to a parent who may use such certificate only 
as payment for child care services. Nothing in this subchapter 
shall preclude the use of such certificates for sectarian child 
care services if freely chosen by the parent. For purposes of this 
subchapter, child care certificates shall not be considered to be 
grants or contracts. 
"(3) ELEMENTARY SCHOOL.—The term 'elementary school' 
means a day or residential school that provides elementary 
education, as determined under State law. 
"(4) ELIGIBLE CHILD.—The term 'eligible child' means an 
individual— 
"(A) who is less than 13 years of age; 
"(B) whose family income does not exceed 75 percent of 
the State median income for a family of the same size; and 
"(C) who— 
"(i) resides with a parent or parents who are working 
or attending a job training or educational program; or 
** So in original. Probably should be "out" 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-249 
"(ii) is receiving, or needs to receive, protective serv-
ices and resides with a parent or parents not described 
in clause (i). 
"(5) ELIGIBLE CHILD CARE PROVIDER.—The term 'ehgible child 
care provider' means— 
"(A) a center-based child care provider, a group home 
child care provider, a family child care provider, or other 
provider of child care services for compensation that— 
"(i) is licensed, regulated, or registered under State 
law as described in section 658E(c)(2)(E); and 
"(ii) satisfies the State and local requirements, 
including those referred to in section 658E(c)(2)(F); 
applicable to the child care services it provides; or 
"(B) a child care provider that is 18 years of age or older 
who provides child care services only to eligible children 
who are, by affinity or consanguinity, or by court decree, 
the grandchild, niece, or nephew of such provider, if such 
provider is registered and complies with any State require-
ments that govern child care provided by the relative in-
volved. 
"(6) FAMILY CHILD CARE PROVIDER.—The term 'family child 
care provider' means one individual who provides child care 
services for fewer than 24 hours per day, as the sole caregiver, 
and in a private residence. 
"(1) INDIAN TRIBE.—The term 'Indian tribe' has the meaning 
given it in section 4(b) of the Indian Self-Determination and 
Education Assistance Act (25 U.S.C. 450b(b)). 
"(8) LEAD AGENCY.—The term 'lead agency' means the agency 
designated under section 658B(a). 
"(9) PARENT.—The term 'parent' includes a legal guardian or 
other person standing in loco parentis. 
"(10) SECONDARY SCHOOL.—The term 'secondary school' means 
a day or residential school which provides secondary education, 
as determined under State law. 
"(11) SECRETARY.—The term 'Secretary' means the Secretary 
of Health and Human Services unless the context specifies 
otherwise. 
"(12) SLIDING FEE SCALE.—The term 'sliding fee scale' means a 
system of cost sharing by a family based on income and size of 
the family. 
"(13) STATE.—The term 'State' means any of the several 
States, the District of Columbia, the Virgin Islands of the 
United States, the Commonwealth of Puerto Rico, Guam, Amer-
ican Samoa, the Commonwealth of the Northern Mariana Is-
lands, and the Trust Territory of the Pacific Islands. 
"(14) TRIBAL ORGANIZATION.—The term 'tribal organization' 
has the meaning given it in section 4(c) of the Indian Self-
Determination and Education Assistance Act (25 U.S.C. 450b(c)). 
"SEC. 658Q. PARENTAL RIGHTS AND RESPONSIBILITIES. 
42 USC 9858o. 
"Nothing in this subchapter shall be construed or applied in any 
manner to infringe on or usurp the moral and legal rights and 
responsibilities of parents or legal guardians. 
"SEC. 658R. SEVERABILITY. 
42 USC 9858p. 
"If any provision of this subchapter or the application thereof to 
any person or circumstance is held invalid, the invalidity shall not 
104 STAT. 1388-250 
PUBLIC LAW 101-508—NOV. 5, 1990 
affect other provisions of applications of this subchapter which can 
be given effect without regard to the invalid provision or applica-
tion, and to this end the provisions of this subchapter shall be 
severable.". 
SUBTITLE B—OLD-AGE, SURVIVORS, AND DISABIUTY INSURANCE 
SEC. 5100. TABLE OF CONTENTS. 
Sec. 5100. Table of contents. 
Sec. 5101. Amendment of the Social Security Act. 
Sec. 5102. Continuation of disability benefits during appeal. 
Sec. 5103. Repeal of special disability standard for widows and widowers. 
Sec. 5104. Dependency requirements applicable to a child adopted by a surviving 
spouse. 
Sec. 5105. Representative payee reforms. 
Sec. 5106. Fees for representation of claimants in administrative proceedings. 
Sec. 5107. Applicability of administrative res judicata; related notice requirements. 
Sec. 5108. Demonstration projects relating to accountability for telephone service 
center communications. 
Sec. 5109. Notice requirements. 
Sec. 5110. Telephone access to the Social Security Administration. 
Sec. 5111. Amendments relating to social security account statements. 
Sec. 5112. Trial work period during rolling five-year period for all disabled benefici-
aries. 
Sec. 5113. Continuation of benefits on account of participation in a non-state voca-
tional rehabilitation program. 
Sec. 5114. Limitation on new entitlement to special age-72 pajmients. 
Sec. 5115. Elimination of advanced crediting to the trust funds of social security 
payroll tfixes. 
Sec. 5116. Elimination of eligibility for retroactive benefits for certain individuals 
eligible for reduced benefits 
Sec. 5117. Consolidation of old methods of computing primary insurance amounts. 
Sec. 5118. Suspension of dependent's benefits when the worker is in an extended 
period of eligibility. 
Sec. 5119. Entitlement to benefits of deemed spouse and legal spouse. 
Sec. 5120. Vocational rehabilitation demonstration projects. 
Sec. 5121. Exemption for certain aliens, receiving amnesty under the Immigration 
and Nationality Act, from prosecution for misreporting of earnings or 
misuse of social security account numbers or social security cards. 
Sec. 5122. Reduction of amount of wages needed to earn a year of coverage applica-
ble in determining special minimum primary insurance amount. 
Sec. 5123. Charging of earnings of corporate directors. 
Sec. 5124. Collection of employee social security and railroad retirement taxes on 
taxable group-term life insurance provided to retirees. 
Sec. 5125. Tier 1 railroad retirement tax rates explicitly determined by reference to 
social security taxes. 
Sec. 5126. Transfer to railroad retirement account. 
Sec. 5127. Waiver of 2-year waiting period for independent entitlement to divorced 
spouse's benefits. 
Sec. 5128. Modification of the preeffectuation review requirement applicable to dis-
ability insurance cases. 
Sec. 5129. Recovery of OASDI overpayments by means of reduction in tax refunds. 
Sec. 5130. Miscellaneous technical corrections. 
SEC. 5101. AMENDMENT OF THE SOCIAL SECURITY ACT. 
Except as otherwise expressly provided, whenever in this subtitle 
an amendment or repeal is expressed in terms of an amendment to, 
or repeal of, a section or other provision, the reference shall be 
considered to be made to a section or other provision of the Social 
Security Act. 
SEC. 5102. CONTINUATION OF DISABILITY BENEFITS DURING APPEAL. 
Subsection (g) of section 223 (42 U.S.C. 423(g)) is amended— 
(1) in paragraph (1), in the matter following subparagraph (C), 
by inserting "or" after "hearing,", and by striking "pending, or 
(iii) June 1991." and inserting "pending."; and 
(2) by striking paragraph (3). 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-251 
SEC. 5103. REPEAL OF SPECIAL DISABILITY STANDARD FOR WIDOWS 
AND WIDOWERS. 
(a) IN GENERAL.—Section 223(d)(2) (42 U.S.C. 423(d)(2)) is 
amended— 
(1) in subparagraph (A), by striking "(except a widow, surviv-
ing divorced wife, widower, or surviving divorced husband for 
purposes of section 202(e) or (f))"; 
(2) by striking subparagraph (B); and 
(3) by redesignating subparagraph (C) as subparagraph (B). 
(b) CONFORMING AMENDMENTS.— 
(1) The third sentence of section 216(i)(l) (42 U.S.C. 416(i)(l)) is 
amended by striking "(2)(C)" and inserting "(2)(B)". 
(2) Section 223(f)(1)(B) (42 U.S.C. 423(f)(1)(B)) is amended to 
read as follows: 
"(B) the individual is now able to engage in substantial 
gainful activity; or". 
(3) Section 223(f)(2)(A)(ii) (42 U.S.C. 423(f)(2)(A)(ii)) is amended 
to read as follows: 
"(ii) the individual is now able to engage in substan-
tial gainful activity, or". 
(4) Section 223(f)(3) (42 U.S.C. 423(f)(3)) is amended by striking 
"therefore—" and all that follows and inserting "therefore the 
individual is able to engage in substantial gainful activity; or". 
(5) Section 223(f) is further amended, in the matter following 
paragraph (4), by striking "(or gainful activity in the case of a 
widow, surviving divorced wife, widower, or surviving divorced 
husband)" each place it appears. 
(c) TRANSITIONAL RULES RELATING TO MEDICAID AND MEDICARE 
ELIGIBIUTY.— 
(1) DETERMINATION OF MEDICAID ELIGIBILITY.—Section 1634(d) 
(42 U.S.C. 1383c(d)) is amended— 
(A) by redesignating paragraphs (1) and (2) as subpara-
graphs (A) and (B), respectively; 
(B) by striking "(d) If any person—" and inserting 
"(d)(1) This subsection applies with respect to any person 
who—"; 
(C) in subparagraph (A) (as redesignated), by striking "as 
required" and all that follows through "but not entitled" 
and inserting "being then not entitled '; 
(D) in subparagraph (B) (as redesignated), by striking 
"section 1616(a)," and inserting "section 1616(a) (or pay-
ments of the type described in section 212(a) of Public Law 
93-66)."; and 
(E) by striking "such person shall" and all that follows 
and inserting the following new paragraph: 
"(2) For purposes of title XIX, each person with respect to whom 
this subsection applies— 
"(A) shall be deemed to be a recipient of supplemental secu-
rity income benefits under this title if such person received such 
a benefit for the month before the month in which such person 
began to receive a benefit described in paragraph (1)(A), and 
"(B) shall be deemed to be a recipient of State supplementary 
payments of the type referred to in section 1616(a) of this Act (or 
payments of the type described in section 212(a) of Public Law 
93-66) if such person received such a payment for the month 
104 STAT. 1388-252 
PUBLIC LAW 101-508—NOV. 5, 1990 
before the month in which such person began to receive a 
benefit described in paragraph (1)(A), 
for so long as such person (i) would be eligible for such supplemental 
security income benefits, or such State supplementary payments (or 
payments of the type described in section 212(a) of Public Law 
93-66), in the absence of benefits described in paragraph (1)(A), and 
(ii) is not entitled to hospital insurance benefits under part A of title 
XVIII.". 
(2) INCLUSION OF MONTHS OF SSI ELIGIBIUTY WITHIN 5-MONTH 
DISABILITY WAITING PERIOD AND 24-MONTH MEDICARE WAITING 
PERIOD.— 
(A) 
WIDOW'S 
BENEFITS BASED ON DISABIUTY.—Section 
202(e)(5) (42 U.S.C. 402(e)(5)) is amended— 
(i) in subparagraph (B), by striking "(i)" and "(ii)" 
and inserting "(I)" and "(II)", respectively; 
(ii) by redesignating subparagraphs (A) and (B) as 
clauses (i) and (ii), respectively; 
(iii) by inserting "(A)" after "(5)"; and 
(iv) by adding at the end the following new subpara-
graph: 
"(B) For purposes of paragraph (l)(F)(i), each month in the period 
commencing with the first month for which such widow or surviving 
divorced wife is first eligible for supplemental security income 
benefits under title XVI, or State supplementary payments of the 
type referred to in section 1616(a) (or payments of the type described 
in section 212(a) of Public Law 93-66) which are paid by the Sec-
retary under an agreement referred to in section 1616(a) (or in 
section 212(b) of Public Law 93-66), shall be included as one of the 
months of such waiting period for which the requirements of 
subparagraph (A) have been met.". 
(B) WIDOWER'S BENEFITS BASED ON DISABILITY.—Section 
202(f)(6) (42 U.S.C. 402(f)(6)) is amended— 
(i) in subparagraph (B), by striking "(i)" and "(ii)" 
and inserting "(I)" and "(II)", respectively; 
(ii) by redesignating subparagraphs (A) and (B) as 
clauses (i) and (ii), respectively; 
(iii) by inserting "(A)" after "(6)"; and 
(iv) by adding at the end the following new subpara-
graph: 
"(B) For purposes of paragraph (l)(F)(i), each month in the period 
commencing with the first month for which such widower or surviv-
ing divorced husband is first eligible for supplemental security 
income benefits under title XVI, or State supplementary payments 
of the type referred to in section 1616(a) (or payments of the type 
described in section 212(a) of Public Law 93-66) which are paid by 
the Secretary under an agreement referred to in section 1616(a) (or 
in section 212(b) of Public Law 93-66), shall be included as one of the 
months of such waiting period for which the requirements of 
subparagraph (A) have been met.". 
(C) MEDICARE BENEFITS.—Section 226(e)(1) (42 U.S.C. 
426(e)(1)) is amended— 
(i) by redesignating subparagraphs (A) and (B) as 
clauses (i) and (ii), respectively; 
(ii) by inserting "(A)" after "(e)(1)"; and 
(iii) by adding at the end the following new subpara-
graph: 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-253 
"(B) For purposes of subsection (bX2XA)(iii), each month in the 
period commencing with the first month for which an individual is 
first eligible for supplemental security income benefits under title 
XVI, or State supplementary payments of the type referred to in 
section 1616(a) of this Act (or pa5niients of the type described in 
section 212(a) of Public Law 93-66) which are paid by the Secretary 
under an agreement referred to in section 1616(a) (or in section 
212(b) of Public Law 93-66), shall be included as one of the 24 
months for which such individual must have been entitled to 
widow's or widower's insurance benefits on the bsisis of disability in 
order to become entitled to hospital insurance benefits on that 
basis.". 
(d) DEEMED DISABIUTY FOR PURPOSES OF ENTITLEMENT TO WIDOW'S 
AND WIDOWER'S INSURANCE BENEFITS FOR WIDOWS AND WIDOWERS 
ON SSI ROLLS.— 
(1) WIDOW'S INSURANCE BENEFITS.—Section 202(e) (42 U.S.C. 
402(e)) is amended by adding at the end the following new 
paragraph: 
"(9) An individual shall be deemed to be under a disability for 
purposes of paragraph (l)(B)(ii) if such individual is eligible for 
supplemental security income benefits under title XVI, or State 
supplementary payments of the type referred to in section 1616(a) 
(or payments of the type described in section 212(a) of Public Law 
93-66) which are paid by the Secretary under an agreement referred 
to in section 1616(a) (or in section 212(b) of Public Law 93-66), for the 
month for which all requirements of paragraph (1) for entitlement 
to benefits under this subsection (other than being under a disabil-
ity) are met.". 
(2) WIDOWER'S INSURANCE BENEFITS.—Section 202(f) (42 U.S.C. 
402(f)) is amended by adding at the end the following new 
paragraph: 
"(9) An individual shall be deemed to be under a disability for 
purposes of paragraph (l)(BXii) if such individual is eligible for 
supplemental security income benefits under title XVI, or State 
supplementary payments of the type referred to in section 1616(a) 
(or payments of the type described in section 212(a) of Public Law 
93-66) which are paid by the Secretary under an agreement referred 
to in such section 1616(a) (or in section 212(b) of Public Law 93-66), 
for the month for which all requirements of paragraph (1) for 
entitlement to benefits under this subsection (other than being 
under a disability) are met.". 
(e) EFFECTIVE DATE.— 
42 USC 402 note. 
(1) IN GENERAL.—The amendments made by this section 
(other than paragraphs (1) and (2XC) of subsection (c)) shall 
apply with respect to monthly insurance benefits for months 
after December 1990 for which applications are filed on or after 
January 1, 1991, or are pending on such date. The amendments 
made by subsection (cXD shall apply with respect to medical 
assistance provided aiPter December 1990. The amendments 
made by subsection (c)(2)(C) shall apply with respect to items 
and services furnished after December 1990. 
(2) APPLICATION REQUIREMENTS FOR CERTAIN INDIVIDUALS ON 
BENEFIT ROLLS.—In the case of any individual who— 
(A) is entitled to disability insurance benefits under sec-
tion 223 of the Social Security Act for December 1990 or is 
eligible for supplemental security income benefits under 
title XVI of such Act, or State supplementary payments of 
104 STAT. 1388-254 
PUBLIC LAW 101-508—NOV. 5, 1990 
the t3rpe referred to in section 1616(a) of such Act (or 
payments of the type described in section 212(a) of Public 
Law 93-66) which are paid by the Secretary under an 
agreement referred to in such section 1616(a) (or in section 
212(b) of Public Law 93-66), for January 1991, 
(B) applied for widow's or widower s insurance benefits 
under subsection (e) or (f) of section 202 of the Social 
Security Act during 1990, and 
(C) is not entitled to such benefits under such subsection 
(e) or (f) for any month on the beusis of such application by 
reEison of the definition 
of disability under 
section 
223(dX2)(B) of the Social Security Act (as in effect imme-
diately before the date of the enactment of this Act), and 
would have been so entitled for such month on the basis of 
such application if the amendments made by this section 
had been applied with respect to such application, 
for purposes of determining such individual's entitlement to 
such benefits under subsection (e) or (f) of section 202 of the 
Social Security Act for months after December 1990, the 
requirement of paragraph (l)(C)(i) of such subsection shall be 
deemed to have been met. 
SEC. 5104. DEPENDENCY REQUIREMENTS APPLICABLE TO A CHILD 
ADOPTED BY A SURVIVING SPOUSE. 
(a) IN GENERAL.—Section 216(e) (42 U.S.C. 416(e)) is amended in 
the second sentence— 
(1) by striking "at the time of such individual's death living in 
such individual's household" and inserting "either living with 
or receiving at least one-half of his support from such individual 
at the time of such individual's death ; and 
(2) by striking "; except" and all that follows and inserting a 
period. 
42 use 416 note. 
(b) EFFECTIVE DATE.—The amendments made by this section shall 
apply with respect to benefits payable for months after December 
1990, but only on the basis of applications filed after December 31, 
1990. 
SEC. 
5
1
0
5
. 
REPRESENTATIVE 
PAYEE 
REFORMS. 
(a) IMPROVEMENTS IN THE REPRESENTATIVE PAYEE SELECTION AND 
RECRUITMENT PROCESS.— 
(1) AUTHORITY FOR CERTIFICATION OF PAYMENTS TO REPRESENT-
ATIVE PAYEES — 
(A) TITLE IL—Section 2050)(1) (42 U.S.C. 4050")) is 
amended to read as follows: 
"REPRESENTATIVE PAYEES 
"(jXD If the Secretary determines that the interest of any individ-
ual under this title would be served thereby, certification of pay-
ment of such individual's benefit under this title may be made, 
regardless of the legal competency or incompetency of the individ-
ual, either for direct payment to the individual, or for his or her use 
and benefit, to another individual, or an organization, with respect 
to whom the requirements of paragraph (2) have been met (herein-
after in this subsection referred to as the individual's 'representa-
tive payee'). If the Secretary or a court of competent jurisdiction 
determines that a representative payee has misused any individual's 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-255 
benefit paid to such representative payee pursuant to this subsec-
tion or section 1631(aX2), the Secretary shall promptly revoke 
certification for payment of benefits to such representative payee 
pursuant to this subsection and certify payment to an alternative 
representative payee or to the individual.". 
(B) TITLE XVL— 
(i) IN GENERAL.—Section 1631(aX2XA) (42 U.S.C. 
1383(aX2XA)) is amended to read as follows: 
"(AXi) Pajrments of the benefit of any individual may be made to 
any such individual or to the eligible spouse (if any) of such individ-
ual or partly to each. 
"(ii) Upon a determination by the Secretary that the interest of 
such individual would be served thereby, or in the ceise of any 
individual or eligible spouse referred to in section 1611(eX3XA), such 
payments shall be made, regardless of the legal competency or 
incompetency of the individual or eligible spouse, to another individ-
ual, or an organization, with respect to whom the requirements of 
subparagraph (B) have been met (in this paragraph referred to as 
such individual's 'representative payee') for the use and benefit of 
the individual or eligible spouse. 
"(iii) If the Secretary or a court of competent jurisdiction deter-
mines that the representative payee of an individual or eligible 
spouse has misused any benefits which have been paid to the 
representative payee pursuant to clause (ii) or section 205(jXl), the 
Secretary shall promptly terminate payment of benefits to the 
representative payee pursuant to this subparagraph, and provide for 
pajnnent of benefits to the individual or eligible spouse or to an 
alternative representative payee of the individual or eligible 
spouse.". 
(ii) CONFORMING AMENDMENTS.—Section 1631(aX2XC) 
(42 U.S.C. 1383(aX2XC)) is amended— 
(I) in clause (i), by striking "a person other than 
the individual or spouse entitled to such payment" 
and inserting "representative payee of an individ-
ual or spouse"; 
(II) in clauses (ii), (iii), and (iv), by striking "other 
person to whom such pa3mient is made" each place 
it appears and inserting "representative payee"; 
and 
(III) in clause (v)— 
(aa) by striking "person receiving payments 
on behalf of another" and inserting "rep-
resentative payee"; and 
(bb) by striking "person receiving such pay-
ments" and inserting "representative payee'. 
(2) PROCEDURE FOR SELECJTING REPRESENTATIVE PAYEES.— 
(A) IN GENERAL.— 
(i) TITLE II.—Section 205(jX2) (42 U.S.C. 405(jX2)) is 
amended to read as follows: 
"(2XA) Any certification made under paragraph (1) for payment of 
benefits to an individual's representative payee shall be made on the 
basis o
f
— 
"(i) an investigation by the Secretary of the person to serve as 
representative payee, which shall be conducted in advance of 
such certification and shall, to the extent practicable, include a 
face-to-face interview with such person, and 
104 STAT. 1388-256 
PUBLIC LAW 101-508—NOV. 5, 1990 
"(ii) adequate evidence that such certification is in the in-
terest of such individual (as determined by the Secretary in 
regulations). 
"(B)(i) As part of the investigation referred to in subparagraph 
(A)(i), the Secretary shall— 
"(I) require the person being investigated to submit docu-
mented proof of the identity of such person, unless information 
establishing such identity has been submitted with an applica-
tion for benefits under this title or title XVI, 
"(II) verify such person's social security account number (or 
employer identification number), 
"(III) determine whether such person has been convicted of a 
violation of section 208 or 1632, and 
"(IV) determine whether certification of payment of benefits 
to such person has been revoked pursuant to this subsection or 
payment of benefits to such person has been terminated pursu-
ant to section 1631(a)(2)(AXiii) by reason of misuse of funds paid 
as benefits under this title or title XVI. 
"(ii) The Secretary shall establish and maintain a centralized file, 
which shall be updated periodically and which shall be in a form 
which renders it readily retrievable by each servicing office of the 
Social Security Administration. Such file shall consist of— 
"(I) a list of the names and social security account numbers 
(or employer identification numbers) of all persons with respect 
to whom certification of payment of benefits has been revoked 
on or after January 1, 1991, pursuant to this subsection, or with 
respect to whom payment of benefits has been terminated on or 
after such date pursuant to section 1631(a)(2)(A)(iii), by reason of 
misuse of funds paid as benefits under this title or title XVI, 
and 
"(II) a list of the names and social security account numbers 
(or employer identification numbers) of all persons who have 
been convicted of a violation of section 208 or 1632. 
"(C)(i) Benefits of an individual may not be certified for payment 
to any other person pursuant to this subsection if— 
"(I) such person has previously been convicted as described in 
subparagraph (B)(i)(III), 
"(II) except as provided in clause (ii), certification of payment 
of benefits to such person under this subsection has previously 
been revoked as described in subparagraph (B)(i)(IV), or pay-
ment 
of benefits 
to such 
person 
pursuant 
to 
section 
1631(a)(2)(AXii) has previously been terminated as described in 
section 1631(a)(2)(B)(ii)(IV), or 
"(III) except as provided in clause (iii), such person is a 
creditor of such individual who provides such individual with 
goods or services for consideration. 
"(ii) The Secretary shall prescribe regulations under which the 
Secretary may grant exemptions to any person from the provisions 
of clause (iXII) on a case-by-case basis if such exemption is in the best 
interest of the individual whose benefits would be paid to such 
person pursuant to this subsection. 
"(iii) Clause (i)(III) shall not apply with respect to any person who 
is a creditor referred to therein if such creditor is— 
"(I) a relative of such individual if such relative resides in the 
same household as such individual, 
"(II) a legal guardian or legal representative of such indi-
vidual. 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-257 
"(III) a facility that is licensed or certified as a care facility 
under the law of a State or a political subdivision of a State, 
"(IV) a person who is an administrator, owner, or employee of 
a facility referred to in subclause (III) if such individual resides 
in such facility, and the certification of payment to such facility 
or such person is made only after good faith efforts have been 
made by the local servicing office of the Social Security 
Administration to locate an alternative representative payee to 
whom such certification of payment would serve the best in-
terests of such individual, or 
"(V) an individual who is determined by the Secretary, on the 
basis of written findings and under procedures which the Sec-
retary shall prescribe by regulation, to be acceptable to serve as 
a representative payee. 
"(iv) The procedures referred to in clause (iii)(V) shall require the 
individual who will serve as representative payee to establish, to the 
satisfaction of the Secretary, that— 
"(I) such individual poses no risk to the beneficiary, 
"(II) the financial relationship of such individual to the bene-
ficiary poses no substantial conflict of interest, and 
"(III) no other more suitable representative payee can be 
found. 
"(D)(i) Subject to clause (ii), if the Secretary makes a determina-
tion described in the first sentence of paragraph (1) with respect to 
any individual's benefit and determines that direct payment of the 
benefit to the individual would cause substantial harm to the 
individual, the Secretary may defer (in the case of initial entitle-
ment) or suspend (in the case of existing entitlement) direct pay-
ment of such benefit to the individual, until such time as the 
selection of a representative payee is made pursuant to this sub-
section. 
"(ii)(I) Except as provided in subclause (II), any deferral or suspen-
sion of direct payment of a benefit pursuant to clause (i) shall be for 
a period of not more than 1 month. 
"(II) Subclause (I) shall not apply in any case in which the 
individual is, as of the date of the Secretary's determination, legally 
incompetent or under the age of 15. 
"(iii) Payment pursuant to this subsection of any benefits which 
are deferred or suspended pending the selection of a representative 
payee shall be made to the individual or the representative payee as 
a single sum or over such period of time as the Secretary determines 
is in the best interest of the individual entitled to such benefits. 
"(E)(i) Any individual who is dissatisfied with a determination by 
the Secretary to certify payment of such individual's benefit to a 
representative payee under paragraph (1) or with the designation of 
a particular person to serve as representative payee shall be entitled 
to a hearing by the Secretary to the same extent as is provided in 
subsection (b), and to judicial review of the Secretary's final decision 
as is provided in subsection (g). 
"(ii) In advance of the certification of payment of an individual's 
benefit to a representative payee under paragraph (1), the Secretary 
shall provide written notice of the Secretary s initial determination 
to certify such payment. Such notice shall be provided to such 
individual, except that, if such individual— 
"(I) is under the age of 15, 
"(II) is an unemancipated minor under the age of 18, or 
"(III) is legally incompetent. 
104 STAT. 1388-258 
PUBLIC LAW 101-508—NOV. 5, 1990 
then such notice shall be provided solely to the legal guardian or 
legal representative of such individual. 
"(iii) Any notice described in clause (ii) shall be clearly written in 
language that is easily understandable to the reader, shall identify 
the person to be designated as such individual's representative 
payee, and shall explain to the reader the right under clause (i) of 
such individual or of such individual's legal guardian or legal 
representative— 
"(I) to appeal a determination that a representative payee is 
necessary for such individual, 
"(II) to appeal the designation of a particular person to serve 
as the representative payee of such individual, and 
"(III) to review the evidence upon which such designation is 
based and submit additional evidence.". 
(ii) 
TITLE 
XVL—Section 
1631(a)(2)(B) 
(42 
U.S.C. 
1383(a)(2)(B)) is amended to read as follows: 
"(B)(i) Any determination made under subparagraph (A) for pay-
ment of benefits to the representative payee of an individual or 
eligible spouse shall be made on the basis of— 
"(I) an investigation by the Secretary of the person to serve as 
representative payee, which shall be conducted in advance of 
such payment, and shall, to the extent practicable, include a 
face-to-face interview with such person; and 
"(II) adequate evidence that such payment is in the interest of 
the individual or eligible spouse (as determined by the Secretary 
in regulations), 
"(ii) As part of the investigation referred to in clause (i)(I), the 
Secretary shall— 
"(I) require the person being investigated to submit docu-
mented proof of the identity of such person, unless information 
establishing such identity was submitted with an application for 
benefits under title II or this title; 
"(II) verify the social security account number (or employer 
identification number) of such person; 
"(III) determine whether such person has been convicted of a 
violation of section 208 or 1632; and 
"(IV) determine whether payment of benefits to such person 
has been terminated pursuant to subparagraph (A)(iii), and 
whether certification of pa3rment of benefits to such person has 
been revoked pursuant to section 205CJ), by reason of misuse of 
funds paid as benefits under title II or this title, 
"(iii) Benefits of an individual may not be paid to any other person 
pursuant to subparagraph (AXii) if— 
"(I) such person has previously been convicted as described in 
clause (iiXIII); 
"(II) except as provided in clause (iv), payment of benefits to 
such person pursuant to subparagraph (A)(ii) has previously 
been terminated as described in clause (ii)(IV), or certification of 
payment of benefits to such person under section 205(j) has 
previously 
been 
revoked 
as 
described 
in 
section 
2050)(2)(B)(i)(IV); or 
"(III) except as provided in clause (v), such person is a creditor 
of such individual who provides such individual with goods or 
services for consideration. 
"(iv) The Secretary shall prescribe regulations under which the 
Secretary may grant an exemption from clause (iii)(II) to any person 
on a case-by-case basis if such exemption would be in the best 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-259 
interest of the individual or eligible spouse whose benefits under 
this title would be paid to such person pursuant to subparagraph 
(AXii). 
"(v) Clause (iiiXIII) shall not apply with respect to any person who 
is a creditor referred to therein if such creditor is— 
"(I) a relative of such individual if such relative resides in the 
same household as such individual; 
"(ID a legal guardian or legal representative of such indi-
vidual; 
"(III) a facility that is licensed or certified as a care facility 
under the law of a State or a political subdivision of a State; 
"(IV) a person who is an administrator, owner, or employee of 
a facility referred to in subclause (III) if such individual resides 
in such facility, and the payment of benefits under this title to 
such facility or such person is made only after good faith efforts 
have been made by the local servicing office of the Social 
Security Administration to locate an alternative representative 
payee to whom the payment of such benefits would serve the 
best interests of such individual; or 
"(V) an individual who is determined by the Secretary, on the 
basis of written findings and under procedures which the Sec-
retary shall prescribe by regulation, to be acceptable to serve as 
a representative payee. 
"(vi) The procedures referred to in clause (v)(V) shall require the 
individual who will serve as representative payee to establish, to the 
satisfaction of the Secretary, that— 
"(I) such individual poses no risk to the beneficiary; 
"(II) the financial relationship of such individual to the bene-
ficiary poses no substantial conflict of interest; and 
"(III) no other more suitable representative payee can be 
found. 
"(vii) Subject to clause (viii), if the Secretary makes a determina-
tion described in subparagraph (A)(ii) with respect to any individ-
ual's benefit and determines that direct payment of the benefit to 
the individual would cause substantial harm to the individual, the 
Secretary may defer (in the case of initial entitlement) or suspend 
(in the case of existing entitlement) direct payment of such benefit 
to the individual, until such time as the selection of a representative 
payee is made pursuant to this subparagraph. 
"(viii)(I) Except as provided in subclause (II), any deferral or 
suspension of direct payment of a benefit pursuant to clause (vii) 
shall be for a period of not more than 1 month. 
"(II) Subclause (I) shall not apply in any case in which the 
individual or eligible spouse is, as of the date of the Secretary's 
determination, legally incompetent, under the age 15 years, or a 
drug addict or alcoholic referred to in section 1611(e)(3)(A). 
"(ix) Payment pursuant to this subparagraph of any benefits 
which are deferred or suspended pending the selection of a rep-
resentative payee shall be made to the individual, or to the rep-
resentative payee upon such selection, as a single sum or over such 
period of time as the Secretary determines is in the best interests of 
the individual entitled to such benefits. 
"(x) Any individual who is dissatisfied with a determination by 
the Secretary to pay such individual's benefits to a representative 
payee under this title, or with the designation of a particular person 
to serve as representative payee, shall be entitled to a hearing by 
104 STAT. 1388-260 
PUBLIC LAW 101-508—NOV. 5, 1990 
the Secretary, and to judicial review of the Secretary's final deci-
sion, to the same extent as is provided in subsection (c). 
"(xi) In advance of the first pa3mient of an individual's benefit to a 
representative payee under subparagraph (A)(ii), the Secretary shall 
provide written notice of the Secretary's initial determination to 
make any such pa3mient. Such notice shall be provided to such 
individual, except that, if such individual— 
"(I) is under the age of 15, 
"(II) is an unemancipated minor under the age of 18, or 
"(III) is legally incompetent, 
then such notice shall be provided solely to the legal guardian or 
legal representative of such individual. 
"(xii) Any notice described in clause (xi) shall be clearly written in 
language that is easily understandable to the reader, shall identify 
the person to be designated as such individual's representative 
payee, and shall explain to the reader the right under clause (x) of 
such individual or of such individual's legal guardian or legal 
representative— 
"(I) to appeal a determination that a representative payee is 
necessary for such individual, 
"(II) to appeal the designation of a particular person to serve 
as the representative payee of such individual, and 
"(III) to review the evidence upon which such designation is 
based and submit additional evidence.". 
42 u s e 405 note. 
(B) REPORT ON FEASIBIUTY OF OBTAINING READY ACCESS TO 
CERTAIN CRIMINAL FRAUD RECORDS.—As soon as practicable 
after the date of the enactment of this Act, the Secretary of 
Health and Human Services, in consultation with the 
Attorney General of the United States and the Secretary of 
the Treasury, shall study the feasibility of establishing and 
maintaining a current list, which would be readily avail-
able to local offices of the Social Security Administration 
for use in investigations undertaken pursuant to section 
2050X2) or 1631(aX2)(B) of the Social Security Act, of the 
names and social security account numbers of individuals 
who have been convicted of a violation of section 495 of title 
18, United States Code. The Secretary of Health and 
Human Services shall, not later than July 1, 1992, submit 
the results of such study, together with any recommenda-
tions, to the Committee on Ways and Means of the House of 
Representatives and the Committee on Finance of the 
Senate. 
(3) PROVISION FOR COMPENSATION OF QUAUFIED ORGANIZATIONS 
SERVING AS REPRESENTATIVE PAYEES.— 
(A) IN GENERAL.— 
(i) TITLE II.—Section 205(j) (42 U.S.C. 4050')) is 
amended by redesignating paragraph (4) as paragraph 
(5), and by inserting after paragraph (3) the following 
new paragraph: 
"(4XA) A qualified organization may collect from an individual a 
monthly fee for expenses (including overhead) incurred by such 
organization in providing services performed as such individual's 
representative payee pursuant to this subsection if such fee does not 
exceed the lesser of— 
"(i) 10 percent of the monthly benefit involved, or 
"(ii) $25.00 per month. 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-261 
Any agreement providing for a fee in excess of the amount per-
mitted under this subparagraph shall be void and shall be treated as 
misuse by such organization of such individual's benefits. 
"(B) For purposes of this paragraph, the term 'qualified organiza-
tion' means any community-based nonprofit social service agency 
which is bonded or licensed in each State in which it serves as a 
representative payee and which, in accordance with any applicable 
regulations of the Secretary— 
"(i) regularly provides services as the representative payee, 
pursuant to this subsection or section 1631(a)(2), concurrently to 
5 or more individuals, 
"(ii) demonstrates to the satisfaction of the Secretary that 
such agency is not otherwise a creditor of any such individual, 
and 
"(iii) was in existence on October 1,1988. 
The Secretary shall prescribe regulations under which the Secretary 
may grant an exception from clause (ii) for any individual on a case-
by-case basis if such exception is in the best interests of such 
individual. 
"(C) Any qualified organization which knowingly charges or col-
lects, directly or indirectly, any fee in excess of the maximum fee 
prescribed under subparagraph (A) or makes any agreement, di-
rectly or indirectly, to charge or collect any fee in excess of such 
maximum fee, shall be fined in accordance with title 18, United 
States Code, or imprisoned not more than 6 months, or both. 
"(D) This paragraph shall cease to be effective on July 1, 1994.". 
(ii) TITLE XVI.—Section 1631(a)(2) (42 U.S.C. 1383(a)(2)) 
is amended— 
(I) by 
redesignating 
subparagraph 
(D) 
as 
subparagraph (E); 
(III) ^2 by inserting after subparagraph (C) the 
following: 
"(D)(i) A qualified organization may collect from an individual a 
monthly fee for expenses (including overhead) incurred by such 
organization in providing services performed as such individual's 
representative payee pursuant to subparagraph (A)(ii) if the fee does 
not exceed the lesser o
f
— 
"(I) 10 percent of the monthly benefit involved, or 
"(II) $25.00 per month. 
Any agreement providing for a fee in excess of the amount per-
mitted under this clause shall be void and shall be treated as misuse 
by the organization of such individual's benefits. 
"(ii) For purposes of this subparagraph, the term 'qualified 
organization' means any community-based nonprofit social service 
agency which— 
"(I) is bonded or licensed in each State in which the agency 
serves as a representative payee; 
"(II) in accordance with any applicable regulations of the 
Secretary— 
"(aa) regularly provides services as a representative 
payee pursuant to subpareigraph (A)(ii) or section 205(j)(4) 
concurrently to 5 or more individuals; 
"(bb) demonstrates to the satisfaction of the Secretary 
that such agency is not otherwise a creditor of any such 
individual; and 
"(cc) was in existence on October 1,1988. 
*^ So in original. Probably should be "(II)". 
104 STAT. 1388-262 
PUBLIC LAW 101-508—NOV. 5,1990 
The Secretary shall prescribe regulations under which the Secretary 
may grant an exception from subclause (II)(bb) for any individual on 
a case-by-case basis if such exception is in the best interests of such 
individual. 
"(iii) Any qualified organization which knowingly charges or col-
lects, directly or indirectly, any fee in excess of the maximum fee 
prescribed under clause (i) or makes any agreement, directly or 
indirectly, to charge or collect any fee in excess of such maximum 
fee, shall be fined in accordance with title 18, United States Code, or 
imprisoned not more than 6 months, or both. 
"(iv) This subparagraph shall cease to be effective on July 1, 
1994.". 
42 u s e 405 note. 
(B) STUDIES AND REPORTS.— 
(i) REPORT BY SECRETARY OF HEALTH AND HUMAN SERV-
ICES.—Not later than January 1, 1993, the Secretary of 
Health and Human Services shall transmit a report to 
the Committee on Ways and Means of the House of 
Representatives and the Committee on Finance of the 
Senate setting forth the number and t3rpes of qualified 
organizations which have served as representative 
payees and have collected fees for such service pursu-
ant to any amendment made by subparagraph (A). 
(ii) REPORT BY COMPTROLLER GENERAL.—Not later 
than July 1, 1992, the Comptroller General of the 
United States shall conduct a study of the advantages 
and disadvantages of allowing qualified organizations 
serving as representative payees to charge fees pursu-
ant to the amendments made by subparagraph (A) and 
shall transmit a report to the Committee on Ways and 
Means of the House of Representatives and the 
Committee on Finance of the Senate setting forth the 
results of such study. 
42 use 405 note. 
(4) STUDY RELATING TO FEASIBILITY OF SCREENING OF INDIVID-
UALS WITH CRIMINAL RECORDS.—As soon as practicable after the 
date of the enactment of this Act, the Secretary of Health and 
Human Services shall conduct a study of the feasibility of 
determining the type of representative payee applicant most 
likely to have a felony or misdemeanor conviction, the suit-
ability of individuals with prior convictions to serve as rep-
resentative payees, and the circumstances under which such 
applicants could be allowed to serve as representative payees. 
The Secretary shall transmit the results of such study to the 
Committee on Ways and Means of the House of Representatives 
and the Committee on Finance of the Senate not later than 
July 1,1992. 
42 u s e 405 note. 
(5) EFFECTIVE DATES.— 
(A) USE AND SELECTION OF REPRESENTATIVE PAYEES.—The 
amendments made by paragraphs (1) and (2) shall take 
effect July 1, 1991, and shall apply only with respect to— 
(i) certifications of payment of benefits under title II 
of the Social Security Act to representative payees 
made on or after such date; and 
(ii) provisions for payment of benefits under title XVI 
of such Act to representative payees made on or after 
such date. 
(B) 
COMPENSATION OF 
REPRESENTATIVE PAYEES.—The 
amendments made by paragraph (3) shall take effect July 1, 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-263 
1991, and the Secretary of Health and Human Services 
shall prescribe initial regulations necessary to carry out 
such amendments not later than such date. 
(b) IMPROVEMENTS IN RECORDKEEPING AND AUDITING REQUIRE-
MENTS.— 
(1) IMPROVED ACCESS TO CERTAIN INFORMATION.— 
(A) IN GENERAL.—Section 205(jX3) (42 U.S.C. 605(j)(3)) is 42 USC 405. 
amended— 
(i) by striking subparagraph (B); 
(ii) by redesignating subparagraphs (C), (D), and (E) 
as subparsigraphs (B), (C), and (D), respectively; 
(iii) in subparagraph (D) (as so redesignated), by strik-
ing "(A), (B), (C), and (D)" and inserting "(A), (B), and 
(C)"; and 
(iv) by adding at the end the following new subpara-
graphs: 
"(E) The Secretary shall maintain a centralized file, which shall 
be updated periodically and which shall be in a form which will be 
readily retrievable by each servicing office of the Social Security 
Administration, of— 
"(i) the address and the social security account number (or 
employer identification number) of each representative payee 
who is receiving benefit payments pursuant to this subsection or 
section 1631(a)(2), and 
"(ii) the address and social security account number of each 
individual for whom each representative payee is reported to be 
providing services as representative payee pursuant to this 
subsection or section 1631(a)(2). 
"(F) Each servicing office of the Administration shall maintain a 
list, which shall be updated periodically, of public agencies and 
community-based nonprofit social service agencies which are quali-
fied to serve as representative payees pursuant to this subsection or 
section 1631(aX2) and which are located in the area served by such 
servicing office.". 
(B) EFFECTIVE DATE.—The amendments made by subpara- 42 USC 405 note, 
graph (A) shall take effect October 1, 1992, and the Sec-
retary of Health and Human Services shall take such 
actions as are necessary to ensure that the requirements of 
section 205(jX3XE) of the Social Security Act (as amended by 
subparagraph (A) of this paragraph) are satisfied as of such 
date. 
(2) STUDY RELATING TO MORE STRINGENT OVERSIGHT OF HIGH- 42 USC 405 note. 
RISK REPRESENTATIVE PAYEES.— 
(A) IN GENERAL.—As soon as practicable after the date of 
the enactment of this Act, the Secretary of Health and 
Human Services shall conduct a study of the need for a 
more stringent accounting system for high-risk representa-
tive payees than is otherwise generally provided under 
section 205(jX3) or 1631(aX2XC) of the Social Security Act, 
which would include such additional reporting require-
ments, record maintenance requirements, and other meas-
ures as the Secretary considers necessary to determine 
whether services are being appropriately provided by such 
payees in accordance with such sections 205(j) and 
1631(aX2). 
104 STAT. 1388-264 
PUBLIC LAW 101-508—NOV. 5, 1990 
(B) SPECIAL PROCEDURES.—In such study, the Secretary 
shall determine the appropriate means of implementing 
more stringent, statistically valid procedures for— 
(i) reviewing reports which would be submitted to the 
Secretary under any system described in subparagraph 
(A), and 
(ii) periodic, random audits of records which would be 
kept under such a system, 
in order to identify any instances in which high-risk rep-
resentative payees are misusing payments made pursuant 
to section 2050') or 1631(a)(2) of the Social Security Act. 
(C) HIGH-RISK REPRESENTATIVE PAYEE.—For purposes of 
this paragraph, the term "high-risk representative payee" 
means a representative payee under section 205(j) or 
1631(a)(2) of the Social Security Act (42 U.S.C. 405(j) and 
1383(a)(2), respectively) (other thkn a Federal or State 
institution) who— 
(i) regularly provides concurrent services as a rep-
resentative payee under such section 205(j), such sec-
tion 1631(a)(2), or both such sections, for 5 or more 
individuals who are unrelated to such representative 
payee, 
(ii) is neither related to an individual on whose behalf 
the payee is being paid benefits nor living in the same 
household with such individual, 
(iii) is a creditor of such individual; or 
(iv) is in such other category of payees as the Sec-
retary may determine appropriate. 
(D) REPORT.—The Secretary shall report to the Commit-
tee on Ways and Means of the House of Representatives 
and the Committee on Finance of the Senate the results of 
the study, together with any recommendations, not later 
than July 1, 1992. Such report shall include an evaluation 
of the feasibility and desirability of legislation implement-
ing stricter accounting and review procedures for high-risk 
representative payees in all servicing offices of the Social 
Security Administration (together with proposed legislative 
language). 
42 u s e 405 note. 
(3) DEMONSTRATION PROJECTS RELATING TO PROVISION OF 
INFORMATION TO LOCAL AGENCIES PROVIDING CHILD AND ADULT 
PROTECTIVE SERVICES.— 
(A) IN GENERAL.—As soon as practicable after the date of 
the enactment of this Act, the Secretary of Health and 
Human Services shall implement a demonstration project 
under this paragraph in all or part of not fewer than 2 
States. Under each such project, the Secretary shall enter 
into an agreement with the State in which the project is 
located to make readily available, for the duration of the 
project, to the appropriate State agency, a listing of 
addresses of multiple benefit recipients. 
(B) LISTING OF ADDRESSES OF MULTIPLE BENEFIT RECIPI-
ENTS.—The list referred to in subparagraph (A) shall consist 
of a current list setting forth each address within the State 
at which benefits under title II, benefits under title XVI, or 
any combination of such benefits are being received by 5 or 
more individuals. For purposes of this subparagraph, in the 
case of benefits under title II, all individuals receiving 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-265 
benefits on the basis of the wEiges and self-employment 
income of the same individual shall be counted as 1 indi-
vidual. 
(C) APPROPRIATE STATE AGENCY.—The appropriate State 
agency referred to in subparagraph (A) is the agency of the 
State which the Secretary determines is primarily respon-
sible for regulating care facilities operated in such State or 
providing for child and adult protective services in such 
State. 
(D) REPORT.—The Secretary shall report to the Commit-
tee on Ways and Means of the House of Representatives 
and the Committee on Finance of the Senate concerning 
such demonstration projects, together with any rec-
ommendations, not later than July 1, 1992. Such report 
shall include an evaluation of the feasibility and desirabil-
ity of legislation implementing the programs established 
pursuant to this paragraph on a permanent basis. 
(E) STATE.—For purposes of this paragraph, the term 
"State" means a State, including the entities included in 
such term by section 210(h) of the Social Security Act (42 
U.S.C. 410(h)). 
(c) RESTITUTION.— 
(1) TITLE IL—Section 205(j) (42 U.S.C. 405(j)) is amended by 
redesignating paragraph (5) (as so redesignated by subsection 
(a)(3)(A)(i) of this section) as paragraph (6) and by inserting after 
paragraph (4) (as added by subsection (a)(3)(A)(i)) the following 
new paragraph: 
"(5) In cases where the negligent failure of the Secretary to 
investigate or monitor a representative payee results in misuse of 
benefits by the representative payee, the Secretary shall certify for 
payment to the beneficiary or the beneficiary's alternative rep-
resentative payee an amount equal to such misused benefits. The 
Secretary shall make a good faith effort to obtain restitution from 
the terminated representative payee.". 
(2) TITLE XVI.—Section 1631(a)(2) (42 U.S.C. 1383(a)(2)) is 
amended by redesignating subparagraph (E) {as so redesignated 
by subsection (a)(3)(A)(ii)(I) of this section) as subparagraph (F) 
and by inserting after subparagraph (D) (as added by subsection 
(a)(3)(A)(i)(III)) the following new subparagraph: 
"(E) RESTITUTION.—In cases where the negligent failure of the 
Secretary to investigate or monitor a representative payee re-
sults in misuse of benefits by the representative payee, the 
Secretary shall make payment to the beneficiary or the 
beneficiary's representative payee of an amount equal to such 
misused benefits. The Secretary shall make a good faith effort 
to obtain restitution from the terminated 
representative 
payee.". 
(d) REPORTS TO THE CONGRESS.— 
(1) IN GENERAL.— 
(A) TITLE II.—Section 205(j)(5) (as so redesignated by 
subsection (c)(1) of this section) is amended to read as 
follows: 
"(5) The Secretary shall include as a part of the annual report 
required under section 704 information with respect to the im-
plementation of the preceding provisions of this subsection, includ-
ing the number of cases in which the representative payee was 
changed, the number of cases discovered where there has been a 
39-194 O - 91 - 22 : QL 3 Part 2 
104 STAT. 1388-266 
PUBLIC LAW 101-508—NOV. 5, 1990 
misuse of funds, how any such cases were dealt with by the Sec-
retary, the final disposition of such cases, including any criminal 
penalties imposed, and such other information as the Secretary 
determines to be appropriate.". 
(B) 
TITLE 
XVI.—Section 
1631(a)(2)(E) 
(42 
U.S.C. 
1383(aX2)(E)), as so redesignated by subsection (c)(2) of this 
section, is amended to read as follows: 
"(E) The Secretary shall include as a part of the annual report 
required under section 704 information with respect to the im-
plementation of the preceding provisions of this paragraph, 
including— 
"(i) the number of cases in which the representative payee 
was changed; 
"(ii) the number of cases discovered where there has been a 
misuse of funds; 
"(iii) how any such cases were dealt with by the Secretary; 
"(iv) the final disposition of such cases (including any criminal 
penalties imposed); and 
"(v) such other information as the Secretary determines to be 
appropriate.". 
42 use 405 note. 
(2) EFFECTIVE DATE.—The amendments made by paragraph (1) 
shall apply with respect to annual reports issued for years after 
1991. 
(3) FEASIBILITY STUDY REGARDING INVOLVEMENT OF DEPART-
MENT OF VETERANS AFFAIRS.—As soon as practicable after the 
date of the enactment of this Act, the Secretary of Health and 
Human Services, in cooperation with the Secretary of Veterans 
Affairs, shall conduct a study of the feasibility of designating 
the Department of Veterans Affairs as the lead agency for 
purposes of selecting, appointing, and monitoring representa-
tive payees for those individuals who receive benefits paid 
under title II or XVI of the Social Security Act and benefits paid 
by the Department of Veterans Affairs. Not later than 180 days 
after the date of the enactment of this Act, the Secretary of 
Health and Human Services shall transmit to the Committee on 
Ways and Means of the House of Representatives and the 
Committee on Finance of the Senate a report setting forth the 
results of such study, together with any recommendations. 
SEC. 5106. FEES FOR REPRESENTATION OF CLAIMANTS IN ADMINISTRA-
TIVE PROCEEDINGS. 
(a) IN GENERAL.— 
(1) TITLE IL—Subsection (a) of section 206 (42 U.S.C. 406(a)) is 
amended— 
(A) by inserting "(1)" after "(a)"; 
(B) in the fifth sentence, by striking "Whenever" and 
inserting "Except as provided in paragraph (2XA), when-
ever"; and 
(C) by striking the sixth sentence and all that follows 
through "Any person who" in the seventh sentence and 
inserting the following: 
"(2XA) In the case of a claim of entitlement to past-due benefits 
under this title, if— 
"(i) an agreement between the claimant and another person 
regarding any fee to be recovered by such person to compensate 
such person for services with respect to the claim is presented in 
PUBLIC LAW 101-508—NOV. 5,1990 
104 STAT. 1388-267 
writing to the Secretary prior to the time of the Secretary's 
determination regarding the claim, 
"(ii) the fee specified in the agreement does not exceed the 
lesser of— 
"(I) 25 percent of the total amount of such past-due 
benefits (as determined before any applicable reduction 
under section 1127(a)), or 
"(II) $4,000, and 
"(iii) the determination is favorable to the claimant, 
then the Secretary shall approve that agreement at the time of the 
favorable determination, and (subject to paragraph (3)) the fee speci-
fied in the agreement shall be the maximum fee. The Secretary may 
from time to time increase the dollar amount under clause (iiXII) to 
the extent that the rate of increase in such amount, as determined 
over the period since January 1, 1991, does not at any time exceed 
the rate of increase in primary insurance amounts under section 
215(i) since such date. The Secretary shall publish any such in-
creEised amount in the Federal Register. 
"(B) For purposes of this subsection, the term 'past-due benefits' 
excludes any benefits with respect to which pajnnent has been 
continued pursuEint to subsection (g) or (h) of section 223. 
"(C) In the case of a claim with respect to which the Secretary has 
approved an agreement pursuant to subparagraph (A), the Secretary 
shall provide the claimant and the person representing the claimant 
a written notice o
f
— 
"(i) the dollar amount of the past-due benefits (as determined 
before any applicable reduction under section 1127(a)) and the 
dollar amount of the past-due benefits payable to the claimant, 
"(ii) the dollar amount of the maximum fee which may be 
charged or recovered as determined under this paragraph, and 
"(iii) a description of the procedures for review under para-
graph (3). 
"(3)(A) The Secretary shall provide by regulation for review of the 
amount which would otherwise be the maximum fee as determined 
under pargigraph (2) if, within 15 days after receipt of the notice 
provided pursuant to paragraph (2)(C)— 
"(i) the claimant, or the administrative law judge or other 
adjudicator who made the favorable determination, submits a 
written request to the Secretary to reduce the maximum fee, or 
"(ii) the person representing the claimant submits a written 
request to the Secretary to increase the msiximum fee. 
Any such review shall be conducted after providing the claimant, 
the person representing the claimant, and the adjudicator with 
reasonable notice of such request and an opportunity to submit 
written information in favor of or in opposition to such request. The 
adjudicator may request the Secretary to reduce the maximum fee 
only on the basis of evidence of the failure of the person represent-
ing the claimant to represent adequately the claimant's interest or 
on the basis of evidence that the fee is clearly excessive for services 
rendered. 
"(BXi) In the case of a request for review under subparagraph (A) 
by the claimant or by the person representing the claimant, such 
review shall be conducted by the administrative law judge who 
made the favorable determination or, if the Secretary determines 
that such administrative law judge is unavailable or if the deter-
mination was not made by an administrative law judge, such review 
104 STAT. 1388-268 
PUBLIC LAW 101-508—NOV. 5, 1990 
shall be conducted by another person designated by the Secretary 
for such purpose. 
"(ii) In the case of a request by the adjudicator for review under 
subparagraph (A), the review shall be conducted by the Secretary or 
by an administrative law judge or other person (other than such 
adjudicator) who is designated by the Secretary. 
"(C) Upon completion of the review, the administrative law judge 
or other person conducting the review shall affirm or modify the 
amount which would otherwise be the maximum fee. Any such 
amount so affirmed or modified shall be considered the amount of 
the maximum fee which may be recovered under paragraph (2). The 
decision of the administrative law judge or other person conducting 
the review shall not be subject to further review. 
"(4)(A) Subject to subparagraph (B), if the claimant is determined 
to be entitled to past-due benefits under this title and the person 
representing the claimant is an attorney, the Secretary shall, not-
withstanding section 205(i), certify for payment out of such past-due 
benefits (as determined before any applicable reduction under sec-
tion 1127(a)) to such attorney an amount equal to so much of the 
maximum fee as does not exceed 25 percent of such past-due benefits 
(as determined before any applicable reduction under section 
1127(a)). 
"(B) The Secretary shall not in any case certify any amount for 
payment to the attorney pursuant to this paragraph before the 
expiration of the 15-day period referred to in paragraph (3)(A) or, in 
the case of any review conducted under paragraph (3), before the 
completion of such review. 
"(5) Any person who". 
(2) TITLE XVL—Paragraph (2)(A) of section 1631(d) (42 U.S.C. 
1383(d)(2)(A)) is amended to read as follows: 
"(2)(A) The provisions of section 206(a) (other than paragraph (4) 
thereof) shall apply to this part to the same extent as they apply in 
the case of title II, except that paragraph (2) thereof shall be 
applied— 
"(i) by substituting 'section 1127(a) or 1631(g)' for 'section 
1127(a)'; and 
"(ii) by substituting 'section 1631(a)(7XA) or the requirements 
of due process of law' for 'subsection (g) or (h) of section 223'.". 
(b) PROTECTION OF ATTORNEY'S FEES FROM OFFSETTING SSI BENE-
FITS.—Subsection (a) of section 1127 (42 U.S.C. 1320a-6(a)) is amended 
by adding at the end the following new sentence: "A benefit under 
title II shall not be reduced pursuant to the preceding sentence to 
the extent that any amount of such benefit would not otherwise be 
available for payment in full of the maximum fee which may be 
recovered from such benefit by an attorney pursuant to section 
206(aX4).". 
(c) LIMITATATION OF TRAVEL EXPENSES FOR REPRESENTATION OF 
CLAIMANTS AT ADMINISTRATIVE PROCEEDINGS.—Section 2010') (42 
U.S.C. 4010*)), section 1631(h) (42 U.S.C. 1383(h)), and section 1817(i) 
(42 U.S.C. 1395i(i)) are each amended by adding at the end the 
following new sentence: "The amount available for payment under 
this subsection for travel by a representative to attend an adminis-
trative proceeding before an administrative law judge or other 
adjudicator shall not exceed the maximum amount allowable under 
this subsection for such travel originating within the geographic 
area of the office having jurisdiction over such proceeding.". 
PUBLIC LAW 101-508—NOV. 5,1990 
104 STAT. 1388-269 
(d) EFFECTIVE DATE.—The amendments made by this section shall 
42 USC 401 note, 
apply with respect to determinations made on or after July 1, 1991, 
and to reimbursement for travel expenses incurred on or after 
April 1,1991. 
SEC. 5107. APPLICABILITY OF ADMINISTRATIVE RES JUDICATA; RELATED 
NOTICE REQUIREMENTS. 
(a) IN GENERAL.— 
(1) TITLE II.—Section 205(b) (42 U.S.C. 405(b)) is amended by 
adding at the end the following new paragraph: 
"(3)(A) A failure to timely request review of an initial adverse 
determination with respect to an application for any benefit 
under this title or an adverse determination on reconsideration 
of such an initial determination shall not serve as a basis for 
denial of a subsequent application for any benefit under this 
title if the applicant demonstrates that the applicant, or any 
other individual referred to in paragraph (1), failed to so request 
such a review acting in good faith reliance upon incorrect, 
incomplete, or misleading information, relating to the con-
sequences of reapplying for benefits in lieu of seeking review of 
an adverse determination, provided by any officer or employee 
of the Social Security Administration or any State agency 
acting under section 221. 
"(B) In any notice of an adverse determination with respect to 
which a review may be requested under paragraph (1), the 
Secretary shall describe in clear and specific language the effect 
on possible entitlement to benefits under this title of choosing to 
reapply in lieu of requesting review of the determination.". 
(2) TITLE XVL—Section 1631(cXl) (42 U.S.C. 1383(cXl)) is 
amended— 
(A) by inserting "(A)" after "(cXD"; and 
(B) by adding at the end the following: 
"(BXi) A failure to timely request review of an initial adverse 
determination with respect to an application for any payment under 
this title or an adverse determination on reconsideration of such an 
initial determination shall not serve EIS a basis for denial of a 
subsequent application for any payment under this title if the 
applicant demonstrates that the applicant, or any other individual 
referred to in paragraph (1), failed to so request such a review acting 
in good faith reliance upon incorrect, incomplete, or misleading 
information, 
relating to the consequences of reapplying for 
pajonents in lieu of seeking review of an adverse determination, 
provided by any officer or employee of the Social Security Adminis-
tration or any State agency acting under section 221. 
"(ii) In any notice of an adverse determination with respect to 
which a review may be requested under paragraph (1), the Secretary 
shall describe in clear and specific language the effect on possible 
eligibility to receive payments under this title of choosing to reapply 
in lieu of requesting review of the determination.". 
(b) EFFECTIVE DATE.—The amendments made by this section shall 
42 USC 405 note, 
apply with respect to adverse determinations made on or after 
July 1,1991. 
SEC. 5108. DEMONSTRATION PROJECTS RELATING TO ACCOUNTABILITY 
42 USC 902 note. 
FOR TELEPHONE SERVICE CENTER COMMUNICATIONS. 
(a) IN GENERAL.—The Secretary of Health and Human Services 
shall develop and carry out demonstration projects designed to 
104 STAT. 1388-270 
PUBLIC LAW 101-508—NOV. 5, 1990 
implement the accountability procedures described in subsection (b) 
in each of not fewer than 3 telephone service centers operated by the 
Social Security Administration. Telephone service centers shall be 
selected for implementation of the accountability procedures so as to 
permit a thorough evaluation of such procedures as they would 
operate in conjunction with the service technology most recently 
employed by the Social Security Administration. Each such dem-
onstration project shall commence not later than 180 days after the 
date of the enactment of this Act and shall remain in operation for 
not less than 1 year and not more than 3 years, 
(b) ACCOUNTABILITY PROCEDURES,— 
(1) IN GENERAL.—During the period of each demonstration 
project developed and carried out by the Secretary of Health 
and Human Services with respect to a telephone service center 
pursuant to subsection (a), the Secretary shall provide for the 
application at such telephone service center of accountability 
procedures consisting of the following: 
(A) In any case in which a person communicates with the 
Social Security Administration by telephone at such tele-
phone service center and provides in such communication 
his or her name, address, and such other identifying 
information as the Secretary determines necessary and 
appropriate for purposes of this subparagraph, the Sec-
retary must thereafter promptly provide such person a 
written receipt which sets forth— 
(i) the name of any individual representing the Social 
Security Administration with whom such person has 
spoken in such communication, 
(ii) the date of the communication; 
(iii) a description of the nature of the communication, 
(iv) any action that an individual representing the 
Social Security Administration has indicated in the 
communication will be taken in response to the 
communication, and 
(v) a description of the information or advice offered 
in the communication by an individual representing 
the Social Security Administration. 
(B) Such person must be notified during the communica-
tion by an individual representing the Social Security 
Administration that, if adequate identifying information is 
provided to the Administration, a receipt described in 
subparagraph (A) will be provided to such person. 
(C) A copy of any receipt required to be provided to any 
person under subparagraph (A) must be— 
(i) included in the file maintained by the Social Secu-
rity Administration relating to such person, or 
(ii) if there is no such file, otherwise retained by the 
Social Security Administration in retrievable form 
until the end of the 5-year period following the termi-
nation of the project. 
(2) EXCLUSION OF CERTAIN ROUTINE TELEPHONE COMMUNICA-
TIONS.—The Secretary 
may 
exclude 
from 
demonstration 
projects carried out pursuant to this section routine telephone 
communications which do not relate to potential or current 
eligibility or entitlement to benefits. 
PUBLIC LAW 101-508—NOV. 5,1990 
104 STAT. 1388-271 
(c) REPORT.— 
(1) IN GENERAL ^^—The Secretary of Health and Human Serv-
ices shall submit to the Committee on Ways and Means of the 
House of Representatives and the Committee on Finance of the 
Senate a written report on the progress of the demonstration 
projects conducted pursuant to this section, together with any 
related data and materials which the Secretary may consider 
appropriate. The report shall be submitted not later than 90 
days after the termination of the project. 
(2) SPECIFIC MATTERS TO BE INCLUDED.—The report required 
under paragraph (1) shall— 
(A) assess the costs and benefits of the accountability 
procedures, 
(B) identify any major difficulties encountered in im-
plementing the demonstration project, and 
(C) assess the feasibility of implementing the account-
ability procedures on a national basis. 
SEC. 5109. NOTICE REQUIREMENTS. 
(1) TITLE II.—Section 205 (42 U.S.C. 405) is amended by insert-
ing after subsection (r) the following new subsection: 
"NOTICE REQUIREMENTS 
"(s) The Secretary shall take such actions as are necessary to 
ensure that any notice to one or more individuals issued pursuant to 
this title by the Secretary or by a State agency— 
"(1) is written in simple and clear language, and 
"(2) includes the address and telephone number of the local 
office of the Social Security Administration which serves the 
recipient. 
In the case of any such notice which is not generated by a local 
servicing office, the requirements of paragraph (2) shall be treated 
£is satisfied if such notice includes the address of the local office of 
the Social Security Administration which services the recipient of 
the notice and a telephone number through which such office can be 
(2) TITLE xvi.—Section 1631 (42 U.S.C. 1383) is amended by 
adding at the end the following: 
"NOTICE REQUIREMENTS 
"(n) The Secretary shall take such actions as are necessary to 
ensure that any notice to one or more individuals issued pursuant to 
this title by the Secretary or by a State agency— 
"(1) is written in simple and clear language, and 
"(2) includes the address and telephone number of the local 
office of the Social Security Administration which serves the 
recipient. 
In the case of any such notice which is not generated by a local 
servicing office, the requirements of paragraph (2) shall be treated 
as satisfied if such notice includes the address of the local office of 
the Social Security Administration which services the recipient of 
the notice and a telephone number through which such office can be 
reached.". 
(b) EFFECTIVE DATE.—The amendments made by this section shall 
42 USC 405 note, 
apply with respect to notices issued on or after July 1,1991. 
*' So in original. Probably should be "GENERAL.—". 
104 STAT. 1388-272 
PUBLIC LAW 101-508—NOV. 5, 1990 
42 u s e 902 note. 
SEC. 5110. TELEPHONE ACCESS TO THE SOCIAL SECURITY ADMINISTRA-
TION. 
(a) REQUIRED MINIMUM LEVEL OF ACCESS TO LOCAL OFFICES.—In 
addition to such other access by telephone to offices of the Social 
Security Administration as the Secretary of Health and Human 
Services may consider appropriate, the Secretary shall maintain 
access by telephone to local offices of the Social Security Adminis-
tration at the level of access generally available as of September 30, 
1989. 
(b) TELEPHONE LISTINGS.—The Secretary shall make such requests 
of local telephone utilities in the United States as are necessary to 
ensure that the listings subsequently maintained and published by 
such utilities for each locality include the address and telephone 
number for each local office of the Social Security Administration to 
which direct telephone access is maintained under subsection (a) in 
such locality. Such listing may also include information concerning 
the availability of a toll-free number which may be called for 
general information. 
(c) REPORT BY SECRETARY.—Not later than January 1, 1993, the 
Secretary shall submit to the Committee on Ways and Means of the 
House of Representatives and the Committee on Finance of the 
Senate a report which— 
(1) assesses the impact of the requirements established by this 
section on the Social Security Administration's allocation of 
resources, workload levels, and service to the public, and 
(2) presents a plan for using new, innovative technologies to 
enhance access to the Social Security Administration, including 
access to local offices. 
(d) GAO REPORT.—The Comptroller General of the United States 
shall review the level of telephone access by the public to the local 
offices of the Social Security Administration. The Comptroller Gen-
eral shall file an interim report with the Committee on Ways and 
Means of the House of Representatives and the Committee on 
Finance of the Senate describing such level of telephone access not 
later than 120 days after the date of the enactment of this Act and 
shall file a final report with such Committees describing such level 
of access not later than 210 days after such date. 
(e) EFFECTIVE DATE.—The Secretary of Health and Human Serv-
ices shall meet the requirements of subsections (a) and (b) as soon as 
possible after the date of the enactment of this Act but not later 180 
days after such date. 
SEC. 5111. AMENDMENTS RELATING TO SOCIAL SECURITY ACCOUNT 
STATEMENTS. 
(a) IN GENERAL.—Section 1142 (42 U.S.C. 1320b-13), as added by 
section 10308 of the Omnibus Budget Reconciliation Act of 1989 (103 
Stat. 2485), is amended— 
(1) by striking "SEC. 1142." and inserting "SEC. 1143."; and 
(2) in subsection (cX2), by striking " a biennial" and inserting 
"an annual". 
(b) DISCLOSURE OF ADDRESS INFORMATION BY INTERNAL REVENUE 
SERVICE TO SOCIAL SECURITY ADMINISTRATION.— 
(1) IN GENERAL.—Section 6103(m) of the Internal Revenue 
26 use 6103. 
Code of 1986 (relating to disclosure of taxpayer identity informa-
tion) is amended by adding at the end the following new para-
graph: 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-273 
"(7) SOCIAL SECURITY ACCOUNT STATEMENT FURNISHED BY SOCIAL 
SECURITY ADMINISTRATION.—Upon written request by the Commis-
sioner of Social Security, the Secretary may disclose the mailing 
address of any taxpayer who is entitled to receive a social security 
account statement pursuant to section 1143(c) of the Social Security 
Act, for use only by officers, employees or agents of the Social 
Security Administration for purposes of mailing such statement to 
such taxpayer.". 
(2) SAFEGUARDS.—Section 6103(p)(4) of such Code (relating to 
safeguards) is amended, in the matter following subparagraph 
(f)(iii), by striking "subsection (mX2), (4), or (6)" and inserting 
"paragraph (2), (4), (6), or (7) of subsection (m)". 
(3) UNAUTHORIZED DISCLOSURE PENALTIES.—Paragraph (2) of 
section 7213(a) of such Code (relating to unauthorized disclosure 
of returns and return information) is amended by striking 
"(m)(2), (4), or (6)" and inserting "(m)(2), (4), (6), or (7)". 
SEC. 5112. TRIAL WORK PERIOD DURING ROLLING FIVE-YEAR PERIOD 
FOR ALL DISABLED BENEFICIARIES. 
(a) IN GENERAL.—Section 222(c) (42 U.S.C. 422(c)) is amended— 
(1) in paragraph (4)(A), by striking ", beginning on or after the 
first day of such period," and inserting ", in any period of 60 
consecutive months,"; and 
(2) by striking paragraph (5). 
(b) EFFECTIVE DATE.—The amendments made by subsection (a) 42 USC 422 note, 
shall take effect on January 1,1992. 
SEC. 5113. CONTINUATION OF BENEFITS ON ACCOUNT OF PARTICIPATION 
IN A NON-STATE VOCATIONAL REHABILITATION PROGRAM. 
(a) IN GENERAL.—Section 225(b) (42 U.S.C. 425(b)) is amended— 
(1) by striking paragraph (1) and inserting the following new 
paragraph: 
"(1) such individual is participating in a program of voca-
tional rehabilitation services approved by the Secretary, and"; 
and 
(2) in paragraph (2), by striking "Commissioner of Social 
Security" and inserting "Secretary". 
(b) PAYMENTS AND PROCEDURES.—Section 1631(a)(6) (42 U.S.C. 
1383(a)(6)) is amended— 
(1) by striking subparagraph (A) and inserting the following 
new subparagraph: 
"(A) such individual is participating in a program of voca-
tional rehabilitation services approved by the Secretary, and"; 
and 
(2) in subparagraph (B), by striking "Commissioner of Social 
Security" and inserting "Secretary". 
(c) EFFECTIVE DATE.—The amendments made by this section shall 
42 USC 425 note, 
be effective with respect to benefits payable for months after the 
eleventh month following the month in which this Act is enacted 
and shall apply only Avith respect to individuals whose blindness or 
disability has or may have ceased after such eleventh month. 
SEC. 5114. LIMITATION ON NEW ENTITLEMENT TO SPECIAL AGE-72 PAY-
MENTS. 
(a) IN GENERAL.—Section 228(a)(2) (42 U.S.C. 428(aX2)) is amended 
by striking "(B)" and inserting "(B)(i) attained such age after 1967 
and before 1972, and (ii)". 
104 STAT. 1388-274 
PUBLIC LAW 101-508—NOV. 5, 1990 
42 use 428 note. 
(b) EFFECTIVE DATE—The amendment made by subsection (a) shall 
apply with respect benefits payable on the basis of applications filed 
after the date of the enactment of this Act. 
SEC. 5115. ELIMINATION OF ADVANCED CREDITING TO THE TRUST FUNDS 
OF SOCIAL SECURITY PAYROLL TAXES. 
(a) IN GENERAL.—Section 201(a) (42 U.S.C. 401(a)) is amended— 
(1) in the first sentence following clause (4)— 
(A) by striking "monthly on the first day of each calendar 
month" both places it appears and inserting "from time to 
time"; 
(B) by striking "to be paid to or deposited into the Treas-
ury during such month" and inserting "paid to or deposited 
into the Treasury"; and 
(2) in the last sentence, by striking "Fund;" and inserting 
"Fund. Notwithstanding the preceding sentence, in any case in 
which the Secretary of the Treasury determines that the assets 
of either such Trust Fund would otherwise be inadequate to 
meet such Fund's obligations for any month, the Secretary of 
the Treasury shall transfer to such Trust Fund on the first day 
of such month the amount which would have been transferred 
to such Fund under this section as in effect on October 1, 1990; 
and". 
42 use 401 note. 
(c) EFFECTIVE DATE.—The amendments made by this section shall 
become effective on the first day of the month following the month 
in which this Act is enacted. 
* 
SEC. 5116. ELIMINATION OF ELIGIBILITY FOR RETROACTIVE BENEFITS 
FOR CERTAIN INDIVIDUALS ELIGIBLE FOR REDUCED BENE-
FITS. 
(a) IN GENERAL.—Section 2O20')(4) (42 U.S.C. 4O20')(4)) is amended— 
(1) in subparagraph (A), by striking "if the effect" and all that 
follows and inserting "if the amount of the monthly benefit to 
which such individual would otherwise be entitled for any such 
month would be subject to reduction pursuant to subsection 
(q)."; and 
(2) in subparagraph (B), by striking clauses (i) and (iv) and by 
redesignating clauses (ii), (iii), and (v) as clauses (i), (ii), and (iii), 
respectively. 
42 use 402 note. 
(b) EFFECTIVE DATE.—The amendments made by this section shall 
apply with respect to applications for benefits filed on or after 
January 1,1991. 
SEC. 5117. CONSOLIDATION OF OLD METHODS OF COMPUTING PRIMARY 
INSURANCE AMOUNTS. 
(a) CONSOUDATION OF COMPUTATION METHODS.— 
(1) IN GENERAL.—Section 215(aX5) (42 U.S.C. 415(aX5)) is 
amended— 
(A) by striking "For purposes o f and inserting "(A) 
Subject to subparagraphs (B), (C), (D) and (E), for purposes 
of; 
(B) by striking the last sentence; and 
(C) by adding at the end the following new subpara-
graphs: 
"(BXi) Subject to clauses (ii), (iii), and (iv), and notwithstanding 
any other provision of law, the primary insureince amount of any 
individual described in subparagraph (C) shall be, in lieu of the 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-275 
primary insurance amount as computed pursuant to any of the 
provisions referred to in subparagraph (D), the primary insurance 
amount computed under subsection (a) of section 215 as in effect in 
December 1978, without regard to subsection G3)(4) and (c) of such 
section £is so in effect. 
"(ii) The computation of a primary insurance amount under this 
subparagraph shall be subject to section 104(j)(2) of the Social Secu-
rity Amendments of 1972 (relating to the number of elapsed years 
under section 215(b)). 
"(iii) In computing a primary insurance amount under this 
subparagraph, the dollar amount specified in paragraph (3) of sec-
tion 215(a) (as in effect in December 1978) shall be increased to 
$11.50. 
"(iv) In the case of an individual to whom section 215(d) applies, 
the primary insurance amount of such individual shall be the 
greater of— 
"(I) the primary insurance amount computed under the 
preceding clauses of this subparagraph, or 
"(II) the primary insurance amount computed under section 
215(d). 
"(C) An individual is described in this subparagraph if— 
"(i) paragraph (1) does not apply to such individual by reason 
of such individual's eligibility for an old-age or disability insur-
ance benefit, or the individual's death, prior to 1979, and 
"(ii) such individual's primary insurance amount computed 
under this section as in effect immediately before the date of the 
enactment of the Omnibus Budget Reconciliation Act of 1990 
would have been computed under the provisions described in 
subparagraph (D). 
"(D) The provisions described in this subparagraph are— 
"(i) the provisions of this subsection as in effect prior to the 
enactment of the Social Security Amendments of 1965, if such 
provisions would preclude the use of wages prior to 1951 in the 
computation of the primary insurance amount, 
"(ii) the provisions of section 209 as in effect prior to the 
enactment of the Social Security Act Amendments of 1950, and 
"(iii) the provisions of section 215(d) as in effect prior to the 
enactment of the Social Security Amendments of 1977. 
"(E) For purposes of this paragraph, the table for determining 
primary insurance amounts and maximum family benefits con-
tained in this section in December 1978 shall be revised as provided 
by subsection (i) for each year after 1978.". 
(2) COMPUTATION OF PRIMARY INSURANCE BENEFIT UNDER 1939 
ACT.— 
(A) 
DIVISION OF WAGES BY ELAPSED YEARS.—Section 
215(d)(1) (42 U.S.C. 415(d)(1)) is amended— 
(i) in subparagraph (A), by inserting "and subject to 
section 104(jX2) of the Social Security Amendments of 
1972" after "thereof; and 
(ii) by striking "(B) For purposes" in subparagraph 
(B) and all that follows through clause (ii) of such 
subparagraph and inserting the following: 
"(B) For purposes of subparagraphs (B) and (C) of subsection 
(bX2) (as so in effect)— 
"(i) the total wages prior to 1951 (as defined in subpara-
graph (C) of this paragraph) of an individual— 
104 STAT. 1388-276 
PUBLIC LAW 101-508—NOV. 5, 1990 
"(I) shall, in the case of an individual who attained 
age 21 prior to 1950, be divided by the number of years 
(hereinafter in this subparagraph referred to as the 
'divisor') elapsing after 
the year in which the 
individual attained age 20, or 1936 if later, and prior to 
the earlier of the year of death or 1951, except that 
such divisor shall not include any calendar year en-
tirely included in a period of disability, and in no case 
shall the divisor be less than one, and 
"(II) shall, in the case of an individual who died 
before 1950 and before attaining age 21, be divided by 
the number of years (hereinafter in this subparagraph 
referred to as the 'divisor') elapsing after the second 
year prior to the year of (ieath, or 1936 if later, and 
prior to the year of death, and in no case shall the 
divisor be less than one; and 
"(ii) the total wages prior to 1951 (as defined in subpara-
graph (C) of this paragraph) of an individual who either 
attained age 21 after 1949 or died after 1949 before attain-
ing age 21, shall be divided by the number of years (herein-
after in this subparagraph referred to as the 'divisor') 
elapsing after 1949 and prior to 1951.". 
(B) CREDITING OF WAGES TO YEARS.—Clause (iii) of section 
215(d)(1)(B) (42 U.S.C. 415(d)(l)(B)(iii)) is amended to read as 
follows: 
"(iii) if the quotient exceeds $3,000, only $3,000 shall be 
deemed to be the individual's wages for each of the years 
which were used in computing the amount of the divisor, 
and the remainder of the individual's total wages prior to 
1951 (I) if less than $3,000, shall be deemed credited to the 
computation base year (as defined in subsection (b)(2) as in 
effect in December 1977) immediately preceding the earliest 
year used in computing the amount of the divisor, or (II) if 
$3,000 or more, shall be deemed credited, in $3,000 incre-
ments, to the computation base year (as so defined) imme-
diately preceding the earliest year used in computing the 
amount of the divisor and to each of the computation base 
years (as so defined) consecutively preceding that year, with 
any remainder less than $3,000 being credited to the com-
putation base year (as so defined) immediately preceding 
the earliest year to which a full $3,000 increment was 
credited; and". 
(C) APPUCABILITY.—Section 215(d) is further amended— 
(i) in paragraph (2)(B), by striking "except as pro-
vided in paragraph (3),"; 
(ii) by striking paragraph (2)(C) and inserting the 
following: 
"(C)(i) who becomes entitled to benefits under section 202(a) or 
223 or who dies, or 
"(ii) whose primary insurance amount is required to be recom-
puted under paragraph (2), (6), or (7) of subsection (f) or under 
section 231."; and 
(iii) by striking paragraphs (3) and (4). 
(3) CONFORMING AMENDMENTS.— 
(A) Section 215(i)(4) (42 U.S.C. 415(i)(4)) is amended in the 
first sentence by inserting "and as amended by section 5117 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-277 
of the Omnibus Budget Reconciliation Act of 1990" after 
"as then in effect". 
(B) Section 203(a)(8) (42 U.S.C. 403(a)(8)) is amended in the 
first sentence by inserting "and as amended by section 5117 
of the Omnibus Budget Reconciliation Act of 1990," after 
"December 1978" the second place it appears. 
(C) Section 215(c) (42 U.S.C. 415(c)) is amended by striking 
"This" and inserting "Subject to the amendments made by 
section 5117 of the Omnibus Budget Reconciliation Act of 
1990 this" 
(D) Section 215(f)(7) (42 U.S.C. 415(f)(7)) is amended by 
striking the period at the end of the first sentence and 
inserting ", including a primary insurance amount com-
puted under any such subsection whose operation is modi-
fied as a result of the amendments made by section 5117 of 
the Omnibus Budget Reconciliation Act of 1990". 
(E)(i) Section 215(d) (42 U.S.C. 415(d)) is further amended 
by redesignating paragraph (5) as paragraph (3). 
(ii) Subsections (a)(7)(A), (a)(7XC)(ii), and (fX9)(A) of section 
215 (42 U.S.C. 415) are each amended by striking "subsec-
tion (d)(5)" each place it appears and inserting "subsection 
(d)(3)". 
"(iii) Section 215(fK9)(B) (42 U.S.C. 415(fK9)(B)) is amended 
by striking "subsection (a)(7) or (d)(5)" each place it appears 
and inserting "subsection (a)(7) or (dX3)". 
(4) EFFECTIVE DATE.— 
^2 USC 403 note. 
(A) IN GENERAL.—Except as provided in subparagraph (B), 
the amendments made by this subsection shall apply with 
respect to the computation of the primary insurance 
amount of any insured individual in any case in which a 
person becomes entitled to benefits under section 202 or 223 
on the basis of such insured individual's wages and self-
employment income for months after the 18-month period 
following the month in which this Act is enacted, except 
that such amendments shall not apply if any person is 
entitled to benefits based on the wages and self-employment 
income of such insured individual for the month preceding 
the initial month of such person's entitlement to such 
benefits under section 202 or 223. 
(B) RECOMPUTATIONS.—The amendments made by this 
subsection shall apply with respect to any primary insur-
ance amount upon the recomputation of such primary 
insurance amount if such recomputation is first effective 
for monthly benefits for months after the 18-month period 
following the month in which this Act is enacted. 
(b) BENEFITS IN CASE OF VETERANS.—Section 217(b) (42 U.S.C. 
417(b)) is amended— 
(1) in the first sentence of paragraph (1), by striking "Any" 
and inserting "Subject to paragraph (3), any"; and 
(2) by adding at the end the following new paragraph: 
"(3XA) The preceding provisions of this subsection shall apply for 
purposes of determining the entitlement to benefits under section 
202, based on the primary insurance amount of the deceased World 
War II veteran, of any surviving individual only if such surviving 
individual makes application for such benefits before the end of the 
18-month period after the month in which the Omnibus Budget 
Reconciliation Act of 1990 was enacted. 
104 STAT. 1388-278 
PUBLIC LAW 101-508—NOV. 5, 1990 
"(B) Subparagraph (A) shall not apply if any person is entitled to 
benefits under section 202 based on the primary insurance amount 
of such veteran for the month preceding the month in which such 
application is made.". 
(c) APPLICABIUTY OF ALTERNATIVE METHbD FOR DETERMINING 
QUARTERS OF COVERAGE WITH RESPECT TO WAGES IN THE PERIOD 
FROM 1937-TO 1950.— 
(1) APPUCABIIJTY WITHOUT REGARD TO NUMBER OF ELAPSED 
YEARS.—Section 213(c) (42 U.S.C. 413(c)) is amended— 
(A) by inserting "and 215(d)" after "214(a)"; and 
(B) by striking "except where—" and all that follows and 
inserting the following: "except where such individual is 
not a fully insured individual on the basis of the number of 
quarters of coverage so derived plus the number of quarters 
of coverage derived from the wages and self-employment 
income credited to such individual for periods after 1950.". 
(2) APPLICABILITY WITHOUT REGARD TO DATE OF DEATH.—Sec-
42 use 413 note. 
tion 155(bX2) of the Social Security Amendments of 1967 is 
amended by striking "after such date". 
42 use 413 note. 
(3) EFFECTIVE DATE.—The amendments made by this subsec-
tion shall apply only with respect to individuals who— 
(A) make application for benefits under section 202 of the 
Social Security Act after the 18-month period following the 
month in which this Act is enacted, and 
(B) are not entitled to benefits under section 227 or 228 of 
such Act for the month in which such application is made. 
SEC. 5118. SUSPENSION OF DEPENDENT'S BENEFITS WHEN THE WORKER 
IS IN AN EXTENDED PERIOD OF ELIGIBILITY. 
42 use 423. 
(a) IN GENERAL.—Section 223(e) (42 U.S.C. 623(e)) is amended by— 
(1) by inserting "(1)" after "(e)"; and 
(2) by adding at the end the following new paragraph: 
"(2) No benefit shall be payable under section 202 on the basis of 
the wages and self-employment income of an individual entitled to a 
benefit under subsection (a)(1) of this section for any month for 
which the benefit of such individual under subsection (a)(1) is not 
payable under paragraph (1).". 
42 use 423 note. 
(b) EFFECTIVE DATE.—The amendments made by subsection (a) 
shall apply with respect to benefits for months after the date of the 
enactment of this Act. 
SEC. 5119. ENTITLEMENT TO BENEFITS OF DEEMED SPOUSE AND LEGAL 
SPOUSE. 
(a) CONTINUED ENTITLEMENT OF DEEMED SPOUSE DESPITE ENTITLE-
MENT OF LEGAL SPOUSE.—Section 216(h)(1) (42 U.S.C. 416(h)(1)) is 
amended— 
(1) in subparagraph (A)— 
(A) by inserting "(i)" after "(h)(1)(A)"; and 
(B) by striking "If such courts" in the second sentence 
and inserting the following: 
"(ii) If such courts"; and 
(2) in subparagraph (B)— 
(A) by inserting "(i)" after "(B)"; 
(B) by striking "The provisions of the preceding sentence" 
in the second sentence and inserting the following: 
"(ii) The provisions of clause (i)"; 
PUBLIC LAW 101-508—NOV. 5,1990 
104 STAT. 1388-279 
(C) by striking "(i) if another" in the second sentence and 
all that follows through "or (ii)"; 
(D) by striking "The entitlement" in the third sentence 
and inserting the following: 
"(iii) The entitlement"; 
(E) by striking "subsection (b), (c), (e), (f), or (g)" the first 
place it appears in the third sentence and inserting "subsec-
tion (b) or (c)", 
(F) by strildng "wife, widow, husband, or widower" the 
first place it appears in the third sentence £ind inserting 
"wife or husband"; 
(G) by striking "(i) in which" in the third sentence and all 
that follows through "in which such applicant entered" and 
inserting "in which such person enters*; 
(H) by striking "For purposes" in the fourth sentence and 
inserting the following: 
"(iv) For purposes"; 
and 
(I) by striking "(i)" and "(ii)" in the fourth sentence and 
inserting "(I)" and "(II)", respectively. 
(b) TREATMENT OF DIVORCE IN THE C!ONTEXT OF INVAUD MAR-
RIAGE.—Section 216(hXlXBXi) (as amended by subsection (a)) is fur-
ther amended— 
(1) by striking "where under subsection (b), (c), (f), or (g) such 
applicant is not the wife, widow, husband, or widower of such 
individual" and inserting "where under subsection (b), (c), (d), 
(f), or (g) such applicant is not the wife, divorced wife, widow, 
surviving divorced wife, husband, divorced husband, widower, 
or surviving divorced husband of such individual"; 
(2) by striking "and such applicant" and all that follows 
through "files the application,"; 
(3) by striking "subsections (b), (c), (f), and (g)" and inserting 
"subsections (b), (c), (d), (f), and (g)"; and 
(4) by adding at the end the following new sentences: "Not-
withstanding the preceding sentence, in the case of any person 
who would be deemed under the preceding sentence a wife, 
widow, husband, or widower of the insured individual, such 
marriage shall not be deemed to be a valid marriage unless the 
applicant and the insured individual were living in the same 
household at the time of the death of the insured individual or 
(if the insured individual is living) at the time the applicant files 
the application. A marriage that is deemed to be a valid mar-
riage by reason of the preceding sentence shall continue to be 
deemed a valid marriage if the insured individual and the 
person entitled to benefits as the wife or husband of the insured 
individual are no longer living in the same household at the 
time of the death of such insured individual.". 
(c) TREATMENT OF MULTIPLE ENTITLEMENTS UNDER THE FAMILY 
MAXIMUM.—Section 203(aX3) (42 U.S.C. 403(aX3)) is amended by 
adding after subparagraph (C) the following new subparagraph: 
"(D) In any case in which— 
"(i) two or more individuals are entitled to monthly benefits 
for the same month as a spouse under subsection (b) or (c) of 
section 202, or as a surviving spouse under subsection (e), (f), or 
(g) of section 202, 
"(ii) at least one of such individuals is entitled by reason of 
subparagraph (AXii) or (B) of section 216(hXl), and 
104 STAT. 1388-280 
PUBLIC LAW 101-508—NOV. 5, 1990 
"(iii) such entitlements are based on the wages and self-
employment income of the same insured individual, 
the benefit of the entitled individual whose entitlement is based on a 
valid marriage (as determined without regard to subparagraphs 
(A)(ii) and (B) of section 216(h)(1)) to such insured individual shall, 
for such month and all months thereafter, be determined without 
regard to this subsection, and the benefits of all other individuals 
who are entitled, for such month or any month thereafter, to 
monthly benefits under section 202 based on the wages and self-
employment income of such insured individual shall be determined 
as if such entitled individual were not entitled to benefits for such 
month.". 
(d) 
CONFORMING 
AMENDMENT.—Section 
203(a)(6) (42 U.S.C. 
403(a)(6)) is amended by inserting "(3)(D)," after "(3)(C),". 
42 use 403 note. 
(e) EFFECTIVE DATE.— 
(1) IN GENERAL.—The amendments made by this section shall 
apply with respect to benefits for months after December 1990. 
(2) APPUCATION REQUIREMENT.— 
(A) GENERAL RULE.—Except as provided in subparagraph 
(B), the amendments made by this section shall apply only 
with respect to benefits for which application is filed with 
the Secretary of Health and Human Services after Decem-
ber 31,1990. 
(B) 
EXCEPTION 
FROM 
APPLICATION 
REQUIREMENT.— 
Subparagraph (A) shall not apply with respect to the bene-
fits of any individual if such individual is entitled to a 
benefit under subsection (b), (c), (e), or (f) of section 202 of 
the Social Security Act for December 1990 and the individ-
ual on whose wages and self-employment income such bene-
fit for December 1990 is based is the same individual on the 
b£isis of whose wages and self-emplo3anent income applica-
tion would otherwise be required under subparagraph (A). 
42 use 1310 
SEC. 5120. VOCATIONAL REHABILITATION DEMONSTRATION PROJECTS. 
(a) DEMONSTRATION PROJECT.— 
(1) IN GENERAL.—Pursuant to section 505 of the Social Secu-
rity Disability Amendments of 1980, the Secretary of Health 
and Human Services shall develop and carry out under this 
section demonstration projects in each of not fewer than three 
States. Each such demonstration project shall be designed to 
assess the advantages and disadvantages of permitting disabled 
beneficiaries (as defined in paragraph (3)) to select, from among 
both public and private qualified vocational rehabilitation 
providers, providers of vocational rehabilitation services di-
rected at enabling such beneficiaries to engage in substantial 
gainful activity. Each such demonstration project shall com-
mence as soon as practicable after the date of the enactment of 
this Act and shall remain in operation until the end of fiscal 
year 1993. 
(2) SCOPE AND PARTICIPATION.—Each demonstration project 
shall be of sufficient scope and open to sufficient participation 
by disabled beneficiaries so as to permit meaningful determina-
tions under subsection (b). 
(3) DISABUID BENEFICIARY.—For purposes of this section, the 
term "disabled beneficiary" means an individual who is entitled 
to disability insurance benefits under section 223 of the Social 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-281 
Security Act or benefits under section 202 of such Act based on 
such individual's own disabiUty. 
(b) MATTERS TO BE DETERMINED.—In the course of each demonstra-
tion project conducted under this section, the Secretary shall deter-
mine the following: 
(1) the extent to which disabled beneficiaries participate in 
the process of selecting providers of rehabilitation services, and 
their reasons for participating or not participating; 
(2) notable characteristics of participating disabled bene-
ficiaries (including their impairments), classified by the type of 
provider selected; 
(3) the various needs for rehabilitation demonstrated by 
participating disabled beneficiaries, classified by the type of 
provider selected; 
(4) the extent to which providers of rehabilitation services 
which are not agencies or instrumentalities of States accept 
referrals of disabled beneficiaries under procedures in effect 
under section 222(d) of the Social Security Act as of the date of 
the enactment of this Act relating to reimbursement for such 
services and the most effective way of reimbursing such provid-
ers in accordance with such provisions; 
(5) the extent to which providers participating in the dem-
onstration projects enter into contracts with third parties for 
T
' 
services and the types of such services; 
(6) whether, and if so the extent to which, disabled bene-
ficiaries who select their own providers of rehabilitation serv-
ices are more likely to engage in substantial gainful activity and 
thereby terminate their entitlement under section 202 or 223 of 
the Social Security Act than those who do not; 
(7) the cost effectiveness of permitting disabled beneficiaries 
to select their providers of vocational rehabilitation services, 
and the comparative cost effectiveness of different types of 
providers; and 
(8) the feasibility of establishing a permanent national pro-
gram for allowing disabled beneficiaries to choose their own 
qualified vocational rehabilitation provider and any additional 
safeguards which would be necessary to assure the effectiveness 
of such a program. 
(c) PROCEDURAL REQUIREMENTS.— 
(1) SELECTION OF PARTICIPANTS.—The Secretary shall select for 
participation in each demonstration project under this section 
disabled beneficiaries for whom there is a reasonable likelihood 
that rehabilitation services provided to them will result in 
performance by them of substantial gainful activity for a 
continuous period of nine months prior to termination of the 
project. 
(2) SELECTION OF PROVIDERS OF REHABILITATION SERVICES.—The 
Secretary shall select qualified rehabilitation agencies to serve 
as providers of rehabilitation services in the geographic area 
covered by each demonstration project conducted under this 
section. The Secretary shall make such selection after consulta-
tion with disabled individuals and organizations representing 
such individuals. With respect to each demonstration project, 
the Secretary may approve on a case-by-case basis additional 
qualified rehabilitation agencies from outside the geographic 
area covered by the project to serve particular disabled bene-
ficiaries. 
104 STAT. 1388-282 
PUBLIC LAW 101-508—NOV. 5, 1990 
(3) REIMBURSEMENT OF PROVIDERS.— 
(A) Except as provided in subparagraph (B), providers of 
rehabilitation services under each demonstration project 
under this section shall be reimbursed in accordance with 
the procedures in effect under the provisions of section 
222(d) of the Social Security Act EIS of the date of the 
enactment of this Act relating to reimbursement for serv-
ices provided under such section. 
(B) The Secretary may contract with providers of re-
habilitation services under each demonstration project 
under this section on a fee-for-service basis in order to— 
(i) conduct vocational evaluations directed at identi-
fying those disabled beneficiaries who have reasonable 
potential for engaging in substantial gainful activity 
and thereby terminating their entitlement to benefits 
under section 202 or 223 of the Social Security Act if 
provided with vocational rehabilitation services as 
participants in the project, and 
(ii) develop jointly with each disabled beneficiary so 
identified an individualized, written rehabilitation pro-
gram. 
(C) Each written rehabilitation program developed pursu-
ant to subparagraph (BXii) for any participant shall include 
among its provisions— 
(i) a statement of the participant's rehabilitation 
goal, 
(ii) a statement of the specific rehabilitation services 
to be provided and of the identity of the provider to 
furnish such services, 
(iii) the projected date for the initiation of such serv-
ices and their anticipated duration, and 
(iv) objective criteria and an evaluation procedure 
and schedule for determining whether the stated re-
habilitation goal is being achieved. 
(d) REPORTS.—The Secretary of Health and Human Services shall 
submit to the Committee on Ways and Means of the House of 
Representatives and the C!ommittee on Finance of the Senate an 
interim written report on the progress of the demonstration projects 
conducted under this section not later than April 1, 1992, together 
with any related data and materials which the Secretary considers 
appropriate. The Secretary shall submit a final written report to 
such Committees addressing the matters to be determined under 
subsection (b) not later than April 1,1994. 
(e) STATE.—For purposes of this section, the term "State" means a 
State, including the entities included in such term by section 210(h) 
of the Social Security Act (42 U.S.C. 410(h)). 
(f) CONTINUATION OF DEMONSTRATION AUTHORITY.—Section 505(c) 
of the Social Security Disability Amendments of 1980 (42 U.S.C. 1310 
note) is amended to read as follows: 
"(c) The Secretary shall submit to the Congress a final report with 
respect to all experiments and demonstration projects carried out 
under this section (other than demonstration projects conducted 
under section 5120 of the Omnibus Budget Reconciliation of 1990) no 
later than October 1,1993.". 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-283 
SEC. 5121. EXEMPTION FOR CERTAIN ALIENS, RECEIVING AMNESTY 
UNDER THE IMMIGRATION AND NATIONALITY ACT, FROM 
PROSECUTION FOR MISREPORTING OF EARNINGS OR MISUSE 
OF SOCIAL SECURITY ACCOUNT NUMBERS OR SOCIAL SECU-
RITY CARDS. 
(a) IN GENERAL.—Section 208 (42 U.S.C. 408) is amended by adding 
at the end the following: 
"(d)(1) Except as provided in paragraph (2), an alien— 
"(A) whose status is adjusted to that of lawful temporary 
resident under section 210 or 245A of the Immigration and 
Nationality Act or under section 902 of the Foreign Relations 
Authorization Act, Fiscal Years 1988 and 1989, 
"(B) whose status is adjusted to that of permanent resident— 
"(i) under section 202 of the Immigration Reform and 
Control Act of 1986, or 
"(ii) pursuant to section 249 of the Immigration and 
Nationality Act, or 
"(C) who is granted special immigrant status under section 
101(a)(27)(I) of the Immigration and Nationality Act, 
shall not be subject to prosecution for any alleged conduct described 
in paragraph (6) or (7) of subsection (a) if such conduct is alleged to 
have occurred prior to 60 days after the date of the enactment of the 
Omnibus Budget Reconciliation Act of 1990. 
"(2) Paragraph (1) shall not apply with respect to conduct (de-
scribed in subsection (a)(7)(C)) consisting of^ 
"(A) selling a card that is, or purports to be, a social security 
card issued by the Secretary, 
"(B) possessing a social security card with intent to sell it, or 
"(C) counterfeiting a social security card with intent to sell it. 
"(3) Paragraph (1) shall not apply with respect to any criminal 
conduct involving both the conduct described in subsection (a)(7) to 
which paragraph (1) applies and any other criminal conduct if such 
other conduct would be criminal conduct if the conduct described in 
subsection (a)(7) were not committed.". 
(b) TECHNICAL AND CONFORMING AMENDMENTS.—So much of sec-
tion 208 as precedes subsection (d) (as added by subsection (a) of this 
section) is amended— 
(1) in subsection (a), by redesignating paragraphs (1), (2), and 
(3) £is subparagraphs (A), (B), and (C), respectively; 
(2) in subsection (g), by redesignating paragraphs (1), (2), and 
(3) as subparagraphs (A), (B), and (C), respectively; 
(3) by redesignating subsections (a) through (h) as paragraphs 
(1) through (8), respectively; 
(4) by inserting "(a)" before "Whoever"; 
(5) by inserting "(b)" at the beginning of the next-to-last 
undesignated paragraph; and 
(6) by inserting "(c)' at the beginning of the last undesignated 
paragraph. 
SEC. 5122. REDUCTION OF AMOUNT OF WAGES NEEDED TO EARN A YEAR 
^ 
OF COVERAGE APPLICABLE IN DETERMINING SPECIAL 
MINIMUM PRIMARY INSURANCE AMOUNT. 
(a) IN GENERAL.—Section 215(a)(lXC)(ii) (42 U.S.C. 415(aXl)(C)(ii)) is 
amended by striking "of not less than 25 percent" the first place it 
appears and all that follows through "1977) i f and inserting "of not 
less than 25 percent (in the case of a year after 1950 and before 1978) 
of the maximum amount which (pursuant to subsection (e)) may be 
104 STAT. 1388-2^4 
PUBLIC LAW 101-508—NOV. 5,1990 
counted for such year, or 25 percent (in the case of a year after 1977 
and before 1991) or 15 percent (in the case of a year after 1990) of the 
maximum amount which (pursuant to subsection (e)) could be 
counted for such year if. 
(b) RETENTION OF CURRENT AMOUNT OF WAGES NEEDED TO EARN A 
YEAR OF COVERAGE FOR PURPOSES OF WINDFALL EUMINATION PROVI-
SION.—Section 215(a)(7)(D) (42 U.S.C. 415(aX7XD)) is amended— 
(1) in the first sentence, by striking "(as defined in paragraph 
(IXCXii))"; and 
(2) by adding at the end (after the table) the following new 
flush sentence: 
"For purposes of this subparagraph, the term 'year of coverage' 
shall have the meaning provided in paragraph (lXC)(ii), except that 
the reference to '15 percent' therein shall be deemed to be a 
reference to '25 percent.". 
SEC. 5123. CHARGING OF EARNINGS OF CORPORATE DIRECTORS. 
(a) IN GENERAL.— 
(1) Title II is amended by moving the last undesignated 
42 use 411,403. 
paragraph of section 211(a) of such title (as added by section 
9022(a) of the Omnibus Budget Reconciliation Act of 1987) to the 
end of section 203(f)(5) of such title. 
(2) The undesignated paragraph moved to section 203(fK5) of 
42 use 403. 
the Social Security Act by paragraph (1) is amended— 
(A) by striking "Any income of an individual which re-
sults from or is attributable to" and inserting "(E) For 
purposes of this section, any individual's net earnings from 
self-employment which result from or are attributable to", 
(B) by striking "the income is actually paid" and insert-
ing "the income, on which the computation of such net 
earnings from self-employment is based, is actually paid"; 
and 
(C) by striking "unless it was" and inserting "unless such 
income was". 
(3) The last undesignated paragraph of section 1402(a) of the 
26 use 1402. 
Internal Revenue Code of 1986 (as added by section 9022(b) of 
the Omnibus Budget Reconciliation Act of 1987) is repealed. 
42 use 403 note. 
(b) EFFECTIVE DATE.—The amendments made by this section shall 
apply with respect to income received for services performed in 
taxable years beginning after December 31,1990. 
SEC. 5124. COLLECTION OF EMPLOYEE SOCIAL SECURITY AND RAILROAD 
RETIREMENT TAXES ON TAXABLE GROUP-TERM LIFE INSUR-
ANCE PROVIDED TO RETIREES. 
(a) SOCIAL SECURITY TAXES.—Section 3102 of the Internal Revenue 
26 use 3102. 
Code of 1986 (relating to deduction of tax from wages) is amended by 
adding at the end thereof the following new subsection: 
"(d) SPECIAL RULE FOR CERTAIN TAXABLE GROUP-TERM LIFE INSUR-
ANCE BENEFITS.— 
"(1) IN GENERAL.—In the case of any payment for group-term 
life insurance to which this subsection applies— 
"(A) subsection (a) shall not apply, 
"(B) the employer shall separately include on the state-
ment required under section 6051— 
"(i) the portion of the wages which consists of pay-
ments for group-term life insurance to which this 
subsection applies, and 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-285 
"(ii) the amount of the tax imposed by section 3101 on 
such payments, and 
"(C) the tax imposed by section 3101 on such payments 
shall be paid by the employee. 
"(2) BENEFITS TO WHICH SUBSECTION APPUES.—This subsection 
shall apply to any payment for group-term life insurance to the 
extent— 
"(A) such payment constitutes wages, and 
"(B) such payment is for coverage for periods during 
which an employment relationship no longer exists be-
tween the employee and the employer." 
(b) RAILROAD RETIREMENT TAXES.—Section 3202 of such Code 
(relating to deduction of tax from compensation) is amended by 
adding at the end thereof the following new subsection: 
"(d) SPECIAL RULE FOR CERTAIN TAXABLE GROUP-TERM LIFE INSUR-
ANCE BENEFITS.— 
"(1) IN GENERAL.—In the case of any payment for group-term 
life insurance to which this subsection applies— 
"(A) subsection (a) shall not apply, 
"(B) the employer shall separately include on the state-
ment required under section 6051— 
"(i) the portion of the compensation which consists of 
payments for group-term life insurance to which this 
subsection applies, and 
"(ii) the amount of the tax imposed by section 3201 on 
such payments, and 
"(C) the tax imposed by section 3201 on such payments 
shall be paid by the employee. 
"(2) BENEFITS TO WHICH SUBSECTION APPLIES.—This subsection 
shall apply to any payment for group-term life insurance to the 
extent— 
"(A) such payment constitutes compensation, and 
"(B) such payment is for coverage for periods during 
which an employment relationship no longer exists be-
tween the employee and the employer." 
(c) EFFECTIVE DATE.—The amendments made by this section shall 
26 USC 3102 
apply to coverage provided after December 31,1990. 
note. 
SEC. 5125. TIER 1 RAILROAD RETIREMENT TAX RATES EXPLICITLY 
DETERMINED BY REFERENCE TO SOCIAL SECURITY TAXES. 
(a) TAX ON EMPLOYEES.—Subsection (a) of section 3201 of the 
Internal Revenue Code of 1986 (relating to rate of tax) is amended— 26 USC 3201. 
(1) by striking "following" and inserting "applicable", and 
(2) by striking "employee:" and all that follows and inserting 
"employee. For purposes of the preceding sentence, the term 
'applicable percentage' means the percentage equal to the sum 
of the rates of tax in effect under subsections (a) and (b) of 
section 3101 for the calendar year." 
Cb) TAX ON EMPLOYEE REPRESENTATIVES.—Paragraph (1) of section 
3211(a) of such Code (relating to rate of tax) is amended— 
(1) by striking "following" and inserting "applicable", and 
(2) by striking "representative:" and all that follows and 
inserting "representative. For purposes of the preceding sen-
tence, the term 'applicable percentage' means the percentage 
equal to the sum of the rates of tax in effect under subsections 
(a) and (b) of section 3101 and subsections (a) and (b) of section 
3111 for the calendar year." 
104 STAT. 1388-286 
PUBLIC LAW 101-508—NOV. 5, 1990 
(c) TAX ON EMPLOYERS.—Subsection (a) of section 3221 of such 
Code (relating to rate of tax) is amended— 
(1) by striking "following" and inserting "applicable", and 
(2) by striking "employer:" and all that follows and inserting 
"employer. For purposes of the preceding sentence, the term 
'applicable percentage' means the percentage equal to the sum 
of the rates of tax in effect under subsections (a) and (b) of 
section 3111 for the calendar year." 
SEC. 5126. TRANSFER TO RAILROAD RETIREMENT ACCOUNT. 
Subsection (c)(1)(A) of section 224 of the Railroad Retirement 
45 use 231n 
Solvency Act of 1983 (relating to section 72(r) revenue increase 
"o^- 
transferred to certain railroad accounts) is amended by striking 
"1990" and inserting "1992". 
SEC. 5127. WAIVER OF 2-YEAR WAITING PERIOD FOR INDEPENDENT 
ENTITLEMENT TO DIVORCED SPOUSE'S BENEFITS. 
(a) WAIVER FOR PURPOSES OF DEDUCTIONS ON ACCOUNT OF WORK.— 
Section 203(b)(2) (42 U.S.C. 403(b)(2)) is amended— 
(1) by striking "(2) When" and all that follows through "2 
years, the benefit" and inserting the" following: 
"(2XA) Except as provided in subparagraph (B), in any case in 
which— 
"(i) any of the other persons referred to in paragraph (1)(B) is 
entitled to monthly benefits as a divorced spouse under section 
202(b) or (c) for any month, and 
"(ii) such person has been divorced for not less than 2 years, 
the benefit"; and 
(2) by adding at the end the following new subparagraph: 
"(B) Clause (ii) of subparagraph (A) shall not apply with respect to 
any divorced spouse in any case in which the individual referred to 
in paragraph (1) became entitled to old-age insurance benefits under 
section 202(a) before the date of the divorce.". 
(b) WAIVER IN CASE OF NONCOVERED WORK OUTSIDE THE UNITED 
STATES.—Section 203(d)(lXB) (42 U.S.C. 403(d)(1)(B)) is amended— 
(1) by striking "(B) When" and all that follows through "2 
years, the benefit" and inserting the following: 
"(BXi) Except as provided in clause (ii), in any case in which— 
"(I) a divorced spouse is entitled to monthly benefits under 
section 202(b) or (c) for any month, and 
"(II) such divorced spouse has been divorced for not less than 
2 years, 
the benefit"; and 
(2) by adding at the end the following new clause: 
"(ii) Subclause (II) of clause (i) shall not apply with respect to any 
divorced spouse in any case in which the individual entitled to old-
age insurance benefits referred to in subparagraph (A) became 
entitled to such benefits before the date of the divorce.". 
42 use 403 note. 
(c) EFFECTIVE DATE.—The amendments made by this section shall 
apply with respect to benefits for months after December 1990. 
SEC. 5128. MODIFICATION OF THE PREEFFECTUATION REVIEW REQUIRE-
MENT APPLICABLE TO DISABILITY INSURANCE CASES. 
(a) IN GENERAL.—Section 221(cX3) (42 U.S.C. 421(cX3)) is amended 
to read as follows: 
"(3XA) In carrying out the provisions of paragraph (2) with respect 
to the review of determinations made by State agencies pursuant to 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-287 
this section that individuals are under disabilities (as defined in 
section 216(i) or 223(d)), the Secretary shall review— 
"(i) at legist 50 percent of all such determinations made by 
State agencies on applications for benefits under this title, and 
"(ii) other determinations made by State agencies pursuant to 
this section to the extent necessary to assure a high level of 
accuracy in such other determinations. 
"(B) In conducting reviews pursuant to subparagraph (A), the 
Secretary shall, to the extent feasible, select for review those deter-
minations which the Secretary identifies as being the most likely to 
be incorrect. 
"(C) Not later than April 1, 1992, and annually thereafter, the 
Secretary shall submit to the Committee on Ways and Means of the 
House of Representatives and the Committee on Finance of the 
Senate a written report setting forth the number of reviews con-
ducted under subparagraph (AXii) during the preceding fiscal year 
and the findings of the Secretary based on such reviews of the 
accuracy of the determinations made by State agencies pursuant to 
this section.". 
(b) EFFECTIVE DATE.—The amendment made by subsection (a) 42 use 421 note, 
shall apply with respect to determinations made by State agencies 
in fiscal years after fiscal year 1990. 
SEC. 5129. RECOVERY OF OASDI OVERPAYMENTS BY MEANS OF REDUC-
TION IN TAX REFUNDS. 
(a) ADDITIONAL METHOD OF RECOVERY.—Section 204(a)(1)(A) (42 
U.S.C. 404(a)(1)(A)) is amended by inserting after "payments to such 
overpaid person," the following: "or shall obtain recovery by means 
of reduction in tax refunds based on notice to the Secretary of the 
Treasury as permitted under section 3720A of title 31, United States 
Code,". 
(b) RECOVERY BY MEANS OF REDUCTION IN TAX REFUNDS.—Section 
3720A of title 31, United States Code (relating to collection of debts 
owed to Federal Eigencies) is amended— 
(1) in subsection (a), by striking "OASDI overpayment and"; 
(2) by redesignating subsection (f) as subsection (g); and 
(3) by inserting the following new subsection after subsection 
(e): 
"(fKl) Subsection (a) shall apply with respect to an OASDI over-
payment made to any individual only if such individual is not 
currently entitled to monthly insurance benefits under title II of the 
Social Security Act. 
"(2)(A) The requirements of subsection (b) shall not be treated as 
met in the case of the recovery of an OASDI overpayment from any 
individual under this section unless the notification under subsec-
tion (bXD describes the conditions under which the Secretary of 
Health and Human Services is required to waive recovery of an 
overpayment, as provided under section 204(b) of the Social Security 
Act. 
"(B) In any case in which an individual files for a waiver under 
section 204(b) of the Social Security Act within the 60-day period 
referred to in subsection (bX2), the Secretary of Health and Human 
Services shall not certify to the Secretary of the Treasury that the 
debt is valid under subsection (bX4) before rendering a decision on 
the waiver request under such section 204(b). In lieu of payment, 
pursuant to subsection (c), to the Secretary of Health and Human 
Services of the amount of any reduction under this subsection based 
104 STAT. 1388-288 
PUBLIC LAW 101-508—NOV. 5, 1990 
on an OASDI overpayment, the Secretary of the Treasury shall 
deposit such amount in the Federal Old-Age and Survivors Insur-
ance Trust Fund or the Federal Disability Insurance Trust Fund, 
whichever is certified to the Secretary of the Treasury as appro-
priate by the Secretary of Health and Human Services.". 
(c) INTERNAL REVENUE CODE PROVISIONS.— 
(1) IN GENERAL.—Subsection (d) of section 6402 of the Internal 
26 use 6402. 
Revenue Code of 1986 (relating to collection of debts owed to 
Federal agencies) is amended— 
(A) in paragraph (1), by striking "any OASDI overpay-
ment and'; and 
(B) by striking paragraph (3) and inserting the following 
new paragraph: 
"(3) TREATMENT OF OASDI OVERPAYMENTS.— 
"(A) REQUIREMENTS.—Paragraph (1) shall apply with re-
spect to an OASDI overpayment only if the requirements of 
paragraphs (1) and (2) of section 3720A(f) of title 31, United 
States Code, are met with respect to such overpayment. 
"(B) NOTICE; PROTECTION OF OTHER PERSONS FIUNG JOINT 
RETURN.— 
"(i) NOTICE.—In the case of a debt consisting of an 
OASDI overpayment, if the Secretary determines upon 
receipt of the notice referred to in paragraph (1) that 
the refund from which the reduction described in para-
graph (1)(A) would be made is based upon a joint 
return, the Secretary shall— 
"(I) notify each taxpayer filing such joint return 
that the reduction is being made from a refund 
based upon such return, and 
"(II) include in such notification a description of 
the procedures to be followed, in the case of a joint 
return, to protect the share of the refund which 
may be payable to another person. 
"(ii) ADJUSTMENTS BASED ON PROTECTIONS GIVEN TO 
OTHER TAXPAYERS ON JOINT RETURN.—If the other 
person filing a joint return with the person owing the 
OASDI overpayment takes appropriate action to secure 
his or her proper share of the refund subject to reduc-
tion under this subsection, the Secretary shall pay such 
share to such other person. The Secretary shall deduct 
the amount of such payment from amounts which are 
derived from subsequent reductions in refunds under 
this subsection and are payable to a trust fund referred 
to in subparagraph (C). 
"(C) DEPOSIT OF AMOUNT OF REDUCTION INTO APPROPRIATE 
TRUST FUND.—In lieu of payment, pursuant to paragraph 
(1)(B), of the amount of any reduction under this subsection 
to the Secretary of Health and Human Services, the Sec-
retary shall deposit such amount in the Federal Old-Age 
and Survivors Insurance Trust Fund or the Federal Disabil-
ity Insurance Trust Fund, whichever is certified to the 
Secretary as appropriate by the Secretary of Health and 
Human Services. 
"(D) OASDI OVERPAYMENT.—For purposes of this para-
graph, the term 'OASDI overpayment' means any overpay-
ment of benefits made to an individual under title II of the 
Social Security Act.". 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-289 
(2) PRESERVATION OF REMEDIES.—Subsection (e) of section 6402 
of such Code (relating to review of reductions) is amended in the 
last sentence by inserting before the period the following: "or 
any such action against the Secretary of Health and Human 
Services which is otherwise available with respect to recoveries 
of overpayments of benefits under section 204 of the Social 
Security Act", 
(d) EFFECTIVE DATE.—The amendments made by this section— 26 use 6402 
(1) shall take effect January 1,1991, and 
note. 
(2) shall not apply to refunds to which the amendments made 
by section 2653 of the Deficit Reduction Act of 1984 (98 Stat. 
1153) do not apply. 
SEC. 5130. MISCELLANEOUS TECHNICAL CORRECTIONS. 
(a) IN GENERAL.— 
(1) AMENDMENT RELATING TO SECTION 7088 OF PUBLIC LAW loo-
690.—Section 208 (42 U.S.C. 408) is amended, in the last undesig-
nated paragraph, by striking "section 405(c)(2) of this title" and 
inserting "section 205(c)(2)". 
(2) AMENDMENTS RELATING TO SECTION 322 OF PUBUC LAW 98-
21.—Paragraphs (1) and (2) of section 322(b) of the Social Secu-
rity Amendments of 1983 (Public Law 98-21, 97 Stat. 121) are 42 USC 411; 
each amended by inserting "the first place it appears" before 26 USC 140i2. 
"the following". 
(3) AMENDMENT RELATING TO SECTION lOiiB(b) (4) OF PUBUC 
LAW 100-647.—Section 211(a) (42 U.S.C. 411(a)) is amended by 
redesignating the second paragraph (14) as paragraph (15). 
(4) AMENDMENT RELATING TO SECTION 2003 (d) OF PUBUC LAW 
100-647.—Paragraph (3) of section 3509(d) of the Internal Reve-
nue Code of 1986 (as amended by section 2003(d) of the Tech- 26 USC 3509. 
nical and Miscellaneous Revenue Act of 1988 (Public Law 100-
647; 102 Stat. 3598)) is further amended by striking "subsection 
(dX4)" and inserting "subsection (d)(3)". 
(5) AMENDMENT RELATING TO SECTION 10208 OF PUBUC LAW 
101-239.—Section 209(a)(7)(B) (42 U.S.C. 409(a)(7)(B)) is amended 
by striking "subparagraph (B)" in the matter following clause 
(ii) and inserting "clause (ii)". 
(b) EFFECTIVE DATES.—The amendments made by subsection (a) 26 USC 1402 
shall be effective as if included in the enactment of the provision to note, 
which it relates. 
TITLE VI—ENERGY AND 
ENVIRONMENTAL PROGRAMS 
Subtitle A—Abandoned Mine Reclamation 
A
b
a
n
d
o
n
e
d 
Mine 
Reclamation Act 
SEC. 6001. SHORT TITLE. 
of 1990. 
This subtitle may be cited as the "Abandoned Mine Reclamation 30 USC 1201 
Act of 1990". 
SEC. 6002. ABANDONED MINE RECLAMATION FUND. 
(a) SOURCES OF DEPOSITS.—Section 401(b) of the Surface Mining 
Control and Reclamation Act of 1977 (30 U.S.C. 1231(b)) is amended 
as follows: 
(1) Amend paragraph (1) to read as follows: 
note. 
104 STAT. 1388-290 
PUBLIC LAW 101-508—NOV. 5, 1990 
"(1) the reclamation fees levied under section 402;". 
(2) Strike "and" at the end of paragraph (3); strike the period 
at the end of paragraph (4) and insert "; and"; and add the 
following new paragraph at the end: 
"(5) interest credited to the fund under subsection (e).". 
(b) USE OF MONEY.—Section 401(c) of the Surface Mining Control 
and Reclamation Act of 1977 (30 U.S.C. 1231(c)) is amended as 
follows: 
(1) In paragraph (1), strike "402(gX2)" and insert ''402(gXl)". 
(2) Amend paragraph (2) to read as follows: 
"(2) for transfer on an annual basis to the Secretary of 
Agriculture for use under section 406;". 
(3) In paragraph (6), strike "by contract" and insert "con-
ducted in accordance with section 3501 of the Opinibus Budget 
Reconciliation Act of 1986" after "projects". 
(4) Strike "and" at the end of paragraph (9). 
(5) Strike paragraph (10) and insert the following: 
"(10) for use under section 411; 
"(11) for the purpose of section 507(c), except that not more 
than $10,000,000 shall annually be available for such purpose; 
and 
"(12) all other necessary expenses to accomplish the purposes 
of this title.". 
(c) INTEREST.—Section 401 of the Surface Mining Control and 
Reclamation Act of 1977 (30 U.S.C. 1231) is amended by adding the 
following new subsection at the end: 
"(e) INTEREST.—The Secretary of the Interior shall notify the 
Secretary of the Treasury as to what portion of the fund is not, in 
his judgment, required to meet current withdrawals. The Secretary 
of the Treasury shall invest such portion of the fund in public debt 
securities with maturities suitable for the needs of such fund and 
bearing interest at rates determined by the Secretary of the Treas-
ury, taking into consideration current market yields on outstanding 
marketable obligations of the United States of comparable matu-
rities. The income on such investments shall be credited to, and 
form a part of, the fund.". 
SEC. 6003. RECLAMATION FEES. 
(a) DUE DATE.—Section 402(b) of the Surface Mining (Dontrol and 
Reclamation Act of 1977 (30 U.S.C. 1232(b)) is amended by striking 
"fifteen years after the date of enactment of this Act unless ex-
tended by an Act of Congress" and inserting "September 30, 1995". 
(b) STATEMENT.—Section 402(c) of the Surface Mining Control and 
Reclamation Act of 1977 (30 U.S.C. 1232(c)) is amended by adding the 
following at the end thereof: "Such statement shall include an 
identification of the permittee of the surface coal mining operation, 
any operator in addition to the permittee, the owner of the coal, the 
preparation plant, tripple,^* or loading point for the coal, and the 
person purchasing the coal from the operator. The report shall also 
specify the number of the permit required under section 506 and the 
mine safety and health identification number. Each quarterly report 
shall contain a notification of any changes in the information 
required by this subsection since the date of the preceding quarterly 
report. The information contained in the quarterly reports under 
this subsection shall be maintained by the Secretary in a computer-
ized database.". 
•* So in original. Probably should be "tipple". 
-
•
*
*
#
#
#
:
• 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-291 
(c) AUDITS.—Section 402(d) of the Surface Mining Control and 
Reclamation Act of 1977 (30 U.S.C. 1232(d)) is amended by inserting 
"(1)" after "(d)" and by adding the following at the end thereof: 
"(2) The Secretary shall conduct such audits of coal production 
and the payment of fees under this title as may be necessary to 
ensure full compliance with the provisions of this title. For purposes 
of performing such audits the Secretary (or any duly designated 
officer, employee, or representative of the Secretary) shall, at all 
reasonable times, upon request, have access to, and may copy, all 
books, papers, and other documents of any person subject to the 
provisions of this title. The Secretary may at any time conduct audits 
of any surface coal mining and reclamation operation, including 
without limitation, tipples and preparation plants, as may be nec-
essary in the judgment of the Secretary to ensure full and complete 
payment of the fees under this title.". 
(d) NOTICE.—Section 402(f) of the Surface Mining Control and 
Reclamation Act of 1977 (30 U.S.C. 1232(f)) is amended by adding the 
following at the end thereof: "Whenever the Secretary believes that 
any person has not paid the full amount of the fee payable under 
subsection (a) the Secretary shall notify the Federal agency respon-
sible for ensuring compliance with the provisions of section 4121 of 
the Internal Revenue Code of 1986.". 
SEC. 6004. ALLOCATION OF FUNDS. 
Section 402(g) of the Surface Mining Control and Reclamation Act 
of 1977 (30 U.S.C. 1232(g)) is amended to read as follows: 
"(g) ALLOCATION OF FUNDS.—(1) Moneys deposited into the fund 
shall be allocated by the Secretary to accomplish the purposes of 
this title as follows: 
"(A) 50 percent of the reclamation fees collected annually in 
any State (other than fees collected with respect to Indian 
lands) shall be allocated annually by the Secretary to the State, 
subject to such State having each of the following: 
"(i) An approved abandoned mine reclamation program 
pursuant to section 405. 
"(ii) Lands and waters which are eligible pursuant to 
section 404 (in the case of a State not certified under section 
411(a)) or pursuant to section 411(b) (in the case of a State 
certified under section 411(a)). 
"(B) 50 percent of the reclamation fees collected annually 
with respect to Indian lands shall be allocated annually by the 
Secretary to the Indian tribe having jurisdiction over such 
lands, subject to such tribe having each of the following: 
"(i) an approved abandoned mine reclamation program 
pursuant to section 405. 
"(ii) Lands and waters which are eligible pursuant to 
section 404 (in the case of an Indian tribe not certified 
under section 411(a)) or pursuant to section 411(b) (in the 
case of a tribe certified under section 411(a)). 
"(C) The funds allocated by the Secretary under this para-
graph to States and Indian tribes shall only be used for annual 
reclamation project construction and program administration 
grants. 
"(D) To the extent not expended within 3 years after the date 
of any grant award under this paragraph, such grant shall be 
available for expenditure by the Secretary in any area under 
paragraph (2), (3), (4), or (5). 
104 STAT. 1388-292 
PUBLIC LAW 101-508—NOV. 5, 1990 
"(2) 20 percent of the amounts available in the fund in any fiscal 
year which are not allocated under paragraph (1) in that fiscal year 
(including that interest accruing as provided in section 401(e) and 
including funds available for reallocation pursuant to paragraph 
(IXD)), shall be allocated to the Secretary only for the purpose of 
making the annual transfer to the Secretary of Agriculture under 
section 401(c)(2). 
"(3) Amounts available in the fund which are not allocated to 
States and Indian tribes under paragraph (1) or allocated under 
paragraphs (2) and (5) are authorized to be expended by the Sec-
retary for any of the following: 
"(A) For the purpose of section 507(c), either directly or 
through grants to the States, subject to the limitation contained 
in section 401(cXll). 
"(B) For the purpose of section 410 (relating to emergencies). 
"(C) For the purpose of meeting the objectives of the fund set 
forth in section 403(a) for eligible lands and waters pursuant to 
section 404 in States and on Indian lands where the State or 
Indian tribe does not have an approved abandoned mine rec-
lamation program pursuant to section 405. 
"(D) For the administration of this title by the Secretary. 
"(4XA) Amounts available in the fund which are not allocated 
under paragraphs (1), (2), and (5) or expended under paragraph (3) in 
any fiscal year are authorized to be expended by the Secretary 
under this paragraph for the reclamation or drainage abatement of 
lands and waters within unreclaimed sites which are mined for coal 
or which were affected by such mining, wastebanks, coal processing 
or other coal mining processes and left in an inadequate reclamation 
status. 
"(B) Funds made available under this paragraph may be used for 
reclamation or drainage abatement at a site referred to in subpara-
graph (A) if the Secretary makes either of the following findings: 
"(i) A finding that the surface coal mining operation occurred 
during the period beginning on August 4,1977, and ending on or 
before the date on which the Secretary approved a State pro-
gram pursuant to section 503 for a State in which the site is 
located, and that any funds for reclamation or abatement which 
are available pursuant to a bond or other form of financial 
guarantee or from any other source are not sufficient to provide 
for adequate reclamation or abatement at the site. 
"(ii) A finding that the surface coal mining operation occurred 
during the period beginning on August 4,1977, and ending on or 
before the date of enactment of this paragraph, and that the 
surety of such mining operator became insolvent during such 
period, and as of the date of enactment of this paragraph, funds 
immediately available from proceedings relating to such insol-
vency, or from any financial guarantee or other source are not 
sufficient to provide for adequate reclamation or abatement at 
the site. 
"(C) In determining which sites to reclaim pursuant to this para-
graph, the Secretary shall follow the priorities stated in paragraphs 
(1) and (2) of section 403(a). The Secretary shall ensure that priority 
is given to those sites which are in the immediate vicinity of a 
residenti£d area or which have an adverse economic impact upon a 
local community. 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-293 
"(D) Amounts collected from the assessment of civil penalties 
under section 518 are authorized to be appropriated to carry out this 
paragraph. 
"(E) Any State may expend grants made available under para-
graphs (1) and (5) for reclamation and abatement of any site referred 
to in subparagraph (A) if the State, with the concurrence of the 
Secretary, makes either of the findings referred to in clause (i) or (ii) 
of subparagraph (B) and if the State determines that the reclama-
tion priority of the site is the same or more urgent than the 
reclamation priority for eligible lands and waters pursuant to sec-
tion 404 under the priorities stated in paragraphs (1) and (2) of 
section 403(a). 
"(F) For the purposes of the certification referred to in section 
411(a), sites referred to in subparagraph (A) of this paragraph shall 
be considered as having the same priorities as those stated in section 
403(a) for eligible lands and waters pursuant to section 404. All sites 
referred to in subparagraph (A) of this paragraph within any State 
shall be reclaimed prior to such State making the certification 
referred to in section 411(a). 
"(5) The Secretary shall allocate 40 percent of the amount in the 
fund after making the allocation referred to in paragraph (1) for 
making additional annual grants to States and Indian tribes which 
are not certified under section 411(a) to supplement grants received 
by such States and Indian tribes pursuant to paragraph (1)(C) until 
the priorities stated in paragraphs (1) and (2) of section 403(a) have 
been achieved by such State or Indian tribe. The allocation of such 
funds for the purpose of making such expenditures shall be through 
a formula based on the amount of coal historically produced in the 
State or from the Indian lands concerned prior to August 3, 1977. 
Funds allocated or expended by the Secretary under paragraphs (2), 
(3), or (4) of this subsection for any State or Indian tribe shall not be 
deducted against any allocation of funds to the State or Indian tribe 
under paragraph (1) or under this paragraph. 
"(6) Any State may receive and retain, without regard to the 3-
year limitation referred to in paragraph (1)(D), up to 10 percent of 
the total of the grants made annually to such State under para-
graphs (1) and (5) if such amounts are deposited into either— 
"(A) a special trust fund established under State law pursuant 
to which such amounts (together with all interest earned on 
such amounts) are expended by the State solely to achieve the 
priorities stated in section 403(a) after September 30, 1995, or 
"(B) an acid mine drainage abatement and treatment fund 
established under State law as provided in paragraph (7). 
"(7)(A) Any State may establish under State law an acid mine 
drainage abatement and treatment fund from which amounts (to-
gether with all interest earned on such amounts) are expended by 
the State to implement, in consultation with the Soil Conservation 
Service, acid mine drainage abatement and treatment plans ap-
proved by the Secretary. Such plans shall provide for the com-
prehensive abatement of the causes and treatment of the effects of 
acid mine drainage within qualified hydrologic units affected by coal 
mining practices. 
"(B) The plan shall include, but shall not be limited to, each of the 
following: 
"(i) An identification of the qualified hydrologic unit. 
104 STAT. 1388-294 
PUBLIC LAW 101-508—NOV. 5, 1990 
"(ii) The extent to which acid mine drainage is affecting the 
water quality and biological resources within the hydrologic 
unit. 
"(iii) An identification of the sources of acid mine drainage 
within the hydrologic unit. 
. "(iv) An identification of individual projects and the measures 
proposed to be undertaken to abate and treat the causes or 
effects of acid mine drainage within the hydrologic unit. 
"(v) The cost of undertaking the proposed abatement and 
treatment measures. 
"(vi) An identification of existing and proposed sources of 
funding for such measures. 
"(vii) An analysis of the cost-effectiveness and environmental 
benefits of abatement and treatment me^ures. 
"(C) The Secretary may approve any plan under this paragraph 
only after determining that such plan meets the requirements of 
this paragraph. In conducting an analysis of the items referred to in 
clauses (iv), (v), and (vii) the Director of the Office of Surface Mining 
shall obtain the comments of the Director of the Bureau of Mines. In 
approving plans under this paragraph, the Secretary shall give a 
priority to those plans which will be implemented in coordination 
with measures undertaken by the Secretary of Agriculture under 
section 406. 
"(D) For purposes of this paragraph, the term 'qualified hydrologic 
unit' means a hydrologic unit— 
"(i) in which the water quality has been significantly affected 
by acid mine drainage from coal mining practices in a manner 
which adversely impacts biological resources; and 
"(ii) which contains lands and waters which are— 
"(I) eligible pursuant to section 404 and include any of the 
priorities stated in paragraph (1), (2), or (3) of section 403(a); 
and 
"(II) proposed to be the subject of the expenditures by the 
State (from amounts available from the forfeiture of bonds 
required under section 509 or from other State sources) to 
mitigate acid mine drainage. 
"(8) Of the funds available for expenditure under this subsection 
in any tiscal year, the Secretary shall allocate annually not less 
than $2,000,000 for expenditure in each State, and for each Indian 
tribe, having an approved abandoned mine reclamation program 
pursuant to section 405 and eligible lands and waters pursuant to 
section 404 so long as an allocation of funds to such State or such 
tribe is necessary to achieve the priorities stated in paragraphs (1) 
and (2) of section 403(a).". 
SEC. 6005. FUND OBJECTIVES. 
Section 403 of the Surface Mining Control and Reclamation Act of 
1977 (30 U.S.C. 1233) is amended as follows: 
(1) Insert "(a) PRIORITIES.—" after "SEC. 403.". 
(2) Insert ", except as provided for under section 411," after 
"title". 
(3) Add at the end the following new subsections: 
"(b) UTILITIES AND OTHER FACILITIES.—(1) Any State or Indian 
tribe not certified under section 411(a) may expend up to 30 percent 
of the funds allocated to such State or Indian tribe in any year 
through the grants made available under paragraphs (1) and (5) of 
section 402(g) for the purpose of protecting, repairing, replacing, 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-295 
constructing, or enhancing facilities relating to water supply, 
including water distribution facilities and treatment plants, to re-
place water supplies adversely affected by coal mining practices. 
"(2) If the adverse effect on water supplies referred to in this 
subsection occurred both prior to and after August 3, 1977, section 
404 shall not be construed to prohibit a State or Indian tribe 
referred to in paragraph (1) from using funds referred to in such 
paragraph for the purposes of this subsection if the State or Indian 
tribe determines that such adverse effects occurred predominantly 
prior to August 3,1977. 
"(c) INVENTORY.—For the purposes of assisting in the planning 
and evaluation of reclamation projects pursuant to section 405, and 
assisting in making the certification referred to in section 411(a), the 
Secretary shall maintain an inventory of eligible lands and waters 
pursuant to section 404 which meet the priorities stated in para-
graphs (1) and (2) of subsection (a). Under standardized procedures 
established by the Secretary, States and Indian tribes with approved 
abandoned mine reclamation programs pursuant to section 405 may 
offer amendments to update the inventory as it applies to eligible 
lands and waters under the jurisdiction of such States or tribes. The 
Secretary shall provide such States and tribes with the financial and 
technical assistance necessary for the purpose of making inventory 
amendments. The Secretary shall compile and maintain an inven-
tory for States and Indian lands in the case when a State or Indian 
tribe does not have an approved abandoned mine reclamation pro-
gram pursuant to section 405. On a regular basis, but not less than 
annually, the projects completed under this title shall be so noted on 
the inventory under standardized procedures established by the 
Secretary.". 
SEC. 6006. ELIGIBLE LANDS AND WATERS. 
Section 404 of the Surface Mining Control and Reclamation Act of 
1977 (30 U.S.C. 1234) is amended by inserting ", except as provided 
for under section 411" after "processes", and by adding the following 
at the end thereof: "For other provisions relating to lands and 
waters eligible for such expenditures, see section 402(g)(4), section 
40303)(1), and section 409.". 
SEC. 6007. STATE RECLAMATION PROGRAMS. 
Section 405 of the Surface Mining Control and Reclamation Act of 
1977 (30 U.S.C. 1235) is amended by adding the following at the end 
thereof: 
"(1) No State shall be liable under any provision of Federal law for 
any costs or damages as a result of action taken or omitted in the 
course of carrying out a State abandoned mine reclamation plan 
approved under this section. This subsection shall not preclude 
liability for cost or damages as a result of gross negligence or 
intentional misconduct by the State. For purposes of the preceding 
sentence, reckless, willful, or wanton misconduct shall constitute 
gross negligence.". 
SEC. 6008. CLARIFICATION. 
Section 406(d) of the Surface Mining Control and Reclamation Act 
of 1977 (30 U.S.C. 1236(d)) is amended by striking "experimental". 
104 STAT. 1388-296 
PUBLIC LAW 101-508—NOV. 5, 1990 
SEC. 6009. VOIDS AND TUNNELS. 
Section 409 of the the ^^ Surface Mining Control and Reclamation 
Act of 1977 (30 U.S.C 1239) is amended— 
(1) in subsection (a) by striking "chairman of any tribe" and 
inserting in lieu thereof "the governing body of an Indian 
tribe"; 
(2) in subsection (b), by striking "or Indian reservations under 
the provisions of subsection 402(g)" and inserting "or Indian 
tribes under the provisions of paragraphs (1) and (5) of section 
402(g)"; and 
(3) by amending subsection (c) to read as follows: 
"(cXl) The Secretary may make expenditures and carry out the 
purposes of this section in such States where requests are made by 
the Governor or governing body of an Indian tribe for those reclama-
tion projects which meet the priorities stated in section 403(aXl), 
except that for the purposes of this section the reference to coal in 
section 403(a)(1) shall not apply. 
"(2) The provisions of section 404 shall apply to this section, with 
the exception that such mined lands need not have been mined for 
coal. 
"(3) The Secretary shall not make any expenditures for the pur-
poses of this section in those States which have made the certifi-
cation referred to in section 411(a).". 
SEC. 6010. CERTIFICATION. 
Title IV of the Surface Mining Control and Reclamation Act of 
1977 (30 U.S.C. 1231 et seq.) is amended as follows: 
30 use 
(1) Redesignate sections 411, 412, and 413 as sections 412, 413, 
1241-1243. 
and 414, respectively. 
(2) Insert after section 410 the following new section: 
30 u s e 1240a. 
"SEC. 411. CERTIFICATION. 
"(a) CERTIFICATION OF COMPLETION OF COAL RECLAMATION.—The 
Governor of a State, or the head of a governing body of an Indian 
tribe, with an approved abandoned mine reclamation program 
under section 405 may certify to the Secretary that all of the 
priorities stated in section 403(a) for eligible lands and waters 
pursuant to section 404 have been achieved. The Secretary, after 
notice in the Federal Register and opportunity for public comment, 
shall concur with such certification if the Secretary determines that 
such certification is correct. 
"(b) EuGiBLE LANDS, WATERS, AND FACIUTIES.—If the Secretary 
has concurred in a State or tribal certification under subsection (a), 
for purposes of determining the eligibility of lands and waters for 
annual grants under section 402(g)(1), section 404 shall not apply, 
and eligible lands, waters, and facilities shall be those— 
"(1) which were mined or processed for minerals or which 
were affected by such mining or processing, and abandoned or 
left in an inadequate reclamation status prior to August 3,1977; 
and 
"(2) for which 
there 
is no continuing 
reclamation 
responsibility under State or other Federal laws. In determining 
the eligibility under this subsection of Federal lands, waters, 
and facilities under the jurisdiction of the Forest Service or 
Bureau of Land Management, in lieu of the August 3,1977, date 
referred to in paragraph (1) the applicable date shall be August 
28,1974, and November 26,1980, respectively. 
o'' So in original. Probably should be "of the Surface". 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-297 
"(c) PRIORITIES.—Expenditures of moneys for lands, waters, and 
facilities referred to in subsection (b) shall reflect the following 
objectives and priorities in the order stated (in lieu of the priorities 
set forth in section 403): 
"(1) The protection of public health, safety, general welfare, 
and property from extreme danger of adverse effects of mineral 
mining and processing practices. 
"(2) The protection of public health, safety, and general wel-
fare from adverse effects of mineral mining and processing 
practices. 
"(3) The restoration of land and water resources and the 
environment previously degraded by the adverse effects of min-
eral mining and processing practices. 
"(d) SPECIFIC SITES AND AREAS NOT EUGIBLE.—Sites and areas 
designated for remedial action pursuant to the Uranium Mill 
Tailings Radiation Control Act of 1978 (42 U.S.C. 7901 and following) 
or which have been listed for remedial action pursuant to the 
Comprehensive Environmental Response Compensation and Liabil-
ity Act of 1980 (42 U.S.C. 9601 and following) shall not be eligible for 
expenditures from the Fund under this section. 
"(e) 
UTIUTIES AND OTHER 
FACILITIES.—Reclamation projects 
involving the protection, repair, replacement, construction, or 
enhancement of utilities, such as those relating to water supply, 
roads, and such other facilities serving the public adversely affected 
by mineral mining and processing practices, and the construction of 
public facilities in communities impacted by coal or other mineral 
mining and processing practices, shall be deemed part of the objec-
tives set forth, and undertaken as they relate to, the priorities stated 
in subsection (c). 
"(f) Notwithstanding subsection (e), where the Secretary has con-
curred in the certification referenced in subsection (a) and where the 
Governor of a State or the head of a governing body of an Indian 
tribe determines there is a need for activities or construction of 
specific public facilities related to the coal or minerals industry in 
States impacted by coal or minerals development and the Secretary 
concurs in such need, then the State or Indian tribe, as the case may 
be, may use annual grants made available under section 402(g)(1) to 
carry out such activities or construction. 
"(g) APPUCATION OF OTHER PROVISIONS.—The provisions of sec-
tions 407 and 408 shall apply to subsections (a) through (e) of this 
section, except that for purposes of this section the references to coal 
in sections 407 and 408 shall not apply.". 
SEC. 6011. SMALL OPERATOR ASSISTANCE. 
Section 507(c) of the Surface Mining Control and Reclamation Act 
of 1977 (30 U.S.C. 1257(c)) is amended by striking "100,000" and 
. inserting "300,000". 
SEC. 6012. TECHNICAL AND CONFORMING AMENDMENTS. 
(a) TABLE OF CONTENTS.—The table of contents in the first section 
of the Surface Mining Control and Reclamation Act of 1977 (30 
U.S.C. 1201) is amended as follows: 
(1) Redesignate the items relating to sections 411, 412, and 413 
as items 412, 413, and 414, respectively. 
(2) Insert after the item relating to section 410 the following: 
"Sec. 411. Certification.". 
39-194 O - 91 - 23 : QL 3 Part 2 
104 STAT. 1388-298 
PUBLIC LAW 101-508—NOV. 5, 1990 
(b) REFERENCE.—Section 712 (b) of the Surface Mining Control and 
Reclamation Act of 1977 (30 U.S.C. 1302(b)) is amended to read as 
follows: 
"(b) For the implementation and funding of section 507(c), see the 
provisions of section 401(cXll).". 
(c) REPEAL.—Section 406(i) of the Surface Mining Control and 
Reclamation Act of 1977 (30 U.S.C. 1236(i)) is repealed. 
(d) TECHNICAL CORRECTIONS.—The following provisions of the Sur-
face Mining Control and Reclamation Act of 1977 (30 U.S.C. 1231 
£ind following) are amended as follows: 
30 use 1235. 
(1) Section 405(a) is amended by striking out "perparation" 
and inserting "preparation". 
(2) Section 405(h) is amended by striking out "Upon ap-
proved" and inserting "Upon approval". 
30 use 1236. 
(3) Section 406(a) is amended by striking out "including 
owners" and inserting "(including owners". 
30 use 1237. 
(4) Section 407(a)(4) is amended by striking out the period and 
inserting a semicolon. 
(5) Section 407(a) is amended by striking out "Then" and 
inserting "then". 
(6) Section 407(e) is amended by striking out "paragraph (1), of 
this subsection" and inserting "paragraph (1) of subsection (c)". 
(7) Section 407(g)(2) is amended by striking out "the use o f 
and inserting "the use or". 
30 use 1231 
SEC. 6013. SAVINGS CLAUSE. 
Nothing in this subtitle shall be construed to affect the certifi-
cations made by the State of Wyoming, the State of Montana, and 
the State of Louisiana to the Secretary of the Interior prior to the 
date of enactment of this subtitle that such State has completed the 
reclamation of eligible abandoned coal mine lands. 
30 use 1231 
SEC. 6014. EFFECTIVE DATE. 
The amendments made by this subtitle shall take effect at the 
beginning of the first fiscal year immediately following the fiscal 
year in which this subtitle is enacted. 
Subtitle B—NRC User Fees and Annual 
Charges 
42 use 2214. 
SEC. 6101. NRC USER FEES AND ANNUAL CHARGES. 
(a) ANNUAL ASSESSMENT.— 
(1) IN GENERAL.—Except as provided in paragraph (3), the 
Nuclear Regulatory Commission (in this section referred to as 
the "Commission") shall annually assess and collect such fees 
and charges as are described in subsections (b) and (c). 
(2) FIRST ASSESSMENT.—The first assessment of fees under 
subsection (b) and annual charges under subsection (c) shall be 
made not later than September 30,1991. 
(3) LAST ASSESSMENT OF ANNUAL CHARGES.—The last assess-
ment of annual charges under subsection (c) shall be made not 
later than September 30,1995. 
(b) FEES FOR SERVICE OR THING OF VALUE.—Pursuant to section 
9701 of title 31, United States Code, any person who receives a 
service or thing of value from the Commission shall pay fees to cover 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-299 
the Commission's costs in providing any such service or thing of 
value. 
(c) ANNUAL CHARGES.— 
(1) PERSONS SUBJECT TO CHARGE.—Any licensee of the Commis-
sion may be required to pay, in addition to the fees set forth in 
subsection (b), an annual charge. 
(2) AGGREGATE AMOUNT OF CHARGES.—The aggregate amount 
of the annual charge collected from all licensees shall equal an 
amount that approximates 100 percent of the budget authority 
of the Commission in the fiscal year in which such charge is 
collected, less any amount appropriated to the Commission from 
the Nuclear Waste Fund and the amount of fees collected under 
subsection (b) in such fiscal year. 
(3) AMOUNT PER UCENSEE.—The Commission shall establish, 
by rule, a schedule of charges fairly and equitably allocating the 
aggregate amount of charges described in paragraph (2) among 
licensees. To the maximum extent practicable, the charges shall 
have a reasonable relationship to the cost of providing regu-
latory services and may be based on the allocation of the 
Commission's resources among licensees or classes of licensees. 
(d) DEFINITION.—As used in this section, the term "Nuclear Waste 
Fund" means the fund established pursuant to section 302(c) of the 
Nuclear Waste Policy Act of 1982 (42 U.S.C. 10222(c)). 
(e) CONFORMING AMENDMENT TO COBRA.—Paragraph (1)(A) of 
section 7601 of the Consolidated Omnibus Budget Reconciliation Act 
of 1985 (Public Law 99-272) is amended by striking "except that for 42 USC 2213. 
fiscal year 1990 such maximum amount shall be estimated to be 
equal to 45 percent of the costs incurred by the Commission for 
fiscal year 1990" and inserting "except as otherwise provided by 
law". 
Subtitle C—Amendments to Coastal Zone 
coastai z
o
n
e A
c
t 
Management Act of 1972 
A
m
e
n
d
S
i
^
^
o
f 
** 
1990. 
SEC. 6201. SHORT TITLE. 
16 USC 1451 
This subtitle may be cited as the "Coastal Zone Act Reauthoriza-
tion Amendments of 1990". 
SEC. 6202. FINDINGS AND PURPOSE OF THIS SUBTITLE. 
16 USC 1451 
(a) FINDINGS.—Congress finds and declares the following: 
(1) Our oceans, coastal waters, and estuaries constitute a 
unique resource. The condition of the water quality in and 
around the coastal areas is significantly declining. Growing 
human pressures on the coastal ecosystem will continue to 
degrade this resource until adequate actions and policies are 
implemented. 
(2) Almost one-half of our total population now lives in coastal 
areas. By 2010, the coastal population will have grown from 
80,000,000 in 1960 to 127,000,000 people, an increase of approxi-
mately 60 percent, and population density in coastal counties 
will be among the highest in the Nation. 
(3) Marine resources contribute to the Nation's economic 
stability. Commercial and recreational fishery activities support 
an industry with an estimated value of $12,000,000,000 a year. 
104 STAT. 1388-300 
PUBLIC LAW 101-508—NOV. 5, 1990 
(4) Wetlands play a vital role in sustaining the coastal econ-
omy and environment. Wetlands support and nourish fishery 
and marine resources. They also protect the Nation's shores 
from storm and wave damage. Coastal wetlands contribute an 
estimated $5,000,000,000 to the production of fish and shellfish 
in the United States coastal waters. Yet, 50 percent of the 
Nation's coastal wetlands have been destroyed, and more are 
likely to decline in the near future. 
(5) Nonpoint source pollution is increasingly recognized as a 
significant factor in coastal water degradation. In urban areas, 
storm water and combined sewer overflow are linked to major 
coastal problems, and in rural areas, run-off from agricultural 
activities may add to coastal pollution. 
(6) Coastal planning and development control measures are 
essential to protect coastal water quality, which is subject to 
continued ongoing stresses. Currently, not enough is being done 
to manage and protect our coastal resources. 
(7) Global warming results from the accumulation of man-
made gases, released into the atmosphere from such activities 
as the burning of fossil fuels, deforestation, and the production 
of chlorofluorocarbons, which trap solar heat in the atmosphere 
and raise temperatures worldwide. Global warming could result 
in significant global sea level rise by 2050 resulting from ocean 
expansion, the melting of snow and ice, and the gradual melting 
, 
of the polar ice cap. Sea level rise will result in the loss of 
natural resources such as beaches, dunes, estuaries, and wet-
lands, and will contribute to the salinization of drinking water 
supplies. Sea level rise will also result in damage to properties, 
infrastructures, and public works. There is a growing need to 
plan for sea level rise. 
(8) There is a clear link between coastal water quality and 
land use activities along the shore. State management programs 
under the Coastal Zone Management Act of 1972 (16 U.S.C. 1451 
et seq.) are among the best tools for protecting coastal resources 
and must play a larger role, particularly in improving coastal 
zone water quality. 
(9) All coastal States should have coastal zone management 
programs in place that conform to the Coastal Zone Manage-
ment Act of 1972, as amended by this Act. 
(b) PURPOSE.—It is the purpose of Congress in this subtitle to 
enhance the effectiveness of the Coastal Zone Management Act of 
1972 by increasing our understanding of the coastal environment 
and expanding the ability of State coastal zone management pro-
grams to address coastal environmental problems. 
SEC. 6203. FINDINGS AND POLICY OF COASTAL ZONE MANAGEMENT ACT 
OF 1972. 
(a) FINDINGS.—(1) Section 302(d) of the Coastal Zone Management 
Act of 1972 (16 U.S.C. 1451(d)) is amended by inserting "habitat 
areas of the" immediately before "coastal zone". 
(2) Section 302(f) of the Coastal Zone Management Act of 1972 (16 
U.S.C. 1451(f)) is amended by inserting "exclusive economic zone," 
immediately after "territorial sea,". 
(3) Section 302 of the Coastal Zone Management Act of 1972 (16 
U.S.C. 1451) is amended by adding at the end the following new 
subsections: 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-301 
"(k) Land uses in the coastal zone, and the uses of adjacent lands 
which drain into the coastal zone, may significantly affect the 
quality of coastal waters and habitats, and efforts to control coastal 
water pollution from land use activities must be improved. 
"(1) Because global warming may result in a substantial sea level 
rise with serious adverse effects in the coastal zone, coastal states 
must anticipate and plan for such an occurrence. 
"(m) Because of their proximity to and reliance upon the ocean 
and its resources, the coastal states have substantial and significant 
interests in the protection, management, and development of the . 
resources of the exclusive economic zone that can only be served by 
the active participation of coastal states in all Federal programs 
affecting such resources and, wherever appropriate, by the develop-
ment of state ocean resource plans as part of their federally ap-
proved coastal zone management programs.". 
(b) POLICY.—(1) Section 303(2) of the Coastal Zone Management 
Act of 1972 (16 U.S.C. 1452(2)) is amended by striking "as well as the 
needs for" and inserting in lieu thereof "EIS well as the needs for 
compatible". 
(2) Section 303(2)(B) of the Coastal Zone Management Act of 1972 
(16 U.S.C. 1452(2)(B)) is amended by striking "of subsidence" and 
inserting in lieu thereof the following: "likely to be affected by or 
vulnerable to sea level rise, land subsidence,". 
(3) Section 303(2) of the Coastal Zone Management Act of 1972 (16 
U.S.C. 1452(2)), as amended by paragraph (1), is amended— 
(A) by redesignating subparagraphs (C) through (I) as sub-
paragraphs (D) through (J), respectively; and 
(B) by inserting immediately after subparagraph (B) the fol-
lowing new subparagraph: 
"(C) the management of coastal development to improve, 
safeguard, and restore the quality of coastal waters, and to 
protect natural resources and existing uses of those 
(4) Section 303(2) of the Coastal Zone Management Act of 1972 (16 
U.S.C. 1452(2)), as amended by paragraphs (1) and (3), is further 
amended— 
(A) by striking "and" at the end of subparagraph (I), as so 
redesignated by paragraph (3); 
(B) by striking the semicolon in subparagraph (J), as so re-
designated by paragraph (3), and inserting in lieu thereof a 
comma; and 
(C) bv adding at the end the following new subparagraph: 
' (K) the study and development, in any case in which the 
Secretary considers it to be appropriate, of plans for 
addressing the adverse effects upon the coastal zone of land 
subsidence and of sea level rise; and". 
(5) Section 303(3) of the Coastal Zone Management Act of 1972 (16 
U.S.C. 1452(3)) is amended by inserting "including those areas likely 
to be affected by land subsidence, sea level rise, or fluctuating water 
levels of the Great Lakes," immediately after "hazardous areas,". 
(6) Section 303 of the Coastal Zone Management Act of 1972 (16 
U.S.C. 1452) is amended by striking "and" at the end of paragraph 
(3); by striking the period at the end of paragraph (4) and inserting 
in lieu thereof a semicolon; and by adding at the end the following 
new paragraphs: 
"(5) to encourage coordination and cooperation with and 
among the appropriate Federal, State, and local agencies, and 
104 STAT. 1388-302 
PUBLIC LAW 101-508—NOV. 5, 1990 
international organizations where appropriate, in collection, 
analysis, synthesis, and dissemination of coastal management 
information, research results, and technical assistance, to sup-
port State and Federal regulation of land use practices affecting 
the coastal and ocean resources of the United States; and 
"(6) to respond to changing circumstances affecting the 
coastal environment and coastal resource management by 
encouraging States to consider such issues as ocean uses poten-
tially affecting the coastal zone.". 
SEC. 6204. DEFINITIONS. 
(a) COASTAL ZONE.—The third sentence of section 304(1) of the 
Coastal Zone Management Act of 1972 (16 U.S.C. 1453(1)) is 
amended— 
(1) by inserting ", and to control those geographical areas 
which are likely to be affected by or vulnerable to sea level rise" 
immediately before the period at the end; and 
(2) by striking "the United States territorial sea." and insert-
ing in lieu thereof "the outer limit of State title and ownership 
under the Submerged Lands Act (43 U.S.C. 1301 et seq.), the Act 
of March 2, 1917 (48 U.S.C. 749), the Covenant to Establish a 
Commonwealth of the Northern Mariana Islands in Political 
Union with the United States of America, as approved by the 
Act of March 24, 1976 (48 U.S.C. 1681 note), or section 1 of the 
Act of November 20, 1963 (48 U.S.C. 1705, ^e as applicable.". 
(b) ENFORCEABLE POUCY.—Section 304 of the Coastal Zone 
Management Act of 1972 (16 U.S.C. 1453) is amended by inserting 
after paragraph (6) the following' ®' 
"(6a) ^
® The term 'enforceable policy' means State policies 
which are legally binding through constitutional provisions, 
laws, regulations, land use plans, ordinances, or judicial or 
administrative decisions, by which a State exerts control over 
private and public land and water uses and natural resources in 
the coastal zone.". 
(c) WATER USE.—Section 304(18) of the Coastal Zone Management 
Act of 1972 (16 U.S.C. 1453(18)) is amended by striking all after 
"means" and inserting in lieu thereof "a use, activity, or project 
conducted in or on waters within the coastal zone.". 
SEC. 
6
2
0
5
. 
MANAGEMENT 
PROGRAM 
DEVELOPMENT 
GRANTS. 
Section 305 of the Coastal Zone Management Act of 1972 (16 
U.S.C. 1454) is amended to read as follows: 
"MANAGEMENT PROGRAM DEVELOPMENT GRANTS 
"SEC. 305. (a) In fiscal years 1991, 1992, and 1993, the Secretary 
may make a grant annually to any coastal state without an ap-
proved program if the coastal state demonstrates to the satisfaction 
of the Secretary that the grant will be used to develop a manage-
ment program consistent with the requirements set forth in section 
306. The amount of any such grant shall not exceed $200,000 in any 
fiscal year, and shall require State matching funds according to 
a 4-to-l ratio of Federal-to-State contributions. After an initial grant 
is made to a coastal state pursuant to this subsection, no subsequent 
grant shall be made to that coastal state pursuant to this subsection 
unless the Secretary finds that the coastal state is satisfactorily 
** So in original. Probably should be "1705),". 
'^ So in original. Probably should be "following:". 
" So in original. Probably should be "(6Xa)". 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-303 
developing its management program. No coastal State is eligible to 
receive more than two grants pursuant to this subsection. 
"(b) Any coastal State which has completed the development of its 
management program shall submit such program to the Secretary 
for review and approval pursuant to section 306.". 
SEC. 6206. ADMINISTRATIVE GRANTS. 
(a) IN GENERAL.—Section 306 of the Coastal Zone Management 
Act of 1972 (16 U.S.C. 1455) is amended to read as follows: 
"ADMINISTRATIVE GRANTS 
"SEC. 306. (a) The Secretary may make grants to any coastal State 
for the purpose of administering that State's management program, 
if the State matches any such grant according to the following ratios 
of Federal-to-State contributions for the applicable fiscal year: 
"(1) For those States for which programs were approved prior 
to enactment of the Coastal Zone Act Reauthorization Amend-
ments of 1990,1 to 1 for any fiscal year. 
"(2) For programs approved after enactment of the Coastal 
Zone Act Reauthorization Amendments of 1990, 4 to 1 for the 
first fiscal year, 2.3 to 1 for the second fiscal year, 1.5 to 1 for the 
third fiscal year, and 1 to 1 for each fiscal year thereafter. 
"(b) The Secretary may make a grant to a coastal State under 
subsection (a) only if the Secretary finds that the management 
program of the coastal State meets all applicable requirements of 
this title and has been approved in accordance with subsection (d); 
"(c) Grants under this section shall be allocated to coastal States 
with approved programs based on rules and regulations promul-
gated by the Secretary which shall take into account the extent and 
nature of the shoreline and area covered by the program, population 
of the area, and other relevant factors. The Secretary shall estab-
lish, after consulting with the coastal States, maximum and mini-
mum grants for any fiscal year to promote equity between coastal 
States and effective coastal management. 
"(d) Before approving a management program submitted by a 
coastal State, the Secretary shall find the following: 
"(1) The State has developed and adopted a management 
program for its coastal zone in accordance with rules and 
regulations promulgated by the Secretary, after notice, and 
with the opportunity of full participation by relevant Federal 
agencies, State agencies, local governments, regional organiza-
tions, port authorities, and other interested parties and individ-
uals, public and private, which is adequate to carry out the 
purposes of this title and is consistent with the policy declared 
in section 303. 
"(2) The management program includes each of the following 
required program elements: 
"(A) An identification of the boundaries of the coastal 
zone subject to the management program. 
"(B) A definition of what shall constitute permissible land 
uses and water uses within the coastal zone which have a 
direct and significant impact on the coastal waters. 
"(C) An inventory and designation of areas of particular 
concern within the coastal zone. 
"(D) An identification of the means by which the State 
proposes to exert control over the land uses and water uses 
104 STAT. 1388-304 
PUBLIC LAW 101-508—NOV. 5, 1990 
referred to in subparagraph (B), including a list of relevant 
State constitutional provisions, laws, regulations, and ju-
dicial decisions. 
"(E) Broad guidelines on priorities of uses in particular 
areas, including specifically those uses of lowest priority. 
"(F) A description of the organizational structure pro-
posed to implement such management program, including 
the 
responsibilities 
and 
interrelationships 
of 
local, 
areawide. State, regional, and interstate agencies in the 
management process. 
"(G) A definition of the term 'beach' and a planning 
process for the protection of, and access to, public beaches 
and other public coastal areas of environmental, rec-
reational, historical, esthetic, ecological, or cultural value. 
"(H) A planning process for energy facilities likely to be 
located in, or which may significantly affect, the coastal 
zone, including a process for anticipating the management 
of the impacts resulting from such facilities. 
"(I) A planning process for assessing the effects of, and 
studying and evaluating ways to control, or lessen the 
impact of, shoreline erosion, and to restore areas adversely 
affected by such erosion. 
"(3) The State has— 
"(A) coordinated its program with local, areawide, and 
' interstate plans applicable to areas within the coastal 
zone— 
"(i) existing on January 1 of the year in which the 
State's management program is submitted to the Sec-
retary; and 
"(ii) which have been developed by a local govern-
ment, an areawide agency, a regional agency, or an 
interstate agency; and 
"(B) established an effective mechanism for continuing 
consultation and coordination between the management 
agency designated pursuant to paragraph (6) and with local 
governments, interstate agencies, regional agencies, and 
areawide agencies within the coastal zone to assure the full 
participation of those local governments and agencies in 
carrying out the purposes of this title; except that the 
Secretary shall not find any mechanism to be effective for 
purposes of this subparagraph unless it requires that— 
"(i) the management agency, before implementing 
any management program decision which would con-
flict with any local zoning ordinance, decision, or other 
action, shall send a notice of the management program 
decision to any local government whose zoning author-
ity is affected; 
"(ii) within the 30-day period commencing on the 
date of receipt of that notice, the local government may 
submit to the management agency written comments 
on the management program decision, and any rec-
ommendation for alternatives; and 
"(iii) the management agency, if any comments are 
submitted to it within the 30-day period by any local 
government— 
"(I) shall consider the comments; 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-305 
"(11) may, in its discretion, hold a public hearing 
on the comments; and 
"(III) may not take any action within the 30-day 
period to implement the management program 
decision. 
"(4) The State has held public hearings in the development of 
the management program. 
"(5) The management program and any changes thereto have 
been reviewed and approved by the Governor of the State. 
"(6) The Governor of the State has designated a single State 
agency to receive and administer grants for implementing the 
management program. 
"(7) The State is organized to implement the management 
program. 
"(8) The management program provides for adequate consid-
eration of the national interest involved in planning for, and 
managing the coastal zone, including the siting of facilities such 
as energy facilities which are of greater than local significance. 
In the case of energy facilities, the Secretary shall find that the 
State has given consideration to any applicable national or 
interstate energy plan or program. 
"(9) The management program includes procedures whereby 
specific areas may be designated for the purpose of preserving 
or restoring them for their conservation, recreational, ecological, 
historical, or esthetic values. 
"(10) The State, acting through its chosen agency or agencies 
(including local governments, areawide agencies, regional agen-
cies, or interstate agencies) has authority for the management 
of the coastal zone in accordance with the management pro-
gram. Such authority shall include power— 
"(A) to administer land use and water use regulations to 
control development to ensure compliance with 
the 
management program, and to resolve conflicts among 
competing uses; and 
"(B) to acquire fee simple and less than fee simple in-
terests in land, waters, and other property through con-
demnation or other means when necessary to achieve 
conformance with the management program. 
"(11) The management program provides for any one or a 
combination of the following general techniques for control of 
land uses and water uses within the coastal zone: 
"(A) State establishment of criteria and standards for 
local implementation, subject to administrative review and 
enforcement. 
"(B) Direct State land and water use planning and regula-
tion. 
"(C) State administrative review for consistency with the 
management program of all development plans, projects, or 
land and water use regulations, including exceptions and 
variances thereto, proposed by any State or local authority 
or private developer, with power to approve or disapprove 
after public notice and an opportunity for hearings. 
"(12) The management program contains a method of assur-
ing that local land use and water use regulations within the 
coastal zone do not unreasonably restrict or exclude land uses 
and water uses of regional benefit. 
"(13) The management program provides for— 
104 STAT. 1388-306 
PUBLIC LAW 101-508—NOV. 5, 1990 
"(A) the inventory and designation of areas that contain 
one or more coastal resources of national significance; and 
"(B) specific and enforceable standards to protect such 
resources. 
"(14) The management program provides for public participa-
tion in permitting processes, consistency determinations, and 
other similar decisions. 
"(15) The mansigement program provides a mechanism to 
ensure that all State agencies will adhere to the program. 
"(16) The management program contains enforceable policies 
and mechanisms to implement the applicable requirements of 
the Coastal Nonpoint Pollution Control Program of the State 
required by section 6217 of the Coastal Zone Act Reauthoriza-
tion Amendments of 1990. 
"(e) A coastal state may amend or modify a management program 
which it has submitted and which has been* approved by the Sec-
retary under this section, subject to the following conditions: 
"(1) The State shall promptly notify the Secretary of any 
proposed amendment, modification, or other program change 
and submit it for the Secretary's approval. The Secretary may 
suspend all or part of any grant made under this section 
pending State submission of the proposed amendments, modi-
fication, or other program change. 
"(2) Within 30 days after the date the Secretary receives any 
proposed amendment, the Secretary shall notify the State 
whether the Secretary approves or disapproves the amendment, 
or whether the Secretary finds it is necessary to extend the 
review of the proposed amendment for a period not to exceed 
120 days after the date the Secretary received the proposed 
amendment. The Secretary may extend this period only as 
necessary to meet the requirements of the National Environ-
mental Policy Act of 1969 (42 U.S.C. 4321 et seq.). If the Sec-
retary does not notify the coastal State that the Secretary 
approves or disapproves the amendment within that period, 
then the amendment shall be conclusively presumed as 
approved. 
"(3XA) Except as provided in subparagraph (B), a coastal State 
may not implement any amendment, modification, or other 
change as part of its approved management program unless the 
amendment, modification, or other change is approved by the 
Secretary under this subsection. 
"(B) The Secretary, after determining on a preliminary basis, 
that an amendment, modification, or other change which has 
been submitted for approval under this subsection is likely to 
meet the program approval standards in this section, may 
permit the State to expend funds awarded under this section to 
begin implementing the proposed amendment, modification, or 
change. This preliminary approval shall not extend for more 
than 6 months and may not be renewed. A proposed amend-
ment, modification, or change which has been given prelimi-
nary approval and is not finally approved under this paragraph 
shall not be considered an enforceable policy for purposes of 
section 307.". 
42 use 1456 
(b) ADDITIONAL PROGRAM REQUIREMENTS.—Each State which sub-
"o*®- 
mits a management progrsmi for approval under section 306 of the 
Coastal Zone Management Act of 1972, as amended by this subtitle 
PUBLIC LAW 101-508—NOV. 5,1990 
104 STAT. 1388-307 
(including a State which submitted a program before the date of 
enactment of this Act), shall demonstrate to the Secretary— 
(1) that the program complies with section 306(dX14) and (15) 
of that Act, by not later than 3 years after the date of the 
enactment of this Act; and 
(2) that the program complies with section 306(dX16) of that 
Act, by not later than 30 months after the date of publication of 
final guidance under section 6217(g) of this Act. 
SEC. 6207. RESOURCE MANAGEMENT IMPROVEMENT GRANTS. 
Section 306A(b)(l) of the Coastal Zone Management Act of 1972 (16 
U.S.C. 1455a(b)(l)) is amended by adding before the period at the end 
the following: ", or for the purpose of restoring and enhancing 
shellfish production by the purchase and distribution of clutch 
material on publicly owned reef tracts". 
SEC. 6208. COASTAL ZONE MANAGEMENT CONSISTENCY. 
(a) FEDERAL AGENCY ACTIVITIES.—Section 307(cXl) of the Coastal 
Zone Management Act of 1972 (16 U.S.C. 1456(cXl)) is amended to 
read as follows: 
"(c)(1)(A) Each Federal agency activity within or outside the 
coastal zone that affects any land or water use or natural resource of 
the coastal zone shall be carried out in a manner which is consistent 
to the maximum extent practicable with the enforceable policies of 
approved State management programs. A Federal agency activity 
shall be subject to this paragraph unless it is subject to paragraph 
(2) or (3). 
"(B) After any final judgment, decree, or order of any Federal 
court that is appealable under section 1291 or 1292 of title 28, 
United States Code, or under any other applicable provision of 
Federal law, that a specific Federal agency activity is not in compli-
ance with subparagraph (A), and certification by the Secretary that 
mediation under subsection (h) is not likely to result in such compli-
ance, the President may, upon written request from the Secretary, 
exempt from compliance those elements of the Federal agency 
activity that are found by the Federal court to be inconsistent with 
an approved State program, if the President determines that the 
activity is in the paramount interest of the United States. No such 
exemption shall be granted on the basis of a lack of appropriations 
unless the President has specifically requested such appropriations 
as part of the budgetary process, and the C!ongress has failed to 
make available the requested appropriations. 
"(C) Each Federal agency carrjdng out an activity subject to 
paragraph (1) shall provide a consistency determination to the 
relevant State agency designated under section 306(d)(6) at the 
earliest practicable time, but in no case later than 90 days before 
final approval of the Federal activity unless both the Federal agency 
and the State agency agree to a different schedule.". 
(b) TECHNICAL AND CONFORMING CHANGES.— 
(1) Section 307(cX2) of the Coastal Zone Management Act of 
1972 (16 U.S.C. 1456(cX2)) is amended by inserting "the enforce-
able policies o f before "approved State management pro-
grams". 
(2) Section 307(cX3XA) of the (Doastal Zone Management Act of 
1972 (16 U.S.C. 1456(cX3XA)) is amended in the first sentence— 
(A) by inserting ", in or outside of the coastal zone," after 
"to conduct an activity"; 
104 STAT. 1388-308 
PUBLIC LAW 101-508—NOV. 5, 1990 
(B) by striking "land or water uses in" and inserting "any 
land or water use or natural resource of; and 
(C) by inserting "the enforceable policies o f after the 
words the proposed activity complies with". 
(3) Section 307(cX3)(B) of the Coastal Zone Management Act of 
1972 (16 U.S.C. 1456(c)(3XB)) is amended in the first sentence— 
(A) by striking "land use or water use in" and inserting 
"land or water use or natural resource of; and 
(B) by inserting "the enforceable policies o f after "such 
plan complies". 
(4) Section 307(d) of the Coastal Zone Management Act of 1972 
(16 U.S.C. 1456(d)) is amended— 
(A) by striking "affecting" and inserting ", in or outside 
of the coastal zone, affecting any land or water use of 
natural resource of; and 
(B) by inserting "the enforceable policies o f after "that 
are inconsistent with". 
(c) FEDERAL FEE.—Section 307 of the Coastal Zone Management 
Act of 1972 (16 U.S.C. 1456) is amended by adding at the end the 
following: 
"(i) With respect to appeals under subsections (c)(3) and (d) which 
are submitted after the date of the enactment of the Coastal Zone 
Act Reauthorization Amendments of 1990, the Secretary shall col-
lect an application fee of not less than $200 for minor appeals and 
not less than $500 for major appeals, unless the Secretary, upon 
consideration of an applicant's request for a fee waiver, determines 
that the applicant is unable to pay the fee. The Secretary shall 
collect such other fees as are necessary to recover the full costs of 
administering and processing such appeals under subsection (c).". 
SEC. 6209. COASTAL ZONE MANAGEMENT FUND. 
Section 308 of the Coastal Zone Management Act of 1972 (16 
U.S.C. 1456) is amended to read as follows: 
"COASTAL ZONE MANAGEMENT FUND 
16 use 1456a. 
"SEC. 308. (aXD The obligations of any coastal State or unit of 
general purpose local government to repay loans made pursuant to 
this section as in effect before the date of the enactment of the 
Coastal Zone Act Reauthorization Amendments of 1990, and any 
repayment schedule established pursuant to this Act as in effect 
before that date of enactment, are not altered by any provision of 
this title. Such loans shall be repaid under authority of this subsec-
tion and the Secretary may issue regulations governing such repay-
ment. If the Secretary finds that any coastal State or unit of local 
government is unable to meet its obligations pursuant to this subsec-
tion because the actual increases in employment and related 
population resulting from coastal energy activity and the facilities 
associated with such activity do not provide adequate revenues to 
enable such State or unit to meet such obligations in accordance 
with the appropriate repayment schedule, the Secretary shall, after 
review of the information submitted by such State or unit, take any 
of the following actions: 
"(A) Modify the terms and conditions of such loan. 
"(B) Refinance the loan. 
"(C) Recommend to the Congress that legislation be enacted 
to forgive the loan. 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-309 
"(2) Loan repayments made pursuant to this subsection shall be 
retained by the Secretary as offsetting collections, and shall be 
deposited into the Coastal Zone Management Fund established 
under subsection (b). 
"(bXl) The Secretary shall establish and maintain a fund, to be 
known as the 'Coastal Zone Management Fund' (hereinafter in this 
section referred to as the 'Fund'), which shall consist of amounts 
retained and deposited into the Fund under subsection (a). 
"(2) Subject to amounts provided in appropriation Acts, amounts 
in the Fund shall be available to the Secretary for use for the 
following: 
"(A) Expenses incident to the administration of this title, in 
an amount not to exceed— 
"(i) $5,000,000 for fiscal year 1991; 
"(ii) $5,225,000 for fiscal year 1992; 
"(iii) $5,460,125 for fiscal year 1993; 
"(iv) $5,705,830 for fiscal year 1994; and 
"(v) $5,962,593 for fiscal year 1995. 
"(B) After use under subparagraph (A)— 
"(i) projects to address management issues which are 
regional in scope, including interstate projects; 
"(ii) demonstration projects which have high potential for 
improving coastal zone management, especially at the local 
level; 
"(iii) emergency grants to State coastal zone management 
agencies to address unforeseen or disaster-related cir-
cumstances; 
"(iv) appropriate awards recognizing excellence in coastal 
zone management as provided in section 314; 
"(v) program development grants as authorized by section 
305; and 
"(vi) to provide financial support to coastal States for use 
for investigating and applying the public trust doctrine to 
implement State maneigement programs approved under 
section 306. 
"(3) On December 1 of each year, the Secretary shall transmit to 
the Congress an annual report on the Fund, including the balance of 
the Fund and an itemization of all deposits into and disbursements 
from the Fund in the preceding fiscal year.". 
SEC. 6210. COASTAL ZONE ENHANCEMENT GRANTS. 
Section 309 of the Coastal Zone Management Act of 1972 (16 
U.S.C. 1452b) is amended to read as follows: 
"COASTAL ZONE ENHANCEMENT GRANTS 
"SEC. 309. (a) For purposes of this section, the term 'coastal zone 16 USC 1456b. 
enhancement objective' means any of the following objectives: 
"(1) Protection, restoration, or enhancement of the existing 
coastal wetlands base, or creation of new coeistal wetlands. 
"(2) Preventing or significantly reducing threats to life and 
destruction of property by eliminating development and re-
development in high-hazard areas, managing development in 
other hazard areas, and anticipating and managing the effects 
of potential sea level rise and Great Lakes level rise. 
"(3) Attaining increased opportunities for public access, 
taking into account current and future public access needs, to 
104 STAT. 1388-310 
PUBLIC LAW 101-508—NOV. 5, 1990 
coastal areas of recreational, historical, aesthetic, ecological, or 
cultural value. 
"(4) Reducing marine debris entering the Nation's coastal and 
ocean environment by managing uses and activities that 
contribute to the entry of such debris. 
"(5) Development and adoption of procedures to assess, con-
sider, and control cumulative and secondary impacts of coEistal 
growth and development, including the collective effect on var-
ious individual uses or activities on coastal resources, such as 
coastal wetlands and fishery resources. 
"(6) Preparing and implementing special area management 
plans for important coastal areas. 
"(7) Planning for the use of ocean resources. 
"(8) Adoption of procedures and enforceable policies to help 
facilitate the siting of energy facilities and Government facili-
ties and energy-related activities and Government activities 
which may be of greater than local significance. 
"(b) Subject to the limitations and goals established in this section, 
the Secretary may make grants to coastal States to provide funding 
for development and submission for Federal approval of program 
changes that support attainment of one or more coastal zone 
enhancement objectives. 
"(c) The Secretary shall evaluate and rank State proposals for 
funding under this section, and make funding awards based on those 
proposals, taking into account the criteria established by the Sec-
retary under subsection (d). The Secretary shall ensure that funding 
decisions under this section take into consideration the fiscal and 
technical needs of proposing States and the overall merit of each 
proposal in terms of benefits to the public. 
"(d) Within 12 months following the date of enactment of this 
section, and consistent with the notice and participation require-
ments established in section 317, the Secretary shall promulgate 
regulations concerning coastal zone enhancement grants that estab-
lish— 
"(1) specific and detailed criteria that must be addressed by a 
coastal state (including the State's priority needs for improve-
ment as identified by the Secretary after careful consultation 
with the State) as part of the State's development and im-
plementation of coastal zone enhancement objectives; 
"(2) administrative or procedural rules or requirements as 
necessary to facilitate the development and implementation of 
such objectives by coastal states; and 
"(3) other funding award criteria as are necessary or appro-
priate to ensure that evaluations of proposals, and decisions to 
award funding, under this section are based on objective stand-
ards applied fairly and equitably to those proposals. 
"(e) A State shall not be required to contribute any portion of the 
cost of any proposal for which funding is awarded under this section. 
"(f) Beginning in fiscal year 1991, not less than 10 percent and not 
more than 20 percent of the amounts appropriated to implement 
sections 306 and 306A of this title shall be retained by the Secretary 
for use in implementing this section, up to a maximum of 
$10,000,000 annually. 
"(g) If the Secretary finds that the State is not undertaking the 
actions committed to under the terms of the grant, the Secretary 
shall suspend the State's eligibility for further funding under this 
section for at least one year.". 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-311 
SEC. 6211. TECHNICAL ASSISTANCE. 
The Coastal Zone Management Act of 1972 (16 U.S.C. 1451 et seq.) 
is amended by inserting immediately after section 309 the following 
new section: 
"TECHNICAL ASSISTANCE 
"SEC. 310. (a) The Secretary shall conduct a program of technical 16 USC 1456c. 
assistance and management-oriented research necessary to support 
the development and implementation of State coastal management 
program amendments under section 309, and appropriate to the 
furtherance of international cooperative efforts and technical assist-
ance in coastal zone management. Each department, agency, and 
instrumentality of the executive branch of the Federal Government 
may assist the Secretary, on a reimbursable basis or otherwise, in 
carrjdng out the purposes of this section, including the furnishing of 
information to the extent permitted by law, the transfer of person-
nel with their consent and without prejudice to their position and 
rating, and the performance of any research, study, and technical 
assistance which does not interfere with the performance of the 
primary duties of such department, agency, or instrumentality. The 
Secretary may enter into contracts or other arrangements with any 
qualified person for the purposes of carrying out this subsection. 
"OJXD The Secretary shall provide for the coordination of tech-
nical assistance, studies, and research activities under this section 
with any other such activities that are conducted by or subject to the 
authority of the Secretary. 
"(2) The Secretary shall make the results of research and studies 
conducted pursuant to this section available to coastal states in the 
form of technical assistance publications, workshops, or other means 
appropriate. 
"(3) The Secretary shall consult with coastal states on a regular 
basis regarding the development and implementation of the pro-
gram established by this section.". 
SEC. 6212. COASTAL ZONE MANAGEMENT REVIEW. 
(a) PuBuc PARTICIPATION.—Subsection (b) of section 312 of the 
Coastal Zone Management Act of 1972 (16 U.S.C. 1458) is amended 
to read as follows: 
"Ot)) In evaluating a coastal State's performance, the Secretary 
shall conduct the evaluation in an open and public manner, and 
provide full opportunity for public participation, including holding 
public meetings in the State being evaluated and providing 
opportunities for the submission of written and oral comments by 
the public. The Secretary shall provide the public with at least 45 
days' notice of such public meetings by placing a notice in the 
Federal Register, by publication of timely notices in newspapers of 
general circulation within the State being evaluated, and by commu-
nications with persons and organizations known to be interested in 
the evaluation. Each evaluation shall be prepared in report form 
and shall include written responses to the written comments re-
ceived during the evaluation process. The final report of the evalua-
tion shall be completed within 120 days after the last public meeting 
held in the State being evaluated. Copies of the evaluation shall be 
immediately provided to all persons and organizations participating 
in the evaluation process.". 
104 STAT. 1388-312 
PUBLIC LAW 101-508—NOV. 5, 1990 
O
t
)
) INTERIM SANCTIONS.—Subsection (c) of section 312 of the 
Coastal Zone Management Act of 1972 (16 U.S.C. 1458(c)) is amended 
to read as follows: 
"(c)(1) The Secretary may suspend payment of any portion of 
financial assistance extended to any coastal State under this title, 
and may withdraw any unexpended portion of such assistance, if the 
Secretary determines that the coastal state is failing to adhere to (A) 
the management program or a State plan developed to manage a 
national estuarine reserve established under section 315 of this title, 
or a portion of the program or plan approved by the Secretary, or (B) 
the terms of any grant or cooperative agreement funded under this 
title. 
"(2) Financial assistance may not be suspended under paragraph 
(1) unless the Secretary provides the Governor of the coastal state 
with— 
* 
"(A) written specifications and a schedule for the actions that 
should be taken by the State in order that such suspension of 
financial assistance may be withdrawn; and 
"(B) written specifications stating how those funds from the 
suspended financial assistance shall be expended by the coastal 
state to take the actions referred to in subparagraph (A). 
"(3) The suspension of financial assistance may not last for less 
than 6 months or more than 36 months after the date of suspen-
sion.". 
(c) FINAL SANCTIONS.—Section 312(d) of the Coastal Zone Manage-
ment Act of 1972 (16 U.S.C. 1458(d)) is amended to read as follows: 
"(d) The Secretary shall withdraw approval of the management 
program of any coastal state and shall withdraw financial assistance 
available to that State under this title as well as any unexpended 
portion of such assistance, if the Secretary determines that the 
coastal state has failed to take the actions referred to in subsection 
(c)(2)(A).". 
(d) REPEAL.—Subsection (f) of section 312 of the Coastal Zone 
Management Act of 1972 (16 U.S.C. 1458) is repealed. 
SEC. 6213. COASTAL ZONE MANAGEMENT AWARDS. 
The Coastal Zone Management Act of 1972 is amended by insert-
ing after section 313 the following: 
"WALTER B. JONES EXCELLENCE IN COASTAL ZONE MANAGEMENT 
AWARDS 
16 use 1460. 
"SEC. 313. (a) The Secretary shall, using sums in the Coastal Zone 
Management Fund established under section 308, implement a pro-
gram to promote excellence in coastal zone management by identify-
ing and acknowledging outstanding accomplishments in the field. 
"(b) The Secretary shall elect annually— 
"(1) one individual, other than an employee or officer of the 
Federal Government, whose contribution to the field of coastal 
zone management has been the most significant; 
"(2) 5 local governments which have made the most progress 
in developing and implementing the coastal zone management 
principles embodied in this title; and 
"(3) up to 10 graduate students whose academic study prom-
ises to contribute materially to development of new or improved 
approaches to coastal zone management. 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-313 
"(c) In making selections under subsection (b)(2) the Secretary 
shall solicit nominations from the coastal states, and shall consult 
with experts in local government planning and land use. 
"(d) In making selections under subsection (b)(3) the Secretary 
shall solicit nominations from coastal states and the National Sea 
Grant College Program. 
"(e) Using sums in the Coastal Zone Management Fund estab-
lished under section 308, the Secretary shall establish and execute 
appropriate awards, to be known as the 'Walter B. Jones Awards', 
including— 
"(1) cash awards in an amount not to exceed $5,000 each; 
"(2) research grants; and 
"(3) public ceremonies to acknowledge such awards.". 
SEC. 6214. NATIONAL ESTUARINE RESEARCH RESERVE SYSTEM. 
(a) AMENDMENT TO SECTION HEADING.—The heading for section 
315 of the Coastal Zone Management Act of 1972 (16 U.S.C. 1461) is 
amended by striking "RESERVE RESEARCH" and inserting in lieu 
thereof "RESEARCH RESERVE". 
(b) GRANTS FOR ACQUISTION OF LANDS AND WATERS.—Section 
315(e)(3)(A) of the Coastal Zone Management Act of 1972 (16 U.S.C. 
1461(e)(3)(A)) is amended by striking "per centum" and inserting in 
lieu thereof "percent", and by striking "$4,000,000" and inserting in 
lieu thereof "$5,000,000". 
(c) GRANTS FOR OPERATIONS AND EDUCATION.—Section 315(e)(3)(B) 
of the Coastal Zone Management Act of 1972 (16 U.S.C. 1461(e)(3)(B)) 
is amended— 
(1) by striking "50 per centum" and inserting in lieu thereof 
"70 percent"; and 
(2) by inserting immediately before the period at the end the 
following: "; except that the amount of the financial assistance 
provided under paragraph (l)(A)(iii) may be up to 100 percent of 
any costs for activities that benefit the entire System". 
(d) CLERICAL AMENDMENT.—Section 315(e)(3) of the Coastal Zone 
Management Act of 1972 (16 U.S.C. 1461(e)) is amended by striking 
"of subsection (e)" each place it appears. 
SEC. 6215. AUTHORIZATION OF APPROPRIATIONS. 
Section 318(a) of the Coastal Zone Management Act of 1972 (16 
U.S.C 1464) is amended by striking all after "Secretary—" and 
inserting in lieu thereof the following: 
"(1) such sums, not to exceed $750,000 for each of the fiscal 
years occurring during the period beginning October 1, 1990, 
and ending September 30, 1993, as may be necessary for grants 
under section 305, to remain available until expended; 
"(2) such sums, not to exceed $42,000,000 for the fiscal year 
ending September 30, 1991, $48,890,000 for the fiscal year 
ending September 30, 1992, $58,870,000 for the fiscal year 
ending September 30, 1993, $67,930,000 for the fiscal year 
ending September 30, 1994, and $90,090,000 for the fiscal year 
ending September 30, 1995, as may be necessary for grants 
under sections 306, 306A, and 309, to remain available until 
expended; 
"(3) such sums, not to exceed $6,000,000 for the fiscal year 
ending September 30, 1991, $6,270,000 for the fiscal year ending 
September 30, 1992, $6,552,000 for the fiscal year ending 
September 30, 1993, $6,847,000 for the fiscal year ending 
104 STAT. 1388-314 
PUBLIC LAW 101-508—NOV. 5, 1990 
September 30, 1994, and $7,155,000 for the fiscal year ending 
September 30, 1995, £is may be necessary for grants under 
section 315, to remain available until expended; and 
"(4) such sums, not to exceed $10,000,000 for each of the fiscal 
years occurring during the period beginning October 1, 1990, 
and ending September 30, 1995, as may be necessary for activi-
ties under section 310 and for administrative expenses incident 
to the administration of this title; except that expenditures for 
such administrative expenses shall not exceed $5,000,000 in any 
such fiscal year.". 
SEC. 6216. CONFORMING AMENDMENTS. 
(a) Section 306a(bXl) of the Coastal Zone Management Act of 1972 
(16 U.S.C. 1455a(b)(l)) is amended by striking "306(cX9)" and insert> 
ing in lieu thereof "306(d)(9)". 
(b) Section 312(a) of the Coastal Zone Management Act of 1972 (16 
U.S.C. 1458(a)) is amended by striking "through (I)" and inserting in 
lieu thereof "through (K)". 
16 use 1455b. 
SEC. 6217. PROTECTING COASTAL WATERS. 
(a) IN GENERAL.— 
(1) PROGRAM DEVELOPMENT.—Not later than 30 months after 
the date of the publication of final guidance under subsection 
(g), each State for which a management program has been 
approved pursuant to section 306 of the Cloastal Zone Manage-
ment Act of 1972 shall prepare and submit to the Secretary and 
the Administrator a Coastal Nonpoint Pollution Control Pro-
gram for approval pursuant to this section. The purpose of the 
program shall be to develop and implement management meas-
ures for nonpoint source pollution to restore and protect coastal 
waters, working in close conjunction with other State and local 
authorities. 
(2) PROGRAM COORDINATION.—A State program under this 
section shall be coordinated closely with State and local water 
quality plans and programs developed pursuant to sections 208, 
303, 319, and 320 of the Federal Water Pollution Control Act (33 
U.S.C. 1288, 1313, 1329, and 1330) and with State plans devel-
oped pursuant to the Coastal Zone Management Act of 1972, as 
amended by this Act. The program shall serve as an update and 
expansion of the State nonpoint source mansigement program 
developed under section 319 of the Federal Water Pollution 
Control Act, as the program under that section relates to land 
and water uses affecting coastal waters. 
Ot)) PROGRAM CONTENTS.—Each State program under this section 
shall provide for the implementation, at a minimum, of manage-
ment measures in conformity with the guidsince published under 
subsection (g), to protect coastal waters generally, and shall also 
contain the following: 
(1) IDENTIFYING LAND USES.—The identification of, and a 
continuing process for identifying, land uses which, individually 
or cumulatively, may cause or contribute significantly to a 
degradation of— 
(A) those coastal waters where there is a failure to attain 
or maintain applicable water quality standards or protect 
designated uses, as determined by the State pursuant to its 
water quality planning processes; or 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-315 
(B) those coastal waters that are threatened by reason-
ably foreseeable increases in pollution loadings from new or 
expanding sources. 
(2) IDENTIFYING CRITICAL COASTAL AREAS.—The identification 
of, and a continuing process for identifying, critical coastal 
areas adjacent to coastal waters referred to in paragraph (1)(A) 
and (B), within which any new land uses or substantial expan-
sion of existing land uses shall be subject to management 
measures in addition to those provided for in subsection (g). 
(3) 
MANAGEMENT 
MEASURES.—The 
implementation 
and 
continuing revision from time to time of additional manage-
ment measures applicable to the land uses and areas identified 
pursuant to paragraphs (1) and (2) that are necessary to achieve 
and maintain applicable water quality standards under section 
303 of the Federal Water Pollution Control Act (33 U.S.C. 1313) 
and protect designated uses. 
(4) TECHNICAL ASSISTANCE.—The provision of technical and 
other assistance to local governments and the public for im-
plementing the measures referred to in paragraph (3), which 
may include assistance in developing ordinances and regula-
tions, technical guidance, and modeling to predict and assess 
the effectiveness of such measures, training, financial incen-
tives, demonstration projects, and other innovations to protect 
coastal water quality and designated uses. 
(5) PUBLIC PARTICIPATION.—Opportunities for public participa-
tion in all aspects of the program, including the use of public 
notices and opportunities for comment, nomination procedures, 
public hearings, technical and financial assistance, public 
education, and other means. 
(6) ADMINISTRATIVE COORDINATION.—The establishment of 
mechanisms to improve coordination among State agencies and 
between State and local officials responsible for land use pro-
grams and permitting, water quality permitting and enforce-
ment, habitat protection, and public health and safety, through 
the use of joint project review, memoranda of agreement, or 
other mechanisms. 
(7) STATE COASTAL ZONE BOUNDARY MODIFICATION.—A proposal 
to modify the boundaries of the State coastal zone as the coastal 
management agency of the State determines is necessary to 
implement the recommendations made pursuant to subsection 
(e). If the coastal management agency does not have the author-
ity to modify such boundaries, the program shall include rec-
ommendations for such modifications to the appropriate State 
authority. 
(c) PROGRAM SUBMISSION, APPROVAL, AND IMPLEMETATION.— 
(1) REVIEW AND APPROVAL.—Within 6 months after the date of 
submission by a State of a program pursuant to this section, the 
Secretary and the Administrator shall jointly review the 
program. The program shall be approved i
f
— 
(A) the Secretary determines that the portions of the 
program under the authority of the Secretary meet the 
requirements of this section and the Administrator concurs 
with that determination; and 
(B) the Administrator determines that the portions of the 
program under the authority of the Administrator meet the 
requirements of this section and the Secretary concurs with 
that determination. 
104 STAT. 1388-316 
PUBLIC LAW 101-508—NOV. 5, 1990 
(2) IMPLEMENTATION OF APPROVED PROGRAM.—If the program 
of a State is approved in accordance with paragraph (1), the 
State shall implement the program, including the management 
measures included in the progrsim pursuant to subsection (b), 
through— 
(A) changes to the State plan for control of nonpoint 
source pollution approved under section 319 of the Federal 
Water Pollution Control Act; and 
(B) changes to the State coastal zone management pro-
gram developed under section 306 of the Coastal Zone 
Management Act of 1972, as amended by this Act. 
(3) WITHHOLDING COASTAL MANAGEMENT ASSISTANCE.—If the 
Secretary finds that a coastal State has failed to submit an 
approvable program as required by this section, the Secretary 
shall withhold for each fiscal year until such a program is 
submitted a portion of grants otherwise available to the State 
for the fiscal year under section 306 of the Coastal Zone 
Management Act of 1972, as follows: 
(A) 10 percent for fiscal year 1996. 
(B) 15 percent for fiscal year 1997. 
(C) 20 percent for fiscal year 1998. 
(D) 30 percent for fiscal year 1999 and each fiscal year 
thereafter. 
The Secretary shall make amounts withheld under this para-
graph available to coastal States having programs approved 
under this section. 
(4) WITHHOLDING WATER POLLUTION CONTROL ASSISTANCE.—If 
the Administrator finds that a coastal State has failed to submit 
an approvable program as required by this section, the Adminis-
trator shall withhold from grants available to the State under 
section 319 of the Federal Water Pollution Control Act, for each 
fiscal year until such a program is submitted, an amount equal 
to a percentage of the grants awarded to the State for the 
preceding fiscal year under that section, as follows: 
(A) For fiscal year 1996, 10 percent of the amount 
awarded for fiscal year 1995. 
(B) For fiscal year 1997, 15 percent of the amount 
awarded for fiscal year 1996. 
(C) For fiscal year 1998, 20 percent of the amount 
awarded for fiscal year 1997. 
(D) For fiscal year 1999 and each fiscal year thereafter, 30 
percent of the amount awarded for fiscal year 1998 or other 
preceding fiscal year. 
The Administrator shall make amounts withheld under this 
paragraph available to States having programs approved pursu-
ant to this subsection, 
(d) TECHNICAL ASSISTANCE.—The Secretary and the Administrator 
shall provide technical sissistance to coastal States and local govern-
ments in developing and implementing programs under this section. 
Such assistance shall include— 
(1) methods for assessing water quality impacts associated 
with coastal land uses; 
(2) methods for assessing the cumulative water quality effects 
of coastal development; 
(3) maintaining and from time to time revising an inventory 
of model ordinances, and providing other assistance to coastal 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-317 
States and local governments in identifying, developing, and 
implementing pollution control measures; and 
(4) methods to predict and assess the effects of coastal land 
use management measures on coastal water quality and des-
ignated uses. 
(e) INLAND COASTAL ZONE BOUNDARIES.— 
(1) REVIEW.—The Secretary, 
in consultation 
with 
the 
Administrator of the Environmental Protection Agency, shall, 
within 18 months after the effective date of this title, review the 
inland coastal zone boundary of each cosistal State program 
which has been approved or is proposed for approval under 
section 306 of the Coastal Zone Management Act of 1972, and 
evaluate whether the State's coastal zone boundary extends 
inland to the extent necessary to control the land and water 
uses that have a significant impact on coastal waters of the 
State. 
(2) RECOMMENDATION.—If the Secretary, in consultation with 
the Administrator, finds that modifications to the inland bound-
aries of a State's coastal zone are necessary for that State to 
more effectively manage land and water uses to protect coastal 
waters, the Secretary, in consultation with the Administrator, 
shall recommend appropriate modifications in writing to the 
affected State. 
(f) FINANCIAL ASSISTANCE.— 
(1) IN GENERAL.—Upon request of a State having a program 
approved under section 306 of the Coastal Zone Management 
Act of 1972, the Secretary, in consultation with the Adminis-
trator, may provide grants to the State for use for developing a 
State program under this section. 
(2) AMOUNT.—The total amount of grants to a State under 
this subsection shall not exceed 50 percent of the total cost to 
the State of developing a program under this section. 
(3) STATE SHARE.—The State share of the cost of an activity 
carried out with a grant under this subsection shall be paid 
from amounts from non-Federal sources. 
(4) ALLOCATION.—Amounts available for grants under this 
subsection shall be allocated among States in accordance with 
regulations issued pursuant to section 306(c) of the Coastal Zone 
Management Act of 1972, except that the Secretary may use not 
more than 25 percent of amounts available for such grants to 
assist States which the Secretary, in consultation with the 
Administrator, determines are making exemplary progress in 
preparing a State program under this section or have extreme 
needs with respect to coastal water quality. 
(g) GUIDANCE FOR COASTAL NONPOINT SOURCE POLLUTION CON-
TROL.— 
(1) IN GENERAL.—The Administrator, in consultation with the 
Secretary and the Director of the United States Fish and Wild-
life Service and other Federal agencies, shall publish (and 
periodically revise thereafter) guidance for specifying manage-
ment measures for sources of nonpoint pollution in coastal 
waters. 
(2) CONTENT.—Guidance under this subsection shall include, 
at a minimum— 
(A) a description of a range of methods, measures, or 
practices, including structur^ and nonstructural controls 
104 STAT. 1388-318 
PUBLIC LAW 101-508—NOV. 5, 1990 
and operation and maintenance procedures, that constitute 
each measure; 
(B) a description of the categories and subcategories of 
activities and locations for which each measure may be 
suitable; 
(C) an identification of the individual pollutants or cat-
egories or classes of pollutants that may be controlled by 
the measures and the water quality effects of the measures; 
(D) quantitative estimates of the pollution reduction ef-
fects and costs of the measures; 
(E) a description of the factors which should be taken into 
account in adapting the measures to specific sites or loca-
tions; and 
(F) any necessary monitoring techniques to accompany 
the measures to assess over time the success of the meas-
ures in reducing pollution loads ^nd improving water 
quality. 
(3) PUBLICATION.—The Administrator, in consultation with 
the Secretary, shall publish— 
(A) proposed guidance pursuant to this subsection not 
later than 6 months after the date of the enactment of this 
Act; and 
(B) final guidance pursuant to this subsection not later 
than 18 months after such effective date. 
(4) NOTICE AND COMMENT.—The Administrator shall provide 
to coastal States and other interested persons an opportunity to 
provide written comments on proposed guidance under this 
subsection. 
(5) MANAGEMENT MEASURES.—For purposes of this subsection, 
the term "management measures" means economically achiev-
able measures for the control of the addition of pollutants from 
existing and new categories and classes of nonpoint sources of 
pollution, which reflect the greatest degree of pollutant reduc-
tion achievable through the application of the best available 
nonpoint pollution control practices, technologies, processes, 
siting criteria, operating methods, or other alternatives. 
(h) AUTHORIZATIONS OF APPROPRIATIONS.— 
(1) ADMINISTRATOR.—There is authorized to be appropriated 
to the Administrator for use for carrying out this section not 
more than $1,000,000 for each of fiscal years 1992, 1993, and 
1994. 
(2) SECRETARY.—(A) Of amounts appropriated to the Secretary 
for a fiscal year under section 318(a)(4) of the Coastal Zone 
Management Act of 1972, as amended lay this Act, not more 
than $1,000,000 shall be available for use by the Secretary for 
carrying out this section for that fiscal year, other than for 
providing in the form of grants under subsection (f). 
(B) There is authorized to be appropriated to the Secretary for 
use for providing in the form of grants under subsection (f) not 
more than— 
(i) $6,000,000 for fiscal year 1992; 
(ii) $12,000,000 for fiscal year 1993; 
(iii) $12,000,000 for fiscal year 1994; and 
(iv) $12,000,000 for fiscal year 1995. 
(i) DEFINITIONS.—In this section— 
(1) the term "Administrator" means the Administrator of the 
Environmental Protection Agency; 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-319 
(2) the term "coastal State" has the meaning given the term 
"coastal state" under section 304 of the CoEistal Zone Manage-
ment Act of 1972 (16 U.S.C. 1453); 
(3) each of the terms "coastal waters", and "coastal zone" has 
the meaning that term has in the Coastal Management Act of 
1972; 
(4) the term "coastal management agency" means a State 
agency designated pursuant to section 306(dX6) of the Coastal 
Zone Management Act of 1972; 
(5) the term "land use" includes a use of waters adjacent to 
coEistal waters; and 
(6) the term "Secretary" means the Secretary of Commerce. 
Subtitle D—Extension of Superfund for 3 
Years 
SEC. 6301. 3-YEAR EXTENSION OF COMPREHENSIVE ENVIRONMENTAL 
RESPONSE, COMPENSATION, AND LIABILITY ACT OF 1980. 
Section 111 of the Comprehensive Environmented Response, Com-
pensation, and Liability Act of 1980 (42 U.S.C. 9611) is amended— 
(1) by inserting after "Reauthorization Act of 1986," in subsec-
tion (a) the following: "and not more than $5,100,000,000 for the 
period commencing October 1, 1991, and ending September 30, 
1994,"; 
(2) by striking "5-fiscal-year period" in subsection (cXH) and 
inserting "8-fiscal year period"; 
(3) by striking and 1991" in subsection (cX12) and inserting 
"1991,1992,1993, and 1994"; 
(4) by striking "1990 and 1991" in subsection (m) and inserting 
"1990,1991,1992,1993, and 1994"; 
(5) by striking "and 1991" in subsection (nXD and inserting 
"1991,1992,1993, and 1994"; 
(6) by striking subsection (nX2XE) and inserting the following 
new subparagraph: 
"(E) For each of the fiscal years 1991, 1992, 1993, and 1994, 
$35,000,000."; 
(7) by striking "and 1991" in subsection (nX3) and inserting 
"1991,1992,1993, and 1994"; and 
(8) by inserting after subparagraph (E) of subsection (pXD the 
following new subparagraphs: 
"(F) For fiscal year 1992, $212,500,000. 
"(G) For fiscal year 1993, $212,500,000. 
"(H) For fiscal year 1994, $212,500,000.". 
Subtitle E—Shale Oil Contract ModiHcation 
SEC. 6401. SHALE OIL CONTRACT MODIFICATION. 
Section 7404(a) of the Consolidated Omnibus Budget Reconcili-
ation Act of 1985 (Public Law 99-272) is amended by adding at the 42 USC 8791 
end the following sentence: "The Secretary of the Treasury shall "°*®-
have the authority to negotiate and execute agreements modifying 
an existing contract relating to the production of synthetic crude oil 
from oil shale, entered into under the Defense Production Act 
Amendments of 1980 £ind subsequently transferred to the Secretary 
104 STAT. 1388-320 
PUBLIC LAW 101-508—NOV. 5, 1990 
of the Treasury for administration, provided the terms and condi-
tions of any modification(s) are revenue neutral or result in a fiscal 
savings to the United States Government, and in no event would 
increase the financial exposure of the United States Government 
under the contract: Provided, however. That the Secretary of the 
Treasury shall have no authority to increase the total amount of 
funds originally authorized for the existing contract: And provided 
further, That the Secretary shall have no authority to negotiate and 
execute any agreement modif3dng the existing contract if such 
modification(s) would increase or accelerate the financial support 
per unit for the synthetic fuel to be produced under the contract.". 
Subtitle F—Environmental Protection Agency 
Fees 
42 use 4370c. 
SEC. 6501. ENVIRONMENTAL PROTECTION AGENCY FEES. 
(a) ASSESSMENT AND COLLECTION.—The Administrator of the 
Environmental Protection Agency shall, by regulation, assess and 
collect fees and charges for services and activities carried out pursu-
ant to laws administered by the Environmental Protection Agency. 
(b) AMOUNT OF FEES AND CHARGES.—Fees and charges assessed 
pursuant to this section shall be in such amounts as may be nec-
essary to ensure that the aggregate amount of fees and charges 
collected pursuant to this section, in excess of the amount of fees 
and charges collected under current law— 
(1) in fiscal year 1991, is not less than $28,000,000; and 
(2) in each of fiscal years 1992,1993,1994, and 1995, is not less 
than $38,000,000. 
(c) LIMITATION ON FEES AND CHARGES.—(1) The maximum aggre-
gate amount of fees and charges in excess of the amounts being 
collected under current law which may be assessed and collected 
pursuant to this section in a fiscal year— 
(A) for services and activities carried out pursuant ot ^^ the 
Federal Water Pollution Control Act is $10,000,000; and 
(B) for services and activities in programs within the jurisdic-
tion of the House Committee on Energy and Commerce and 
administered by the Environmental Protection Agency through 
the Administrator, shall be limited to such sums collected as of 
the date of enactment of this Act pursuant to sections 260)) and 
305(e)(2) of the Toxic Substances Control Act, and such sums 
specifically authorized by the Clean Air Act Amendments of 
1990. 
(2) Any remaining amounts required to be collected under this 
section shall be collected from services and programs administered 
by the Environmental Protection Agency other than those specified 
in subparagraphs (A) and (B) of paragraph (1). 
(d) RULE OF CONSTRUCTION.—Nothing in this section increases or 
diminishes the authority of the Administrator to promulgate regula-
tions pursuant to the Independent Office Appropriations Act (31 
U.S.C.9701). 
(e) USES OF FEES.—Fees and charges collected pursuant to this 
section shall be deposited into a special account for environmental 
services in the Treasury of the United States. Subject to appropria-
tion Acts, such funds shall be available to the Environmental 
Protection Agency to carry out the activities for which such fees and 
•* bo in original. Probably should be "to". 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-321 
charges are collected. Such funds shall remain available until 
expended. 
SEC. 6601. SHORT TITLE. 
Pollution 
Prevention Act 
This subtitle may be cited as the "Pollution Prevention Act of 
of 1990. 
1990". 
42 use 13101 
note. 
SEC. 6602. FINDINGS AND POLICY. 
42 USC 13101. 
(a) FINDINGS.—The Congress finds that: 
(1) The United States of America annually produces millions 
of tons of pollution and spends tens of billions of dollars per 
year controlling this pollution. 
(2) There are significant opportunities for industry to reduce 
or prevent pollution at the source through cost-effective changes 
in production, operation, and raw materials use. Such changes 
offer industry substantial savings in reduced raw material, 
pollution control, and liability costs as well as help protect the 
environment and reduce risks to worker health and safety. 
(3) The opportunities for source reduction are often not re-
alized because existing regulations, and the industrial resources 
they require for compliance, focus upon treatment and disposal, 
rather than source reduction; existing regulations do not 
emphasize 
multi-media 
management 
of 
pollution; 
and 
businesses need information and technical assistance to over-
come institutional barriers to the adoption of source reduction 
practices. 
(4) Source reduction is fundamentally different and more 
desirable than waste management and pollution control. The 
Environmental Protection Agency needs to address the histori-
cal lack of attention to source reduction. 
(5) As a first step in preventing pollution through source 
reduction, the Environmental Protection Agency must establish 
a source reduction program which collects and disseminates 
information, provides financial assistance to States, and imple-
ments the other activities provided for in this subtitle. 
(b) POLICY.—The Congress hereby declares it to be the national 
policy of the United States that pollution should be prevented or 
reduced at the source whenever feasible; pollution that cannot be 
prevented should be recycled in an environmentally safe manner, 
whenever feasible; pollution that cannot be prevented or recycled 
should be treated in an environmentally safe manner whenever 
feasible; and disposal or other release into the environment should 
be employed only as a last resort and should be conducted in an 
environmentally safe manner. 
SEC. 6603. DEFINITIONS. 
For purposes of this subtitle— 
(1) The term "Administrator" means the Administrator of the 
Environmental Protection Agency. 
(2) The term "Agency" means the Environmental Protection 
Agency. 
(3) The term "toxic chemical" means any substance on the list 
described in section 313(c) of the Superfund Amendments and 
Reauthorization Act of 1986. 
(4) The term "release" has the same meaning as provided by 
section 329(8) of the Superfund Amendments and Reauthoriza-
tion Act of 1986. 
42 USC 13102. 
104 STAT. 1388-322 
PUBLIC LAW 101-508—NOV. 5, 1990 
(5XA) The term "source reduction" means any practice 
which— 
(i) reduces the amount of any hazardous substance, 
pollutant, or contaminant entering any waste stream or 
otherwise released into the environment (including fugitive 
emissions) prior to recycling, treatment, or disposal; and 
(ii) reduces the hazards to public health and the environ-
ment associated with the release of such substances, pollut-
ants, or contaminants. 
The term includes equipment or technology modifications, proc-
ess or procedure modifications, reformulation or i-edesign of 
products, substitution of raw materials, and improvements in 
housekeeping, maintenance, training, or inventory control, 
(B) The term "source reduction" does not include any practice 
which alters the physical, chemical, or biological characteristics 
or the volume of a hazardous substance, pollutant, or contami-
nant through a process or activity which itself is not integral to 
and necessary for the production of a product or the providing 
of a service. 
(6) The term "multi-media" means water, air, and land. 
(7) The term "SIC codes" refers to the 2-digit code numbers 
used for classification of economic activity in the Standard 
Industrial Classification Manual. 
42 use 13103. 
SEC. 6604. EPA ACTIVITIES. 
(a) AUTHORITIES.—The Administrator shall establish in the 
Agency an office to carry out the functions of the Administrator 
under this subtitle. The office shall be independent of the Agency's 
single-medium program offices but shall have the authority to 
review and advise such offices on their activities to promote a multi-
media approach to source reduction. The office shall be under the 
direction of such officer of the Agency as the Administrator shall 
designate. 
(b) FUNCTIONS.—The Administrator shall develop and implement 
a strategy to promote source reduction. As part of the strategy, the 
Administrator shall— 
(1) establish standard methods of measurement of source 
reduction; 
(2) ensure that the Agency considers the effect of its existing 
and proposed programs on source reduction efforts and shall 
review regulations of the Agency prior and subsequent to their 
proposal to determine their effect on source reduction; 
(3) coordinate source reduction activities in each Agency 
Office and coordinate with appropriate offices to promote source 
reduction practices in other Federal agencies, and generic re-
search and development on techniques and processes which 
have broad applicability; 
(4) develop improved methods of coordinating, streamlining 
and assuring public access to data collected under Federal 
environmental statutes; 
(5) facilitate the adoption of source reduction techniques by 
businesses. This strategy shall include the use of the Source 
Reduction Clearinghouse and State matching grants provided in 
this subtitle to foster the exchange of information regarding 
source reduction techniques, the dissemination of such informa-
tion to businesses, and the provision of technical assistance to 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-323 
businesses. The strategy shall also consider the capabilities of 
various businesses to make use of source reduction techniques; 
(6) identify, where appropriate, measurable goals which re-
flect the policy of this subtitle, the tasks necessary to achieve 
the goals, dates at which the principal tasks are to be accom-
plished, required resources, organizational responsibilities, and 
the means by which progress in meeting the goals will be 
megisured; 
(8) establish an advisory panel of technical experts comprised 
of representatives from industry, the States, and public interest 
groups, to advise the Administrator on ways to improve collec-
tion and dissemination of data; 
(9) establish a training program on source 
reduction 
opportunities, including workshops and guidance documents, 
for State and Federal permit issuance, enforcement, and inspec-
tion officials working within all agency program offices. 
(10) identify and make recommendations to Congress to elimi-
nate barriers to source reduction including the use of incentives 
and disincentives; 
(11) identify opportunities to use Federal procurement to 
encourage source reduction; 
(12) develop, test and disseminate model source reduction 
auditing procedures designed to highlight source reduction 
opportunities; and 
(13) establish an annual award program to recognize a com-
pany or companies which operate outstanding or innovative 
source reduction programs. 
SEC. 6605. GRANTS TO STATES FOR STATE TECHNICAL ASSISTANCE PRO- 
42 USC 13104. 
GRAMS. 
(a) GENERAL AUTHORITY.—The Administrator shall make match-
ing grants to States for programs to promote the use of source 
reduction techniques by businesses. 
(b) CRITERIA.—When evaluating the requests for grants under this 
section, the Administrator shall consider, among other things, 
whether the proposed State program would accomplish the 
following: 
(1) Make specific technical assistance available to businesses 
seeking information about source reduction opportunities, 
including funding for experts to provide onsite technical advice 
to business seeking assistance and to assist in the development 
of source reduction plans. 
(2) Target assistance to businesses for whom lack of informa-
tion is an impediment to source reduction. 
(3) Provide training in source reduction techniques. Such 
training may be provided through local engineering schools or 
any other appropriate means. 
(c) MATCHING FUNDS.—Federal funds used in any State program 
under this section shall provide no more than 50 per centum of the 
funds made available to a State in each year of that State's partici-
pation in the program. 
(d) EFFECTIVENESS.—The Administrator shall establish appro-
priate means for measuring the effectiveness of the State grants 
made under this section in promoting the use of source reduction 
techniques by businesses. 
104 STAT. 1388-324 
PUBLIC LAW 101-508—NOV. 5, 1990 
(e) INFORMATION.—States receiving grants under this section shall 
make information generated under the grants available to the 
Administrator. 
42 use 13105. 
SEC. 6606. SOURCE REDUCTION CLEARINGHOUSE. 
(a) AUTHORITY.—The Administrator shall establish a Source 
Reduction Clearinghouse to compile information including a com-
puter data base which contains information on management, 
technical, and operational approaches to source reduction. The 
Administrator shall use the clearinghouse to— 
(1) serve as a center for source reduction technology transfer; 
(2) mount active outreach and education programs by the 
States to further the adoption of source reduction technologies; 
and 
(3) collect and compile information reported by States receiv-
ing grants under section 6605 on the operation and success of 
State source reduction programs. 
r. 
(b) PUBLIC AVAILABILITY.—The Administrator shall make avail-
able to the public such information on source reduction as is gath-
ered pursuant to this subtitle and such other pertinent information 
and analysis regarding source reduction as may be available to the 
Administrator. The data base shall permit entry and retrieval of 
information to any person. 
42 use 13106. 
SEC. 6607. SOURCE REDUCTION AND RECYCLING DATA COLLECTION. 
(a) REPORTING REQUIREMENTS.—Each owner or operator of a facil-
ity required to file an annual toxic chemical release form under 
section 313 of the Superfund Amendments and Reauthorization Act 
of 1986 ("SARA") for any toxic chemical shall include with each 
such annual filing a toxic chemical source reduction and recycling 
report for the preceeding '^° calendar year. The toxic chemical 
source reduction and recycling report shall cover each toxic chemi-
cal required to be reported in the annual toxic chemical release 
form filed by the owner or operator under section 313(c) of that Act. 
This section shall take effect with the annual report filed under 
section 313 for the first full calendar year beginning after the 
enactment of this subtitle. 
(b) ITEMS INCLUDED IN REPORT.—The toxic chemical source reduc-
tion and recycling report required under subsection (a) shall set 
forth each of the following on a facility-by-facility basis for each 
toxic chemical: 
(1) The quantity of the chemical entering any waste stream 
(or otherwise released into the environment) prior to recycling, 
treatment, or disposal during the calendar year for which the 
report is filed and the percentage change from the previous 
year. The quantity reported shall not include any amount re-
ported under paragraph (7). When actual measurements of the 
quantity of a toxic chemical entering the waste streams are not 
readily available, reasonable estimates should be made based on 
best engineering judgment. 
(2) The amount of the chemical from the facility which is 
recycled (at the facility or elsewhere) during such calendar year, 
the percentage change from the previous year, and the process 
of recycling used. 
(3) The source reduction practices used with respect to that 
chemical during such year at the facility. Such practices shall 
be reported in accordance with the following categories unless 
^o So in original. Probably should be "preceding". 
PUBLIC LAW 101-508—NOV. 5,1990 
104 STAT. 1388-325 
the Administrator finds other categories to be more appro-
priate: 
(A) Equipment, technology, process, or procedure modi-
fications. 
(B) Reformulation or redesign of products. 
(C) Substitution of raw materials. 
(D) Improvement in management, training, inventory 
control, materials handling, or other general operational 
phases of industrial facilities. 
(4) The amount expected to be reported under paragraph (1) 
and (2) for the two calendar years immediately following the 
calendar year for which the report is filed. Such amount shall 
be expressed as a percentage change from the amount reported 
in paragraphs (1) and (2). 
(5) A ratio of production in the reporting year to production in 
the previous year. The ratio should be calculated to most closely 
reflect all activities involving the toxic chemical. In specific 
industrial classifications subject to this section, where a feed-
stock or some variable other than production is the primary 
influence on waste characteristics or volumes, the report may 
provide an index based on that primary variable for each toxic 
chemical. The Administrator is encouraged to develop produc-
tion indexes to accommodate individual industries for use on a 
voluntary basis. 
(6) The techniques which were used to identify source reduc-
tion opportunities. Techniques listed should include, but are not 
limited to, employee recommendations, external ai^j internal 
audits, participative team management, and material balance 
audits. Each type of source reduction listed under paragraph (3) 
should be associated with the techniques or multiples of tech-
niques used to identify the source reduction technique. 
(7) The amount of any toxic chemical released into the 
environment which resulted from a catastrophic event, re-
medial action, or other one-time event, and is not associated 
with production processess during the reporting year. 
(8) The amount of the chemical from the facility which is 
treated (at the facility or elsewhere) during such calendar year 
and the percentage change from the previous year. For the first 
year of reporting under this subsection, comparison with the 
previous year is required only to the extent such information is 
available. 
(c) SARA PROVISIONS.—The provisions of sections 322, 325(c), and 
326 of the Superfund Amendments and Reauthorization Act of 1986 
shall apply to the reporting requirements of this section in the same 
manner as to the reports required under section 313 of that Act. The 
Administrator may modify the form required for purposes of report-
ing information under section 313 of that Act to the extent he deems 
necessary to include the additional information required under this 
section. 
(d) ADDITIONAL OPTIONAL INFORMATION.—Any person filing a 
report under this section for any year may include with the report 
additional information regarding source reduction, recycling, and 
other pollution control techniques in earlier years. 
(e) 
AVAILABILITY OF DATA.—Subject to section 322 of 
the 
Superfund Amendments and Reauthorization Act of 1986, the 
Administrator shall make data collected under this section publicly 
104 STAT. 1388-326 
PUBLIC LAW 101-508—NOV. 5, 1990 
available in the same manner as the data collected under section 
313 of the Superfund Amendments and Reauthorization Act of 1986. 
42 use 13107. 
SEC. 6608. EPA REPORT. 
(a) BIENNIAL REPORTS.—The Administrator shall provide Congress 
with a report within eighteen months after enactment of this sub-
title and biennially thereafter, containing a detailed description of 
the actions taken to implement the strategy to promote source 
reduction developed under section 4(b) and of the results of such 
actions. The report shall include an assessment of the effectiveness 
of the clearinghouse and grant program established under this 
subtitle in promoting the goals of the strategy, and shall evaluate 
data gaps and data duplication with respect to data collected under 
Federal environmental statutes. 
(b) SUBSEQUENT REPORTS.—Each biennial report submitted under 
subsection (a) after the first report shall contain each of the 
following: 
(1) An analysis of the data collected under section 6607 on an 
industry-by-industry basis for not less than five SIC codes or 
other categories as the Administrator deems appropriate. The 
analysis shall begin with those SIC codes or other categories of 
facilities which generate the largest quantities of toxic chemical 
waste. The analysis shall include an evaluation of trends in 
source reduction by industry, firm size, production, or other 
useful means. Each such subsequent report shall cover five SIC 
codes or other categories which were not covered in a prior 
report until all SIC codes or other categories have been covered. 
(2) An analysis of the usefulness and validity of the data 
collected under section 6607 for measuring trends in source 
reduction and the adoption of source reduction by business. 
(3) Identification of regulatory and nonregulatory barriers to 
source reduction, and of opportunities for using existing regu-
latory programs, and incentives and disincentives to promote 
and assist source reduction. 
(4) Identification of industries and pollutants that require 
priority assistance in multi-media source reduction "^ ^ 
(5) Recommendations as to incentives needed to encourage 
investment and research and development in source reduction. 
(6) Identification of opportunities and development of prior-
ities for research and development in source reduction methods 
and techniques. 
(7) An evaluation of the cost and technical feasibility, by 
industry and processes, of source reduction opportunities and 
current activities and an identification of any industries for 
which there are significant barriers to source reduction with an 
analysis of the basis of this identification. 
(8) An evaluation of methods of coordinating, streamlining, 
and improving public access to data collected under Federal 
environmental statutes. 
(9) An evaluation of data gaps and data duplication with 
respect to data collected under Federal environmental statutes. 
In the report following the first biennial report provided for under 
this subsection, paragraphs (3) through (9) may be included at the 
discretion of the Administrator. 
^
* So in original. Probably should be "reduction.' 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-327 
SEC. 6609. SAVINGS PROVISIONS. 
(a) Nothing in this subtitle shall be construed to modify or inter-
fere with the implementation of title III of the 
Superfund 
Amendments and Reauthorization Act of 1986. 
(b) Nothing contained in this subtitle shall be construed, inter-
preted or applied to supplant, displace, preempt or otherwise dimin-
ish the responsibilities and liabilities under other State or Federal 
law, whether statutory or common. 
SEC. 6610. AUTHORIZATION OF APPROPRIATIONS. 
There is authorized to be appropriated to the Administrator 
$8,000,000 for each of the fiscal years 1991, 1992 and 1993 for 
functions carried out under this subtitle (other than State Grants), 
and $8,000,000 for each of the fiscal years 1991, 1992 and 1993, for 
grant programs to States issued pursuant to section 6605. 
TITLE VII—CIVIL SERVICE AND POSTAL 
SERVICE PROGRAMS 
Subtitle A—Civil Service 
42 use 13108. 
42 use 13109. 
SEC. 7001. ELIMINATION OF LUMP-SUM RETIREMENT BENEFIT. 
(a) LUMP-SUM BENEFIT.—(1) Sections 8343a and 8420a of title 5, 
United States Code, are each amended by adding at the end the 
following: 
"(fKD Notwithstanding any other provision of this section, and 
except as provided in parsigraph (2), an alternative form of annuity 
under this section may not be elected if the commencement date of 
the annuity would be later than December 1,1990. 
"(2) Nothing in this subsection shall prevent an election from 
being made by any individual— 
"(A) who is separated from Government service involuntarily 
(other than for cause on charges of misconduct or delinquency), 
excluding— 
"(i) any Senator or Representative in, or Delegate or 
Resident C!ommissioner to, the Congress; 
"(ii) the Vice President; 
"(iii) any individual holding a position placed in the 
Executive Schedule under sections 5312 through 5317; 
"(iv) any individual appointed to a position by the Presi-
dent (or his designee) or the Vice President under section 
105(aXl), 106(aXl), or 107 (aXD or (bXD of title 3, if the 
maximum rate of basic pay for such position is at or above 
the rate for level V of the Executive Schedule; 
"(v) any noncareer appointee in the Senior Executive 
Service or noncareer member of the Senior Foreign Service; 
and 
"(vi) any individual holding a position which is excepted 
from the competitive service because of its confidential, 
policy-determining, policy-making, or 
policy-advocating 
character; or 
"(B) as to whom the application of paragraph (1) would be 
against equity and good conscience, due to a life-threatening 
affliction or other critical medical condition affecting such 
individual. 
104 STAT. 1388-328 
PUBLIC LAW 101-508—NOV. 5, 1990 
5 u s e 8343a 
note. 
5 u s e 8343a 
not^. 
5 u s e 8343a 
note. 
5 u s e 8343a 
note. 
5 u s e 8343a 
note. 
"(3) This subsection shall cease to be effective as of October 1, 
1995.". 
(2) Section 4005 of the Omnibus Budget Reconciliation Act of 1989 
(Public Law 101-239; 103 Stat. 2135) is amended— 
(A) in subsection (a), by striking "October 1,1990." and insert-
ing "December 2,1990."; and 
(B) by adding at the end the following: 
"(f) CONTINUED APPUCABIUTY.—The preceding provisions of this 
section (disregarding the provision in subsection (a) limiting this 
section's applicability to annuities commencing before the date 
specified in such provision) shall also apply in the case of any 
employee or Member whose election of an alternative form of 
annuity would not have been allowable under section 8343a(f) or 
8420a(6 of title 5, United States Code (as the case may be), but for— 
"(1) paragraph (2)(A) thereof; or 
"(2) section 7001(a)(4) of the Omnibus Budget Reconciliation 
Act of 1990.". 
(C)(i) Section 6001(b)(2) of the Omnibus Budget Reconciliation Act 
of 1987 (5 U.S.C. 8343a note) and section 4005(b)(2) of the Omnibus 
Budget Reconciliation Act of 1989 (103 Stat. 2135) are each amended 
by striking "described in paragraph (1)." and inserting "on which 
the payment described in paragraph (1) is paid.". 
(ii) The amendments made by clause (i) shall not apply in any case 
in which the first half of the lump-sum payment involved was paid 
before the beginning of the 11-month period which ends on the date 
of the enactment of this Act. 
(D) Section 2 of Public Law 101-227 (103 Stat. 1943) is repealed. 
(3) Section 8348(a)(1)(B) of title 5, United States Code, is amended 
by inserting "in administering alternative forms of annuities under 
sections 8343a and 8420a (and related provisions of law)," before 
"and in withholding". 
(4)(A) In applying the provisions of section 8343a(f) or 8420a(f) of 
title 5, United States Code (as amended by paragraph (1)) to any 
individual described in subparagraph (B), the reference in such 
provisions to "December 1, 1990" shall be deemed to read "Decem-
ber 1,1991". 
(B) This paragraph applies with respect to any individual who— 
(i)(I) is a member of the Armed Forces of the United States 
who, before December 1, 1990, was called or ordered to active 
duty (other than for training) pursuant to section 672, 673, 673b, 
674, 675, or 688 of title 10, United States Code, in connection 
with Operation Desert Shield; or 
(II) is an employee of the Department of Defense who is 
certified by the Secretary of Defense to have performed, after 
November 30,1990, duties essential for the support of Operation 
Desert Shield; and 
(ii) would have been eligible to make an election under section 
8343a or 8420a of title 5, United States Code (as amended by 
paragraph (1)) as of November 30,1990. 
(C) The Office of Personnel Management may prescribe such 
regulations as may be necessary to carry out this paragraph. 
Qa) PRIOR REFUNDS.—(1) Section 8334(d) of title 5, United States 
' (A) by striking "(d)" and inserting "(d)(1)"; and 
(B) by adding at the end the following: 
"(2)(A) This paragraph applies with respect to any employee or 
Member who— 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-329 
"(i) separates before October 1,1990, and receives (or elects, in 
accordance with applicable provisions of this subchapter, to 
receive) a refund (described in paragraph (1)) which relates to a 
period of service ending before October 1,1990; 
"(ii) is entitled to an annuity under this subchapter (other 
than a disability annuity) which is based on service of such 
employee or Member, and which commences on or after Decem-
ber 2,1990; and 
"(iii) does not make the deposit (described in paragraph (1)) 
required in order to receive credit for the period of service with 
respect to which the refund relates. 
"(B) Notwithstanding the second sentence of paragraph (1), the 
annuity to which an employee or Member under this paragraph is 
entitled shall (subject to adjustment under section 8340) be equal to 
an amount which, when taken together with the unpaid amount 
referred to in subparagraph (A)(iii), would result in the present 
value of the total being actuarially equivalent to the present value 
of the annuity which would otherwise be provided the employee or 
Member under this subchapter, as computed under subsections (a)-
(i) and (n) of section 8339 (treating, for purposes of so computing the 
annuity which would otherwise be provided under this subchapter, 
the deposit referred to in subparagraph (A)(iii) as if it had been 
timely made). 
"(C) The Office of Personnel Management shall prescribe such 
regulations as may be necessary to carry out this paragraph.". 
(2XA) Section 8334 of title 5, United States Code, is amended in 
paragraphs (1) and (2) of subsection (e), and in subsection (h), by 
striking "(d)," and inserting "(d)(1),". 
(B) Section 8334(f) and section 8339(i)(l) of title 5, United States 
Code, are amended by striking "(d)" and inserting "(d)(1)". 
(C) Section 8339(e) of title 5, United States Code, is amended by 
striking "8334(d)" and inserting "8334(d)(1)". 
(D) The second sentence of section 8342(a) of title 5, United States 
Code, is amended by inserting "or 8334(d)(2)" after "8343a". 
(3) The amendments made by this subsection shall be effective 
5 USC 8334 note, 
with respect to any annuity having a commencement date later 
than December 1,1990. 
SEC. 7002. REFORMS IN THE HEALTH BENEFITS PROGRAM. 
(a) HospiTALizATiON-CosT-CoNTAiNMENT MEASURES.—Section 8902 
of title 5, United States Code, is amended by adding at the end the 
following: 
"(n) A contract for a plan described by section 8903 (1), (2). or (3), or 
section 8903a, shall require the carrier— 
"(1) to implement hospitalization-cost-containment measures, 
such as measures— 
"(A) for verifying the medical necessity of any proposed 
treatment or surgery; 
"(B) for determining the feasibility or appropriateness of 
providing services on an outpatient rather than on an 
inpatient basis; 
"(C) for determining the appropriate length of stay 
(through concurrent review or otherwise) in cases involving 
inpatient care; and 
"(D) involving case management, if the circumstances so 
warrant; and 
39-194 O - 91 - 24 : QL 3 Part 2 
104 STAT. 1388-330 
PUBLIC LAW 101-508—NOV. 5, 1990 
"(2) to establish incentives to encourage compliance with 
measures under paragraph (1).". 
(b) IMPROVED CASH MANAGEMENT.—Section 8909(a) of title 5, 
United States Code, is amended by adding at the end (as a flush left 
sentence) the following: 
"Payments from the Fund to a plan participating in a letter-of-
credit arrangement under this chapter shall, in connection with any 
payment or reimbursement to be made by such plan for a health 
service or supply, be made, to the maximum extent practicable, on a 
checks-presented basis (as defined under regulations of the Depart-
ment of the Treasury).". 
(c) EXEMPTION FROM STATE PREMIUM TAXES.—Section 8909 of title 
5, United States Code, is amended by adding at the end the follow-
ing: 
"(f)(1) No tax, fee, or other monetary payment may be imposed, 
directly or indirectly, on a carrier or an Underwriting or plan 
administration subcontractor of an approved health benefits plan by 
any State, the District of Columbia, or the Commonwealth of Puerto 
Rico, or by any political subdivision or other governmental author-
ity thereof, with respect to any payment made from the Fund. 
"(2) Paragraph (1) shall not be construed to exempt any carrier or 
underwriting or plan administration subcontractor of an approved 
health benefits plan from the imposition, payment, or collection of a 
tax, fee, or other monetary payment on the net income or profit 
accruing to or realized by such carrier or underwriting or plan 
administration subcontractor from business conducted under this 
chapter, if that tax, fee, or payment is applicable to a broad range of 
business activity.". 
(d) IMPROVED COORDINATION WITH MEDICARE.—Section 8910 
of 
title 5, United States Code, is amended by adding at the end the 
following: 
"(d) Tlie Office, in consultation with the Department of Health 
and Human Services, shall develop and implement a system 
through which the carrier for an approved health benefits plan 
described by section 8908 or 8903a will be able to identify those 
annuitants or other individuals covered by such plan who are 
entitled to benefits under part A or B of title XVIII of the Social 
Security Act in order to ensure that payments under coordination of 
benefits with Medicare do not exceed the statutory maximums 
which physicians may charge Medicare enroUees.". 
(e) AMENDMENTS TO PUBLIC LAW 101-76.—Public Law 101-76 (103 
5 use 8906 note. Stat. 556) is amended— 
(1) in subsection (a)(1), by striking "contract year 1990 or 
1991," and inserting "each of contract years 1990 through 1993 
(inclusive),"; and 
(2) in subsection (c), by striking "contract year 1991," and 
inserting "a contract year (or any period thereafter),". 
(f) APPUCATION OF CERTAIN MEDICARE LIMITS TO FEDERAL EM-
PLOYEE HEALTH BENEFITS ENROLLEES AGE 65 OR OLDER.—(1) Section 
8904 of title 5, United States Code, is amended by inserting "(a)" 
before the first sentence and by adding at the end of the section the 
following new subsection: 
"(b)(1) A plan, other than a prepayment plan described in section 
8903(4) of this title, may not provide benefits, in the case of any 
retired enrolled individual who is age 65 or older and is not covered 
to receive Medicare hospital and insurance benefits under part A of 
title XVIII of the Social Security Act (42 U.S.C. 1395c et seq.), to pay 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-331 
a charge imposed by any health care provider, for inpatient hospital 
services which are covered for purposes of benefit payments under 
this chapter and part A of title XVIII of the Social Security Act, to 
the extent that such charge exceeds applicable limitations on hos-
pital charges established for Medicare purposes under section 1886 
of the Social Security Act (42 U.S.C. 1895ww). Hospital providers 
who have in force participation agreements with the Secretary of 
Health and Human Services consistent with sections 1814(a) and 
1866 of the Social Security Act (42 U.S.C. 1395f(a) and 1895cc), 
whereby the participating provider accepts Medicare benefits as full 
payment for covered items and services after applicable patient 
copayments under section 1813 of such Act (42 U.S.C. 1395e) have 
been satisfied, shall accept equivalent benefit payments and enroUee 
copayments under this chapter as full payment for services de-
scribed in the preceding sentence. The Office of Personnel Manage-
ment shall notify the Secretary of Health and Human Services if a 
hospital is found to knowingly and willfully violate this subsection 
on a repeated basis and the Secretary may invoke appropriate 
sanctions in accordance with section 1866(b)(2) of the Social Security 
Act (42 U.S.C. 1395cc(b)(2)) and applicable regulations. 
"(2) Notwithstanding any other provision of law, the Secretary of 
Health and Human Services and the Director of the Office of 
Personnel Management, and their Eigents, shall exchange any 
information necessary to implement this subsection. 
"(3)(A) Not later than December 1, 1991, and periodically there-
after, the Secretary of Health and Human Services (in consultation 
with the Director of the Office of Personnel Management) shall 
supply to carriers of plans described in paragraphs (1) through (3) of 
section 8903 the Medicare program information necessary for them 
to comply with paragraph (1). 
"(B) For purposes of this paragraph, the term 'Medicare program 
information' includes the limitations on hospital charges established 
for Medicare purposes under section 1886 of the Social Security Act 
(42 U.S.C. 1395ww) and the identity of hospitals which have in force 
agreements with the Secretary of Health and Human Services 
consistent with section 1814(a) and 1866 of the Social Security Act 
(42 U.S.C. 1395f(a) and 1395cc).". 
(2) The amendments made by this subsection shall apply with 5 USC 8904 note, 
respect to contract years beginning on or after January 1, 1992. 
(g) EFFECTIVE DATE.—Except as provided in subsection (f), the 5 USC 8902 note, 
amendments made by this section shall apply with respect to con-
tract years beginning on or after January 1,1991. 
Subtitle B—Postal Service 
SEC. 7101. FUNDING OF COLAS FOR POSTAL SERVICE ANNUITANTS AND 
SURVIVOR ANNUITANTS. 
(a) EXPANDED SCOPE OF COVERAGE; CHANGE IN PRORATION RULE.— 
Section 8348(mXl) of title 5, United States Code, is amended by 
striking "October 1, 1986," each place it appears and inserting 
"July 1,1971,". 
(b) REPEAL OF PROVISION RELATING TO CERTAIN EARUER COLAS.— 
Section 4002(b) of the Omnibus Budget Reconciliation Act of 1989 
(Public Law 101-239; 103 Stat. 2134) is repealed. 
5 USC 8348 note. 
(c) PROVISION RELATING TO PRE-1991 COLAs.—(1) For the purpose 5 USC 8348 note, 
of this subsection— 
104 STAT. 1388-332 
PUBLIC LAW 101-508—NOV. 5, 1990 
(A) the term "pre-1991 COLA" means a cost-of-living adjust-
ment which took effect in any of the fiscal years specified in 
subparagraphs (A)-(N) of paragraph (3); 
(B) the term "post-1990 fiscal year" means a fiscal year after 
fiscal year 1990; and 
(C) the term "pre-1991 fiscal year" means a fiscal year before 
fiscal year 1991. 
(2) Notwithstanding any other provision of law, an installment 
(equal to an amount determined by reference to paragraph (3)) shall 
be payable by the United States Postal Service in a post-1990 fiscal 
year, with respect to a pre-1991 COLA, if such fiscal year occurs 
within the 15-fiscal-year period which begins with the first fiscal 
year in which that COLA took effect, subject to section 7104. 
(3) Notwithstanding any provision of section 8348(m) of title 5, 
United States Code, or any determination thereunder (including any 
made under such provision, as in effect before October 1, 1990), the 
estimated increase in the unfunded liability referred to in para-
graph (1) of such section 8348(m) shall be payable, in accordance 
with this subsection, based on annual installments equal to— 
(A) $6,500,000 each, with respect to the cost-of-living adjust-
ment which took effect in fiscal year 1977; 
(B) $7,000,000 each, with respect to the cost-of-living adjust-
ment which took effect in fiscal year 1978; 
(C) $10,400,000 each, with respect to the cost-of-living adjust-
ment which took effect in fiscal year 1979; 
(D) $20,500,000 each, with respect to the cost-of-living adjust-
ment which took effect in fiscal year 1980; 
(E) $26,100,000 each, with respect to the cost-of-living adjust-
ment which took effect in fiscal year 1981; 
(F) $28,100,000 each, with respect to the cost-of-living adjust-
ment which took effect in fiscal year 1982; 
(G) $30,600,000 each, with respect to the cost-of-living adjust-
ment which took effect in fiscal year 1983; 
(H) $5,700,000 each, with respect to the cost-of-living adjust-
ment which took effect in fiscal year 1984; 
(I) $19,400,000 each, with respect to the cost-of-living adjust-
ment which took effect in fiscal year 1985; 
(J) $7,400,000 each, with respect to the cost-of-living adjust-
ment which took effect in fiscal year 1986; 
(K) $8,500,000 each, with respect to the cost-of-living adjust-
ment which took effect in fiscal year 1987; 
(L) $36,800,000 each, with respect to the cost-of-living adjust-
ment which took effect in fiscal year 1988; 
(M) $51,600,000 each, with respect to the cost-of-living adjust-
ment which took effect in fiscal year 1989; and 
(N) $63,500,000 each, with respect to the cost-of-living adjust-
ment which took effect in fiscal year 1990. 
(4) Any installment payable under this subsection shall be paid by 
the Postal Service at the same time as when it pays any install-
ments due in that same fiscal year under section 8348(m) of title 5, 
United States Code. 
(5) An installment payable under this subsection in a fiscal year, 
with respect to a pre-1991 COLA, shall be in lieu of any other 
installment for which the Postal Service might otherwise be liable 
in such fiscal year, with respect to such COLA, under section 
8348(m) of title 5, United States Code. 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-333 
(d) EFFECTIVE DATE.—This section and the amendments made by 5 USC 8348 note, 
this section shall take effect on October 1,1990. 
SEC. 7102. FUNDING OF HEALTH BENEFITS FOR POSTAL SERVICE RETIR-
EES AND SURVIVORS OF POSTAL SERVICE EMPLOYEES OR 
RETIREES. 
(a) EXPANDED SCOPE OF Ck)VERAGE.—Section 8906(gX2) of title 5, 
United States Code, is amended by striking "October 1, 1986," each 
place it appears and inserting "July 1,1971,". 
(b) CONTRIBUTIONS TO BE PRORATED.—Section 8906(gX2) of title 5, 
United States Code, as amended by subsection (a), is further 
amended— 
(1) by striking "(2)" and inserting "(2XA)"; and 
(2) by adding at the end the following: 
"(B) In determining any amount for which the Postal Service is 
liable under this paragraph, the amount of the liability shall be 
prorated to reflect only that portion of total service which is attrib-
utable to civilian service performed (by the former postal employee 
or by the deceased individual referred to in subparagraph (A), as the 
case may be) after June 80, 1971, as estimated by the Office of 
Personnel Management.". 
(c) EFFECTIVE DATE.—The amendments made by this section shall 5 USC 8906 note, 
take effect on October 1, 1990, and shall apply with respect to 
amounts payable for periods beginning on or after that date. 
SEC. 7103. PAYMENTS RELATING TO AMOUNTS WHICH WOULD HAVE 5 USC 8348 note. 
BEEN DUE BEFORE FISCAL YEAR 1987. 
(a) DEFINITION.—For the purpose of this section, the term "pre-
1987 fiscal year" means a fiscal year before fiscal year 1987. 
(b) FOR PAST RETIREMENT COLAS.—As payment for any amounts 
which would have been due in any pre-1987 fiscal year under the 
provisions of section 8348(m) of title 5, United States Code (as 
amended by section 7101) if such provisions had been in effect as of 
July 1,1971, the United States Postal Service shall pay into the Civil 
Service Retirement and Disability Fund— 
(1) $216,000,000, not later than September 30,1991; 
(2) $266,000,000, not later than September 30,1992; 
(3) $316,000,000, not later than September 30,1993; 
(4) $416,000,000, not later than September 30,1994; and 
(5) $471,000,000, not later than September 30,1995. 
(c) FOR PAST HEALTH BENEFITS.—As payment for any amounts 
which would, for any period ending before the start of fiscal year 
1987, have been payable under the provisions of section 8906^X2) of 
title 5, United States Code (as amended by section 7102) if such 
provisions had been in effect as of July 1, 1971, the United States 
Postal Service shall pay into the Employees Health Benefits Fund— 
(1) $56,000,000, not later than September 30,1991; 
(2) $47,000,000, not later than September 30,1992; 
(3) $62,000,000, not later than September 30,1993; 
(4) $56,000,000, not later than September 30,1994; and 
(5) $234,000,000, not later than September 30,1995. 
104 STAT. 1388-334 
PUBLIC LAW 101-508—NOV. 5, 1990 
Subtitle C—Miscellaneous 
Computer 
Matching and 
Privacy 
Protection 
Amendments of 
1990. 
5 use 552a note. 
5 use 552a note. 
SEC. 7201. COMPUTER MATCHING OF FEDERAL BENEFITS INFORMATION 
AND PRIVACY PROTECTION. 
(a) SHORT TITLE.—This section may be cited as the "Computer 
Matching and Privacy Protection Amendments of 1990". 
(b) VERIFICATION REQUIREMENTS AMENDMENT.—(1) Subsection (p) 
of section 552a of title 5, United States Code, is amended to read as 
follows: 
"(p) VERIFICATION AND OPPORTUNITY TO CONTEST FINDINGS.—(1) In 
order to protect any individual whose records are used in a match-
ing program, no recipient agency, non-Federal agency, or source 
agency may suspend, terminate, reduce, or make a final denial of 
any financial assistance or payment under a Federal benefit pro-
gram to such individual, or take other adverse action against such 
individual, as a result of information produced by such matching 
program, until— 
"(A)(i) the agency has independently verified the information; 
or 
"(ii) the Data Integrity Board of the agency, or in the case of a 
non-Federal agency the Data Integrity Board of the source 
agency, determines in accordance with guidance issued by the 
Director of the Office of Management and Budget that— 
"(I) the information is limited to identification and 
amount of benefits paid by the source agency under a 
Federal benefit program; and 
"(II) there is a high degree of confidence that the informa-
tion provided to the recipient agency is accurate; 
"(B) the individual receives a notice from the agency contain-
ing a statement of its findings and informing the individual of 
the opportunity to contest such findings; and 
"(C)(i) the expiration of any time period established for the 
program by statute or regulation for the individual to respond 
to that notice; or 
"(ii) in the case of a program for which no such period is 
established, the end of the 30-day period beginning on the date 
on which notice under subparagraph (B) is mailed or otherwise 
provided to the individual. 
"(2) Independent verification referred to in paragraph (1) requires 
investigation and confirmation of specific information relating to an 
individual that is used as a basis for an adverse action against the 
individual, including where applicable investigation and confirma-
tion o
f
— 
"(A) the amount of any asset or income involved; 
"(B) whether such individual actually has or had access to 
such asset or income for such individual's own use; and 
"(C) the period or periods when the individual actually had 
such asset or income. 
"(3) Notwithstanding paragraph (1), an agency may take any 
appropriate action otherwise prohibited by such paragraph if the 
agency determines that the public health or public safety may be 
adversely affected or significantly threatened during any notice 
period required by such paragraph.". 
(2) Not later than 90 days after the date of the enactment of this 
Act, the Director of the Office of Management and Budget shall 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-335 
publish guidance under subsection (pXlXAXii) of section 552a of title 
5, United States Code, as amended by this Act. 
5 use 552a note. 
(c) LIMITATION ON APPUCATION OF VERIFICATION REQUIREMENT.— 
Section 552a(pXlXAXiiXn) of title 5, United States Code, as amended 
by section 2, shall not apply to a program referred to in paragraph 
(1), (2), or (4) of section 1187(b) of the Social Security Act (42 U.S.C. 
1320b-7), until the earlier of— 
(1) the date on which the Data Integrity Board of the Federal 
agency which administers that program determines that there 
is not a high degree of confidence that information provided by 
that agency under Federal matching programs is accurate; or 
(2) 30 days after the date of publication of guidance under 
section 2(b). 
SEC. 7202. PORTABILITY OF BENEFITS FOR EMPLOYEES CONVERTING TO Portability of 
THE CIVIL SERVICE SYSTEM. 
Benefits for 
Nonappropriated 
(a) SHORT TITLE.—This section may be cited as the "Portability of Fund Employees 
Benefits for Nonappropriated Fund Employees Act of 1990". 
Act of 1990. 
(b) DEFINITIONAL AMENDMENT.—Section 2105(c) of title 5, United ^ ^ ^ ^^"^ ''°^-
States Code, is amended— 
(1) by amending paragraph (1) to read as follows: 
"(1) laws administered by the OfRce of Personnel Maneige-
ment, except— 
"(A) section 7204; 
"(B) as otherwise specifically provided in this title; 
"(C) the Fair Labor Standards Act of 1938; or 
"(D) for the purpose of entering into an interchange 
agreement to provide for the noncompetitive movement of 
employees between such instrumentalities and the competi-
tive service; or"; and 
(2) in paragraph (2), by striking "chapter 84" and inserting 
"chapter 84 (except to the extent specifically provided therein)'. 
(c) AMENDMENT RELATING TO ORDER OF RETENTION.—Section 
3502(a)(C) of title 5, United States Code, is amended to read as 
follows: 
"(C) is entitled to credit for— 
"(i) service rendered as an employee of a county 
committee established pursuant to section 8(b) of the 
Soil Conservation and Allotment Act or of a committee 
or association of producers described in section 10(b) of 
the Agricultural Adjustment Act; and 
"(ii) service rendered as an employee described in 
section 2105(c) if such employee moves or has moved, 
on or after Jguiuary 1, 1987, without a break in service 
of more 
than 
3 days, from 
a 
position 
in a 
nonappropriated fund instrumentality of the Depart-
ment of Defense or the Coast Guard to a position in the 
Department of Defense or the Coast Guard, respec-
tively, that is not described in section 2105(c).". 
(d) AMENDMENT RELATING TO PAY ON A CHANGE OF POSITION.— 
Section 5334 of title 5, United States Code, is amended by adding at 
the end the following: 
"(g) An employee of a nonappropriated fund instrumentality of 
the Department of Defense or the Coast Guard described in section 
2105(c) who moves, without a break in service of more than 3 days, 
to a position in the Department of Defense or the Coast Guard, 
respectively, that is subject to this subchapter, may have such 
104 STAT. 1388-336 
PUBLIC LAW 101-508—NOV. 5, 1990 
employee's initial rate of basic pay fixed at the minimum rate of the 
appropriate grade or at any step of such grade that does not exceed 
the highest previous rate of basic pay received by that employee 
during the employee's service described in section 2105(c). In the 
case of a nonappropriated fund employee who is moved involuntar-
ily from such nonappropriated fund instrumentality without a 
break in service of more than 3 days and without substantial change 
in duties to a position that is subject to this subchapter, the employ-
ee's pay shall be set at a rate (not above the maximum for the grade, 
except as may be provided for under section 5365) that is not less 
than the employee's rate of basic pay under the nonappropriated 
fund instrumentality immediately prior to so moving.". 
(e) AMENDMENT RELATING TO PERIODIC STEP INCREASES.—Section 
5335 of title 5, United States Code, is amended by adding at the end 
the following: 
"(g) In computing periods of service under subsection (a) in the 
case of an employee who moves without a break in service of more 
than 3 days from a position under a nonappropriated 
fund 
instrumentality of the Department of Defense or the Coast Guard 
described in section 2105(c) to a position under the Department of 
Defense or the Coast Guard, respectively, that is subject to this 
subchapter, service under such instrumentality shall, under regula-
tions prescribed by the Office, be deemed service in a position 
subject to this subchapter.". 
(f) AMENDMENT RELATING TO GRADE AND PAY RETENTION.—Section 
5365(b) of title 5, United States Code, is amended by adding at the 
end, as a flush left sentence, the following: 
"Individuals with respect to whom authority under paragraph (2) 
may be exercised include individuals who are moved without a 
break in service of more than 3 days from employment in 
nonappropriated fund instrumentalities of the Department of De-
fense or the Coast Guard described in section 2105(c) to employment 
in the Department of Defense or the Coast Guard, respectively, that 
is not described in section 2105(c).". 
(g) AMENDMENT RELATING TO PAY FOR ACCUMULATED AND AC-
CRUED LEAVE.—Section 5551(a) of title 5, United States Code, is 
amended by adding at the end the following new sentence: "For the 
purposes of this subsection, movement to employment described in 
section 2105(c) shall not be deemed separation from the service in 
the case of an employee whose annual leave is transferred under 
section 6308(b).". 
(h) AMENDMENTS RELATING TO TRANSFERS BETWEEN POSITIONS 
UNDER DIFFERENT LEAVE SYSTEMS.—Section 6308 of title 5, United 
States Code, is amended— 
(1) by inserting "(a)" before "The annual"; and 
(2) by adding at the end the following: 
"(b) 'The annual leave, sick leave, and home leave to the credit of a 
nonappropriated fund employee of the Department of Defense or the 
Coast Guard described in section 2105(c) who moves without a break 
in service of more than 3 days to a position in the Department of 
Defense or the Coast Guard, respectively, that is subject to this 
subchapter shall be transferred to the employee's credit. The annual 
leave, sick leave, and home leave to the credit of an employee of the 
Department of Defense or the Coast Guard who is subject to this 
subchapter and who moves without a break in service of more than 
3 days to a position under a nonappropriated fund instrumentality 
of the Department of Defense or the Coast Guard, respectively. 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-337 
described in section 2105(c), shall be transferred to the employee's 
credit under the nonappropriated fund instrumentality. The Sec-
retary of Defense or the Secretary of Transportation, as appropriate, 
may provide for a transfer of funds in an amount equal to the value 
of the transferred annual leave to compensate the gaining entity for 
the cost of a transfer of annual leave under this subsection.". 
(i) AMENDMENTS TO INCLUDE ADDITIONAL SERVICE FOR LEAVE AC-
CRUAL PURPOSES.—(1) Section 6312 is amended to read as follows: 
"§ 6312. Accrual and accumulation for former ASCS county office 
and nonappropriated fund employees 
"(a) Credit shall be given in determining years of service for the 
purpose of section 6303(a) for— 
"(1) service as an employee of a county committee established 
pursuant to section 8(b) of the Soil Conservation and Allotment 
Act or of a committee or an association of producers described 
in section 10(b) of the Agricultural Adjustment Act; and 
"(2) service under a nonappropriated fund instrumentality of 
the Department of Defense or the Coast Guard described in 
section 2105(c) by an employee who has moved without a break 
in service of more than 3 days to a position subject to this 
subchapter in the Department of Defense or the Coast Guard, 
respectively. 
"(b) The provisions of subsections (a) and (b) of section 6308 for 
transfer of leave between leave systems shall apply to the leave 
systems established for such county office employees and employees 
of such Department of Defense and Coast Guard nonappropriated 
fund instrumentalities, respectively.". 
(2) The item relating to section 6312 in the table of sections for 
chapter 63 of title 5, United States Code, is amended to read as 
follows: 
"6312. Accrual and accumulation for former ASCS county office and nonappro-
priated fund employees.". 
(j) AMENDMENTS RELATING TO THE CIVIL SERVICE RETIREMENT 
SYSTEM.—(1) Section 8331 of title 5, United States Code, is 
amended— 
(A) by striking "and" at the end of paragraph (IXJ); 
(B) by inserting "and" after the semicolon at the end of 
paragraph (1)(K); 
(C) by inserting after paragraph (IXK) the following: 
"(L) an employee described in section 2105(c) who has 
made an election under section 8347(p)(l) to remain 
covered under this subchapter;"; 
(D) in paragraph (l)(ii), by striking the matter following 
"Government employees" through the semicolon and inserting 
"(besides any employee excluded by clause (x), but including any 
employee who has made an election under section 8347(pX2) to 
remain covered by a retirement system established for employ-
ees described in section 2105(c));"; and 
(E) in paragraph (7), by striking "and Gallaudet College;" and 
inserting "Gallaudet College, and, in the case of an employee 
described 
in 
paragraph 
(1)(L), a 
nonappropriated 
fund 
instrumentality of the Department of Defense or the Coast 
Guard described in section 2105(c);". 
(2) Section 8347 of title 5, United States Code, is amended by 
adding at the end the following: 
104 STAT. 1388-338 
PUBLIC LAW 101-508—NOV. 5, 1990 
"(pXD Under regulations prescribed by the Office of Personnel 
Management, an employee of the Department of Defense or the 
Coast Guard who— 
"(A) has not previously made or had an opportunity to make 
an election under this subsection; 
"(B) has 5 or more years of civilian service creditable under 
this subchapter; and 
"(C) moves, without a break in service of more than 3 days, to 
emplo5mient in a nonappropriated fund instrumentality of the 
Department of Defense or the Coast Guard, respectively, de-
scribed in section 2105(c), 
shall be given the opportunity to elect irrevocably, within 30 days 
after such move, to remain covered as an employee under this 
subchapter during any employment described in section 2105(c) 
after such move. 
"(2) Under regulations prescribed by the Office of Personnel 
Management, an employee of a nonappropriated fund instrumental-
ity of the Department of Defense or the Coast Guard, described in 
section 2105(c), who— 
"(A) has not previously made or had an opportunity to make 
an election under this subsection; 
"(B) is a vested participant in a retirement system established 
for employees described in section 2105(c), as the term 'vested 
participEint' is defined by such system; 
"(C) moves, without a break in service of more than 3 days, to 
a position in the Department of Defense or the Coast Guard, 
respectively, that is not described in section 2105(c); and 
' (D) is excluded from coverage under chapter 84 by section 
8402(b), 
shall be given the opportunity to elect irrevocably, within 30 days 
after such move, to remain covered, during any subsequent employ-
ment as an employee as defined in section 2105(a) or section 2105(c), 
by the retirement system applicable to such employee's current or 
most recent emplo5mient described in section 2105(c) rather than be 
subject to this subchapter.". 
(k) AMENDMENTS RELATING TO THE FEDERAL EMPLOYEES' RETIRE-
MENT SYSTEM.—(1) Section 8401 of title 5, United States Code, is 
amended— 
(A) in paragraph (11)— 
(i) by striking "and" at the end of subparagraph (A); 
(ii) by inserting "and" after the semicolon at the end of 
subparagraph (B); 
(iii) by inserting after subparagraph (B) the following: 
"(C) an employee described in section 2105(c) who has 
made an election under section 8461(n)(l) to remain covered 
under this chapter;"; 
(iv) by striking "or" at the end of clause (ii); 
(v) by inserting "or" after the semicolon at the end of 
clause (iii); and 
(vi) by inserting after clause (iii) the following: 
"(iv) an employee who has made an election under 
section 8461(nX2) to remain covered by a retirement 
system established for employees described in section 
2105(c);"; and 
(B) in paragraph (15), by striking "and Gallaudet College;" 
and inserting ", Gallaudet College, and, in the case of an 
employee described in paragraph (IIXC), a nonappropriated 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-339 
fund instrumentality of the Department of Defense or the Coast 
Guard described in section 2105(c);". 
(2) Section 8461 of title 5, United States Code, is amended by 
adding at the end the following: 
"(nXD Under regulations prescribed by the Office, an employee of 
the Department of Defense or the Coast Guard who— 
"(A) has not previously made or had an opportunity to make 
an election under this subsection; 
"(B) has 5 or more years of civilian service creditable under 
this chapter; and 
"(C) moves, without a break in service of more than 3 days, to 
employment in a nonappropriated fund instrumentality of the 
Department of Defense or the Coast Guard, respectively, de-
scribed in section 2105(c), 
shall be given the opportunity to elect irrevocably, within 30 days 
after such move, to remain covered as an employee under this 
chapter during any employment described in section 2105(c) after 
such move. 
"(2) Under regulations prescribed by the Office, an employee of a 
nonappropriated fund instrumentality of the Department of Defense 
or the Coast Guard described in section 2105(c), who— 
"(A) has not previously made or had an opportunity to make 
an election under this subsection; 
"(B) is a vested participant in a retirement system established 
for employees described in section 2105(c), as the term 'vested 
participant' is defined by such system; 
"(C) moves, without a break in service of more than 3 days, to 
a position in the Department of Defense or the Coast Guard, 
respectively, that is not described by section 2105(c); and 
"(D) is not eligible to make an election under section 8347(p), 
shall be given the opportunity to elect irrevocably, within 30 days 
after such move, to remain covered, during any subsequent employ-
ment as an employee as defined by section 2105(a) or section 2105(c), 
by the retirement system applicable to such employee's current or 
most recent employment described by section 2105(c) rather than be 
subject to this chapter.". 
(1) 
AMENDMENTS 
RELATING 
TO 
HEALTH 
BENEFITS.—Section 
8901(3XA) of title 5, United States Code, is amended— 
(1) by striking "or" at the end of clause (ii); 
(2) by inserting "or" after the semicolon at the end of clause 
(iii); and 
(3) by inserting after clause (iii) the following: 
"(iv) on an immediate annuity under a retirement 
system established for employees described in section 
2105(c), in the case of an individual who elected under 
section 8347(pX2) or 8461(nX2) to remain subject to such 
a system;", 
(m) APPUCABIUTY.—(1) The amendments made by this section 5 USC 2105 note, 
shall apply with respect to any individusil who, on or after 
January 1,1987— 
(A) moves without a break in service of more than 3 days from 
employment in a nonappropriated fund instrumentality of the 
Department of Defense or the Coast Guard that is described in 
section 2105(c) of title 5, United States Code, to employment in 
the Department of Defense or the Coast Guard, respectively, 
that is not described in such section 2105(c); or 
104 STAT. 1388-340 
PUBLIC LAW 101-508—NOV. 5, 1990 
(B) moves without a break in service from emplo5anent in the 
Department of Defense or the Ck)ast Guard that is not described 
in such section 2105(c) to employment in a nonappropriated 
fund instrumentality of the Department of Defense or the Coast 
Guard, respectively, that is described in such section 2105(c). 
(2) The Secretary of Defense, the Secretary of Transportation, the 
Director of the Office of Personnel Management, and the Executive 
Director of the Federal Retirement Thrift Investment Board, as 
applicable, shall take such actions as may be practicable to ensure 
that each individual who has moved as described under paragraph 
(1) on or after January 1, 1987, and before the date of enactment of 
this Act, receives the benefit of the amendments made by this 
section as if such amendments had been in effect at the time such 
individual so moved. Each such individual who wishes to make an 
election of retirement coverage under the amendments made by 
subsection (j) or (k) of this section shall complete such election 
within 180 days after the date of enactment of this Act. 
5 u s e 2105 note. 
(n) CLARIFYING PROVISIONS RELATING TO TREATMENT OF INDIVID-
UALS ELECTING TO REMAIN SUBJECT TO THEIR FORMER RETIREMENT 
SYSTEM.—(1) 
For 
the 
purpose 
of 
this 
section, 
the 
term 
"nonappropriated fund instrumentality" means a nonappropriated 
fund instrumentality of the Department of Defense or the Coast 
Guard, described in section 2105(c) of title 5, United States Code. 
(2XA) If an individual makes an election under section 8347(pXl) of 
title 5, United States Code, to remain covered by subchapter III of 
chapter 83 of such title, any nonappropriated fund instrumentality 
thereafter emplojdng such individual shall deduct from such individ-
ual's pay and contribute to the Thrift Savings Fund such sums as 
are required for such individual in accordance with section 8351 of 
such title. 
(B) Notwithstanding subsection (a) or (b) of section 8432 of title 5, 
United States Code, any individual who, as of the date of enactment 
of this Act, becomes eligible to make an election under section 
8347(pXl) of such title may, within 30 days after such individual 
makes an election thereunder in accordance with subsection (mX2), 
make any election described in section 8432(bXlXA) of such title. 
(3XA) If an individual makes an election under section 8461(nXl) 
of title 5, United States Code, to remain covered by chapter 84 of 
such title, any nonappropriated fund instrumentality thereafter 
emplo3dng such individual shall deduct from such individual's pay 
and shall contribute to the Thrift Savings Fund the funds deducted, 
together with such other sums as are required for such individual 
under subchapter III of such chapter. 
(B) Notwithstanding subsection (a) or (b) of section 8432 of title 5, 
United States Code, any individual who, as of the date of enactment 
of this Act, becomes eligible to make an election under section 
8461(nXl) of such title may, within 30 days after such individual 
makes an election thereunder in accordance with subsection (mX2), 
make any election described in section 8432(bXlXA) of such title. 
(4) If an individu£d makes an election under section 8347(pX2) or 
8461(nX2) of title 5, United States Code, to remain covered by a 
retirement system established for employees described in section 
2105(c) of such title, any Government agency thereafter emplojdng 
such individual shall, in lieu of any deductions or contributions for 
which it would otherwise be responsible with respect to such individ-
ual under chapter 83 or 84 of such title, make such deductions from 
pay and such contributions as would be required (under the retire-
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-341 
ment system for nonappropriated fund employees involved) if it 
were a nonappropriated fund instrumentality. Any such deductions 
and contributions shall be remitted to the Department of Defense or 
the Coast Guard, £is applicable, for transmission to the appropriate 
retirement system. 
Subtitle D—Coordination 
SEC. 7301. COORDINATION. 
5 USC 2101 note. 
For purposes of section 202 of the Balanced Budget and Emer-
gency Deficit Reaffirmation Act of 1987, this title and the amend-
ments made by this title shall be considered an exception under 
subsection (b) of such section. 
TITLE VIII—VETERANS' PROGRAMS 
TABLE OF CONTENTS 
Subtitle A—Compensation, DIC, and Pension 
Sec. 8001. Compensation benefits for certain incompetent veterans. 
Sec. 8002. Elimination of presumption of total disability in determination of pen-
sion for certain veterans. 
Sec. 8003. Reduction in pension for certain veterans receiving Medicaid-covered 
nursing home care. 
Sec. 8004. Ineligibility of remarried surviving spouses or married children for rein-
statement of benefits eligibility upon becoming single. 
Sec. 8005. Cost-of-living increases in compensation rates. 
Subtitle B—Health-Care Benefits 
Sec. 8011. Medical-care cost recovery. 
Sec. 8012. Copayment for medications. 
Sec. 8013. Modification of health-care categories and copayments. 
Subtitle C—Education and Employment 
Sec. 8021. Limitation of rehabilitation program entitlement to service-disabled vet-
ersaiB rated at 20 percent or more. 
Subtitle D—Housing and Loan Guaranty Assistance 
Sec. 8031. Election of claim under guaranty of manufactured home loans. 
Sec. 8032. Loan fee. 
Subtitle E—Burial and Grave Marker Benefits 
Sec. 8041. Headstone or marker allowance. 
Sec. 8042. Plot allowance eligibility. 
Subtitle F—Miscellaneous 
Sec. 8051. Use of Internal Revenue Service and Social Security Administration data 
for income verification. 
Sec. 8052. Line of duty. 
Sec. 8053. Requirement for claimants to report social security numbers; use of 
death information by the Department of Veterans Affairs. 
Subtitle A—Compensation, DIC, and Pension 
SEC. 8001. LIMITATION ON COMPENSATION BENEFITS FOR CERTAIN 
INCOMPETENT VETERANS. 
(a) IN GENERAL.—(1) Chapter 55 of title 38, United States Code, is 
amended by adding at the end the following new section: 
104 STAT. 1388-342 
PUBLIC LAW 101-508—NOV. 5, 1990 
"§ 3205. Limitation on compensation payments for certain incom-
petent veterans 
"(a) In any case in which a veteran having neither spouse, child, 
nor dependent parent is rated by the Secretary in accordance with 
regulations as being incompetent and the value of the veteran's 
estate (excluding the value of the veteran's home) exceeds $25,000, 
further payment of compensation to which the veteran would other-
wise be entitled may not be made until the value of such estate is 
reduced to less than $10,000. 
"Qi)il) Subject to paragraph (2) of this subsection, if a veteran 
denied payment of compensation pursuant to subsection (a) is subse-
quently rated as being competent, the Secretary shall pay to the 
veteran a lump sum equal to the total of the compensation which 
was denied the veteran pursuant to such paragraph. The Secretary 
shall make the lump-sum payment as soon as practicable after the 
end of the 90-day period beginning on the date of the competency 
rating. 
"(2) A lump-sum payment may not be made under paragraph (1) 
to a veteran who, within such 90-day period, dies or is again rated by 
the Secretary as being incompetent. 
"(3) The costs of administering this subsection shall be paid from 
amounts available to the Department of Veterans Affairs for the 
payment of compensation and pension. 
"(c) This section expires on September 30,1992.". 
(2) The table of sections at the beginning of such chapter is 
amended by adding at the end the following new item: 
"3205. Limitation on compensation payments for certain incompetent veterans." 
38 use 3205 
(b) EFFECTIVE DATE.—The amendment made by this section shall 
note. 
apply with respect to payment of compensation for months after 
October 1990. 
SEC. 8002. ELIMINATION OF PRESUMPTION OF TOTAL DISABILITY IN 
DETERMINATION OF PENSION FOR CERTAIN VETERANS. 
(a) ELIMINATION OF PRESUMPTION.—That portion of subsection (a) 
of section 502 of title 38, United States Code, preceding paragraph 
(1) is amended to read as follows: 
"(a) For the purposes of this chapter, a person shall be considered 
to be permanently and totally disabled if such a person is unemploy-
able as a result of disability reasonably certain to continue through-
out the life of the disabled person, or is suffering from—". 
38 use 502 note. 
(b) APPLICABILITY.—The amendment made by subsection (a) shall 
apply with respect to claims filed after October 31,1990. 
SEC. 8003. REDUCTION IN PENSION FOR CERTAIN VETERANS RECEIVING 
MEDICAID-COVERED NURSING HOME CARE. 
(a) IN GENERAL.—Section 3203 of title 38, United States Code, is 
amended by adding at the end the following: 
"(f)(1) For the purposes of this subsection— 
"(A) the term 'Medicaid plan' means a State plan for medical 
assistance referred to in section 1902(a) of the Social Security 
Act (42 U.S.C. 1396a(a)); and 
"(B) the term 'nursing facility' means a nursing facility de-
scribed in section 1919 of such Act (42 U.S.C. 1396r). 
"(2) If a veteran having neither spouse nor child is covered by a 
Medicaid plan for services furnished such veteran by a nursing 
facility, no pension in excess of $90 per month shall be paid to or for 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-343 
the veteran for any period after the month of admission to such 
nursing facility. 
"(3) Notwithstanding any provision of title XIX of the Social 
Security Act, the amount of the pajmient paid a nursing facility 
pursuant to a Medicaid plan for services furnished a veteran may 
not be reduced by any amount of pension permitted to be paid such 
veteran under paragraph (2) of this subsection. 
"(4) A veterEui is not liable to the United States for any pajmient 
of pension in excess of the amount permitted under this subsection 
that is paid to or for the veteran by reason of the inability or failure 
of the Secretary to reduce the veteran's pension under this subsec-
tion unless such inability or failure is the result of a willful conceal-
ment by the veteran of information necessary to make a reduction 
in pension under this subsection. 
"(5) The costs of administering this subsection shall be paid for 
from amounts available to the Department of Veterans Affairs for 
the payment of compensation and pension. 
"(6) This subsection expires on September 30,1992.". 
(b) EFFECTIVE DATE.—The amendment made by subsection (a) 38 use 3203 
shall take effect on November 1, 1990, or the date of the enactment "°*®-
of this Act, whichever is later. 
SEC. 8004. INELIGIBILITY OF REMARRIED SURVIVING SPOUSES OR MAR-
RIED CHILDREN FOR REINSTATEMENT OF BENEFITS ELIGI-
BILITY UPON BECOMING SINGLE. 
(a) IN GENERAL.—Section 103 of title 38, United States Code, is 
amended— 
(1) in subsection (d)— 
(A) by striking out "(1)"; and 
(B) by striking out paragraphs (2) and (3); and 
(2) in subsection (e)— 
(A) by striking out "(1)"; and 
(B) by striking out paragraph (2). 
(b) EFFECTIVE DATE.—The amendments made by subsection (a) 38 USC103 note, 
shall apply with respect to claims filed after October 31, 1990, and 
shall not operate to reduce or terminate benefits to any individual 
whose benefits were predicated on section 103(dX2), 103(dX3), or 
103(eX2) before the effective date of those amendments. 
SEC. 8005. COST-OF-LIVING INCREASES IN COMPENSATION RATES. 
38 USC 301 note. 
(a) POLICY REGARDING FISCAL YEAR 1991.—The fiscal year 1991 
cost-of-living adjustments in the rates of compensation payable 
under chapter 11 of title 38, United States Code, and of the depend-
ency and indemnity compensation payable under chapter 13 of such 
title will be no more than a 5.4 percent increase, with all increased 
monthly rates rounded down to the next lower dollar. The effective 
date for such adjustments will not be earlier than January 1, 1991. 
(b) INCREASE PAYABLE AS OF JANUARY 
1992.—The sunount of 
compensation or dependency and indemnity compensation payable 
to any individual for the month of January 1992 who is entitled to 
such benefits £is of January 1, 1992, shall be increased for such 
month by the amount equal to the amount of the monthly increase 
provided for that individual's benefit level as of January 1, 1991, 
pursuant to the adjustments described in subsection (a). 
104 STAT. 1388-344 
PUBLIC LAW 101-508—NOV. 5, 1990 
Subtitle B—Health-Care BeneHts 
SEC. 8011. MEDICAL-CARE COST RECOVERY. 
(a) APPUCABILITY.—Section 629(a)(2) of title 38, United States 
Code, is amended— 
(1) by striking out "or" at the end of clause (C); 
(2) by striking out the period at the end of clause (D) and 
inserting in lieu thereof "; or"; and 
(3) by adding at the end the following new clause: 
"(E) for which care and services are furnished 
before 
October 1,1993, under this chapter to a veteran who— 
"(i) has a service-connected disability; and 
"(ii) is entitled to care (or payment of the expenses of 
care) under a health-plan contract.". 
(b) 
MAXIMUM AMOUNT RECOVERABLE.—Clause (B) 
of section 
629(c)(2) of such title is amended by striking out "in accordance with 
the prevailing rates at which the third party makes payments under 
comparable health-plan contracts with' and inserting in lieu thereof 
"if provided by". 
(c) ESTABLISHMENT OF MEDICAL-CARE COST RECOVERY FUND.—Sec-
tion 629(g) of such title is amended to read as follows: 
"(g)(1) There is established in the Treasury a fund to be known as 
the Department of Veterans Affairs Medical-Care Cost Recovery 
Fund (hereafter referred to in this section as the 'Fund'). 
"(2) Amounts recovered or collected under this section shall be 
deposited in the Fund. 
(3) Sums in the Fund shall be available to the Secretary for the 
following: 
"(A) Pajnnent of necessary expenses for the identification, 
billing, and collection of the cost of care and services furnished 
under this chapter, and for the administration and collection of 
pajonents required under section 610(f) of this title for hospital 
care or nursing home care, under section 612(f) of this title for 
medical services, and under section 622A of this title for medica-
tions, including— 
"(i) the costs of computer hardware and software, word 
processing and telecommunications equipment, other equip-
ment, supplies, and furniture; 
"(ii) personnel training and travel costs; 
"(iii) personnel and administrative costs for attorneys in 
the Office of General Counsel of the Department and for 
support personnel of such office; 
(iv) other personnel and administrative costs; and 
"(v) the costs of any contract for identification, billing, or 
collection services. 
"(B) Payment of the Secretary for reasonable charges, as 
determined by the Secretary, imposed for (i) services and utili-
ties (including light, water, and heat) furnished by the Sec-
retary, (ii) recovery and collection activities under this section, 
and (iii) administration of the Fund. 
"(4) Not later than January 1 of each year, there shall be depos-
ited into the Treasury as miscellaneous receipts an amount equal to 
the amount of the unobligated balance remaining in the Fund at the 
close of business on September 30 of the preceding year minus any 
part of such balance that the Secretary determines is necessary in 
order to enable the Secretary to defray, during the fiscal year in 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-345 
which the deposit is made, the expenses, payments, and costs de-
scribed in paragraph (3).". 
(d) TRANSFER TO FUND.— 
38 USC 629 note. 
(1) AMOUNT TO BE TRANSFERRED.—The Secretary of the Treas-
ury shall transfer $25,000,000 from the Department of Veterans 
Affairs Loan Guaranty Revolving Fund to the Department of 
Veterans Affairs Medical-Care Cost Recovery Fund established 
by section 629(g) of title 38, United States Code (as amended by 
subsection (c)). The amount so transferred shall be available 
until the end of September 30, 1991, for the support of the 
equivalent of 800 full-time employees and other expenses de-
scribed in paragraph (3) of such section. 
(2) REIMBURSEMENT OF LOAN GUARANTY REVOLVING FUND.— 
Notwithstanding section 629(g) of title 38, United States Code 
(as amended by subsection (c)), the first $25,000,000 recovered or 
collected by the Department of Veterans Affairs during fiscal 
year 1991 as a result of third-party medical recovery activities 
shall be credited to the Department of Veterans Affairs Loan 
Guaranty Revolving Fund. 
(3) THIRD-PARTY MEDICAL RECOVERY ACTIVITIES DEFINED.—For 
the purposes of this subsection, the term "third-party medical 
recovery activities" means recovery and collection activities 
carried out under section 629 of title 38, United States Code. 
(e) EFFECTIVE DATE.—The amendments made by this section shall 38 USC 629 note, 
take effect as of October 1,1990. 
SEC. 8012. COPAYMENT FOR MEDICATIONS. 
(a) CoPAYMENT REQUIRED.—(1) Subchapter III of chapter 17 of title 
38, United States Code, is amended by inserting after section 622 the 
following new section: 
"§ 622A. Copayment for medications 
"(aXD Subject to paragraph (2), the Secretary shall require a 
veteran (other than a veteran with a service-connected disability 
rated 50 percent or more) to pay the United States $2 for each 30-
day supply of medication furnished such veteran under this chapter 
on an outpatient basis for the treatment of a non-service-connected 
disability or condition. If the amount supplied is less than a 30-day 
supply, the amount of the charge may not be reduced. 
"(2) The Secretary may not require a veteran to pay an amount in 
excess of the cost to the Secretary for medication described in 
paragraph (1). 
"(b) Amounts collected under this section shall be deposited in the 
Department of Veterans Affairs Medical-Care Cost Recovery Fund. 
"(c) The provisions of subsection (a) expire on September 30, 
1991.". 
(2) The table of sections at the beginning of such chapter is 
amended by inserting after the item relating to section 622 the 
following new item: 
"622A. Copayment for medications.". 
(b) EFFECTIVE DATE.—The amendments made by subsection (a) 38 USC 622A 
shall take effect with respect to medication furnished to a veteran note, 
after October 31, 1990, or the date of the enactment of this Act, 
whichever is later. 
104 STAT. 1388-346 
PUBLIC LAW 101-508—NOV. 5, 1990 
SEC. 8013. MODIFICATION 
OF 
HEALTH-CARE 
CATEGORIES 
AND 
COPAYMENTS. 
(a) INPATIENT CARE.—(1) Subsection (a) of section 610 of title 38, 
United States Code, is amended— 
(A) in paragraph (1)(I), by striking out "622(aXl)" and insert-
ing in lieu thereof "622(a)"; and 
(B) by striking out paragraph (2) and inserting in lieu thereof 
the following: 
"(2) In the case of a veteran who is not described in paragraph (1) 
of this subsection, the Secretary may, to the extent resources and 
facilities are available, furnish hospital care and nursing home care 
to a veteran which the Secretary determines is needed for a 
nonservice-connected disability, subject to the provisions of subsec-
tion (f) of this section.". 
(2) Subsection (f) of such section is amended— 
(A) by striking out paragraphs (1) and (2) and inserting in lieu 
thereof the following: 
"(fKD The Secretary may not furnish hospital care or nursing 
home care under this section to a veteran who is eligible for such 
care under subsection (a)(2) of this section unless the veteran agrees 
to pay to the United States the applicable amount determined under 
paragraph (2) of this subsection. 
"(2) A veteran who is furnished hospital care or nursing home 
care under this section and who is required under paragraph (1) of 
this subsection to agree to pay an amount to the United States in 
order to be furnished such care shall be liable to the United States 
for an amount equal to— 
"(A) the lesser of— 
"(i) the cost of furnishing such care, as determined by the 
Secretary; or 
"(ii) the amount determined under paragraph (3) of this 
subsection; and 
"(B) an amount equal to $10 for every day the veteran re-
ceives hospital care and $5 for every day the veteran receives 
nursing home care."; and 
(B) in subparagraphs (A) and (B) of paragraph (3), by striking 
out "(2XB)" each place it appears and inserting in lieu thereof 
"(2)(AXii)". 
(b) OUTPATIENT CARE.—Subsection (f) of section 612 of such title is 
amended— 
(1) in paragraph (1), by striking out "610(aX2XB)" and insert-
ing in lieu thereof "610(aX2)"; 
(2) by redesignating paragraphs (5) and (7) as (3) and (4), 
respectively; and 
(3) by striking paragraphs (3), (4), and (6). 
(c) INCOME THRESHOLDS.—(1) Subsection (a) of section 622 of such 
title is amended— 
(A) in parsigraph (1)— 
(i) by striking out "(1)" at the beginning of the subsection; 
(ii) by redesignating clauses (A), (B), and (C) as para-
graphs (1), (2), and (3), respectively; and 
(iii) by striking out "Category A threshold" in paragraph 
(3), as so redesignated, and inserting in lieu thereof 
"amount set forth in subsection (b)"; 
(B) by striking out paragraph (2). 
(2) Subsection (b) of such section is amended to read as follows: 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-347 
"(b)(1) For purposes of subsection (a)(3), the income threshold for 
the calendar year beginning on January 1,1990, is— 
"(A) $17,240 in the case of a veteran with no dependents; and 
"(B) $20,688 in the case of a veteran with one dependent, plus 
$1,150 for each additional dependent. 
"(2) For a calendar year beginning after December 31, 1990, the 
amounts in effect for purposes of this subsection shall be the 
amounts in effect for the preceding calendar year as adjusted under 
subsection (c) of this section.". 
(3) Subsection (c) of such section is amended by striking out 
"paragraphs (1) and (2) of. 
(4) Paragraph (2) of subsection (d) of such section is amended to 
read as follows: 
"(2) A determination described in this paragraph is a determina-
tion that for purposes of subsection (a)(3) of this section a veteran's 
attributable income is not greater than the amount determined 
under subsection (b) of this section.". 
(5) Subsection (e) of such section is amended— 
(A) in paragraph (1), by striking out "the Category A thresh-
old or the Category B threshold, as appropriate" and inserting 
in lieu thereof "the amount determined under subsection Ot)) of 
this section"; and 
(B) by striking out paragraph (2) and inserting in lieu thereof 
the following: 
"(2) A veteran is described in this paragraph for the purposes of 
subsection (a) of this section if^ 
"(A) the veteran has an attributable income greater than the 
amount determined under subsection Qo) of this section; and 
"(B) the current projections of such veteran's income for the 
current year are that the veteran's income for such year will be 
substantially below the amount determined under subsection 
Ot)).". 
(d) EFFECTIVE DATE.—The amendments made by this section shall 38 USC 610 note, 
apply with respect to hospital care and medical services received 
after October 31, 1990, or the date of the enactment of this Act, 
whichever is later. 
(e) SUNSET.—The amendments made by this section expire on 38 USC 610 note. 
September 30,1991. 
Subtitle C—Education and Employment 
SEC. 8021. LIMITATION OF REHABILITATION PROGRAM ENTITLEMENT TO 
SERVICE-DISABLED VETERANS RATED AT 20 PERCENT OR 
MORE. 
(a) IN GENERAL.—Section 1502(1) of title 38, United States Code, is 
amended by inserting "at a rate of 20 percent or more" after 
"compensable" both places it appears. 
(b) EFFECTIVE DATE.—The amendments made by this section shall 38 USC 1502 
apply to veterans and other persons originally applying for eissist- ^°^-
ance under chapter 31 of title 38, United States Code, on or after 
November 1,1990. 
104 STAT. 1388-348 
PUBLIC LAW 101-508—NOV. 5, 1990 
Subtitle D—Housing and Loan Guaranty 
Assistance 
SEC. 8031. ELECTION OF CLAIM UNDER GUARANTY OF MANUFACTURED 
HOME LOANS. 
(a) IN GENERAL.—Paragraph (3) of section 1812(c) of title 38, 
United States Code, is amended to read as follows: 
"(3)(A) The Secretary's guaranty may not exceed the lesser of (i) 
the lesser of $20,000 or 40 percent of the loan, or (ii) the maximum 
amount of the guaranty entitlement available to the veteran as 
specified in paragraph (4) of this subsection. 
"(B) A claim under the Secretary's guaranty shall, at the election 
of the holder of a loan, be made by t];ie filing of an accounting with 
the Secretary— 
"(i) within a reasonable time after the receipt by such holder 
of an appraisal by the Secretary of the value of the security for 
the loan; or 
"(ii) after liquidation of the security for the loan. 
"(C) If the holder of a loan applies for payment of a claim under 
clause (i) of subparagraph (B) of this paragraph, the amount of such 
claim payable by the Secretary shall be the lesser o
f
— 
"(i) the amount equal to the excess, if any, of the total 
indebtedness over the amount of the appraisal referred to in 
such clause; or 
"(ii) the amount equal to the guaranty under this section. 
"(D) If the holder of a loan files for payment of a claim under 
clause (ii) of subparagraph (B) this paragraph, the amount of such 
claim payable by the Secretary shall be the lesser of— 
"(i) the amount equal to the excess, if any, of the total 
indebtedness over the greater of the value of the property 
securing the loan, as determined by the Secretary, or the 
amount of the liquidation or resale proceeds; or 
"(ii) the amount equal to the guaranty under this section. 
"(E) In any accounting filed pursuant to subparagraph (BXii) of 
this subsection, the Secretary shall permit to be included therein 
accrued unpaid interest from the date of the first uncured default to 
such cutoff date as the Secretary may establish, and the Secretary 
shall allow the holder of the loan to charge Eigainst the liquidation 
or resale proceeds accrued interest from the cutoff date established 
to such further date as the Secretary may determine and such costs 
and expenses as the Secretary determines to be reasonable and 
proper. 
"(F) The liability of the United States under the guaranty pro-
vided for by this parsigraph shall decrease or increase pro rata with 
any decrease or increase of the amount of the unpaid portion of the 
obligation.". 
38 use 1812 
(b) EFFECTIVE DATE.—The amendment made by this section shall 
note- 
apply to claims filed with the Secretary of Veterans Affairs on or 
after the date of the enactment of this Act. 
SEC. 8032. LOAN FEE. 
Section 1829(a) of title 38, United States Code, is amended— 
(1) in paragraph (2), by striking out "The amount" and insert-
ing in lieu thereof "Except as provided in paragraph (6) of this 
subsection, the amount"; and 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-349 
(2) by adding at the end the following: 
"(6) With respect to each loan closed during the period beginning 
on November 1, 1990, and ending on September 30, 1991, each 
amount specified in paragraph (2) of this subsection shall be in-
creased by 0.625 percent of the total loan amount.". 
Subtitle E—Burial and Grave Marker Benefits 
SEC. 8041. HEADSTONE OR MARKER ALLOWANCE. 
(a) IN GENERAL.—Section 906 of title 38, United States Code, is 
amended— 
(1) by striking out subsection (d); and 
(2) by redesignating subsection (e) as subsection (d). 
(b) EFFECTIVE DATE.—This section shall apply to deaths occurring 38 USC 906 note, 
on or after November 1,1990. 
SEC. 8042. PLOT ALLOWANCE ELIGIBILITY. 
(a) IN GENERAL.—Section 903(b)(2) of title 38, United States Code, 
is amended by inserting "(other than a veteran whose eligibility for 
benefits under this subsection is based on being a veteran of any 
war)" after "(2) if such veteran". 
(b) EFFECTIVE DATE.—This section shall apply to deaths occurring 38 USC 903 note, 
on or after November 1,1990. 
Subtitle F—Miscellaneous 
SEC. 8051. USE OF INTERNAL REVENUE SERVICE AND SOCIAL SECURITY 
ADMINISTRATION DATA FOR INCOME VERIFICATION. 
(a) DISCLOSURE OF TAX INFORMATION.—(1) Subparagraph (D) of 
section 6103(1X7) of the Internal Revenue Code of 1986 (relating to 26 USC 6103. 
disclosure of return information to Federal, State, and local agencies 
administering certain programs) is amended— 
(A) by striking out "and" at the end of clause (vi); 
(B) by striking out the period at the end of clause (vii) and 
inserting in lieu thereof "; and"; and 
(C) by adding at the end the following: 
'(viiiXD any needs-based pension provided under chapter 
15 of title 38, United States Code, or under any other law 
administered by the Secretary of Veterans Affairs; 
"(II) parents' dependency and indemnity compensation 
provided under section 415 of title 38, United States Code; 
"(III) health-care 
services furnished 
under 
section 
610(aXlXI), 610(aX2), 610(b), and 612(aX2XB) of such title; 
and 
"(IV) compensation psiid under chapter 11 of title 38, 
United States Code, at the 100 percent rate based solely on 
unemployability and without regard to the fact that the 
disability or disabilities are not rated as 100 percent dis-
abling under the rating schedule. 
Only return information from returns with respect to net earn-
ings from self-employment and wages may be disclosed under 
this par^^aph for use with respect to any program described in 
clause (viiiXIV). Clause (viii) shall not apply after September 30, 
1992." 
104 STAT. 1388-350 
PUBLIC LAW 101-508—NOV. 5, 1990 
(2) The heading of paragraph (7) of section 6103(1) of such Code is 
amended by striking out "OR THE FOOD STAMP ACT OF 1977" and 
inserting in lieu thereof ", THE FOOD STAMP ACT OF 1977, OR TITLE 38, 
UNITED STATES CODE". 
(b) USE OF INCOME INFORMATION FOR NEEDS-BASED PROGRAMS.—(1) 
Chapter 53 of title 38, United States Code, is amended by adding at 
the end the following new section: 
"§3117. Use of income information from other agencies: notice 
and verification 
"(a) The Secretary shall notify each applicant for a benefit or 
service described in subsection (c) of this section that income 
information furnished by the applicant to the Secretary may be 
compared with information obtained by the Secretary from the 
Secretary of Health and Human Services or the Secretary of the 
Treasury under section 6103(l)(7)(D)(viii) of the Internal Revenue 
Code of 1986. The Secretary shall periodically transmit to recipients 
of such beneHts and services additional notifications of such 
matters. 
"0>) The Secretary may not, by reason of information obtained 
from the Secretary of Health and Human Services or the Secretary 
of the Treasury under section 6103(l)(7)(D)(viii) of the Internal Reve-
nue Code of 1986, terminate, deny, suspend, or reduce any benefit or 
service described in subsection (c) of this section until the Secretary 
takes appropriate steps to verify independently information relating 
to the following: 
"(1) The amount of the asset or income involved. 
"(2) Whether such individual actually has (or had) access to 
such asset or income for the individual's own use. 
"(3) The period or periods when the individual actually had 
such asset or income. 
"(c) The benefits and services described in this subsection are the 
following: 
"(1) Needs-based pension benefits provided under chapter 15 
of this title or under any other law administered by the Sec-
retary. 
"(2) Parents' dependency and indemnity compensation pro-
vided under section 415 of this title. 
"(3) Health-care services furnished under sections 610(a)(lXI), 
610(aX2), 610(b), and 612(aX2XB) of this title. 
"(4) Compensation paid under chapter 11 of this title at the 
100 percent rate based solely on unemployability and without 
regard to the fact that the disability or disabilities are not rated 
as 100 percent disabling under the rating schedule. 
"(d) In the case of compensation described in subsection (c)(4) of 
this section, the Secretary may independently verify or otherwise 
act upon wage or self-emplojmient information referred to in subsec-
tion (b) of this section only if the Secretary finds that the amount 
and duration of the earnings reported in that information clearly 
indicate that the individual may no longer be qualified for a rating 
of total disability. 
"(e) The Secretary shall inform the individual of the findings 
made by the Secretary on the basis of verified information under 
subsection (b) of this section, and shall give the individual an 
opportunity to contest such findings, in the same manner as applies 
to other information and findings relating to eligibility for the 
benefit or service involved. 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-351 
"(f) The Secretary shall pay the expenses of carrying out this 
section from amounts available to the Department for the payment 
of compensation and pension. 
"(g) The authority of the Secretary to obtain information from the 
Secretary of the Treasury or the Secretary of Health and Human 
Services under section 6103(l)(7)(D)(viii) of the Internal Revenue 
Code of 1986 expires on September 30,1992.". 
(2) The table of sections at the beginning of such chapter is 
amended by adding at the end the following new item: 
"3117. Use of income information from other agencies: notice and verification.". 
(c) NOTICE TO CURRENT BENEFICIARIES.—(1) The Secretary of Veter- 38 USC 3117 
ans Affairs shall notify individuals who (as of the date of the ^°^-
enactment of this Act) are applicants for or recipients of the benefits 
described in subsection (c) (other than paragraph (3)) of section 3117 
of title 38, United States Code (as added by subsection (b)), that 
income information furnished to the Secretary by such applicants 
and recipients may be compared with information obtained by the 
Secretary from the Secretary of Health and Human Services or the 
Secretary of the Treasury under clause (viii) of section 6103(1)(7)(D) 
of the Internal Revenue Code of 1986 (as added by subsection (a)). 
(2) Notification under paragraph (1) shall be made not later than 
90 days after the date of the enactment of this Act. 
(3) The Secretary of Veterans Affairs may not obtain information 
from the Secretary of Health and Human Services or the Secretary 
of the Treasury under section 6103(l)(7)(DXviii) of the Internal Reve-
nue Code of 1986 (as added by subsection (a)) until notification under 
paragraph (1) is made. 
(d) GAO STUDY.—The Comptroller General of the United States 38 USC 3117 
shall conduct a study of the effectiveness of the amendments made ^°^-
by this section and shall submit a report on such study to the 
Committees on Veterans' Affairs and Ways and Means of the House 
of Representatives and the Committees on Veterans' Affairs and 
Finance of the Senate not later than January 1,1992. 
SEC. 8052. LINE OF DUTY. 
(a) EUMINATION OF COMPENSATION IN CERTAIN CASES.—Title 38, 
United States Code, is amended— 
(1) in section 105(a), by striking out "the result of the person's 
own willful misconduct" in the first sentence and inserting in 
lieu thereof "a result of the person's own willful misconduct or 
abuse of alcohol or drugs"; 
(2) in section 310, by striking out "the result of the veteran's 
own willful misconduct" and inserting in lieu thereof "a result 
of the veteran's own willful misconduct or abuse of alcohol or 
drugs"; and 
(3) in section 331, by striking out "the result of the veteran's 
own willful misconduct" and inserting in lieu thereof "a result 
of the veteran's own willful misconduct or abuse of alcohol or 
drugs". 
03) EFFECTIVE DATE.—The amendments made by subsection (a) 38 USC 105 note, 
shall take effect with respect to claims filed after October 31, 1990. 
104 STAT. 1388-352 
PUBLIC LAW 101-508—NOV. 5, 1990 
SEC. 8053. REQUIREMENT FOR CLAIMANTS TO REPORT SOCIAL SECURITY 
NUMBERS; USES OF DEATH INFORMATION BY THE DEPART-
MENT OF VETERANS AFFAIRS. 
(a) MANDATORY REPORTING OF SOCIAL SECURITY NUMBERS.—Sec-
tion 3001 of title 38, United States Code, is amended by adding at the 
end the following new subsection: 
"(c)(1) Any person who applies for or is in receipt of any compensa-
tion or pension benefit under laws administered by the Secretary 
shall, if requested by the Secretary, furnish the Secretary with the 
social security number of such person and the social security 
number of any dependent or beneficiary on whose behalf, or based 
upon whom, such person applies for or is in receipt of such benefit. 
A person is not required to furnish the Secretary with a social 
security number for any person to whom a social security number 
has not been assigned. 
"(2) The Secretary shall deny the application of or terminate the 
payment of compensation or pension to a person who fails to furnish 
the Secretary with a social security number required to be furnished 
pursuant to paragraph (1) of this subsection. The Secretary may 
thereafter reconsider the application or reinstate pajnnent of com-
pensation or pension, £is the case may be, if such person furnishes 
the Secretary with such social security number. 
"(3) The costs of administering this subsection shall be paid for 
from amounts available to the Department of Veterans Affairs for 
the pajonent of compensation and pension.". 
(b) REVIEW OF DEPARTMENT OF HEALTH AND HUMAN SERVICES 
DEATH INFORMATION TO IDENTIFY DECEASED RECIPIENTS OF COM-
PENSATION AND PENSION BENEFITS.—(1) Chapter 53 of title 38, 
United States Code, as amended by section 8051(b), is further 
amended by adding at the end the following new section: 
"§3118. Review of Department of Health and Human Services 
death information 
"(a) The Secretary shall periodically compare Department of Vet-
erans Affairs information regarding persons to or for whom com-
pensation or pension is being paid with information in the records of 
the Department of Health and Human Services relating to persons 
who have died for the purposes of— 
"(1) determining whether any such persons to whom com-
pensation and pension is being paid are deceased; 
"(2) ensuring that such payments to or for any such persons 
who are deceased are terminated in a timely manner; and 
"(3) ensuring that collection of overpayments of such benefits 
resulting from pajmaents after the death of such persons is 
initiated in a timely manner. 
"(b) The Department of Health and Human Services death 
information referred to in subsection (a) of this section is death 
information available to the Secretary from or through the Sec-
retary of Health and Human Services, including death information 
available to the Secretary of Health and Human Services from a 
State, pursuant to a memorandum of understanding entered into by 
such Secretaries. Any such memorandum of understanding shall 
include safeguards to assure that information made available under 
it is not used for unauthorized purposes or improperly disclosed.". 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-353 
(2) The table of sections at the beginning of such chapter, as 
amended by section 8051(b), is further amended by adding at the end 
the following: 
"3118. Review of Department of Health suid Human Services death information.". 
TITLE IX—TRANSPORTATION 
Subtitle A—Surface Transportation 
SEC. 9001. SENSE OF CONGRESS THAT HIGHWAY USER TAXES SHOULD BE 
DEDICATED TO THE HIGHWAY TRUST FUND. 
(a) FINDINGS.—Congress finds that— 
(1) highway motor fuel taxes have in the past been dedicated 
to the Highway Trust Fund and used for the development of the 
surface transportation system; 
(2) extraordinary budget pressures have led to consideration 
of the need for a temporary, 5-year highway motor fuels tax for 
deficit reduction; 
(3) any portion of the new taxes deposited into the Highway 
Trust Fund shall be available to accommodate our country's 
vital transportation needs; 
(4) adequate funding of transportation is a key component of a 
national strategy for economic growth; and 
(5) use of the highway motor fuels taxes for deficit reduction 
should be temporary so that we can return as soon as possible to 
the dedicated user fee principle in order to ensure fairness to 
highway users and to ensure that needed transportation infra-
structure improvements are made. 
O
b
) SENSE OF CONGRESS.—It is the sense of Congress that— 
(1) any increase in motor fuel excise taxes that are deposited 
in the Highway Trust Fund shall be available for surface 
transportation purposes; 
(2) the Budget Resolutions for fiscal years 1991 through 1995 
should accommodate the Nation's transportation needs and the 
section 302(a) allocations should provide budget authority and 
outlays attributable to the increase in deposits into the High-
way Trust Fund as a result of any increases in motor fuels taxes 
through implementation of this Act; 
(3) Congress reaffirms the principle that highway motor fuel 
taxes should be deposited in the Highway Trust Fund; and 
(4) to the extent the highway motor fuel taxes are used for 
deficit reduction during the 5-year period beginning with fiscal 
year 1991, the Congress should return to the dedicated user fee 
principle as soon as possible but no later than the end of fiscal 
year 1995. 
Subtitle B—Aviation Safety and Capacity 
A
v
i
a
t
i
o
n s
a
f
e
t
y 
•wj^ 
» 
and Capacity 
H i X p a n S l O n 
Expansion Act of 
1990. 
SEC. 9101. SHORT TITLE; TABLE OF CONTENTS. 
(a) SHORT TITLE.—This subtitle may be cited as the "Aviation 49 USC app. 
Safety and Capacity Expansion Act of 1990". 
2201 note. 
(b) TABLE OF CONTENTS.— 
104 STAT. 1388-354 
PUBLIC LAW 101-508—NOV. 5, 1990 
Sec. 9101. Short title; table of contents. 
Sec. 9102. Construction of firefighting training facilities. 
Sec. 9103. Declaration of policy. 
Sec. 9104. Airport improvement program. 
Sec. 9105. Airway improvement program. 
Sec. 9106. FAA operations. 
Sec. 9107. Operation and maintenance of aviation system. 
Sec. 9108. Weather service. 
Sec. 9109. Military airport program. 
Sec. 9110. Passenger facility charges. 
Sec. 9111. Reduction in airport improvement program apportionments for large and 
medium hub airports imposing passenger facility charges. 
Sec. 9112. Use of PFC reduced apportionment funds. 
Sec. 9113. Small community air service program. 
Sec. 9114. State block grant pilot program. 
Sec. 9115. Auxiliary flight service station program. 
Sec. 9116. Airport and airway improvements for the Virgin Islands. 
Sec. 9117. Engine condition monitoring systems. 
Sec. 9118. Procurement authority. 
* 
Sec. 9119. Expanded east coast plan. 
Sec. 9120. Transfer of format of geodetic navigation information. 
Sec. 9121. Sensitive security information. 
Sec. 9122. Reports. 
Sec. 9123. Atlantic City airport. 
Sec. 9124. Natural disaster regulation. 
Sec. 9125. Flight takeoff or landing requirement for State taxation. 
Sec. 9126. Allocation of existing capacity at certain airports. 
Sec. 9127. Certificate transfers. 
Sec. 9128. Severability. 
Sec. 9129. Buy American. 
Sec. 9130. Prohibition against fraudulent use of "made in America" labels. 
Sec. 9131. Restrictions on contract awards. 
SEC. 9102. CONSTRUCTION OF FIREFIGHTING TRAINING FACILITIES. 
Section 503(aX2) of the Airport and Airway Improvement Act of 
1982 (49 U.S.C. App. 2202(a)(2)) is amended— 
(1) by striking "and" at the end of subparagraph (B); 
(2) by striking the period at the end of subparagraph (C) and 
inserting "; and"; and 
(3) by inserting after subparagraph (C) the following new 
subparagraph: 
"(D) any acquisition of land for, or work involved to 
construct, a burn area training structure on or off the 
airport for the purpose of providing live fire drill training 
for aircraft rescue and firefighting personnel required to 
receive such training by a regulation of the Department of 
Transportation, including basic equipment and minimum 
structures to support such training in accordance with 
standards of the Federal Aviation Administration.". 
SEC. 9103. DECLARATION OF POLICY. 
Section 502(a) of the Airport and Airway Improvement Act of 1982 
(49 U.S.C. App. 2201(a)) is amended— 
(1) in paragraph (5) by inserting ", including as they may be 
applied between category and class of aircraft' after "discrimi-
natory practices"; and 
(2) in paragraph (13) by inserting "and should not unjustly 
discriminate between categories and classes of aircraft" after 
"attempted". 
SEC. 9104. AIRPORT IMPROVEMENT PROGRAM. 
Section 505 of the Airport and Airway Improvement Act of 1982 
(49 U.S.C. App. 2204) is amended— 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-355 
(1) in subsection (a) by striking " 13,816,700,000" and insert-
ing ^^ «$i3^916 700,000"; and 
(2) in subsection (b) by striking "September 30, 1987" and 
inserting "September 30,1992". 
SEC. 9105. AIRWAY IMPROVEMENT PROGRAM. 
(a) RENAMING OF AIRWAY PLAN.—Section 504(b)(1) of the Airport 
and Airway Improvement Act of 1982 (49 U.S.C. App. 2203(b)(1)) is 
amended by inserting after the second sentence the following new 
sentence: "For fiscal year 1991 and thereafter, the revised plan shall 
be known as the 'Airway Capital Investment Plan'.", 
(b) AIRWAY FACILITIES AND EQUIPMENT.—The first sentence of 
section 506(a)(1) of such Act (49 U.S.C. App. 2205(a)(1)) is amended by 
striking "September 30, 1981," and all that follows through the 
period and inserting the following: "September 30, 1990, aggregate 
amounts not to exceed $2,500,000,000 for fiscal year 1991 and 
$5,500,000,000 for the fiscal years ending before October 1, 1992.". 
SEC. 9106. F A A OPERATIONS. 
Section 106 of title 49, United States Code, is amended by adding 
at the end the following new subsection: 
"(k) AUTHORIZATION OF APPROPRIATIONS FOR OPERATIONS.—There 
is authorized to be appropriated for operations of the Administra-
tion $4,088,000,000 for fiscal year 1991 and $4,412,600,000 for fiscal 
year 1992.". 
SEC. 9107. OPERATION AND MAINTENANCE OF AVIATION SYSTEM. 
(a) ELIMINATION OF PENALTY.—Section 506(c)(3)(B)(i) of the Airport 
and Airway Improvement Act of 1982 (49 U.S.C. App. 2205(c)(3)(B)(i)) 
is amended— 
(1) by inserting "and" after "1989"; and 
(2) by striking "$3,770,000,000" and all that follows through 
"1992". 
(b) FUNDING.—Section 506(c) of such Act (49 U.S.C. App. 2205(c)) is 
amended by adding at the end the following new paragraph: 
"(4) FISCAL YEARS 1991-1992.—The amount appropriated from 
the Trust Fund for the purposes of clauses (A) and (B) of 
paragraph (1) of this subsection for each of fiscal years 1991 and 
1992 may not exceed— 
"(A) 75 percent of the amount of funds made available 
under section 505, subsections (a) and (b) of this section, and 
section 106(k) of title 49, United States Code, for such fiscal 
year; less 
"(B) the amount of funds made available under section 
505 and subsections (a) and (b) of this section for such fiscal 
year.". 
SEC. 9108. WEATHER SERVICE. 
The second sentence of section 506(d) of the Airport and Airway 
Improvement Act of 1982 (49 U.S.C. App. 2205(d)) is amended— 
(1) by striking "and" the first place it appears and inserting a 
comma; and 
(2) by inserting before the period the following: ", $34,521,000 
for fiscal year 1991, and $35,389,000 for fiscal year 1992". 
•
f
* So in original. Probably should be " "$13,916,700,000"; and". 
104 STAT. 1388-356 
PUBLIC LAW 101-508—NOV. 5, 1990 
SEC. 9109. MILITARY AIRPORT PROGRAM. 
(a) DECLARATION OF POUCY.—Section 502(a) of the Airport and 
Airway Improvement Act of 1982 (49 U.S.C. App. 2201(a)) is further 
amended— 
(1) by striking "and" at the end of paragraph (12); 
(2) by striking the period at the end of paragraph (13) and 
inserting "; and"; and 
(3) by adding at the end the following: 
"(14) special emphasis should be placed on the conversion of 
appropriate former military air bases to civil use and on 
the identification and improvement of additional joint-use 
id.cilit^i6S 
49 use app. 
(b) SET-ASIDE.—Section 508(d) of such Act (49 U.S.C. App. 2204(d)) 
2207. 
ia amended by striking paragraph (5) and inserting the following: 
"(5) MILITARY AIRPORT SET-ASIDE.—Not less than 1.5 percent of 
the funds made available under section 505 in each of fiscal 
years 1991 and 1992 shall be distributed during such fiscal year 
to sponsors of current or former military airports designated by 
the Secretary under subsection (f) for the purpose of developing 
current and former military airports to improve the capacity of 
the national air transportation system. 
"(6) REALLOCATION.—If the Secretary determines that he will 
not be able to distribute the amount of funds required to be 
distributed under paragraph (1), (2), (3), (4), or (5) of this subsec-
tion for any fiscal year because the number of qualified applica-
tions submitted in compliance with this title is insufficient to 
meet such amount, the portion of such amount the Secretary 
determines will not be distributed shall be available for obliga-
tion during such fiscal year for other airports and for other 
purposes authorized by section 505 of this title.", 
(c) DESIGNATION OF FORMER MILITARY AIRPORTS.—Section 508 of 
49 use app. 
such Act is further amended by adding at the end the following new 
2207- 
subsection: 
"(f) DESIGNATION OF CURRENT OR FORMER MILITARY AIRPORTS.— 
"(1) DESIGNATION.—The Secretary shall designate not more 
than 8 current or former military airports for participation in 
the grant program established under subsection (d)(5) and this 
subsection. At least 2 such airports shall be designated within 6 
months after the date of the enactment of this subsection and 
the remaining airports shall be designated for participation no 
later than September 30,1992. 
"(2) SURVEY.—The Secretary shall conduct a survey of current 
and former military airports to identify which ones have the 
greatest potential to improve the capacity of the national air 
transportation system. The survey shall also identify the capital 
development needs of such airports in order to make them part 
of the national air transportation system and shall identify 
which capital development needs are eligible for grants under 
section 505. The survey shall be completed by September 30, 
1991. 
"(3) LIMITATION.—In selecting airports for participation in the 
program established under subsection (dX5) and this subsection 
and in conducting the survey under paragraph (2), the Secretary 
shall consider only those current or former military airports 
whose conversion in whole or in part to civilian commercial or 
reliever airport as part of the national air transportation 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-357 
system would enhance airport and air traffic control system 
capacity in major metropolitan areas and reduce current and 
projected flight delays. 
"(4) PERIOD OF ELIGIBIUTY.—An airport designated by the 
Secretary under this subsection shall remain eligible to partici-
pate in the program under subsection (d)(5) and this subsection 
for the 5 fiscal years following such designation. An airport that 
does not attain a level of enplaned passengers during such 5 
flscal year period which qualifies it as a small hub airport as 
defined as of January 1,1990, or reliever airport may be redesig-
nated by the Secretary for participation in the program for such 
additional fiscal years as may be determined by the Secretary. 
"(5) ADDITIONAL FUNDING.—Notwithstanding the provisions of 
section 513(b), not to exceed $5,000,000 per airport of the sums 
to be distributed at the discretion of the Secretary under section 
507(c) for any fiscal year may be used by the sponsor of a 
current or former military airport designated by the Secretary 
under this subsection for construction, improvement, or repair 
of terminal building facilities, including terminal gates used by 
aircraft for enplaning and deplaning revenue passengers. Under 
no circumstances shall any gates constructed, improved, or 
repaired with Federal funding under this paragraph be subject 
to long-term leases for periods exceeding 10 years or majority in 
interest clauses.". 
SEC. 9110. PASSENGER FACILITY CHARGES. 
Section 1113 of the Federal Aviation Act of 1958 (49 U.S.C. App. 
1513) is amended— 
(1) in subsection (a) by inserting "except as provided in subsec-
tion (e) and" before "except that'^ and 
(2) by adding at the end the following new subsection: 
"(e) 
AUTHORITY 
FOR 
IMPOSITION 
OF 
PASSENGER 
FACIUTY 
CHARGES.— 
"(1) IN GENERAL.—Subject to the provisions of this subsection, 
the Secretary may grant a public agency which controls a 
commercial service airport authority to impose a fee of $1.00, 
$2.00, or $3.00 for each paying passenger of an air carrier 
enplaned at such airport to finance eligible airport-related 
projects to be carried out in connection with such airport or any 
other airport which such agency controls. For purposes of this 
subsection, financing an eligible airport-related project includes 
making pajonents for debt service on bonds and other indebted-
ness incurred to carry out such project. 
"(2) USE OF REVENUES AND RELATIONSHIP BETWEEN FEES AND 
REVENUES.—The Secretary may grant a public agency which 
controls a commercial service airport authority to impose a fee 
under this subsection to finance specific projects only if the 
Secretary finds, on the basis of an application submitted for 
such authority— 
"(A) that the amount and duration of the proposed fee 
will result in revenues (including interest and other returns 
on such revenues) which do not exceed amounts necessary 
to finance the specific projects; and 
"(B) that each of the specific projects is an eligible air-
port-related project which will— 
"(i) preserve or enhance capacity, safety, or security 
of the national siir transportation system, 
104 STAT. 1388-358 
PUBLIC LAW 101-508—NOV. 5, 1990 
"(ii) reduce noise resulting from an airport which is 
part of such system, or 
"(iii) furnish opportunities for enhanced competition 
between or among air carriers. 
"(3) 
LIMITATION REGARDING PASSENGERS OF AIR CARRIERS 
RECEIVING ESSENTIAL AIR SERVICE COMPENSATION.—If a pas-
senger of an air carrier is being provided air service to an 
eligible point under section 419 for which compensation is being 
paid under such section, a public agency which controls any 
other airport may not impose a fee pursuant to this subsection 
for enplanement of such passenger with respect to such air 
service. 
"(4) LIMITATION REGARDING OBLIGATIONS.—No fee may be im-
posed pursuant to this subsection for a project which is not 
approved by the Secretary under this subsection on or before 
September 30,1992— 
"(A) if, during fiscal years 1991 and 1992, the amount 
available for obligation, in the aggregate, under section 505 
of Airport and Airway Improvement Act of 1982 is less than 
$3,700,000,000; or 
"(B)(i) if, during fiscal year 1991, the amount available for 
obligation, in the aggregate, under section 419 is less than 
$26,600,000; or 
"(ii) if, during fiscal year 1992, the amount available for 
obligation, in the aggregate, under section 419 is less than 
$38,600,000. 
"(5) LINKAGE.—The Secretary may not grant a public agency 
authority to impose a fee pursuant to this subsection unless the 
Secretary has— 
"(A) issued a final rule establishing a program for review-
ing airport noise and access restrictions on operations of 
Stage 2 and Stage 3 aircraft pursuant to section 9304(a) of 
the Airport Noise and Capacity Act of 1990; and 
"(B) issued a notice of proposed rulemaking to consider 
more efficient allocation of existing capacity at high density 
airports under section 9126 of the Aviation Safety and 
Capacity Expansion Act of 1990. 
"(6) TWO ENPLANEMENTS PER TRIP LIMITATION.—Enplaned pas-
sengers on whom a fee may be imposed by a public agency 
pursuant to this subsection include passengers of air carriers 
originating or connecting at the commercial service airport 
which the agency controls. A fee may not be collected pursuant 
to this subsection from a passenger with respect to any 
enplanement of such passenger, on a one-way trip and on a trip 
in each direction of a round trip, after the second enplanement 
for which a fee has been collected pursuant to this subsection 
from such passenger. 
"(7) AIR CARRIER RATES, FEES, AND CHARGES.— 
"(A) TREATMENT OF FEE REVENUES.—Revenues derived 
from fees collected pursuant to this subsection shall not be 
treated as airport revenues for the purpose of establishing a 
rate, fee, or charge pursuant to a contract between a public 
agency which controls a commercial service airport and an 
air carrier. 
"(B) CAPITAL COSTS.—Except as provided by subparagraph 
(C), a public agency which controls a commercial service 
airport shall not include in its rate base by means of 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-359 
depreciation, amortization, or any other method that por-
tion of the capital costs of a project paid for using revenues 
derived from fees collected pursuant to this subsection for 
the purpose of establishing a rate, fee, or charge pursuant 
to a contract between such agency and an air carrier. 
"(C) FACILITIES FINANCED WITH FEE REVENUES.—With re-
spect to a project for terminal development, gates and 
related areas, or a facility which is occupied or utilized by 1 
or more air carriers on an exclusive or preferential basis, 
the rates, fees, and charges payable by air carriers which 
use such facilities shall be no less than the rates, fees, and 
charges paid by carriers using similar facilities at the 
airport which were not financed using revenues derived 
from collection of a fee imposed pursuant to this subsection. 
"(8) EXCLUSIVITY OF AUTHORITY.—No State or political subdivi-
sion or agency thereof which is not a public agency controlling a 
commercial service airport shall prohibit, limit, or regulate the 
imposition of fees by the public agency pursuant to this subsec-
tion, collection of such fees, or use of revenues derived there-
from. No contract between an air carrier and a public agency 
which controls a commercial service airport entered into before, 
on, or after the date of the enactment of this subsection shall 
impair the authority of the public agency to impose fees pursu-
ant to this subsection and to use the revenues derived from such 
fees in accordance with this subsection. 
"(9) 
NONEXCLUSIVITY OF CONTRACTUAL AGREEMENTS.—No 
project carried out through the use of a fee collected pursuant to 
this subsection may be subject to an exclusive long-term lease or 
use agreement of an air carrier, as defined by the Secretary by 
regulation. No lease or use agreement of an air carrier with 
respect to a project constructed or expanded through the use of 
such fee may restrict the public agency which controls the 
airport from funding, developing, or assigning new capacity at 
the airport with revenues derived from fees imposed pursuant 
to this subsection. 
"(10) COLLECTION AND HANDUNG OF FEES BY AIR CARRIERS.— 
The regulations issued by the Secretary to carry out this subsec-
tion shall— 
"(A) require air carriers and their agents to collect fees 
imposed by public agencies pursuant to this subsection; 
' (B) establish procedures regarding handling and remit-
tance of the amounts so collected; 
"(C) ensure that such amounts are promptly paid to the 
public agency for which they are collected less a uniform 
amount determined by the Secretary as reflecting average 
necessary and reasonable expenses (net of interest accruing 
to the air carrier and agent after collection and prior to 
remittance) incurred in the collection and handling of such 
fees; and 
"(D) require that the amount of fees collected pursuant to 
this subsection with respect to any air transportation be 
noted on the ticket for such air transportation. 
"(11) APPUCATION PROCESS.— 
"(A) SUBMISSION.—A public agency which controls a 
commercial service airport and is interested in imposing a 
fee pursuant to this subsection shall submit to the Sec-
retary an application for authority to impose such fee. 
104 STAT. 1388-360 
PUBLIC LAW 101-508—NOV. 5, 1990 
"(B) CONTENT.—An application submitted under this 
paragraph shall contain such information and be in such 
form as the Secretary may require by regulation. 
"(C) OPPORTUNITY FOR CONSULTATION.—Before submission 
of an application under this paragraph, a public agency 
shall provide reasonable notice to, and an opportunity for 
consultation with, air carriers operating at the airport. The 
Secretary shall issue regulations which define reasonable 
notice and contain the following requirements at a 
minimum: 
"(i) A public agency must provide written notice— 
"(I) of individual projects being considered for 
funding through imposition of a fee pursuant to 
this subsection; and 
"(II) of the date and location of a meeting to 
present such projects to air carriers operating at 
the airport, 
"(ii) Not later than 30 days after the issuance of a 
written notice under clause (i), each air carrier operat-
ing at the airport must provide to the public agency 
written notice of receipt of such notice. Failure of an 
air carrier to provide such notice may be deemed as 
certification of agreement with the project by such air 
carrier under clause (iv). 
"(iii) Not later than 45 days after the issuance of 
written notice under clause (i), the public agency must 
conduct a meeting to provide air carriers— 
"(I) descriptions of projects; 
"(II) justifications for projects; and 
"(III) a detailed financial plan for projects, 
"(iv) Not later than 30 days after the date of such 
meeting, each air carrier must provide the public 
agency with certification of agreement or disagreement 
with projects (or total plan for such projects). The 
failure of an air carrier to submit such certification 
shall be deemed as certification of agreement with the 
project by such air carrier. Any certification of 
disagreement shall contain the reasons for such dis-
agreement. The absence of such reasons will void the 
certification of disagreement. 
"(D) 
NOTICE AND OPPORTUNITY FOR COMMENT.—After 
receiving an application under this paragraph, the Sec-
retary shall provide notice and an opportunity for comment 
by air carriers and other interested persons concerning 
such application. 
"(E) APPROVAL.—A fee may only be imposed pursuant to 
this subsection if the Secretary approves an application 
granting authority for the imposition of such fee. Not later 
than 120 days after the date of receipt of such an applica-
tion, the Secretary shall make a final decision regarding 
approval of such application. 
"(12) RECORDKEEPING AND AUDITS.— 
"(A) WITH RESPECT TO COLLECTION OF FEES.—The Sec-
retary shall issue regulations requiring such recordkeeping 
and auditing of accounts maintained by an air carrier and 
any agency thereof which is collecting a fee imposed pursu-
ant to this subsection and by the public agency which is 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-361 
imposing such fee as may be necessary to ensure compli-
ance with this subsection. 
"(B) WITH RESPECT TO USE OF REVENUES.—The Secretary 
shall periodically audit and review the use by a public 
agency which controls an airport of revenues derived from 
a fee imposed pursuant to this subsection. Upon such 
review and after a public hearing, the Secretary may termi-
nate the authority of such agency to impose such fee, in 
whole or in part, to the extent the Secretary determines 
that revenues derived therefrom are not being used in 
accordance with this subsection. 
"(C) SET-OFF.—If the Secretary determines that a fee 
imposed pursuant to this subsection is excessive or that the 
revenues derived from such fee are not being used in 
accordance with this subsection, the Secretary may set off 
such amounts as may be necessary to ensure compliance 
with this subsection against amounts otherwise payable to 
the public agency under the Airport and Airway Improve-
ment Act of 1982. 
"(13) TERMS AND CONDITIONS.—Authority granted to impose a 
fee pursuant to this subsection shall be subject to such terms 
and conditions as the Secretary may establish to carry out the 
objectives of this subsection. 
"(14) ISSUANCE OF REGULATIONS.—Not later than 180 days 
after the date of the enactment of this subsection, the Secretary 
shall issue such regulations as may be necessary to carry out 
this subsection. Such regulations may prescribe the time and 
form by which a fee imposed pursuant to this subsection shall 
take effect. 
"(15) DEFINITIONS.—For purposes of this subsection, the fol-
lowing definitions apply: 
"(A) AIR CARRIER.—The term 'air carrier' includes a for-
eign air carrier. 
"(B) AIRPORT, COMMERCIAL SERVICE AIRPORT, AND PUBUC 
AGENCY.—The terms 'airport', 'commercial service airport', 
and 'public agency' have the meaning such terms have 
under section 503 of the Airport and Airway Improvement 
Act of 1982. 
"(C) EuGiBLE AIRPORT-RELATED PROJECT.—The term 'eli-
gible airport-related project' means— 
"(i) a project for airport development under the Air-
port and Airway Improvement Act of 1982; 
"(ii) a project for airport planning under such Act; 
"(iii) a project for terminal development described in 
section 513(b) of such Act; 
"(iv) a project for airport noise capability planning 
under section 103(b) of the Aviation Safety and Noise 
Abatement Act of 1979; 
"(v) a project to carry out noise compatibility meas-
ures which are eligible for assistance under section 104 
of the Aviation Safety and Noise Abatement Act of 
1979 without regard to whether or not a program has 
been approved for such measures under such section; 
and 
"(vi) a project for construction of gates and related 
areas at which passengers are enplaned or deplaned. 
-194 O - 91 - 25 : QL 3 Part 2 
104 STAT. 1388-362 
PUBLIC LAW 101-508—NOV. 5, 1990 
"(D) 
SECRETARY.—The term 
'Secretary' 
means 
the 
Secretary of Transportation.". 
SEC. 9111. REDUCTION IN AIRPORT IMPROVEMENT PROGRAM APPOR-
TIONMENTS FOR LARGE AND MEDIUM HUB AIRPORTS IMPOS-
ING PASSENGER FACILITY CHARGES. 
Section 507(b) of the Airport and Airway Improvement Act of 1982 
(49 U.S.C. App. 2206(b)) is amended by adding at the end the 
following new paragraph: 
"(7) REDUCTION IN APPORTIONMENTS TO CERTAIN LARGE AND 
MEDIUM HUBS.— 
"(A) GENERAL RULE.—The amount which, but for this 
paragraph, would be apportioned under this section (other 
than subsection (aX2)) for a fiscal year to a sponsor of an 
airport that annually has 0.25 percent or more of the total 
annual enplanemente in the United States and for which a 
fee is imposed in such fiscal year pursuant to section 1113(e) 
of the Federal Aviation Act of 1958 shall be reduced by an 
amount equal to 50 percent of the projected revenues de-
rived from such fee in such fiscal year. 
"(B) LIMITATIONS.—The maximum reduction in an appor-
tionment to a sponsor of an airport as a result of this 
paragraph in a fiscal year shall be 50 percent of the amount 
which, but for this paragraph, would be apportioned to such 
airport under this section.". 
SEC. 
9
1
1
2
. 
USE 
OF 
PFC 
REDUCED 
APPORTIONMENT 
FUNDS. 
(a) ADDITION OF FUNDS TO EXISTING DISCRETIONARY FUND.—Sec-
tion 507(cXl) of the Airport and Airway Improvement Act of 1982 (49 
U.S.C. App. 2206(c)(1)) is amended by inserting after the first sen-
tence the following new sentences: "Twenty-five percent of the 
amounts which are not apportioned under this section as a result of 
subsection (bX7) shall be added to such discretionary fund. Fifty 
percent of amounts added to such discretionary fund pursuant to the 
preceding sentence shall be used for making grants for projects at 
small hub airports (as such term is defined in section 419(k) of the 
Federal Aviation Act of 1958).". 
(b) SMALL AIRPORT FUND.—Section 507 of such Act is amended by 
redesignating subsections (d) and (e), and any references thereto, as 
subsections (e) and (f), respectively, and by inserting after subsection 
(c) the following new subsection: 
"(d) SMALL AIRPORT FUND.— 
"(1) EJSTABUSHMENT.—Seventy-five percent of the amounts 
which are not apportioned under this section as a result of 
subsection (bX7) shall constitute a small airport fund to be 
distributed at the discretion of the Secretary. 
"(2) SET-ASIDE FOR GENERAL AVIATION AIRPORTS.—One-third of 
the amounts in the small airport fund established by this 
subsection and distributed by the Secretary under this subsec-
tion in a fiscal year shall be used for making grants to sponsors 
of public-use airports (other than commercial service airports) 
for any purpose for which funds are made available under 
section 505. 
"(3) 
SET-ASIDE FOR NONHUB AIRPORTS.—Two-thirds of 
the 
amounts in the small airport fund established by this subsection 
and distributed by the Secretary under this subsection in a 
fiscal year shall be used for making grants to sponsors of 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-363 
commercial service airports each of which annually has less 
than 0.05 percent of the total annual enplanements in the 
United States for any purpose for which funds are made avail-
able under section 505. 
"(4) TREATMENT OF AIRPORTS PARTICIPATING IN STATE BLOCK 
PROGRAM.—An airport in a State which is participating in the 
State block grant program under section 534 shall be eligible to 
receive grants pursuant to this subsection to the same extent 
that the airport would be eligible to receive such grants if the 
State was not participating in such program.". 
(c) PROHIBITION ON REDUCED FUNDING.—It is the sense of Congress 49 use app. 
that the Secretary should not reduce funding under the discre- 2206 note, 
tionary fund established under section 507(c) of the Airport and 
Airway Improvement Act of 1982 for small commercial service and 
general aviation airports as a result of additional funds made 
available to such airports under this section, including amendments 
made by this section. 
SEC. 9113. SMALL COMMUNITY AIR SERVICE PROGRAM. 
(a) DEFINITION OF EUGIBLE POINT.—Section 419(a) of the Federal 
Aviation Act of 1958 (49 U.S.C. App. 1389(a)) is amended to read as 
follows: 
"(a) EUGIBLE POINT DEFINED.— 
"(1) GENERAL RULE.—For purposes of this section, the term 
'eligible point' means any point in the United States— 
"(A) which was defined as an eligible point under this 
section as in effect before October 1,1988; 
"(B) which received scheduled air transportation at any 
time after January 1,1990; and 
"(C) which is not listed in the Department of Transpor-
tation Orders 89-9-37 and 89-12-52 as being a point no 
longer eligible for compensation under this section. 
"(2) LIMITATION ON USE OF PER PASSENGER SUBSIDY.—The Sec-
retary may not determine that a point described in paragraph 
(1) is not an eligible point on the basis of the per passenger 
subsidy at the point or on any other basis not specifically set 
forth in this section.". 
(b) FUNDING.— 
(1) IN GENERAL.—Section 419 of such Act is amended by 
redesignating subsection (1), and any reference thereto, as 
subsection (m) and by inserting after subsection (k) the follow-
ing new subsection: 
"(1) FUNDING.— 
"(1) C!oNTRACT AUTHORITY.—The Secretary is authorized to 
enter into agreements and to incur obligations from the Airport 
and Airway Trust Fund for the payment of compensation under 
this section. Approval by the Secretary of such an agreement 
shall be deemed a contractual obligation of the United States 
for pajonent of the Federal share of such compensation. 
"(2) AMOUNTS AVAILABLE.—There shall be available to the 
Secretary from the Airport and Airway Trust Fund to incur 
obligations under this section $38,600,000 per fiscal year for 
each of fiscal years 1992, 1993, 1994, 1995, 1996, 1997, and 1998. 
Such amounts shall remain available until expended.". 
(2) EFFECTIVE DATE.—The amendment made by paragraph (1) 49 USC app. 
shall take effect October 1,1991. 
1389 note. 
104 STAT. 1388-364 
PUBLIC LAW 101-508—NOV. 5, 1990 
(c) CONFORMING AMENDMENTS.—Section 333 of Public Law 100-
457 and section 325(a) of Public Law 101-164 are repealed. 
SEC. 9114. STATE BLOCK GRANT PILOT PROGRAM. 
Section 534 of the Airport and Airway Improvement Act of 1982 
(49 U.S.C. App. 2227) is amended— 
(1) in subsection (a) by striking "1991" and inserting "1992"; 
and 
(2) in subsection (d) by striking "not later than 90 days before 
its scheduled termination" and inserting "not later than Janu-
ary 31,1992". 
49 u s e app. 
SEC. 9115. AUXILIARY FLIGHT SERVICE STATION PROGRAM. 
(a) GENERAL RULE.—The Secretary of Transportation shall de-
velop and implement a system of manned auxiliary flight service 
stations. The auxiliary flight service stations shall supplement the 
services of the plgmned consolidation to 61 automated flight service 
stations under the flight service station modernization program. 
Auxiliary flight service stations shall be located in areas of unique 
weather or operational conditions which are criticed to the safety of 
flight. 
(b) REPORT TO CONGRESS.—Not later than 180 days after the date 
of the enactment of this Act, the Secretary of Transportation shall 
report to Congress with the plan and schedule for implementation of 
this section. 
SEC. 9116. AIRPORT AND AIRWAY IMPROVEMENTS FOR THE VIRGIN 
ISLANDS. 
(a) AIR SPACE STUDY.—The Administrator of the Federal Aviation 
Administration shall conduct an air space study of the Caribbean 
and Miami air traffic control regions for the purpose of determining 
methods of improving air safety and report to Congress the results 
of such study. 
(b) OPERATIONS OF AIRPORT TOWERS FOR ST. THOMAS AND ST. 
CROIX.—The Administrator may not enter into contracts with pri-
vate persons for operation of the airport control towers for St. 
Thomas and St. Croix, Virgin Islands, before the 30th day following 
the date on which a report is submitted to Congress under subsec-
tion (a). 
(c) REPLACEMENT OP RADAR FACIUTIES FOR ST. THOMAS.—The 
Administrator shall take such action as may be necessary to ensure 
that the radar facilities for the airport on St. Thomas, Virgin 
Islands, which were destroyed by Hurricane Hugo are replaced and 
operational by the 120th day following the date of the enactment of 
this Act. 
SEC. 9117. ENGINE CONDITION MONITORING SYSTEMS. 
(a) STUDY.—The Administrator of the Federsd Aviation Adminis-
tration shall conduct a study of the potential use of engine condition 
monitoring systems on aircraft. In conducting such study, the 
Administrator shall evaluate— 
(1) the availability of technology for such systems; 
(2) the capabilities of such systems in terms of enhancing 
safety and reducing maintenance costs associated with civil and 
military aircraft; 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-365 
(3) the commercial viability of developing computer software 
to enable maintenance workers to efficiently use data gathered 
by such systems; 
(4) the costs and benefits of using such systems £is compared to 
engine fault detection methods which rely on the use of data 
relating to historical performance and statistical failure; 
(5) the types of aircraft engine failures which may be pre-
vented by using such systems; and 
(6) the operational reliability of such systems. 
(b) REPORT TO CONGRESS.—Not later than 12 months after the date 
of the enactment of this Act, the Administrator shall transmit to 
Congress a report containing the results of the study conducted 
pursuant to this section together with such legislative and ad-
ministrative recommendations as the Administrator considers 
appropriate. 
SEC. 9118. PROCUREMENT AUTHORITY. 
(a) IN GENERAL.—Section 803 of the Federal Aviation Act of 1958 
(49 U.S.C. App. 1344) is amended to read as follows: 
"SEC. 303. PROCUREMENT AUTHORITY. 
"(a) ACQUISITION AND DISPOSAL OF PROPERTY.—Subject to subsec-
tion (b), the Administrator, on behalf of the United States, is au-
thorized, where appropriate— 
"(1) within the limits of available appropriations made by the 
Congress therefor, to acquire by purchase, condemnation, lesise 
for a term not to exceed 20 years, or otherwise, personal prop-
erty or services and real property or interests therein, includ-
ing, in the case of air navigation facilities (including airports) 
owned by the United States and operated under the direction of 
the Administrator, easements through or other interests in 
airspace immediately adjacent thereto and needed in connection 
therewith; 
"(2) for adequate compensation, by sale, lease, or otherwise, to 
dispose of any real or personal property or interest therein; 
except that, other than for airport and airway property and 
technical equipment used for the special purposes of the Federal 
Aviation Administration, such disposition shall be made in 
accordance with the Federal Property and Administrative Serv-
ices Act of 1949; and 
"(3) to construct, improve, or renovate laboratories and other 
test facilities and to purchase or otherwise acquire real property 
required therefor. 
"(b) SPECIAL RULES FOR CERTAIN ACQUISITIONS.— 
"(1) ACQUISITIONS BY CONDEMNATION.—Any acquisition by 
condemnation under subsection (a) may be made in accordance 
with the provision of the Act of August 1, 1888 (40 U.S.C. 257; 25 
Stat. 357), the Act of February 26, 1931 (40 U.S.C. 258a-258e-l; 
46 Stat. 1421), or any other applicable Act; except that, in the 
case of condemnations of easements through or other interests 
in airspace, in fixing condemnation awards, consideration may 
be given to the reasonable probable future use of the underlying 
land. 
"(2) ACQUISITIONS OF PUBLIC BUILDINGS.—The Administrator 
may, under subsection (a) construct or acquire by purchase, 
condemnation, or lease a public building, or interest in a public 
building (as defined in section 13 of the Public Buildings Act of 
104 STAT. 1388-366 
PUBLIC LAW 101-508—NOV. 5, 1990 
1959 (40 U.S.C. 612)) only under a delegation of authority from 
the Administrator of General Services. 
"(c) PROCUREMENT PROCEDURES.—In procuring personal property 
or services and real property and interests therein under subsection 
(a), the Administrator may use procedures other than competitive 
procedures in circumstances which are set forth in section 303(c) of 
the Federal Property and Administrative Services Act of 1949 (41 
U.S.C. 253(c)). 
"(d) SOLE SOURCE APPROVAL BY ADMINISTRATOR.—For procure-
ments by the Federal Aviation Administration, the Administrator 
shall be the senior procurement executive referred to in paragraph 
(3) of section 16 of Office of Federal Procurement Policy Act (41 
U.S.C. 414) for the purposes of approving the justification for the use 
of noncompetitive procedures required under section 303(f)(l)(B)(iii) 
of the Federal Property and Administrative Services Act of 1949 (41 
U.S.C. 253(f)(l)(B)(iii)). 
"(e) MuLTiYEAR SERVICE CONTRACTS.— 
"(1) IN GENERAL.—Notwithstanding section 1341(a)(1)(B) of 
title 31, United States Code, the Administrator may enter into 
contracts for periods of not more than 5 years for the following 
types of services (and items of supply related to such services) 
for which funds would otherwise be available for obligation only 
within the fiscal year for which appropriated— 
"(A) operation, maintenance, and support of facilities and 
installations; 
"(B) operation, maintenance, or modification of aircraft, 
vehicles, and other highly complex equipment; 
"(C) specialized training necessitating high 
quality 
instructor skills (for example, pilot and aircrew members; 
foreign language training); and 
"(D) base services (for example, ground maintenance, in-
plane refueling; bus transportation; refuse collection and 
disposal). 
"(2) FINDINGS.—The Administrator may enter into a contract 
described in paragraph (1) only if the Administrator finds 
that— 
"(A) there will be a continuing requirement for the serv-
ices consonant with current plans for the proposed contract 
period; 
"(B) the furnishing of such services will require a 
substantial initial investment in plant or equipment, or the 
incurrence of substantial contingent liabilities for the 
assembly, training, or transportation of a specialized 
workforce; and 
"(C) the use of such a contract will promote the best 
interests of the United States by encouraging effective 
competition and promoting economies in operation. 
"(3) GUIDANCE PRINCIPLES.—In entering into contracts de-
scribed in paragraph (1), the Administrator shall be guided by 
the following principles: 
"(A) The portion of the cost of any plant or equipment 
amortized as a cost of contract performance should not 
exceed the ratio between the period of contract perform-
ance and the anticipated useful commercial life of such 
plant or equipment. Useful commercial life, for this pur-
pose, means the commercial utility of the facilities rather 
than the physical life thereof, the due consideration given 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-367 
to such factors as location of facilities, specialized nature 
thereof, and obsolescence. 
"(B) Consideration shall be given to the desirability of 
obtaining an option to renew the contract for a resisonable 
period not to exceed 8 years, at prices not to include charges 
for plant, equipment, and other nonrecurring costs, already 
amortized. 
"(C) Consideration shall be given to the desirability of 
reserving in the Federal Aviation Administration the right, 
upon pa5mient of the unamortized portion of the cost of the 
plant or equipment, to take title thereto under appropriate 
circumstances. 
"(4) TERMINATION.—In the event funds are not made available 
for the continuation of a contract described in paragraph (1) 
into a subsequent fiscal year, the contract shall be canceled or 
terminated, and the costs of cancellation or termination may be 
paid from— 
"(A) appropriations originally available for the perform-
ance of the contract concerned; 
"(B) appropriations currently available for procurement 
of the type of services concerned, and not otherwise obli-
gated; or 
"(C) funds appropriated for those payments. 
*(f) MuLTiYEAR PROPERTY ACQUISITION CONTRACTS.— 
"(1) IN GENERAL.—Notwithstanding section 1341(a)(lXB) of 
title 31, United States Code, to the extent that funds are 
otherwise available for obligation, the Administrator may make 
multiyear contracts (other than contracts described in para-
graph (6)) for the purchase of property, whenever the Adminis-
trator finds— 
"(A) that the use of such a contract will promote the 
safety or efficiency of the National Airspace System and 
will result in reduced total costs under the contract; 
"(B) that the minimum need for the property to be pur-
chased is expected to remain substantially unchanged 
during the contemplated contract period in terms of produc-
tion rate, procurement rate, and total quantities; 
"(C) that there is a reasonable expectation that through-
out the contemplated contract period the Administrator 
will request funding for the contract at the level required to 
avoid contract cancellation; 
"(D) that there is a stable design for the property to be 
acquired and that the technical risks Eissociated with such 
property are not excessive; and 
"(E) that the estimates of both the cost of the contract 
and the anticipated cost avoidance through the use of a 
multiyear contract are realistic. 
"(2) REGULATIONS.— 
"(A) GENERAL RULE.—The Administrator shall issue regu-
lations for acquisition of property under this subsection to 
promote the use of multiyear contracting as authorized by 
paragraph (1) in a manner that will allow the most efficient 
use of multiyear contracting. 
"(B) CANCELLATION PROVISIONS.—The regulations issued 
under this paragraph may provide for cancellation provi-
sions in multiyear contracts described in paragraph (1) to 
the extent that such provisions are necessary and in the 
104 STAT. 1388-368 
PUBLIC LAW 101-508—NOV. 5, 1990 
best interests of the United States. Such cancellation provi-
sions may include consideration of both recurring and 
nonrecurring costs of the contractor associated with the 
production of the items to be delivered under the contract. 
"(C) BROADENING INDUSTRIAL BASE.—In order to broaden 
the aviation industrial base, the regulations issued under 
this 
paragraph 
shall 
provide 
that, 
to 
the 
extent 
practicable— 
"(i) multiyear contracting under paragraph (1) shall 
be used in such a manner as to seek, retain, and 
promote the use under such contracts of companies 
that are subcontractors, vendors, or suppliers; and 
"(ii) upon accrual of any payment or other benefit 
under such a multiyear contract to any subcontract, 
vendor, or supplier company participating in such con-
tractor, such payment or benefit shall be delivered to 
such company in the most expeditious 
manner 
practicable. 
"(D) PROTECTION OF FEDERAL INTERESTS.—The regulations 
issued under this paragraph shall also provide that, to the 
extent practicable, the administration of this subsection, 
and of the regulations issued under this subsection, shall 
not be carried out in a manner to preclude or curtail the 
existing ability of the Federal Aviation Administration to— 
"(i) provide for competition in the production of items 
to be delivered under such a contract; or 
"(ii) provide for termination of a prime contract the 
performance of which is deficient with respect to cost, 
quality, or schedule. 
"(3) SPECIAL RULE FOR CONTRACTS WITH HIGH CANCELLATION 
CEILING.—Before any contract described in paragraph (1) that 
contains a clause setting forth a cancellation ceiling in excess of 
$100,000,000 may be awarded, the Administrator shall give 
written notification of the proposed contract and of the pro-
posed cancellation ceiling for that contract to the Committee on 
Commerce, Science, and Transportation of the Senate and the 
Committee on Public Works and Transportation of the House of 
Representatives, and such contract may not then be awarded 
until the end of a period of 30 days beginning on the date of 
such notification. 
"(4) ADVANCE PROCUREMENT.—Contracts made under this 
subsection may be used for the advance procurement of compo-
nents, parts, and materials necessary to the manufacture of 
equipment to be used in the National Airspace System, and 
contracts may be made under this subsection for such advance 
procurement, if feasible and practicable, in order to achieve 
economic-lot purchases and more efficient production rates. 
"(5) TERMINATION.—In the event funds are not made available 
for the continuation of a contract made under this subsection 
into a subsequent fiscal year, the contract shall be canceled or 
terminated, and the costs of cancellation or termination may be 
paid from— 
"(A) appropriations originally available for the perform-
ance of the contract concerned; 
"(B) appropriations currently available for procurement 
of the type of property concerned, and not otherwise obli-
gated; or 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-369 
"(C) funds appropriated for those payments. 
"(6) LIMITATION ON APPUCABILITY.—This subsection does not 
apply to contracts for the construction, alteration, or major 
repair or improvements to real property or contracts for the 
purchase of property to which section 111 of the Federal Prop-
erty and Administrative Services Act of 1949 (40 U.S.C. 759) 
applies. 
"(7) MuLTiYEAR CONTRACT DEFINED.—For the purposes of this 
subsection, a multiyear contract is a contract for the purchase 
of property or services for more than 1, but not more than 5, 
fiscal years. Such a contract may provide that performance 
under the contract during the second and subsequent years of 
the contract is contingent upon the appropriation of funds and 
(if it does so provide) may provide for a cancellation payment to 
be made to the contractor if such appropriations are not made. 
"(8) PRICE OPTIONS.—The Administrator may incorporate into 
a proposed multiyear contract negotiated priced options for 
varying the quantities of end items to be procured over the 
period of the contract.", 
(b) CONFORMING AMENDMENT.—The portion of the table of con-
tents contained in the first section of such Act relating to section 303 
is amended to read as follows: 
"Sec. 303. Procurement authority. 
"(a) Acquisition and disposed of property. 
"(b) Special rules for acquisitions. 
"(c) Procurement procedures. 
"(d) Sole source approval by Administrator. 
"(e) Multiyear service contracts. 
"(f) Multiyear property acquisition contracts.". 
SEC. 9119. EXPANDED EAST COAST PLAN. 
(a) ENVIRONMENTAL IMPACT STATEMENT.—Not later than 180 days 
after the date of the enactment of this Act, the Administrator of the 
Federal Aviation Administration shall issue an environmental 
impact statement pursuant to the National Environmental Policy 
Act of 1969 on the effects of changes in aircraft flight patterns over 
the State of New Jersey caused by implementation of the Expanded 
East Coast Plan. 
(b) AIR SAFETY INVESTIGATION.—Not later than 180 days after the 
date of the enactment of this Act, the Administrator shall conduct 
an investigation to determine the effects on air safety of changes in 
aircraft flight patterns over the State of New Jersey caused by 
implementation of the Expanded East Coast Plan. 
(c) REPORT TO CONGRESS.—Not later than 180 days after the date of 
the enactment of this Act, the Administrator shall transmit to 
Congress a report containing the results of the environmental 
impact statement and investigation conducted pursuant to this 
section. Such report shall also contain such recommendations for 
modification of the Expanded East Coast Plan as the Administrator 
considers appropriate or an explanation of why modification of such 
plan is not appropriate. 
(d) IMPLEMENTATION OF MODIFICATIONS.—Not later than 1 year 
after the date of the enactment of this Act, the Administrator shall 
implement modifications to the Expanded East Coast Plan rec-
ommended under subsection (c). 
104 STAT. 1388-370 
PUBLIC LAW 101-508—NOV. 5, 1990 
SEC. 9120. TRANSFER OF FORMAT OF GEODETIC NAVIGATION INFOR-
MATION. 
Not later than 2 years after the date of the enactment of this Act, 
the Administrator of the Federal Aviation Administration and the 
Administrator of the National Oceanic and Atmospheric Adminis-
tration shall complete the transfer of geodetic coordinate navigation 
information from NAD-27 format to NAD-83 format. 
SEC. 9121. SENSITIVE SECURITY INFORMATION. 
Section 316(dX2) of the Federal Aviation Act of 1958 (49 U.S.C. 
App. 1357(dX2)) is amended— 
(1) by inserting "security or" before "research and develop-
ment activities"; and 
(2) by striking "subsection" and inserting "title". 
SEC. 9122. REPORTS. 
Section 107 of the Federal Aviation Act of 1958 (49 U.S.C. App. 
1307) is amended in subsections (b) and (c) by striking "each April 1 
thereafter" each place it appears and inserting "through April 1, 
1990". 
SEC. 9123. ATLANTIC CITY AIRPORT. 
Section 312 of the Airport and Airway-Safety and Capacity Expan-
sion Act of 1987 (101 Stat. 1528) is repealed. 
SEC. 9124. NATURAL DISASTER REGULATION. 
Title VI of the Federal Aviation Act of 1958 (49 U.S.C. App. 1421-
1432) is amended by inserting after section 612 the following new 
section: 
49 u s e app. 
"SEC. 613. SAFETY REGULATION. 
"(a) NATIONAL DISASTER AREAS.—Before the 180th day following 
the date of the enactment of this section, the Administrator, for 
safety and humanitarian reasons, shall issue such regulations as 
may be necessary to prohibit or otherwise restrict 
aircraft 
overflights of any inhabited area which has been declared a national 
disaster area in the State of Hawaii. 
"(b) EXCEPTIONS.—Regulations issued pursuant to subsection (a) 
shall not be applicable in the case of aircraft overflights involving 
an emergency or a ligitimate '^ scientific purpose. 
"(c) STATUS OF STUDIES.—Not later than the 90th day following the 
date of the enactment of this section, the Administrator shall report 
to Congress on the status of the studies and reports required by the 
Act entitled 'An Act to require the Secretary of the Interior to 
conduct a study to determine the appropriate minimum altitude for 
aircraft flying over national airport system units', approved 
August 18,1987 (101 Stat. 674-678; 16 U.S.C. la-1 note).". 
SEC. 9125. FLIGHT TAKEOFF OR LANDING REQUIREMENT FOR STATE 
TAXATION. 
Section 1113 of the Federal Aviation Act of 1958 (49 U.S.C. App. 
1513) is amended by adding at the end the following new subsection: 
"(f) FuGHT TAKEOFF OR LANDING REQUIREMENT FOR STATE TAX-
ATION.—No State (as such term is defined under subsection (dX2XE)) 
or political subdivision thereof shall levy or collect any tax on or 
with respect to any flight of a commercial aircraft or any activity or 
service on board such aircraft unless such aircraft takes off or lands 
in such State or political subdivision as part of such flight.". 
^' So in original. Probably should be "legitimate". 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-371 
SEC. 9126. ALLOCATION OF EXISTING CAPACITY AT CERTAIN AIRPORTS. 
(a) RULEMAKING.— The Secretary of Transportation shall, by 
July 1, 1991, initiate a rulemgiking proceeding to consider more 
efficient methods of allocating existing capacity at high density 
traffic airports in order to provide improved opportunities for oper-
ations by new entrant air carriers. 
(b) DEFINITION.—In this section, the term "new entrant air car-
rier", as used with respect to a high density traffic airport, means an 
air carrier having less than 12 operating rights at such airport. 
SEC. 9127. CERTIFICATE TRANSFERS. 
Section 401(h) of the Federal Aviation Act of 1958 (49 App. U.S.C. 
1371(h)) is amended— 
(1) by inserting "(1)" after "(h)"; and 
(2) by adding at the end the following new paragraphs: 
"(2) CERTIFICATION.—The Secretary of Transportation shall, 
upon any transfer of a certificate, certify to the C!ommittee on 
Commerce, Science, and Transportation of the Senate and the 
C!ommittee on Public Works and Transportation of the House of 
Representatives that the transfer is consistent with the public 
interest. 
"(3) ACCOMPANYING 
REPORT.—A certification 
under this 
subsection shall be accompanied by a report analyzing the 
effects of the transfer on— 
"(A) the viability of each of the carriers involved in the 
transfer; 
"(B) competition in the domestic airline industry,''* and 
"(C) the trade position of the United States in the inter-
national air transportation market.". 
SEC. 9128. SEVERABILITY. 
49 USC app. 
If any provision of this subtitle (including an amendment made by 
"° ' 
this subtitle), or the application thereof to any person or cir-
cumstance, is held invalid, the remainder of this subtitle and the 
application of such provision to other persons of circumstances shall 
not be affected thereby. 
SEC. 9129. BUY AMERICAN. 
49 USC app. 
(a) GENERAL RULE.—^Notwithstanding any other provision of law, 
the Secretary of Transportation shall not obligate, after the date of 
enactment of this Act, any funds authorized to be appropriated to 
carry out this subtitle, section 106(k) of title 49, United States Code, 
or the Airport and Airway Improvement Act of 1982 (other than 
section 506(b)) for any project unless steel and manufactured prod-
ucts used in such project are produced in the United States. 
(b) LIMITATIONS ON APPUCABIUTY.—The provisions of subsection 
(a) of this section shall not apply where the Secretary finds— 
(1) that their application would be inconsistent with the 
public interest; 
(2) that such materials and products are not produced in the 
United States in sufficient and reasonably available quantities 
and of a satisfactory quality; 
(3) in the case of the procurement of facilities and equipment 
under the Airport and Airway Improvement Act of 1982 that 
(A) the cost of components and subcomponents which are pro-
duced in the United States is more than 60 percent of the cost of 
all components of the facility or equipment described in this 
^* So in original. Probably shoiUd be "industry,"-
104 STAT. 1388-372 
PUBLIC LAW 101-508—NOV. 5, 1990 
49 u s e app. 
2226b. 
49 u s e app. 
2226c. 
Federsil Aviation 
Administration 
Rraearch, 
Engineering, 
and 
Development 
Authorization 
Act of 1990. 
49 u s e app. 
2201 note. 
paragraph, and (B) final assembly of the facility or equipment 
described in this paragraph has taken place in the United 
States; or 
(4) that inclusion of domestic material will increase the cost of 
the overall project contract by more than 25 percent. 
(c) CALCULATION OF COMPONENTS COSTS.—For purposes of this 
section, in calculating components' costs, labor costs involved in 
final assembly shall not be included in the calculation. 
SEC. 9130. PROHIBITION AGAINST FRAUDULENT USE OF "MADE IN 
AMERICA" LABELS. 
If the Secretary of Transportation determines that any person 
intentionally affixes a label bearing a "Made in America" inscrip-
tion to any product sold in or shipped to the United States that is 
not made in America, the Secretary shall,declare that person ineli-
gible to receive a Federal contract or grant in conjunction with the 
issuance of any contract made under this subtitle for a period of not 
less than 3 years and not more than 5 years. The Secretary may 
bring action against such person to enforce this subsection in any 
United States district court. 
SEC. 9131. RESTRICTIONS ON CONTRACT AWARDS. 
No person or enterprise domiciled or operating under the laws of 
a foreign government may enter into a contract or subcontract made 
pursuant to this subtitle if that government unfairly maintains, in 
government procurement, a significant and persistent pattern or 
practice of discrimination against United States products or services 
which results in identifiable harm to United States businesses, as 
identified by the President pursuant to section 305(g)(1)(A) of the 
Trade Agreements Act of 1979. 
Subtitle C—Federal Aviation Administration 
Research, Engineering, and Development 
SEC. 9201. SHORT TITLE. 
This subtitle may be cited as the "Federal Aviation Administra-
tion Research, Engineering, and Development Authorization Act of 
1990". 
SEC. 9202. AVIATION RESEARCH AUTHORIZATION OF APPROPRIATIONS. 
Paragraph (2) of section 506(b) of the Airport and Airway Improve-
ment Act of 1982 (49 U.S.C. App. 2205(b)(2)) is amended by striking 
subparagraph (A) and all that follows through the period at the end 
of such paragraph and inserting the following: 
"(A) for fiscal year 1991— 
"(i) $135,800,000 solely for air traffic control projects 
and activities; 
"(ii) $19,100,000 solely for air traffic control advanced 
computer projects and activities; 
"(iii) $3,400,000 solely for navigation projects and 
activities; 
"(iv) $9,700,000 solely for aviation weather projects 
and activities; 
"(v) $16,500,000 solely for aviation medicine projects 
and activities; 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-373 
"(vi) $70,100,000 solely for aircraft safety projects and 
activities; and 
"(vii) $5,400,000 solely for environmental projects 
and activities; and 
"(B) for fiscal year 1992— 
"(i) $135,800,000 solely for air traffic control projects 
and activities; 
"(ii) $19,100,000 solely for air traffic control advanced 
computer projects and activities; 
"(iii) $3,400,000 solely for navigation projects and 
activities; 
"(iv) $9,700,000 solely for aviation weather projects 
and activities; 
"(v) $16,500,000 solely for aviation medicine projects 
and activities; 
"(vi) $70,100,000 solely for aircraft safety projects and 
activities; and 
"(vii) $5,400,000 solely for environmental projects 
and activities. 
Not less than 3 percent of the funds made available under this 
paragraph for a fiscal year shall be available to the Adminis-
trator for making grants under section 312(g) of the Federal 
Aviation Act of 1958.". 
SEC. 9203. ENHANCED AIRPORT CAPACITY. 
Section 506(b)(4) of the Airport and Airway Improvement Act of 
1982 (49 App. U.S.C. 2205(bX4)) is amended— 
(1) in subparagraph (A) by striking "and 1990" and inserting 
"1990,1991, and 1992"; and 
(2) in subparagraph (B) by striking "and 1990" and inserting 
"1990,1991, and 1992". 
SEC. 9204. WEATHER SERVICES. 
Section 506(d) of the Airport and Airway Improvement Act of 1982 
(49 U.S.C. App. 2205(d)) is amended by striking the second sentence 
and inserting the following: "Expenditures for the purposes of carry-
ing out this subsection shall be limited to $34,521,000 for fiscal year 
1991 and $35,389,000 for fiscal year 1992.". 
SEC. 9205. AVIATION RESEARCH GRANT PROGRAM. 
(a) IN GENERAL.—Section 312 of the Federal Aviation Act of 1958 
(49 U.S.C. App. 1353) is amended by adding the following new 
subsection: 
"(g) RESEARCH GRANT PROGRAM.— 
"(1) GENERAL AUTHORITY.—The Administrator may make 
grants to colleges, universities, and nonprofit research organiza-
tions to conduct aviation research into areas deemed by the 
Administrator to be required for the long-term growth of civil 
aviation. 
"(2) 
APPLICATIONS.—A university, 
college, or 
nonprofit 
organization interested in receiving a grant under this subsec-
tion may submit to the Administrator an application for such 
grant. Such application shall be in such form and contain such 
information as the Administrator may require. 
"(3) SELECTION.—The Administrator shall establish a solicita-
tion, review, and evaluation process that ensures (A) the fund-
ing under this subsection of proposals having adequate merit 
104 STAT. 1388-374 
PUBLIC LAW 101-508—NOV. 5, 1990 
and relevancy to the mission of the Federal Aviation Adminis-
tration, (B) an equitable geographical distribution of grant 
funds under this subsection, and (C) the inclusion of historically 
black colleges and universities and other minority institutions 
for funding consideration under this subsection. 
"(4) RECORDS.—Each person awarded a grant under this 
subsection shall maintain such records as the Administrator 
may require as being necessary to facilitate an effective audit 
and evaluation of the use of grant funds. 
"(5) REPORTS.—The Administrator shall make an annual 
report to the Committee on Science, Space, and Technology of 
the House of Representatives and the Committee on Commerce, 
Science, and Transportation of the Senate on the research grant 
program conducted under this subsection.". 
(b) CONFORMING AMENDMENT.—That portion of the table of con-
tents contained in the first section of such Act which appears under 
the heading: 
"Sec. 312. Development planning." 
is amended by adding at the end the following: 
"(g) Research grant program.". 
SEC. 9206. STUDY BY THE GENERAL ACCOUNTING OFFICE OF MULTIYEAR 
CONTRACTING AUTHORITY. 
The Comptroller General of the United States shall conduct a 
study of the advisability of granting to the Administrator of the 
Federal Aviation Administration specific statutory authority— 
(1) to lease real property or interests therein for terms not to 
exceed 20 years, including, in the case of air navigation facilities 
and airports (as such terms are defined in section 101 (8) and (9) 
of the Federal Aviation Act of 1958) owned by the United States 
and operated under the direction of the Administrator, ease-
ments through or other interests in airspace immediately adja-
cent thereto and in connection therewith; 
(2) to procure personal property or services and real property 
and interests therein with procedures other than competitive 
procedures under section 303(c) of the Federal Property and 
Administrative Services Act of 1949 (41 U.S.C. 253(c)); 
(3) to serve as the senior procurement executive under section 
16 of the Office of Federal Procurement Policy Act (41 U.S.C. 
414) for the purpose of approving the justification for the 
use of noncompetitive procedures required under section 
303(f)(l)(B)(iii) of the Federal Property and Administrative Serv-
ices Act of 1949 (41 U.S.C. 253(f)(l)(B)(iii)); 
(4) to let multiyear contracts for services, including the oper-
ation, maintenance, and support of facilities and installations; 
the operation, maintenance, and modification of aircraft, ve-
hicles, and other highly complex equipment; specialized train-
ing necessitating high quality instructor skills; and base 
services; and 
(5) to let multiyear contracts for the purchase of property. 
The study also shall examine the implementation of section 2306(g) 
and (h) of title 10, United States Code, by the Department of 
Defense, and shall £issess the usefulness of granting similar author-
ity to the Federal Aviation Administration. The Comptroller Gen-
eral shall submit a report on the results of the study, along with any 
comments of the Administrator of the Federal Aviation Administra-
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-375 
tion, to the Committee on Science, Space, and Technology of the 
House of Representatives and the Committee on Commerce, Science, 
and Transportation of the Senate within 6 months after the date of 
enactment of this Act. 
SEC. 9207. BUY-AMERICAN REQUIREMENT. 
49 USC app. 
(a) DETERMINATION BY ADMINISTRATOR.—If the Administrator, 
with the concurrence of the Secretary of Commerce and the United 
States Trade Representative, determines that the public interest so 
requires, the Administrator is authorized to award to a domestic 
firm a contract made pursuant to the issuance of any grant made 
under this subtitle that, under the use of competitive procedures, 
would be awarded to a foreign firm, if— 
(1) the final product of the domestic firm will be completely 
assembled in the United States; 
(2) when completely assembled, not less than 51 percent of the 
final product of the domestic firm will be domestically produced; 
and 
(3) the difference between the bids submitted by the foreign 
and domestic firms is not more than 6 percent. 
In determining under this subsection whether the public interest so 
requires, the Administrator shall take into account United States 
international obligations and trade relations. 
(b) LIMITED APPLICATION.—This section shall not apply to the 
extent to which— 
(1) such applicability would not be in the public interest; 
(2) compelling national security considerations require other-
wise; or 
(3) the United States Trade Representative determines that 
such an award would be in violation of the General Agreement 
on Tariffs and Trade or an international agreement to which 
the United States is a party. 
(c) LIMITATION.—This section shall apply only to contracts made 
related to the issuance of any grant made under this subtitle for 
which— 
(1) amounts are authorized by this subtitle (including the 
amendments made by this subtitle) to be made available; and 
(2) solicitations for bids are issued after the date of the 
enactment of this Act. 
(d) REPORT TO CONGRESS.—The Administrator shall report to the 
Congress on contracts covered under this section and entered into 
with foreign entities in fiscal years 1991 and 1992 and shall report to 
the Congress on the number of contracts that meet the requirements 
of subsection (a) but which are determined by the United States 
Trade Representative to be in violation of the General Agreement 
on Tariffs and Trade or an international agreement to which the 
United States is a party. The Administrator shall also report to the 
Congress on the number of contracts covered under this subtitle 
(including the amendments made by this subtitle) and awarded 
based upon the parameters of this section. 
(e) DEFINITIONS.—For purposes of this section— 
(1) the term "Administrator" means the Administrator of the 
Federal Aviation Administration; 
(2) the term "domestic firm" means a business entity that is 
incorporated in the United States and that conducts business 
operations in the United States; and 
104 STAT. 1388-376 
PUBLIC LAW 101-508—NOV. 5, 1990 
(3) the term "foreign firm" means a business entity not 
described in paragraph (2). 
SEC. 9208. CATASTROPHIC FAILURE PREVENTION RESEARCH PROGRAM. 
(a) GENERAL AUTHORITY.—Section 312(b) of the Federal Aviation 
Act of 1958 (49 U.S.C. App. 1353(b)) is amended by inserting after 
"inflight aircraft fires," the following; ''^ "to develop technologies 
and methods to assess the risk of and prevent defects, failures, and 
malfunctions of products, parts, processes, and articles manufac-
tured for use in aircraft, aircraft engines, propellers, and appliances 
which could result in a catastrophic failure of an aircraft,". 
(b) GRANT PROGRAM.—Section 312 of such Act is amended by 
adding at the end the following new subsection: 
"(h) 
CATASTROPHIC 
FAILURE 
PREVENTION 
RESEARCH 
GRANT 
PROGRAM.— 
"(1) GENERAL AUTHORITY.—The Administrator may make 
grants to colleges, universities, and nonprofit research organiza-
tions (A) to conduct aviation research relating to development of 
technologies and methods to assess the risk and prevent defects, 
failures, and malfunctions of products, parts, processes, and 
articles manufactured for use in aircraft, aircraft engines, 
propellers, and appliances which could result in a catastrophic 
failure of an aircraft, and (B) to establish centers of excellence 
for continuing such research. 
"(2) SELECTION AND EVALUATION PROCESSES.—The Adminis-
trator shall establish a solicitation, application, review, and 
evaluation process that ensures (A) the funding under this 
subsection of proposals having adequate merit and relevancy to 
the research described in paragraph (1).". 
(c) CONFORMING AMENDMENT.—^That portion of the table of con-
tents contained in the first section of such Act which appears under 
the heading: 
"Sec. 312. Development planning." 
is amended by adding at the end the following: 
"(h) Catastrophic failure prevention research grant program.". 
SEC. 9209. AVIATION RESEARCH AND CENTERS OF EXCELLENCE. 
(a) IN GENERAL.—Section 312 of the Federal Aviation Act of 1958 
(49 App. U.S.C. 1353) is amended by adding at the end the following 
new subsection: 
"(i) AVIATION RESEARCH AND CENTERS OF EXCELLENCE.— 
"(1) GENERAL AUTHORITY.—The Administrator may make 
grants to one or more colleges or universities to establish and 
operate several regional centers of air transportation excel-
lence, whose locations shall be geographically equitable. 
"(2) RESPONSIBILITIES.—The responsibilities of each regional 
center of air transportation excellence established under this 
subsection shall include, but not be limited to, the conduct of 
research concerning airspace and airport planning and design, 
airport capacity enhancement techniques, human performance 
in the air transportation environment, aviation safety and secu-
rity, the supply of trained air transportation personnel includ-
ing pilots and mechanics, and other aviation issues pertinent to 
developing and maintaining a safe and efficient air transpor-
tation system, and the interpretation, publication, and dissemi-
nation of the results of such research. In conducting such 
^' So in original. Probably should be "following:". 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-377 
research, each center may contract with nonprofit research 
organizations and other appropriate persons. 
"(3) APPUCATION.—Any college or university interested in 
receiving a grant under this subsection shall submit to the 
Administrator an application in such form and containing such 
information as the Administrator may require by regulation. 
"(4) SELECTION CRITERIA.—The Administrator shall select 
recipients of grants under this subsection on the basis of the 
following criteria: 
"(A) The extent to which the needs of the State in which 
the applicant is located are representative of the needs of 
the region for improved air transportation services and 
facilities. 
"(B) The demonstrated research and extension resources 
available to the applicant for carrying out this subsection. 
"(C) The capability of the applicant to provide leadership 
in making national and regional contributions to the solu-
tion of both long-range and immediate air transportation 
problems. 
"(D) The extent to which the applicant has an established 
air transportation program. 
"(E) The demonstrated ability of the applicant to dissemi-
nate results of air transportation research and educational 
programs through a statewide or regionwide continuing 
education program. 
"(F) The projects which the applicant proposes to carry 
out under the grant. 
"(5) MAINTENANCE OF EFFORT.—No grant may be made under 
this subsection in any fiscal year unless the recipient of such 
grant enters into such agreements with the Administrator as 
the Administrator may require to ensure that such recipient 
will maintain its aggregate expenditures from all other sources 
for establishing and operating a regional center of air transpor-
tation excellence and related research activities at or above the 
average level of such expenditures in its 2 fiscal years preceding 
the date of enactment of this subsection. 
"(6) FEDERAL SHARE.—The Federal share of a grant under this 
subsection shall be 50 percent of the costs of establishing and 
operating the regional center of air transportation excellence 
and related research activities carried out by the grant recipi-
ent. 
"(7) ALLOCATION OF FUNDS.—Funds made available to carry 
out this subsection shall be allocated by the Administrator in a 
geographically equitable manner.", 
(b) RESEARCH ADVISORY COMMITTEE.— 
(1) Section 312(f)(2) of the Federal Aviation Act of 1958 (49 
App. U.S.C. 1353(f)(2)) is amended by adding at the end the 
following new sentence: "In addition, the committee shall 
review the research and training to be carried out by the 
regional centers of air transportation excellence established 
under subsection (h).". 
(2) Section 312(f)(3) of the Federal Aviation Act of 1958 (49 
App. U.S.C. 1353(f)(3)) is amended— 
(A) by striking "20" and inserting "30"; and 
(B) by striking the last sentence and inserting the follow-
ing: "The Administrator in appointing the members of the 
committee shall ensure that the research centers of air 
104 STAT. 1388-378 
PUBLIC LAW 101-508—NOV. 5, 1990 
transportation 
excellence, 
universities, 
corporations, 
associations, consumers, and other Government agencies 
are represented.". 
(c) RESEARCH AUTHORITY OF ADMINISTRATOR.—Section 312(c) of the 
Federal Aviation Act of 1958 (49 App. U.S.C. 1353(c)) is amended by 
inserting after the third sentence the following: "The Administrator 
shall undertake or supervise research programs concerning airspace 
and airport planning and design, airport capacity enhancement 
techniques, human performance in the air transportation environ-
ment, aviation safety and security, the supply of trained air 
transportation personnel including pilots and mechanics, and other 
aviation issues pertinent to developing and maintaining a safe and 
efficient air transportation system.". 
(d) CONFORMING AMENDMENT.—That portion of the table of con-
tents contained in the first section of thei Federal Aviation Act of 
1958 relating to section 312 of that Act is amended by adding at the 
end the following: 
"(i) Aviation research and centers of excellence.". 
^dcJpadty 
Subtitle D—Aviation Noise Policy 
Act of 1990. 
49 u s e app. 
SEC. 9301. SHORT TITLE. 
This subtitle may be cited as the "Airport Noise and Capacity Act 
of 1990". 
49 u s e app. 
SEC. 9302. FINDINGS. 
The Congress finds that— 
(1) aviation noise management is crucial to the continued 
increase in airport capacity; 
(2) community noise concerns have led to uncoordinated and 
inconsistent restrictions on aviation which could impede the 
national air transportation system; 
(3) a noise policy must be implemented at the national level; 
(4) local interest in aviation noise management shall be 
considered in determining the national interest; 
(5) community concerns can be alleviated through the use of 
new technology aircraft, combined with the use of revenues, 
including those available from passenger facility charges, for 
noise management; 
(6) federally controlled revenues can help resolve noise prob-
lems and carry with them a responsibility to the national 
airport system; 
(7) revenues derived from a passenger facility charge may be 
applied to noise management and increased airport capacity; 
and 
(8) a precondition to the establishment and collection of pas-
senger facility charges is the issuance by the Secretary of 
Transportation of a final rule establishing procedures for 
reviewing airport noise and access restrictions on operations of 
Stage 2 and Stage 3 aircraft. 
49 u s e app. 
SEC. 9303. NATIONAL AVIATION NOISE POLICY. 
0 1 CO 
(a) DEVELOPMENT.—Not later than July 1, 1991, the Secretary of 
Transportation (hereinafter in this subtitle referred to as the "Sec-
retary") shall issue regulations establishing a national aviation 
noise policy which takes into account the findings, determinations. 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-379 
and provisions of this subtitle, including the phaseout and 
nonaddition of Stage 2 aircraft as provided in this subtitle and 
implementation dates and reporting requirements consistent with 
this subtitle and existing law. 
(b) BASIS.—The national aviation noise policy shall be based upon 
a detailed economic analysis of the impact of the phaseout date for 
Stage 2 aircraft on competition in the airline industry, including the 
ability of air carriers to achieve capacity growth consistent with the 
projected rate of growth for the airline industry, the impact of 
competition within the airline and aircargo industries, the impact 
on nonhub and small community air service, and the impact on new 
entry into the airline industry. 
(c) RECOMMENDATIONS.—Not later than July 1,1991, the Secretary 
shall transmit to Congress recommendations on— 
(1) the need for changes in the standards and procedures 
which govern the rights of State and local governments (includ-
ing airport authorities) to restrict aircraft operations for the 
purpose of limiting aircraft noise; 
(2) the need for changes in the standards and procedures 
which govern law suits by persons adversely affected by aircraft 
noise; 
(3) the need for changes in standards and procedures for 
Federal regulation of airspace (including the pattern of oper-
ations for the air traffic control system) in order to take better 
account of environmental effects; 
(4) the need for changes in the Federal program providing 
assistance for noise abatement planning and programs, includ-
ing the need for greater incentives or mandatory requirements 
for local restrictions on the use of land impacted by aircraft 
noise; 
(5) whether any changes in policy recommended in para-
graphs (1) through (4) should be accomplished through regu-
latory, administrative, or legislative action; and 
(6) specific legislative proposals necessary for implementing 
the national aviation noise policy. 
SEC. 9304. NOISE AND ACCESS RESTRICTION REVIEWS. 
49 USC 2153. 
(a) IN GENERAL.— 
(1) ESTABLISHMENT OF PROGRAM.—The national aviation noise 
policy to be established under this subtitle shall require the 
establishment, by regulation, in accordance with the provisions 
of this section of a national program for reviewing airport noise 
and access restrictions on operations of Stage 2 and Stage 3 
aircraft. Such program shall provide for adequate public notice 
and comment opportunities on such restrictions. 
(2) LIMITATIONS ON APPLICABILITY.— 
(A) APPUCABILITY DATE FOR STAGE 2 AIRCRAFT.—With re-
spect to Stage 2 aircraft, the requirements set forth in 
subsection (c) shall apply only to restrictions proposed after 
October 1,1990. 
(B) APPLICABILITY DATE FOR STAGE 3 AIRCRAFT.—With re-
spect to Stage 3 aircraft, the requirements set forth in 
subsections (b) and (d) shall apply only to restrictions that 
first become effective after October 1,1990. 
(C) SPECIFIC EXEMPTIONS.—Subsections (b), (c), and 
(d) 
shall not apply to— 
104 STAT. 1388-380 
PUBLIC LAW 101-508—NOV. 5, 1990 
(i) a local action to enforce a negotiated or executed 
airport aircraft noise or access agreement between the 
airport operator and the aircraft operator in effect on 
the date of the enactment of this Act; 
(ii) a local action to enforce a negotiated or executed 
airport aircraft noise or access restriction the airport 
operator and the aircraft operators agreed to before the 
date of the enactment of this Act; 
(iii) an intergovernmental agreement including air-
port aircraft noise or access restriction in effect on the 
date of the enactment of this Act; 
(iv) a subsequent amendment to an airport aircraft 
noise or access agreement or restriction in effect on the 
date of the enactment of this Act that does not reduce 
or limit aircraft operations or affect aircraft safety; 
(vXD a restriction which -was adopted by an airport 
operator on or before October 1, 1990, and which was 
stayed as of October 1, 1990, by a court order or as a 
result of litigation, if such restriction or a part thereof 
is subsequently allowed by a court to take effect; and 
(II) in any case in which a restriction described in 
subclause (I) is either partially or totally disallowed by 
a court, any new restriction imposed by an airport 
operator to replace such disallowed restriction if such 
new restriction would not prohibit aircraft operations 
in effect as of the date of the enactment of this Act; and 
(vi) a local action which represents the adoption of 
the final portion of a program of a staged airport 
aircraft noise or access restriction where the initial 
portion of such program was adopted during calendar 
year 1988 and was in effect on the date of the enact-
ment of this Act. 
(D) ADDITIONAL WORKING GROUP EXEMPTIONS.—Subsec-
tions (b) and (d) shall not apply where the Federal Aviation 
Administration has prior to the date of the enactment of 
this Act formed a working group (outside the process estab-
lished by part 150 of title 14 of the Code of Federal Regula-
tions) with a local airport operator to examine the noise 
impact of air traffic control procedure changes. In any case 
in which an agreement relating to noise reductions at such 
airport is entered into between the airport proprietor and 
an air carrier or air carrier constituting a majority of the 
air carrier users of such airport, subsections (b) and (d) shall 
apply only to local actions to enforce such agreement, 
(b) LIMITATION ON STAGE 3 AIRCRAFT RESTRICTIONS.—No airport 
noise or access restriction on the operation of a Stage 3 aircraft, 
including but not limited to— 
(1) a restriction as to noise levels generated on either a single 
event or cumulative basis; 
(2) a limit, direct or indirect, on the total number of Stage 3 
aircraft operations; 
(3) a noise budget or noise allocation program which would 
include Stage 3 aircraft; 
(4) a restriction imposing limits on hours of operations; and 
(5) any other limit on Stage 3 aircraft; 
shall be effective unless it has been agreed to by the airport propri-
etor and all aircraft operators or has been submitted to and ap-
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-381 
proved by the Secretary pursuant to an airport or aircraft operator's 
request for approvsil in accordance with the program established 
pursuant to this section. 
(c) LIMITATION ON STAGE 2 AIRCRAFT RESTRICTIONS.—No giirport 
noise or access restriction shall include a restriction on operations of 
Stage 2 aircraft, unless the airport operator publishes the proposed 
noise or access restriction and prepares and makes available for 
public comment at least 180 days before the effective date of the 
restriction— 
(1) an analysis of the anticipated or actual costs and benefits 
of the existing or proposed noise or access restriction; 
(2) a description of alternative restrictions; and 
(8) a description of the alternative measures considered which 
do not involve aircraft restrictions, and a comparison of the 
costs and benefits of such alternative measures to the costs and 
benefits of the proposed noise or access restriction. 
(d) APPROVAL OF STAGE 3 AIRCRAFT RESTRICTIONS.— 
(1) IN GENERAL.—Not later than the 180th day after the date 
on which the Secretary receives an airport or aircraft operator's 
request for approval of a noise or access restriction on the 
operation of a Stage 3 aircraft, the Secretary shall approve or 
disapprove such request. 
(2) REQUIRED FINDINGS.—The Secretary shall not approve a 
noise or access restriction applying to Stage 3 aircraft oper-
ations unless the Secretary finds the following conditions to be 
supported by substantial evidence: 
(A) The proposed restriction is reasonable, nonarbitrary, 
and nondiscriminatory. 
(B) The proposed restriction does not create an undue 
burden on interstate or foreign commerce. 
(C) The proposed restriction is not inconsistent with 
maintaining the safe and efficient utilization of the navi-
gable airspace. 
(D) The proposed restriction does not conflict with any 
existing Federal statute or regulation. 
(E) There has been £in adequate opportunity for public 
comment with respect to the restriction. 
(F) The proposed restriction does not create an undue 
burden on the national aviation system. 
(e) INELIGIBIUTY FOR PFC'S AND A I P FUNDS.—Sponsors of facilities 
operating under airport aircraft noise or access restrictions on Stage 
3 aircraft operations that first became effective after October 1, 
1990, shall not be eligible to impose a passenger facility charge 
under section 1113(e) of the Federal Aviation Act of 1958 and shall 
not be eligible for grants authorized by section 505 of the Airport 
and Airway Improvement Act of 1982 after the 90th day following 
the date on which the Secretary issues a final rule under section 
9304(a) of this Act, unless such restrictions have been agreed to by 
the airport proprietor and aircraft operators or the Secretary has 
approved the restrictions under this subtitle or the restrictions have 
been rescinded. 
(f) REEVALUATION.—The Secretary may reevaluate any noise 
restrictions previously agreed to or approved under subsection (d) 
upon the request of any aircraft operator able to demonstrate to the 
satisfaction of the Secretary that there has been a change in the 
noise environment of the affected airport and that a review and 
reevaluation pursuant to the criteria established under subsection 
104 STAT. 1388-382 
PUBLIC LAW 101-508—NOV. 5, 1990 
(d) of the previously approved or agreed to noise restriction is 
therefore justified. 
(g) PROCEDURES FOR REEVALUATION.—The Secretary shall estab-
lish by regulation procedures under which reevaluations under 
subsection (f) are to be accomplished. A reevaluation under subsec-
tion (f) of a restriction shall not occur less than 2 years after a 
determination under subsection (d) has been made with respect to 
such restriction. 
(h) EFFECT ON EXISTING LAW.—Except to the extent required by 
the application of the provisions of this section, nothing in this 
subtitle shall be deemed to eliminate, invalidate, or supersede— 
(1) existing law with respect to airport noise or access restric-
tions by local authorities; 
(2) any proposed airport noise or access regulation at a 
general aviation airport where the airport proprietor has for-
mally initiated a regulatory or legislative process on or before 
October 1,1990; and 
(3) the authority of the Secretary to seek and obtain such 
legal remedies as the Secretary considers appropriate, including 
injunctive relief. 
49 use app. 
SEC. 9305. DETERMINATION REGARDING NOISE RESTRICTIONS ON CER-
2154. 
TAIN STAGE 2 AIRCRAFT. 
The Secretary shall determine by a study the applicability of 
subsections (a), (b), (c), and (d) of section 9304 to noise restrictions on 
the operations of Stage 2 aircraft weighing less than 75,000 pounds. 
In making such determination, the Secretary shall consider— 
(1) noise levels produced by such aircraft relative to other 
aircraft; 
(2) the benefits to general aviation and the need for efficiency 
in the national air transportation system; 
(3) the differences in the nature of operations at airports and 
the areas immediately surrounding such airports; 
(4) international standards and accords with respect to air-
craft noise; and 
(5) such other factors which the Secretary deems necessary. 
49 use app. 
SEC. 9306. FEDERAL LIABILITY FOR NOISE DAMAGES. 
In the event that a proposed airport aircraft noise or access 
restriction is disapproved, the Federal Government shall assume 
liability for noise damages only to the extent that a taking has 
occurred as a direct result of such disapproval. Action for the 
resolution of such a case shall be brought solely in the United States 
Claims Court. 
49 use app. 
SEC. 9307. LIMITATION ON AIRPORT IMPROVEMENT PROGRAM REVENUE. 
pi EC 
Under no conditions shall any airport receive revenues under the 
provisions of the Airport and Airway Improvement Act of 1982 or 
impose or collect a passenger facility charge under section 1113(e) of 
the Federal Aviation Act of 1958 unless the Secretary assures that 
the airport is not imposing any noise or access restriction not in 
compliance with this subtitle. 
49 use app. 
SEC. 9308. PROHIBITION ON OPERATION OF CERTAIN AIRCRAFT NOT 
2157. 
COMPLYING WITH STAGE 3 NOISE LEVELS. 
(a) GENERAL RULE.—After December 31, 1999, no person may 
operate to or from an airport in the United States any civil subsonic 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-383 
turbojet aircraft with a maximum weight of more than 75,000 
pounds unless such aircraft complies with the Stage 3 noise levels, 
as determined by the Secretary. 
(b) WAIVER.— 
(1) APPUCATION.—If, by July 1,1999, at least 85 percent of the 
aircraft used by an air carrier to provide air transportation 
comply with the Stage 3 noise levels, such carrier may apply for 
a waiver of the prohibition set forth in subsection (a) for the 
remaining 15 or less percent of the aircraft used by the carrier 
to provide air transportation. Such application must be filed 
with the Secretary no later than January 1, 1999, and must 
include a plan with firm orders for making all aircraft used by 
the air carrier to provide air transportation to comply with such 
noise levels not later than December 31, 2003. 
(2) GRANTING OF WAIVER.—The Secretary may grant a waiver 
under this subsection if the Secretary finds that granting such 
waiver is in the public interest. In making such a finding, the 
Secretary shall consider the effect of granting such waiver on 
competition in air carrier industry and on small community adr 
service. 
(3) LIMITATION.—A waiver granted under this subsection may 
not permit the operation of Stage 2 aircraft in the United States 
after December 31, 2003. 
(c) CoMPUANCE SCHEDULE.—The Secretary shall, by regulation, 
establish a schedule for phased-in compliance with the prohibition 
set forth in subsection (a). The period of such phase-in shall begin on 
the date of the enactment of this Act and end before December 31, 
1999. Such regulations shall establish interim compliance dates. 
Such schedule for phased-in compliance shall be based upon a 
detailed economic analysis of the impact of the phaseout date for 
Stage 2 aircraft on competition in the airline industry, including the 
ability of air carriers to achieve capacity growth consistent with the 
projected rates of growth for the airline industry, the impact of 
competition within the Eiirline and air cargo industries, the impact 
on nonhub and small community air service, and the impact on new 
entry into the airline industry, and on an analysis of the impact of 
aircraft noise on persons residing near airports. 
(d) EXEMPTION FOR NONCONTIGUOUS AIR SERVICE.—This section 
and section 9309 shall not apply to aircraft which are used solely to 
provide air trgmsportation outeide the 48 contiguous States. Any 
civil subsonic turbojet aircraft with a maximum weight of more 
than 75,000 pounds which is imported into a noncontiguous State or 
a territory or possession of the United States on or after the date of 
the enactment of this Act may not be used to provide air transpor-
tation in the 48 contiguous States unless such aircraft complies with 
the Stage 3 noise levels. 
(e) VIOLATIONS.—Violations of this section and section 9309 and 
regulations issued to carry out such sections shall be subject to the 
same civil penalties and procedures as are provided by title IX of the 
Federal Aviation Act of 1958 for violations of title VI. 
(f) JUDICIAL REVIEW.—Actions taken by the Secretary under this 
section and section 9309 shsdl be subject to judicial review in accord-
ance with section 1006 of the Federal Aviation Act of 1958. 
(g) REPORTS.—Beginning with csdendar year 1992, each air carrier 
shall submit to the Secretary an annual report on the progress such 
carrier is making toward complying with the requirements of this 
section (including the regulations issued to carry out this section). 
104 STAT. 1388-384 
PUBLIC LAW 101-508—NOV. 5, 1990 
and the Secretary shall transmit to Congress an annual report on 
the progress being made toward such compliance. 
(h) DEFINITIONS.—As used in this section, the following definitions 
apply: 
(1) AIR CARRIER; AIR TRANSPORTATION; UNITED STATES.—The 
terms "air carrier", "air transportation", and "United States" 
have the meanings such terms have under section 101 of the 
Federal Aviation Act of 1958. 
(2) STAGE 3 NOISE LEVELS.—The term "Stage 3 noise levels" 
means the Stage 3 noise levels set forth in part 36 of title 14, 
Code of Federal Regulations, as in effect on the date of the 
enactment of this Act. 
49 u s e app. 
SEC. 9309. NONADDITION RULE. 
(a) GENERAL RULE.—Except as provided iii subsection (b) of this 
section, no person may operate a civil subsonic turbojet aircraft with 
a msiximum weight of more than 75,000 pounds which is imported 
into the United States on or after the date of the enactment of this 
Act unless— 
(1) it complies with the Stage 3 noise levels, or 
(2) it was purchased by the person who imports the aircrgift 
into the United States under a written contract executed before 
such date of enactment. 
(b) EXEMPTION FOR COMPLYING MODIFICATIONS.—The Secretary 
may provide an exemption from the requirements of subsection (a) 
to permit a person to obtain modifications to an aircraft to meet the 
- 
Stage 3 noise levels. 
(c) LIMITATION ON STATUTORY CONSTRUCTION.—For the purposes of 
this section, an aircraft shall not be considered to have been im-
ported into the United States if such aircraft— 
(1) on the date of the enactment of this Act, is owned— 
(A) by a corporation, trust, or partnership which is orga-
nized under the laws of the United States or any State 
(including the District of Columbia); 
(B) by an individual who is a citizen of the United States; 
or 
(C) by any entity which is owned or controlled by a 
corporation, trust, partnership, or individual described in 
this paragraph; and 
(2) enters into the United States not later than 6 months after 
the date of the expiration of a lease agreement (including any 
extensions thereof) between an owner described in paragraph (1) 
and a foreign air carrier. 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-385 
TITLE X—MISCELLANEOUS USER FEES 
AND OTHER PROVISIONS 
Subtitle A—Customs User Fees and Other 
Trade Provisions 
PART I—CUSTOMS USER F E E S 
SEC. 10001. CUSTOMS USER FEES. 
(a) EXTENSION OF EFFECTIVE PERIOD FOR FEES.—Paragraph (3) of 
section 13031(j) of the Consolidated Omnibus Budget ReconciUation 
Act of 1985 (19 U.S.C. 58c(j)(3)) is amended by striking out "1991" 
and inserting "1995". 
(b) ADJUSTMENT OF FEES FOR FORMALLY-ENTERED MERCHANDISE.— 
Paragraph (9) of section 13031(a) of the ConsoUdated Omnibus 
Budget Reconciliation Act of 1985 (19 U.S.C. 58c(a)(9)) is amended to 
read as follows: 
"(9)(A) For the processing of merchandise that is formally 
entered or released during any fiscal year, a fee in an amount 
equal to 0.17 percent ad valorem, unless adjusted under 
subparagraph (B). 
"(B)(i) The Secretary of the Treasury may adjust the ad 
valorem rate specified in subparagraph (A) to an ad valorem 
rate (but not to a rate of more than 0.19 percent nor less than 
0.15 percent) that would, if charged, offset the salaries and 
expenses that will likely be incurred by the Customs Service in 
the processing of such entries and releases during the fiscal 
year in which such costs are incurred. 
"(ii) In determining the amount of any adjustment under 
clause (i), the Secretary of the Treasury shall take into account 
whether there is a surplus or deficit in the fund established 
under section 613A of the Tariff Act of 1930 with respect to the 
provision of customs services for the processing of formal en-
tries and releases of merchandise. 
"(iii) An adjustment may not be made under clause (i) with 
respect to the fee charged during any fiscal year unless the 
Secretary of the Treasury— 
"(I) not later than 45 days after the date of the enactment 
of the Act providing full-year appropriations for the Cus-
toms Service for that fiscal year, publishes in the Federal 
Register a notice of intent to adjust the fee under this 
paragraph and the amount of such adjustment; 
"(II) provides a period of not less than 30 days following 
publication of the notice described in subclause (I) for public 
comment and consultation with the Committee on Finance 
of the Senate and the Committee on Ways and Means of the 
House of Representatives regarding the proposed adjust-
ment and the methodology used to determine such 
adjustment; 
"(III) upon the expiration of the period provided under 
subclause (II), notifies such committees in writing regarding 
the final determination to adjust the fee, the amount of 
such adjustment, and the methodology used to determine 
such adjustment; and 
104 STAT. 1388-386 
PUBLIC LAW 101-508—NOV. 5, 1990 
"(IV) upon the expiration of the 15-day period following 
the written notification described in subclause (III), submits 
for publication in the Federal Register notice of the final 
determination regarding the adjustment of the fee. 
"(iv) The 15-day period referred to in clause (iiiXIV) shall be 
computed by excluding— 
"(I) the days on which either House is not in session 
because of an adjournment of more than 3 days to a day 
certain or an adjournment of the Congress sine die; and 
"(II) any Saturday and Sunday, not excluded under 
subclause (I), when either House is not in session. 
"(v) An adjustment made under this subparagraph shall 
become effective with respect to formal entries and releases 
made on or after the 15th calendar day after the date of 
publication of the notice described in clause (iii)(IV) and shall 
remain in effect until adjusted under this subparagraph. 
"(C) If for any fiscal year, the Secretary of the Treasury 
determines not to make an adjustment under subparagraph (B), 
the Secretary shall, within the time prescribed under subpara-
graph (B)(iii)(I), submit a written report to the Committee on 
Finance of the Senate and the Committee on Ways and Means 
of the House of Representatives detailing the reasons for 
maintaining the current fee and the methodology used for 
computing such fee. 
"(D) Any fee charged under this paragraph, whether or not 
adjusted under subparagraph (B), is subject to the limitations in 
subsection (bX8XA).". 
(c) AGGREGATION OF MERCHANDISE PROCESSING FEES.—Section 
lll(fKlXB) of the Customs and Trade Act of 1990 (Public Law 101-
19 use 58c note. 
382) is amended by striking out "determined in" and inserting 
"curtently in effect under". 
(d) CUSTOMS SERVICE ADMINISTRATION.—Section 113 of the Cus-
19 use 2082. 
toms and Trade Act of 1990 is amended— 
(1) by inserting "and" after the semicolon at the end of 
subsection (aXD; 
(2) by striking out the semicolon at the end of subsection (aX2) 
and inserting a period; 
(3) by striking out paragraphs (3), (4), and (5) of subsection (a); 
and 
(4) by striking out "Committees referred to in subsection 
(a)(5)" in subsection (b) and inserting "Committee on Ways and 
Means of the House of Representatives and the Committee on 
Finance of the Senate". 
(e) MERCHANDISE PROCESSING FEES FOR CERTAIN SMALL AIR-
PORTS ~'~ 
(1) Section 13031(aX10XC) of the Consolidated Omnibus 
Budget Reconciliation Act of 1985 (19 U.S.C. 58c(aX10XC)) is 
amended by striking "applies," and inserting "applies, if more 
than 25,000 informal entries were cleared through such airport 
or facility during the fiscal year preceding such entry or re-
lease " 
(2) 'section 13031(bX9) of the Consolidated Omnibus Budget 
Reconciliation Act of 1985 (19 U.S.C. 58c(bX9)) is amended by 
inserting ", if more than 25,000 informal entries were cleared 
through such airport or facility during the preceding fiscal 
year" in subparagraph (BXii) before the end period. 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-387 
(f) 
MANUAL ENTRIES AND RELEASES.—Clause 
(ii) 
of 
section 
13031(b)(8)(C) of the Consolidated Omnibus Budget Reconciliation 
Act of 1985 (19 U.S.C. 58c(b)(8)(C)(ii)) is amended to read as follows: 
"(ii) any reference to a manual formal or informal entry or 
release includes £iny entry or release filed by a broker or 
importer that requires the inputting of cargo selectivity data 
into the Automated Commercial System by customs personnel, 
except when— 
"(I) the broker or importer is certified as an ABI cargo 
release filer under the Automated Commercial System at 
any port within the United States, or 
"(II) the entry or release is filed at ports prior to the full 
implementation of the cargo selectivity data system by the 
Customs Service at such ports.". 
(g) EFFECTIVE DATES.— 
19 use 58c note. 
(1) IN GENERAL.—The amendments made by subsections (b), 
(c), and (d) shall take effect on the date of the enactment of the 
Act providing full-year appropriations for the Customs Service 
for fiscal year 1992, and shall apply to fiscal years beginning on 
and after October 1,1991. 
(2) MERCHANDISE PROCESSING FEES FOR SMALL AIRPORTS.—The 
amendments made by subsection (e) shall take effect as if 
included in section 111 of the Customs and Trade Act of 1990. 
(3) MANUAL ENTRIES AND RELEASES.—The amendment made 
by subsection (f) shall take effect on the date of the enactment of 
this Act. 
PART II—TECHNICAL CORRECTIONS 
SEC. 10011. TECHNICAL AMENDMENTS TO THE HARMONIZED TARIFF 
SCHEDULE. 
(a) REDESIGNATIONS.— 
(1) IN GENERAL.—Each subheading of the Harmonized Tariff 
Schedule of the United States )that is listed in column A is 
redesignated as the subheading listed in column B opposite such 
column A subheading: 
Column A 
Column B 
5111.20.60 
5111.20.90 
5111.30.60 
5111.30.90 
5111.90.70 
5111.90.90 
5112.19.10 
5112.19.20 
5112.19.60 
5112.19.90 
5112.90.60 
5112.90.90 
6116.10.10 
6116.10.08 
6116.10.15 
6116.10.18 
6116.10.25 
6116.10.45 
6116.10.35 
6116.10.70 
6116.10.60 
6116.10.90 
6116.92.10 
6116.92.08 
6116.92.20 
6116.92.60 
6116.92.30 
6116.92.90 
6116.93.10 
6116.93.08 
6116.93.15 
6116.93.60 
6116.93.20 
6116.93.90 
6116.99.30 
6116.99.35 
6116.99.60 
6116.99.50 
6116.99.90 
6116.99.80 
6216.00.10 
6216.00.08 
6216.00.15 
6216.00.12 
6216.00.20 
6216.00.18 
104 STAT. 1388-388 
PUBLIC LAW 101-508—NOV. 5, 1990 
6216.00.27 
6216.00.28 
6216.00.31 
6216.00.32 
6216.00.34 
6216.00.35 
6216.00.38 
6216.00.39 
6216.00.44 
6216.00.46 
6216.00.49 
6216.00.52 
6216.00.50 
6216.00.80 
6216.00.60 
6216.00.90 
6702.90.40 
6702.90.35 
6702.90.60 
6702.90.65 
8712.00.10 
8712.00.15 
8712.00.20 
8712.00.25 
8712.00.30 
8712.00.35 
8714.94.20 
8714.94.15 
8714.94.50 
8714.94.60 
9022.90.80 
9022.90.90 
9603.10.20 
9603.10.25 
9603.10.70 
9603.10.90 
(2) STAGED RATE REDUCTION.—Any staged reductions of a spe-
cial rate of duty set forth in a subheading of the Harmonized 
Tariff Schedule of the United States listed in column A in 
paragraph (1) that were proclaimed by the President before 
October 1, 1990, and are scheduled to take effect on or after 
October 1, 1990, shall also apply to the corresponding specisd 
rates of duty set forth in the corresponding subheading listed in 
column B opposite such column A subheading. 
Qji) MISCELLANEOUS AMENDMENTS,—The Harmonized Tariff Sched-
ule of the United States is further amended as follows: 
(1) Chapter 61 is amended by striking out subheading 
6116.10.50. 
(2) Chapter 62 is amended by striking out subheadings 
6216.00.23, 6216.00.29, and 6216.00.47. 
(3) Subheading 6116.10.90, as redesignated by subsection (a), is 
amended— 
(A) by striking out the superior heading for such sub-
heading, and 
(B) by striking out the article description and inserting 
"With fourchettes", with the new article description having 
the same degree of indentation as the superior heading for 
subheading 6116.10.70, as redesignated by subsection (a). 
(4) Subheading 6216.00.28, as redesignated by subsection (a), is 
amended— 
(A) by striking out the superior heading for such sub-
heading, and 
(B) by inserting the article description for such sub-
heading at the same degree of indentation as the superior 
heading for subheading 6216.00.18, as redesignated by 
subsection (a). 
(5) Subheading 6216.00.32, as redesignated by subsection (a), is 
amended— 
(A) by striking out the superior heading for such sub-
heading, and 
(B) by striking out the article description and inserting 
"With fourchettes", with the new article description having 
the same degree of indentation as the article description for 
subheading 6216.00.35, as redesignated by subsection (a). 
(6) Subheading 6216.00.52, as redesignated by subsection (a), is 
amended by inserting the article description for such sub-
heading at the same degree of indentation as subheading 
6216.00.46, as redesignated by subsection (a). 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-389 
(7) The article descriptions for subheadings 6116.10.08, 
6116.92.08, 6116.93.08, 6116.99.35, 6216.00.08, 6216.00.35, and 
6216.00.46, as redesignated by subsection (a), are each amended 
to read as follows: "Other gloves, mittens, and mitts, all the 
foregoing specisdly designed for use in sports, including ski and 
snowmobile gloves, mittens, and mitts". 
(8) The superior heading for subheadings 8712.00.25 and 
8712.00.35, as redesignated by subsection (a), is amended by 
striking out "65" and inserting "63.5". 
(9) Heading 
9902.30.07 
is 
amended 
by 
striking 
out 
"2929.90.10" and inserting "2929.10.40". 
(10) Heading 
9902.30.08 is amended 
by 
striking 
out 
"2907.29.30" and inserting "2907.19.50". 
(11) Heading 
9902.30.42 is amended 
by striking 
out 
"19532-03-07" and inserting "19532-03-7". 
(12) The article description for heading 9902.30.56 is amended 
by striking out "hydroxethyl" and inserting "hydroxyethyl". 
(13) Heading 9902.30.83 (as enacted by section 388 of the 
Customs and Trade Act of 1990) is redesignated as heading 
9902.31.11 and, as so redesignated, is amended by striking out 
"piperadinyl" and inserting "piperidinyl". 
(14) Subchapter II of chapter 99 is amended by inserting in 
numerical sequence the following new heading: 
9902.70.20 Fiberglass tire cord 
fabric woven from 
electrically 
nonconductive 
continuous fiberglass 
filaments 9 microns in 
diameter or 10 
microns in diameter 
and impregnated with 
resorcinol 
formeddehyde latex 
treatment for 
adhesion to polymeric 
compounds (provided 
for in subheading 
7019.20.10, 7019.20.20, 
or 7019.20.50) 
Free 
No change No change 
by 
On or 
before 12/ 
31/92 
striking 
out 
(15) Heading 
9902.84.83 is 
amended 
"(A,C,E,IL)" and inserting "(A,C,CA,E,IL)". 
(16) Heading 9902.87.14 is amended by striking out "brakes," 
the first place it appears. 
(17) The article description for heading 9902.94.01 is amended 
by striking out "Furniture seats" and inserting "Furniture, 
seats,". 
(c) EFFECTIVE DATE.— 
(1) Subject to paragraphs (2) and (3), the amendments made by 
subsections (a) and (b) apply with respect to articles entered, or 
104 STAT. 1388-390 
PUBLIC LAW 101-508—NOV. 5, 1990 
19 use 1613b. 
19 use 1613b. 
19 use 1613b 
note. 
withdrawn from warehouse for consumption, on or after Octo-
ber 1,1990. 
(2) Any amendment made by subsection (a) or (b) to a provi-
sion of the Harmonized Tariff Schedule of the United States 
that was the subject of an amendment made by title III of the 
Customs and Trade Act of 1990 shall— 
(A) be treated as appl3dng to that provision as established 
or amended by such title III; and 
(B) if the amendment made by such title III has retro-
active application under section 4850)) of such Act, be 
treated as appljdng with respect to entries made after the 
relevant applicable date (as defined in paragraph (2)(A) of 
such section 48503)). 
(3) Notwithstanding section 514 of the Tariff Act of 1930 or 
any other provision of law, upon proper request filed with the 
appropriate customs officer before April 1, 1991, any entry— 
(A) which was made after December 31, 1988, and before 
October 1,1990; and 
(B) with respect to which there would have been a lesser 
duty if any amendment made by subsection 0)) (1) through 
(7) applied to such entry; 
shall be liquidated or reliquidated as though such amendment 
applied to such entry. 
SEC. 10012. TECHNICAL AMENDMENTS TO CERTAIN CUSTOMS LAWS. 
(a) CUSTOMS FORFEITURE FUND.— 
(1) Paragraph (5) of section 121 of the Customs and Trade Act 
of 1990 is repealed £ind subsection (f) of section 613A of the 
Tariff Act of 1930 shall be applied as if the amendment made by 
such paragraph (5) had not been enacted. 
(2) Paragraph (2) of such section 613A(f) of the Tariff Act of 
1930 (as in effect after the application of paragraph (1)) is 
amended to read as follows: 
"(2)(A) Subject to subparagraph (B), there are authorized to be 
appropriated from the Fund not to exceed $20,000,000 for each 
fiscal year to carry out the purposes set forth in subsections 
(aX3) and (b) for such fiscal year. 
"(B) Of the amount authorized to be appropriated under 
subparagraph (A), not to exceed the following, shall be available 
to carry out the purposes set forth in subsection (a)(3): 
"(i) $14,855,000 for fiscal year 1991. 
"(ii) $15,598,000 for fiscal year 1992.". 
(b) CERTAIN ENTRIES.—Section 484 of the Customs and Trade 
Act of 1990 (Public Law 101-382) is amended by striking out "1801-
000027" and inserting "1801-7-000027". 
(c) EFFECTIVE DATE.—The provisions of this section take effect 
August 21,1990. 
SEC. 10013. STAGED RATE REDUCTION FOR ETBE. 
(a) IN GENERAL.—Section 484G(b) of the Customs and Trade Act of 
1990 is amended to read as follows: 
"(b) STAGED RATE REDUCTION.—The President may proclaim such 
modifications to the rates of duty set forth in subheading 9901.00.52 
with respect to goods originating in the territory of Canada as will 
result in reduction of such rates in equal annual stages and will 
make such products free of duty effective January 1,1998.". 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-391 
(b) EFFECTIVE DATE.—The amendment made by this section shall 
take effect £is if included in section 484G of the Customs and Trade 
Act of 1990. 
Subtitle B—Patent and Trademark Office User 
Fees 
SEC. 10101. PATENT AND TRADEMARK OFFICE USER FEES. 
(a) SURCHARGES.—There shall be a surcharge, during fiscal years 35 USC 41 note. 
1991 through 1995, of 69 percent, rounded by standard arithmetic 
rules, on all fees authorized by subsections (a) and (b) of section 41 of 
title 35, United States Code. 
G)) USE OF SURCHARGES.—Notwithstanding section 3302 of title 31, 35 USC 41 note. 
United States Code, beginning in fiscal year 1991, all surcharges 
collected by the Patent and Trademark Office— 
(1) in fiscal year 1991— 
(A) shall be credited to a separate account established in 
the Treasury and ascribed to the Patent and Trademark 
Office activities in the Department of Commerce as offset-
ting receipts, and 
(B) $91,000,000 shall be available only to the Patent and 
Trademark Office, to the extent provided in appropriation 
Acts, and the additional surcharge receipts, totalling 
$18,807,000, shall be available only to the Patent and Trade-
mark Office without appropriation, for all authorized activi-
ties and operations of the office, including all direct and 
indirect costs of services provided by the office, 
(2) in fiscal years 1992 through 1995— 
(A) shall be credited to a separate account established in 
the Treasury £md ascribed to the Patent and Trademark 
Office activities in the Department of Commerce as offset-
ting receipts, and 
(B) shall be available only to the Patent and Trademark 
Office, to the extent provided in appropriation Acts, for all 
authorized activities and operations of the office, including 
all direct and indirect costs of services provided by the 
office, and 
(3) shall remain available until expended. 
(c) REVISIONS.—In fiscal years 1991 through 1995, surcharges 35 USC 41 note, 
established under subsection (a) may be revised periodically by the 
Commissioner of Patents and Trademarks, subject to the provisions 
of section 553 of title 5, United States Code, in order to ensure that 
the following amounts, but not more than the following amounts, of 
patent and trademark user fees are collected: 
(1) $109,807,000 in fiscal year 1991. 
(2) $95,000,000 in fiscal year 1992. 
(3) $99,000,000 in fiscal year 1993. 
(4) $103,000,000 in fiscal year 1994. 
(5) $107,000,000 in fiscal year 1995. 
(d) REPEAL.—Section 105(a) of Public Law 100-703 (102 Stat. 4675) 
is repealed. 
< 
(e) REPORT ON FEES.—The Commissioner of Patents and Trade-
marks shall study the structure of all fees collected by the Patent 
and Trademark Office and, not later than May 1, 1991, shall submit 
to the Congress a report on all fees to be collected by the office in 
104 STAT. 1388-392 
PUBLIC LAW 101-508—NOV. 5, 1990 
fiscal years 1992 through 1995. The report shall include a proposed 
schedule of fees that would distribute the surcharges provided by 
subsection (a) among all fees collected by the office, and rec-
ommendations for any statutory changes that may be necessary to 
implement the proposals contained in the report. 
35 use 1 note. 
SEC. 10102. FEDERAL AGENCY STATUS. 
For the purposes of Federal law, the Patent and Trademark Office 
shall be considered a Federal agency. In particular, the Patent and 
Trademark Office shall be subject to all Federal laws pertaining to 
the procurement of goods and services that would apply to a Federal 
agency using appropriated funds, including the Federal Property 
and Administrative Services Act of 1949 and the Office of Federal 
Procurement Policy Act. 
35 use 41 note. 
SEC. 10103. EFFECT ON OTHER LAW. 
Except for section 10101(d), nothing in this subtitle affects the 
provisions of Public Law 100-703 (102 Stat. 4674 and following). 
Subtitle C—Science and Technology User Fees 
SEC. 10201. NATIONAL OCEANIC AND ATMOSPHERIC ADMINISTRATION 
USER FEES. 
(a) AMENDMENTS.—Section 409 of the Act of November 17,1988 (15 
U.S.C. 1534) is amended— 
(1) in subsection (a), by striking "archived" and all that 
follows and inserting in lieu thereof "and information and 
products derived therefrom collected and/or archived by the 
National Oceanic and Atmospheric Administration."; 
(2) in subsection (bXD— 
(A) by inserting ", information, and products" imme-
diately after "data" the first place it appears; and 
(B) by striking "data is" and inserting in lieu thereof 
"data, information, and products are"; 
(3) in subsection (bX2)— 
(A) by inserting ", information, or products" immediately 
after "data" the first place it appears; and 
(B) by striking "data exchange basis" and inserting in 
lieu thereof "basis of exchanging such data, information, 
and products"; 
(4) in subsection (b), by inserting at the end the following new 
paragraph: 
"(3) The Secretary shall waive the assessment of fees authorized 
by subsection (a) as necessary to continue to provide weather 
warnings, watches, and similar products and services essential to 
the mission of the National Oceanic Atmospheric Administration."; 
(5) by amending paragraph (1) of subsection (d) to read as 
follows: 
"(1) The initial schedule of fees established by the National 
Environmental Satellite, Data, and Information Service for 
archived data shall remain in effect for the 3-year period begin-
ning on the date that the fees under that schedule take effect."; 
(6) in subsections (d), (e), and (f)(1), by inserting "by the 
National Environmental Satellite, Data, and Information Serv-
ice for archived data" immediately after "under this section" 
each place it appears; and 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-393 
(7) in subsection (g), by striking the period at the end and 
inserting in lieu thereof the following: ", including the author-
ity of the Secretary pursuant to section 1307 of title 44, United 
States Code. Nothing in this section shall be construed to 
authorize the Secretary to assess fees for nautical and aero-
nautical products of the National Oceanic and Atmospheric 
Administration in addition to those fees authorized under sec-
tion 1307 of title 44, United States Code.". 
(b) EFFECT OF AMENDMENTS.—(1) The increase in revenues to the 15 use 1534 
United States attributable to the amendments made by subsection ^°^-
f&i Sild.ll Tioi^ GXCGGQ^^ 
(A) $2,000,000 for each of the fiscal years 1991,1992, and 1993; 
and 
(B) $3,000,000 for each of the fiscal years 1994 and 1995. 
(2) Increases in revenues to the United States described in para-
graph (1) shall be achieved by the Secretary of Commerce through 
fair and equitable incresises in fees for services offered by the 
various programs of the National Oceanic and Atmospheric 
Administration. 
(3) The Secretary of Commerce shall notify the Congress of any 
changes in fee schedules under section 409 of the Act of Novem-
ber 17, 1988 (15 U.S.C. 1534), before such changes take effect. 
SEC. 10202. RADON MEASUREMENT PROFICIENCY. 
Section 305(e) of the Toxic Substances Control Act is amended by 15 USC 2665. 
adding at the end the following new paragraphs: 
"(5) RESEARCH.—The Administrator shall, in conjunction with 
other Federal agencies, conduct research to develop, test, and 
evaluate radon and radon progeny measurement methods and 
protocols. The purpose of such research shall be to assess the 
ability of those method^ and protocols to accurately assess 
exposure to radon progeny. Such research shsill include— 
"(A) conducting comparisons among radon and radon 
progeny measurement techniques; 
"(B) developing measurement protocols for different 
building types under varying operating conditions; and 
"(C) comparing the exposures estimated by stationary 
monitors and protocols to those measured by personal mon-
itors, and issue guidance documents that— 
"(i) provide information on the results of research 
conducted under this paragraph; and 
"(ii) describe model State radon measurement and 
mitigation programs. 
"(6) MANDATORY PROFICIENCY TESTING PROGRAM STUDY.—(A) 
The Administrator shall conduct a study to determine the 
feasibility of establishing a mandatory proficiency testing pro-
gram that would require that— 
"(i) any product offered for sale, or device used in connec-
tion with a service offered to the public, for the measure-
ment of radon meets minimum performance criteria; and 
"(ii) any operator of a device, or person employing a 
technique, used in connection with a service offered to the 
public for the measurement of radon meets a minimum 
level of proficiency. 
"(B) The study shall also address procedures for— 
39-194 O - 91 - 26 : QL 3 Part 2 
104 STAT. 1388-394 
PUBLIC LAW 101-508—NOV. 5, 1990 
"(i) ordering the recall of any product sold for the 
measurement of radon which does not meet minimum 
performance criteria; 
"(ii) ordering the discontinusmce of any service offered to 
the public for the measurement of radon which does not 
meet minimum performance criteria; and 
"(iii) establishing adequate quality assurance require-
ments for each company offering radon measurement serv-
ices to the public to follow. 
The study shall identify enforcement mechanisms necessary to 
the success of the program. The Administrator shall report the 
findings of the study with recommendations to Congress by 
March 1,1991. 
"(7) USER FEE.—In addition to any charge imposed pursuant 
to paragraph (2), the Administrator shall collect user fees from 
persons seeking certification under the radon proficiency program 
in an amount equal to $1,500,000 to cover the Environmental 
Protection Agency's cost of conducting research pursuant 
to paragraph (5) for each of the fiscal years 1991, 1992, 1993, 
1994, and 1995. Such funds shall be deposited in the account 
established pursuant to paragraph (3).". 
SEC. 10203. DEPARTMENT OF ENERGY USER FEE STUDY. 
The Secretary of Energy shall undertake a study of the Depart-
ment of Energy's user fee assessment and collection practices, and 
shall make recommendations on ways to— 
(1) reasonably increase revenues to the United States through 
user fees, consistent with the mission of the Department; and 
(2) improve user fee collection practices. 
The Secretary of Energy shall submit a report containing such 
findings and recommendations to the Congress within 6 months 
after the date of enactment of this Act. There are authorized to be 
appropriated to the Secretary of Energy for carr3dng out this section 
not to exceed $500,000 for fiscal year 1991, from funds otherwise 
available to the Department of Energy. 
SEC. 10204. DEPARTMENT OF TRANSPORTATION COMMERCIAL SPACE 
LAUNCH STUDY. 
(a) The Secretary of Tremsportation shall report on actions by the 
Department of Transportation for the assessment and collection of 
licensing fees under the Commercial Space Launch Act (49 U.S.C. 
App. 2601 et seq.). 
(b) The Secretary shall submit a report containing such findings to 
the Congress within 6 months after the date of enactment of this 
Act. 
SEC. 10205. NATIONAL INSTITUTE OF STANDARDS AND TECHNOLOGY 
COST RECOVERY STUDY. 
(a) The Secretary of Commerce shall undertake a study of current 
practices at, and any suggested improvements consistent with the 
mission of, the National Institute of Standards and Technology for 
recovering the costs of services and materials provided to private 
and nonprofit organizations, including services provided on a propri-
etary basis to users of Institute facilities. 
Qy) The Secretary shall submit a report containing such findings to 
the Congress within 6 months after the date of enactment of this 
Act. 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-395 
Subtitle D—Travel and Tourism Facilitation 
Fee 
SEC. 10301. UNITED STATES TRAVEL AND TOURISM FACILITATION FEE. 
(a) UNITED STATES TRAVEL AND TOURISM ADMINISTRATION FACIU-
TATiON FEE.—The International Travel Act of 1961 (22 U.S.C. 2121 et 
seq.) is amended by adding at the end the following: 
"SEC. 806. (a) To the extent not inconsistent with treaties or 22USC2128. 
international agreements entered into by the United States, the 
Secretary, on a calendar quarterly basis beginning January 1, 1991, 
shall charge and collect from each commercial airline and passenger 
cruise ship line transporting passengers to the United States, a 
United States Travel and Tourism Administration Facilitation Fee, 
in an amount determined under subsection (b). 
"(bXl) During the period from January 1, 1991, through 
December 31, 1991, the Secretary shall charge each commercial 
airline and passenger cruise ship line an amount equal to one dollar 
multiplied by the number of aliens described in section 101(a)(15)(B) 
of the Immigration and Nationality Act (8 U.S.C. 1101(aX15)(B)) 
arriving at any port within the United States aboard a commercial 
aircraft or cruise ship of such airline or passenger cruise ship line 
during that calendar quarter. 
"(2) Commencing in 1991, the Secretary shall each year determine 
and publish the amount of the fee described in subsection (a) for the 
12-month period commencing on January 1 of the succeeding CEQ-
endar year, as follows: 
"(A) The Secretary (in consultation with the Attorney Gen-
eral and the Secretary of State) shall estimate the number of 
aliens described in section 101(aX15XB) of the Immigration and 
Nationality Act (8 U.S.C. 1101(aX15XB)) expected to enter the 
United States during such succeeding calendar year, based upon 
the number of such aliens who entered the United States during 
the previous calendar year (as reported or estimated by the 
Attorney General) and such other available information as the 
Secretary deems reliable. 
"(B) The Secretary shall divide the amount appropriated to 
the United States Travel and Tourism Administration for the 
fiscal year during which such determination is made by the 
number of aliens described in subparagraph (A) expected by the 
Secretary to enter the United States during the calendar year 
described in such subparagraph, as estimated by the Secretary 
under such subparagraph, and shall round the result up to the 
nearest quarter-dollar. 
"(C) The Secretary shall publish in the Federal Register the 
estimate required by subparagraph (A), together with a descrip-
tion of the information supporting such estimate, and the 
amount of the fee determined under subparagraph (B) which 
shall be applicable during the 12-month period commencing on 
January 1 of the succeeding calendar year. 
"(D) For each calendar quarter beginning after December 31, 
1991, the Secretary shall charge each commercial airline and 
passenger cruise ship line an amount equal to the fee amount 
determined under subparagraph (B) and applicable under 
subparagraph (C) multiplied by the number of aliens described 
in section 101(aX15XB) of the Immigration and Nationality Act 
104 STAT. 1388-396 
PUBLIC LAW 101-508—NOV. 5, 1990 
(8 U.S.C. 1101(a)(15)(B)) arriving at any port within the United 
States aboard a commercial aircraft or cruise ship of such 
airline or passenger cruise ship line during that calendar 
quarter. 
"(3) Neither the estimate of the Secretary under paragraph (2XA) 
nor the amount determined by the Secretary under paragraph (2)(B) 
shall be subject to judicial review. 
"(c) Each commercial airline and passenger cruise ship line shall 
remit the fee charged by the Secretary under subsection (b), in 
United States dollars, no later than 31 days after the close of the 
calendar quarter of the arrival of the aliens on which the calcula-
tion of the fee is based. 
"(d) The Secretary shall deposit the fees received pursuant to 
subsection (c) in the general fund of the Treasury as offsetting 
receipts and ascribed to the travel and tourism activities of the 
Secretary. 
"(e) Beginning on October 1, 1992, the aggregate amounts col-
lected for the fee charged under this section shall at least equal the 
appropriations made for the travel and tourism activities of the 
Secretary under this Act, but at no time shall the aggregate of 
amounts collected for any fiscal year under this section exceed 105 
percent of the aggregate of appropriations made for such fiscal year 
for activities to be funded by such fees. 
"(f) The Secretary may prescribe such rules and regulations as 
may be necessary to carry out the provisions of this section.". 
(b) CIVIL PENALTIES AND ENFORCEMENT.—The International 
Travel Act of 1961, as amended by subsection (a), is amended by 
adding at the end the following: 
22 use 2129. 
"SEC. 307. (a) Any commercial airline or commercial cruise ship 
line which is found by the Secretary or the Secretary's designee, 
after notice and an opportunity for a hearing, to have failed to pay 
to the Secretary, by the due date, the fee charged by the Secretary 
under section 3()6(a), may be ordered by the Secretary or the Sec-
retary's designee to pay any fee amount outstanding plus interest on 
£iny late payment and, in addition, to pay a civil penalty not to 
exceed $5,000 for each day payment to the Secretary is not made or 
was made late. The amount of such civil penalty shall be assessed by 
the Secretary or the Secretary's designee by written notice. In 
determining the amount of such penalty, the Secretary or the 
Secretary's designee shall take into account the nature, cir-
cumstances, extent, and gravity of the violation, and, with respect to 
the violator, the degree of culpability, and history of prior offenses, 
ability to pay, and such other matters as justice may require. Each 
day a pajonent to the Secretary required by this Act is late shall 
constitute a separate violation of this Act. 
"(b) If any commercial airline or cruise ship line fails to pay as 
ordered by the Secretary or the Secretary's designee, the Attorney 
General may, upon request of the Secretary, bring a civil action in 
any appropriate United States district court for the recovery of the 
amount ordered to be paid. 
"(c) Before requesting the Attorney General to bring a civil action, 
the Secretary may compromise, modify, or remit, with or without 
conditions, any civil penalty which is subject to imposition or which 
has been imposed under subsection (a). 
"(d) For the purpose of conducting any hearing under subsection 
(a), the Secretsuy or the Secretary's designee may issue subpoeneis 
for the attendance and testimony of witnesses and the production of 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-397 
relevant papers, books, and documents, and may administer oaths. 
Witnesses summoned shall be paid the same fees and mileage that 
are paid to witnesses in the courts of the United States. In case of 
contempt or refusal to obey a subpoena served upon any person 
pursuant to this subsection, the United States district court for any 
district in which such person is found, resides, or transacts business, 
upon application by the United States and after notice to such 
person, shall have jurisdiction to issue an order requiring such 
person to appear and give testimony before the Secretary or the 
Secretary's designee or to appear and produce papers, books, and 
documents before the Secretary or the Secretary's designee, or both, 
and any failure to obey such order of the court may be punished by 
such court as a contempt thereof.". 
Subtitle E—Coast Guard User Fees 
SEC. 10401. ESTABLISHMENT AND COLLECTION OF FEES FOR COAST 
GUARD SERVICES. 
(a) IN GENERAL.—Section 2110 of title 46, United States Code, is 
amended to read as follows: 
"§2110. Fees 
"(aXD Except as otherwise provided in this title, the Secretary 
shall establish a fee or charge for a service or thing of value 
provided by the Secretary under this subtitle, in accordance with 
section 9701 of title 31. 
"(2) The Secretary may not establish a fee or charge under 
paragraph (1) for inspection or examination of a non-self-propelled 
tank vessel under part B of this title that is more than $500 
annually. 
"(3) The Secretary may, by regulation, adjust a fee or charge 
collected under this subsection to accommodate changes in the cost 
of providing a specific service or thing of value, but the adjusted fee 
or charge may not exceed the total cost of providing the service or 
thing of value for which the fee or charge is collected, including the 
cost of collecting the fee or charge. 
"(4) The Secretary may not collect a fee or charge under this 
subsection that is in conflict with the international obligations of 
the United States. 
"(5) The Secretary may not collect a fee or charge under this 
subsection for any search or rescue service. 
"(bXD The Secretary shall establish a fee or charge as provided in 
paragraph (2) of this subsection, and collect it annually in fiscal 
years 1991,1992,1993,1994, and 1995, from the owner or operator of 
each recreational vessel that is greater than 16 feet in length. 
"(2) The fee or charge established under paragraph (1) of this 
subsection is as follows: 
"(A) for vessels greater than 16 feet in length but less than 20 
feet, not more than $25; 
"(B) for vessels of at least 20 feet in length but less than 27 
feet, not more than $35; 
"(C) for vessels of at least 27 feet in length but less than 40 
feet, not more than $50; and 
"(D) for vessels of at least 40 feet in length, not more than 
$100. 
104 STAT. 1388-398 
PUBLIC LAW 101-508—NOV. 5, 1990 
"(3) The fee or charge established under this subsection applies 
only to vessels operated on the navigable waters of the United 
States where the Coast Guard has a presence. 
"(4) The fee or charge established under this subsection does not 
apply to a— 
"(A) public vessel; or 
"(B) vessel deemed to be a public vessel under section 827 of 
title 14. 
"(c) In addition to the collection of fees and charges established 
under subsections (a) and (b), the Secretary may recover appropriate 
collection and enforcement costs associated with delinquent pay-
ments of the fees and charges. 
"(d)(1) The Secretary may employ any Federal, State, or local 
agency or instrumentality, or any private enterprise or business, to 
collect a fee or charge established under this section. A private 
enterprise or business selected by the Secretary to collect fees or 
charges— 
"(A) shall be subject to reasonable terms and conditions 
agreed to by the Secretary and the enterprise or business; 
"(B) shall provide appropriate accounting to the Secretary; 
and 
"(C) may not institute litigation as part of that collection. 
"(2) A Federal agency shall account for the agency's costs of 
collecting the fee or charge under this subsection as a reimbursable 
expense, and the costs shall be credited to the account from which 
expended. 
'(e) A person that violates this section by failing to pay a fee or 
charge established under this section is liable to the United States 
Government for a civil penalty of not more than $5,000 for each 
violation. 
"(f) When requested by the Secretary, the Secretary of the Treas-
ury shall deny the clearance required by section 4197 of the Revised 
Statutes of the United States (46 App. U.S.C. 91) to a vessel for 
which a fee or charge established under this section has not been 
paid until the fee or charge is paid or until a bond is posted for the 
pavment. 
'(g) The Secretary may exempt a person from pajdng a fee or 
charge established under this section if the Secretary determines 
that it is in the public interest to do so. 
"(h) Fees and charges collected by the Secretary under this section 
shall be deposited in the general fund of the Treasury as offsetting 
receipts of the department in which the Coast Guard is operating 
and ascribed to Coast Guard activities. 
"(i) The collection of a fee or charge under this section does not 
alter or expand the functions, powers, responsibilities, or liability of 
the United States under any law for the performance of services or 
the provision of a thing of value for which a fee or charge is collected 
under this section.". 
(b) CLERICAL AMENDMENT.—The analysis of chapter 21 of title 46, 
United States Code, is amended by striking the item relating to 
section 2110 and inserting the following: 
"2110. Fees.". 
SEC. 10402. TONNAGE DUTIES. 
(a) VESSELS ENTERING FROM FOREIGN PORT OR PLACE.—Section 36 
of the Act entitled "An Act to provide revenue, equalize duties and 
encourage the industries of the United States, and for other pur-
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-399 
poses", approved August 5, lOOQ,"^* (36 Stat. Ill; 46 App. U.S.C. 121) 
is amended in the second paragraph— 
(1) by striking "two cents per ton, not to exceed in the 
aggregate ten cents per ton in any one year," and inserting "9 
cents per ton, not to exceed in the aggregate 45 cents per ton in 
any one year, for fiscal years 1991, 1992, 1993, 1994, and 1995, 
and 2 cents per ton, not to exceed in the aggregate 10 cents per 
ton in any one year, for each fiscal year thereafter"; 
(2) by inserting after "Newfoundland," the following: "and on 
all vessels (except vessels of the United States, recreational 
vessels, and barges, as those terms are defined in section 2101 of 
title 46, United States Code) that depart a United States port or 
place and return to the same port or place without being 
entered in the United States from another port or place,"; and 
(3) by striking "six cents per ton, not to exceed thirty cents 
per ton per annum," and inserting "27 cents per ton, not to 
exceed $1.35 per ton per annum, for fiscal years 1991, 1992, 
1993, 1994, and 1995, and 6 cents per ton, not to exceed 30 cents 
per ton per annum, for each fiscal year thereafter". 
(b) CONFORMING AMENDMENT.—The Act entitled "An Act concern-
ing tonnage duties on vessels entering otherwise than by sea", 
approved March 8, 1910 (36 Stat. 234; 46 App. U.S.C. 132), is 
amended by striking "two cents per ton, not to exceed in the 
aggregate ten cents per ton in any one year" and inserting "9 cents 
per ton, not to exceed in the aggregate 45 cents per ton in any one 
year, for fiscal years 1991,1992,1993,1994, and 1995, and 2 cents per 
ton, not to exceed in the aggregate 10 cents per ton in any one year, 
for each fiscal year thereafter". 
(c) OFFSETTING RECEIPTS.—Increased tonnage charges collected as 46 use app. 121 
a result of the amendments made by subsection (a) shall be depos- °°*®-
ited in the general fund of the Treasury as offsetting receipts of the 
department in which the Coast Guard is operating and ascribed to 
Coast Guard activities. 
Subtitle F—Railroad User Fees 
SEC. 10501. AMENDMENTS TO FEDERAL RAILROAD SAFETY ACT OF 1970. 
(a) USER FEES.—The Federal Railroad Safety Act of 1970 (45 U.S.C. 
431 et seq.) is amended by adding at the end the following new 
section: 
"SEC. 216. USER FEES. 
45 USC 447. 
"(aXl) The Secretary shall establish by regulation, after notice 
and comment, a schedule of fees to be assessed equitably to rail-
roads, in reasonable relationship to an appropriate combination of 
criteria such as revenue ton-miles, track miles, passenger miles, or 
other relevant factors, but shall not be based on the proportion of 
industry revenues attributable to a railroad or class of railroads. 
"(2) The Secretary shall establish procedures for the collection of 
such fees. The Secretary may use the services of any Federal, State, • 
or local agency or instrumentality to collect such fees, and may 
reimburse such agency or instrumentality a reasonable amount for 
such services. 
"(3) Fees established under this section shall be assessed to rail-
roads subject to this Act and shall cover the costs of administering 
this Act, other than activities described in section 202(aX2). 
T* So in original. Probably should be "1909 (36". 
104 STAT. 1388-400 
PUBLIC LAW 101-508—NOV. 5, 1990 
"(b) The Secretary shall assess and collect fees described in subsec-
tion (a) with respect to each fiscal year before the end of such fiscal 
year. 
"(c) All fees collected under subsection (b) shall be deposited into 
the general fund of the United States Treasury as offsetting receipts 
and shall be used, to the extent provided in advance in appropria-
tions Acts, only to carry out activities under this Act. 
"(d) Fees established under subsection (a) shall be assessed in an 
amount sufficient to cover activities described in subsection (c) 
beginning on March 1, 1991, but at no time shall the aggregate oif 
fees received for any fiscal year under this section exceed 105 
percent of the aggregate of appropriations made for such fiscal year 
for activities to be funded by such fees. 
"(e)(1) Within 90 days after the end of each fiscal year in which 
fees are collected pursuant to this section, the Secretary shall report 
to the Congress— 
"(A) the amount of fees collected during that fiscal year; 
"(B) the impact of such fee collections on the financial health 
of the railroad industry and its competitive position relative to 
each competing mode of transportation; and 
"(C) the total cost of Federal safety activities for each such 
other mode of transportation, including the portion of that total 
cost, if any, defrayed by Federal user fees. 
"(2) With respect to any fiscal year for which the Secretary's 
report submitted under paragraph (1) finds— 
"(A) any impact of fees collected under this section either on 
the financial health of the railroad industry, or on its competi-
tive position relative to competing modes of transportation; or 
"(B) any significant difference in the burden of Federal user 
fees borne by the railroad industry and those applicable to 
competing modes of transportation, 
the Secretary shall, within 90 days after submission of such report, 
prepare and submit to the Congress specific recommendations for 
legislation to correct £iny such impact or difference. 
"(f) This section shall expire on September 30,1995.". 
(b) AUTHORIZATION OF APPROPRIATIONS.—Section 214(a) of the Fed-
eral Railroad Safety Act of 1970 (45 U.S.C. 444(a)) is amended to read 
as follows: 
"(a) There are authorized to be appropriated to carry out this Act 
not to exceed $46,884,000 for fiscal year 1991.". 
SSSation 
TITLE XI—REVENUE PROVISIONS 
Act of 1990. 
SEC. 11001. SHORT TITLE; ETC. 
26 use 1 note. 
(a) SHORT TITLE.—This title may be cited as the "Revenue Rec-
onciliation Act of 1990". 
(b) AMENDMENT OF 1986 CODE.—Except as otherwise expressly 
provided, whenever in this title an amendment or repeal is ex-
pressed in terms of an amendment to, or repeal of, a section or other 
provision, the reference shall be considered to be made to a section 
or other provision of the Internal Revenue Code of 1986. 
26 use 15 note. 
(c) SECTION 15 NoT To AppLY.—Except as otherwise expressly 
provided in this title, no amendment made by this title shall be 
treated as a change in a rate of tax for purposes of section 15 of the 
Internal Revenue Code of 1986. 
(d) TABLE OF CONTENTS.— 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-401 
TITLE XI—REVENUE PROVISIONS 
Sec. 11001. Short title; etc. 
Subtitle A—Individual Income Tax Provisions 
PART I—PROVISIONS AFFECTING HIGH-INCOME INDIVIDUALS 
Sec. 11101. Elimination of provision reducing marginal tax rate for high-income 
taxpayers. 
Sec. 11102. Increase in rate of individual alternative minimum tax. 
Sec. 11103. Overall limitation on itemized deductions. 
Sec. 11104. Phaseout of personal exemptions. 
PART II—MODIFICATIONS OF EARNED INCOME CREDIT 
Sec. m i l . Modifications of earned income tax credit. 
Sec. 11112. Requirement of identifying number for certain dependents. 
Sec. 11113. Study of advance pajrmente. 
Sec. 11114. Program to increase public awareness. 
Sec. 11115. Exclusion from income and resources of earned income tax credit under 
titles rV, XVI, and XIX of the Social Security Act. 
Sec. 11116. C!oordination with refund provision. 
Subtitle B—Excise Taxes 
Part I—Taxes Related to Health and the Environment 
Sec. 11201. Increase in excise taxes on distilled spirits, wine, and beer. 
Sec. 11202. Increase in excise taxes on tobacco products. 
Sec. 11203. Additional chemicals subject to tfix on ozone-depleting chemicals. 
Part II—User-Related Taxes 
Sec. 11211. Increase and extension of highway-related taxes and trust fund. 
Sec. 11212. Improvements in administration of gasoline excise tax. 
Sec. 11213. Increase and extension of aviation-related taxes and trust fund; repeal 
of reduction in rates. 
Sec. 11214. Increase in harbor maintenance tax. 
Sec. 11215. Extension of Leaking Underground Storage Tank Trust Fund taxes. 
Sec. 11216. Amendments to gas guzzler tax. 
Sec. 11217. Telephone excise tax modified and made permanent. 
Sec. 11218. Floor stocks tax treatment of articles in foreign trade zones. 
Part III—Taxes on Luxury Items 
Sec. 11221. Taxes on luxury items. 
Part rV—4-Year Extension of Hazardous Substance Superfund 
Sec. 11231. 4-year extension of Hazardous Substance Superfund. 
Subtitle C—Other Revenue Increases 
' 
Part I—Insurance Provisions 
SUBPART A—PROVISIONS RELATED TO POUCY ACQuismoN COSTS 
Sec. 11301. Capitalization of policy acquisition expenses. 
Sec. 11302. Treatment of certain nonlife reserves of life insurance companies. 
Sec. 11303. Treatment of life insurcuice reserves of insurance companies which are 
not life insurance companies. 
SUBPART 
B—TREATMENT 
OF 
SALVAGE 
RECOVERABLE 
Sec. 11305. Treatment of salvage recoverable. 
SUBPART C—WAIVER OF ESTIMATED TAX PENALTIES 
Sec. 11307. Waiver of estimated tax penalties. 
Part II—Compliance Provisions 
Sec. 11311. Suspension of statute of limitations during proceedings to enforce cer-
tain summonses. 
Sec. 11312. Accuracy-related penalty to apply to section 482 adjustments. 
Sec. 11313. Treatment of persons providing services. 
Sec. 11314. Application of amendments made by section 7403 of Revenue Reconcili-
ation Act of 1989 to taxable years beginning on or before July 10, 
1989. 
Sec. 11315. Other reporting requirements. 
104 STAT. 1388-402 
PUBLIC LAW 101-508—NOV. 5, 1990 
Sec. 11316. Study of section 482. 
Sec. 11317. 10-year period of limitation on collection after assessment. 
Sec. 11318. Return requirement where cash received in trade or business. 
Sec. 11319. 5-year extension of Internal Revenue Service user fees. 
Part III—Corporate Provisions 
Sec. 11321. Recognition of gain by distributing corporation in certain section 355 
transactions. 
Sec. 11322. Modifications to regulations issued under section 305(c). 
Sec. 11323. Modifications to section 1060. 
Sec. 11324. Modification to corporation equity reduction limitations on net operat-
ing loss carrybacks. 
Sec. 11325. Issuance of debt or stock in satisfaction of indebtedness. 
Part IV—Employment Tax Provisions 
Sec. 11331. Increase in dollar limitation on amount of wages subject to hospital in-
surance tax. 
Sec. 11332. Coverage of certain State and local employees under social security. 
Sec. 11333. Extension of FUTA surtax. 
Sec. 11334. Deposits of payroll taxes. 
Part V—Miscellaneous Provisions 
Sec. 11341. Increase in rate of interest payable on large corporate underpajmients. 
Sec. 11342. Denial of deduction for unnecessary cosmetic surgery. 
Sec. 11343. Special rules where grantor of trust is a foreign person. 
Sec. 11344. Treatment of contributions of appreciated property under minimum tax. 
Subtitle D—1-Year Extension of Certain Expiring Tax Provisions 
Sec. 11401. Allocation of research and experimental expenditures. 
Sec. 11402. Research credit. 
Sec. 11403. Employer-provided educational assistance. 
Sec. 11404. Group legal services plans. 
Sec. 11405. Targeted jobs credit. 
Sec. 11406. Energy investment credit for solar and geothermal property. 
Sec. 11407. Low-income housing credit. 
Sec. 11408. Qualified mortgage bonds. 
Sec. 11409. Qualified small issue bonds. 
Sec. 11410. Health insurance costs of self-employed individuals. 
Sec. 11411. Expenses for drugs for rare conditions. 
Subtitle E—Energy Incentives 
PART I—MODIFICATIONS OF EXISTING CREDITS 
Sec. 11501. Extension and modification of credit for producing fuel from nonconven-
tional source. 
Sec. 11502. Credit for small producers of ethanol; modification of alcohol fuels 
credit. 
PART II—ENHANCED OIL RECOVERY CREDFT 
Sec. 11511. Tax credit for enhanced oil recovery. 
PART III—MODIFICATIONS OF PERCENTAGE DEPLETION 
Sec. 11521. Percentage depletion permitted after transfer of proven property. 
Sec. 11522. Net income limitation on percentsige depletion increased from 50 per-
cent to 100 percent of property net income for oil and gas properties. 
Sec. 11523. Increase in percentage depletion allowance for marginal production. 
PART IV—MINIMUM TAX TREATMENT 
Sec. 11531. Special energy deduction for minimum ttix. 
Subtitle F—Small Business Incentives 
PART I—TREATMENT OF ESTATE TAX FREEZES 
Sec. 11601. Repeal of section 2036(c). 
Sec. 11602. Special valuation rules. 
PART II—DISABLED ACCESS CREDIT 
Sec. 11611. Credit for cost of providing access for disabled individuals. 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-403 
PART III—OTHER PROVISIONS 
Sec. 11621. Review of impact of regulations on small business. 
Sec. 11622. Graphic presentation of major categories of Federal outlays and income. 
Subtitle G—Tax Technical Corrections 
Sec. 11700. Coordination with other subtitles. 
Sec. 11701. Amendments related to Revenue Reconciliation Act of 1989. 
Sec. 11702. Amendments related to Technical and Miscellaneous Revenue Act of 
1988. 
Sec. 11703. Miscellaneous amendments. 
Sec. 11704. Miscellaneous clerical changes. 
Subtitle H—Repeal of Expired or Obsolete Provisions 
PART I—REPEAL OF EXPIRED OR OBSOLETE PROVISIONS 
SUBPART A—GENERAL PROVISIONS 
Sec. 11801. Repeal of expired or obsolete provisions. 
Sec. 11802. Miscellaneous provisions. 
SUBPART B—MODIFICATIONS TO SPECIFIC PROVISIONS 
Sec. 11811. Elimination of expired provisions in section 172. 
Sec. 11812. Elimination of ol»olete provisions in section 167. 
Sec. 11813. Elimination of expired or obsolete investment tax credit provisions. 
Sec. 11814. Elimination of obsolete provisions in section 243(b). 
Sec. 11815. Elimination of expired provisions in percentage depletion. 
Sec. 11816. Elimination of expired provisions in section 29. 
SUBPART C—EFFECTIVE DATE 
Sec. 11821. Effective date. 
PART II—PROVISIONS RELATING TO STUDIES 
Sec. 11831. Extension of date for filing reports on certain studies. 
Sec. 11832. Repeal of certain studies. 
Sec. 11833. Modifications to study of Americans working abroad. 
Sec. 11834. Increase in threshold for joint committee reports on refunds and credits. 
SUBTITLE I—PUBUC DEBT LIMIT 
Sec. 11901. Increase in public debt limit. 
Subtitle A—Individual Income Tax Provisions 
PART I—PROVISIONS AFFECTING HIGH-INCOME 
INDIVIDUALS 
SEC. 11101. ELIMINATION OF PROVISION REDUCING MARGINAL TAX RATE 
FOR HIGH-INCOME TAXPAYERS. 
(a) GENERAL RULE.—Section 1 (relating to tax imposed) is 
amended by striking subsections (a) through (e) and inserting the 
following: 
"(a) MARRIED INDIVIDUALS FIUNG JOINT RETURNS AND SURVIVING 
SPOUSES.—There is hereby imposed on the taxable income of— 
"(1) every married individual (as defined in section 7703) who 
makes a single return jointly with his spouse under section 
6013, and 
"(2) every surviving spouse (as defined in section 2(a)), 
a tax determined in accordance with the following table: 
"If taxable income is: 
The tax is: 
Not over $32,450 
15% of taxable income. 
Over $32,450 but not over $78,400 
$4,867.50, plus 28% of the 
^ 
excess over $32,450. 
Over $78,400 
$17,733.50, plus 31% of the excess over 
$78,400. 
104 STAT. 1388-404 
PUBLIC LAW 101-508—NOV. 5, 1990 
"(b) HEADS OF HOUSEHOLDS.—There is hereby imposed on the 
taxable income of every head of a household (as defined in section 
2(b)) a tax determined in accordance with the following table: 
"If taxable income is: 
The tax is: 
Not over $26,050 
15% of taxable income. 
Over $26,050 but not over $67,200 
$3,907.50, plus 28% of the excess over 
$26,500. 
Over $67,200 
$15,429.50, plus 31% of the excess over 
$67,200. 
"(c) UNMARRIED INDIVIDUALS (OTHER THAN SURVIVING SPOUSES 
AND HEADS OF HOUSEHOLDS).—There is hereby imposed on the 
taxable income of every individual (other than a surviving spouse as 
defined in section 2(a) or the head of a household as defined in 
section 2(b)) who is not a married individual (as defined in section 
7703) a tax determined in accordance with the following table: 
"If taxable income is: 
The tax is: 
Not over $19,450 
15% of taxable income. 
Over $19,450 but not over $47,050 
$2,917.50, plus 28% of the excess over 
$19,450. 
Over $47,050 
$10,645.50, plus 31% of the excess over 
$47,050. 
"(d) MARRIED INDIVIDUALS FILING SEPARATE RETURNS.—There is 
hereby imposed on the taxable income of every married individual 
(as defined in section 7703) who does not make a single return 
jointly with his spouse under section 6013, a tax determined in 
accordance with the following table: 
"If taxable income is: 
The tax is: 
Not over $16,225 
15% of taxable income. 
Over $16,225 but not over $39,200 
$2,433.75, plus 28% of the excess over 
$16,225. 
Over $39,200 
$8,866.75, plus 31% of the excess over 
$39,200. 
"(e) ESTATES AND TRUSTS.—There is hereby imposed on the taxable 
income of— 
"(1) every estate, and 
"(2) every trust, 
taxable under this subsection a tax determined in accordance with 
the following table: 
"If taxable income is: 
The tax is: 
Not over $3,300 
15% of taxable income. 
Over $3,300 but not over $9,900 
$495, plus 28% of the excess over $3,300. 
Over $9,900 
$2,343, plus 31% of the excess over 
$9,900." 
(b) REPEAL OF PHASEOUT.— 
(1) IN GENERAL.—Section 1 is amended by striking subsection 
(g) (relating to phaseout of 15-percent rate and personal exemp-
tions). 
(2) CONFORMING AMENDMENT.—Subparagraph (A) of section 
l(fX6) (relating to adjustments for inflation) is amended by 
striking "subsection (gX4),". 
(c) 28 PERCENT MAXIMUM CAPITAL GAINS RATE.—Subsection (j) of 
section 1 (relating to maximum capital gains rate) is amended to 
read as follows: 
"(j) MAXIMUM CAPITAL GAINS RATE.—If a taxpayer has a net 
capital gain for any taxable year, then the tax imposed by this 
section shall not exceed the sum of— 
"(1) a tax computed at the rates and in the same manner as if 
this subsection had not been enacted on the greater of— 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-405 
"(A) taxable income reduced by the amount of the net 
capital gain, or 
(B) the amount of taxable income taxed at a rate below 
28 percent, plus 
"(2) a tax of 28 percent of the amount of taxable income in 
excess of the amount determined under paragraph (1)." 
(d) TECHNICAL AMENDMENTS.— 
(IXA) Subsection (f) of section 1 is amended— 
(i) by striking "1988" in paragraph (1) and inserting 
"1990", and 
(ii) by striking "1987" in paragraph (3XB) and inserting 
"1989". 
(B) Subparagraph (B) of section 32(iXl) is amended by striking 
"1987" and inserting "1989". 
(C) Subparagraph (C) of section 41(eX5) is amended— 
(i) by inserting ", by substituting 'calendar year 1987' for 
'calendar year 1989' in subparagraph (B) thereof before 
the period at the end of clause (i), 
(ii) by striking "1987" in clause (ii) and inserting "1989", 
and 
(iii) by adding at the end of clause (ii) the following new 
sentence: "Such substitution shall be in lieu of the substi-
tution under clause (i).". 
(D) Subparagraph (B) of section 63(cX4) is gimended by insert-
ing ", by substituting 'calendar year 1987' for 'calendar year 
1989' in subparagraph (B) thereof*^' before the period at the end. 
(E) Clause (ii) of section 13503X2XB) is amended by strik-
ing ", determined by substituting 'calendar year 1989' for 'cal-
endar year 1987' in subparagraph (B) thereof . 
(F) Subparagraph (B) of section 151(dX3) is amended by strik-
ing "1987^' and inserting "1989". 
(G) Clause (ii) of section 513(hX2XC) is amended by insert-
ing ", by substituting 'calendar year 1987' for 'calendar year 
1989' in subparE^aph (B) thereof'^' before the period at the end. 
(2) Section 1 is amended by striking subsection (h) and re-
designating subsections (i) and (j) as subsections (g) and (h), 
respectively. 
(3) Subsection (j) of section 59 is amended— 
(A) by striking "section l(i)" each place it appears and 
inserting "section 1(g)", and 
(B) by striking "section l(iX3XB)" in paragraph (2XC) and 
inserting "section l(gX3XB)". 
(4) Paragraph (4) of section 691(c) is amended by striking "l(j)" 
and inserting "1(h)". 
(5XA) Clause (i) of section 904(bX3XD) is amended by striking 
"subsection (j)" and inserting "subsection (h)". 
(B) Subclause (I) of section 904(bX3XEXiii) is amended by 
striking "section l(j)" and inserting "section 1(h)". 
(6) Clause (iv) of section 6103(eXlXA) is amended by striking 
"section l(j)" and inserting "section 1(g)". 
(7XA) Subparagraph (A) of section 7518(gX6) is amended by 
striking "l(j)^'and inserting "1(h)". 
(B) Subparagraph (A) of section 607(hX6) of the Merchant 
Marine Act, 1936 is eimended by striking "l(i)" and inserting 
46 USC app. 
"1(h)". 
ll'^'^-
(e) EFFECTIVE DATE.—The amendments made by this section shall 
26 USC 1 note, 
apply to taxable years beginning after December 31,1990. 
104 STAT. 1388-406 
PUBLIC LAW 101-508--NOV. 5, 1990 
SEC. 11102. INCREASE IN RATE OF INDIVIDUAL ALTERNATIVE MINIMUM 
TAX. 
(a) GENERAL RULE.—Subparagraph (A) of section 550t)Xl) (relating 
to tentative minimum tax) is amended by striking "21 percent" and 
inserting "24 percent". 
26 use 55 note. 
(b) EFFECTIVE DATE.—The amendment made by subsection (a) 
shall apply to taxable years beginning after December 31, 1990. 
SEC. 11103. OVERALL LIMITATION ON ITEMIZED DEDUCTIONS. 
(a) IN GENERAL.—Part I of subchapter B of chapter 1 is amended 
by adding at the end thereof the following new section: 
"SEC. 68. OVERALL LIMITATION ON ITEMIZED DEDUCTIONS. 
"(a) GENERAL RULE.—In the case of an individual whose adjusted 
gross income exceeds the applicable amount, the amount of the 
itemized deductions otherwise allowable for the taxable year shall 
be reduced by the lesser of— 
"(1) 3 percent of the excess of adjusted gross income over the 
applicable amount, or 
'(2) 80 percent of the amount of the itemized deductions 
otherwise allowable for such taxable year. 
"Ot)) APPLICABLE AMOUNT.— 
"(1) IN GENERAL.—For purposes of this section, the term 
'applicable amount' means $100,000 ($50,000 in the case of a 
separate return by a married individual within the meaning of 
section 7703). 
"(2) INFLATION ADJUSTMENTS.—In the case of any taxable year 
beginning in a calendar year after 1991, each dollar amount 
contained in paragraph (1) shall be increased by an amount 
equal to— 
"(A) such dollar amount, multiplied by 
"(B) the cost-of-living adjustment determined under sec-
tion l(fK3) for the calendar year in which the taxable year 
begins, by substituting 'calendar year 1990' for 'calendar 
year 1989' in subparagraph (B) thereof." 
"(c) EXCEPTION FOR CERTAIN ITEMIZED DEDUCTIONS.—For purposes 
of this section, the term 'itemized deductions' does not include— 
"(1) the deduction under section 213 (relating to medical, etc. 
expenses), 
(2) any deduction for investment interest (as defined in 
section 163(d)), and 
"(3) the deduction under section 165(a) for losses described in 
subsection (cX3) or (d) of section 165. 
"(d) COORDINATION WITH OTHER LIMITATIONS.—This section shall 
be applied after the application of any other limitation on the 
allowance of any itemized deduction. 
"(e) EXCEPTION FOR ESTATES AND TRUSTS.—This section shall not 
apply to any estate or trust. 
(f) TERMINATION.—This section shall not apply to any taxable 
year beginning after December 31,1995." 
(b) COORDINATION WITH MINIMUM TAX.—Paragraph (1) of section 
56(b) is amended by adding at the end thereof the following new 
subparagraph: 
'(F) SECTION 68 NOT APPUCABLE.—Section 68 shall not 
apply." 
(c) CONFORMING AMENDMENT.—Subparagraph (A) of section 1(f)(6) 
is amended by inserting "section 68(bX2)' after "section 63(cX4),". 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-407 
(d) CLERICAL AMENDMENT.—The table of sections for part I of 
subchapter B of chapter 1 is amended by adding a '^'^ the end thereof 
the following new item: 
"Sec. 68. Overall limitation on itemized deductions." 
(e) EFFECTIVE DATE.—The amendments made by this section shall 
26 USC 1 note, 
apply to taxable years beginning after December 31,1990. 
SEC. 11104. PHASEOUT OF PERSONAL EXEMPTIONS. 
(a) GENERAL RULE.—Subsection (d) of section 151 is amended to 
read as follows: 
"(d) EXEMPTION AMOUNT.—For purposes of this section— 
"(1) IN GENERAL.—Except as otherwise provided in this 
subsection, the term 'exemption amount' means $2,000. 
"(2) EXEMPTION AMOUNT DISALLOWED IN CASE OF CERTAIN 
DEPENDENTS.—In the case of an individual with respect to whom 
a deduction under this section is allowable to another taxpayer 
for a taxable year beginning in the calendar year in which the 
individual's taxable year begins, the exemption amount ap-
plicable to such individual for such individual's taxable year 
shall be zero. 
"(3) PHASEOUT.— 
"(A) IN GENERAL.—In the case of any taxpayer whose 
adjusted gross income for the taxable year exceeds the 
threshold amount, the exemption amount shall be reduced 
by the applicable percentage. 
"(B) APPUCABLE PERCENTAGE.—For purposes of subpara-
graph (A), the term 'applicable percentage' means 2 
percentage points for each $2,500 (or fraction thereof) by 
which the taxpayer's adjusted gross income for the taxable 
year exceeds the threshold amount. In the case of a married 
individual filing a separate return, the preceding sentence 
shall be applied by substituting '$1,250' for '$2,500'. In no 
event shall the applicable percentage exceed 100 percent. 
"(C) THRESHOLD AMOUNT.—For purposes of this para-
graph, the term 'threshold amount' means— 
"(i) $150,000 in the case of a joint of a return or a 
surviving spouse (as defined in section 2(a)), 
"(ii) $125,000 in the case of a head of a household (as 
defined in section 2(b) '®, 
"(iii) $100,000 in the case of an individual who is not 
married and who is not a surviving spouse or head of a 
household, and 
"(iv) $75,000 in the case of a married individual filing 
a separate return. 
For purposes of this paragraph, marital status shall be 
determined under section 7703. 
"(D) COORDINATION WITH OTHER PROVISIONS.—The provi-
sions of this paragraph shall not apply for purposes of 
determining whether a deduction under this section with 
respect to any individual is allowable to another taxpayer 
for any taxable year. 
"(E) TERMINATION.—This paragraph shall not apply to 
any taxable year beginning after December 31,1995. 
"(4) INFLATION ADJUSTMENTS.— 
"(A) ADJUSTMENT TO BASIC AMOUNT OF EXEMPTION.—In 
the case of any taxable year beginning in a calendar year 
^^ So in original. Probably should be "at". 
^* So in original. Probably should be "2(b))". 
104 STAT. 1388-408 
PUBLIC LAW 101-508—NOV. 5, 1990 
after 1989, the dollar amount contained in paragraph (1) 
shall be increased by an amount equal to— 
"(i) such dollar amount, multiplied by 
"(ii) the cost-of-living adjustment determined under 
section 1(f)(3) for the calendar year in which the tax-
able year begins, by substituting 'calendar year 1988' 
for 'calendar year 1989' in subparagraph (B) thereof. 
"(B) 
ADJUSTMENT TO THRESHOLD AMOUNTS FOR YEARS 
AFTER 1991.—In the case of any taxable year beginning in a 
calendar year after 1991, each dollar amount contained in 
paragraph (3)(C) shall be increased by an amount equal to— 
"(i) such dollar amount, multiplied by 
"(ii) the cost-of-living adjustment determined under 
section 1(f)(3) for the calendar year in which the tax-
able year begins, by substituting 'calendar year 1990' 
for 'calendar year 1989' in subparagraph (B) thereof." 
(b) CONFORMING AMENDMENT.—Paragraph (6) of section 1(f) 
is 
amended— 
(1) by striking "section 151(d)(3)" in subparagraph (A) and 
inserting "section 151(d)(4)", and 
(2) by striking "section 151(d)(3)" in subparagraph (B) and 
inserting "section 151(d)(4)(A)". 
26 use 1 note. 
(c) EFFECTIVE DATE.—The amendments made by this section shall 
apply to taxable years beginning after December 31,1990. 
PART II—MODIFICATIONS OF EARNED INCOME 
CREDIT 
SEC. m i l . MODIFICATIONS OF EARNED INCOME TAX CREDIT. 
(a) IN GENERAL.—So much of section 32 (relating to earned income 
credit) as precedes subsection (d) thereof is amended to read as 
follows: 
"SEC. 32. EARNED INCOME. 
"(a) ALLOWANCE OF CREDIT.—In the case of an eligible individual, 
there shall be allowed as a credit against the tax imposed by this 
subtitle for the taxable year an amount equal to the sum of— 
"(1) the basic earned income credit, and 
"(2) the health insurance credit. 
"(b) COMPUTATION OF CREDIT.—For purposes of this section— 
"(1) BASIC EARNED INCOME CREDIT.— 
"(A) IN GENERAL.—The term 'basic earned income credit' 
means an amount equal to the credit percentage of so much 
of the taxpayer's earned income for the taxable year as does 
not exceed $5,714. 
"(B) LIMITATION.—The amount of the basic earned 
income credit allowable to a taxpayer for any taxable year 
shall not exceed the excess (if any) of— 
"(i) the credit percentage of $5,714, over 
"(ii) the phaseout percentage of so much of the ad-
justed gross income (or, if greater the earned income) of 
the taxpayer for the taxable year as exceeds $9,000. 
"(C) PERCENTAGES.—For purposes of this paragraph— 
"(i) IN GENERAL.—Except as provided in clause (ii), 
the percentages shall be determined as follows: 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-409 
"In the case of an eligible individual with: 
pe^clntS'eb: 
S^rcent^eTs: 
1 qualifying child 
23 
16.43 
2 or more qualifying children 
25 
17.86 
"(ii) TRANSITION PERCENTAGES.— 
"(I) For taxable years beginning in 1991, the 
percentages are: 
"In the case of an eligible individual with: 
p e ^ | n ^ e \ : 
S ' r c e n S ' S 
1 qualifying child 
16.7 
11.93 
2 or more qualifying children 
17.3 
12.36 
"(ID For taxable years beginning in 1992, the 
percentages are: 
"In the case of an eligible individual with: 
p e T ^ l n t ^ i l : 
S ' r c e n S ' ^ s : 
1 qualifying child 
17.6 
12.57 
2 or more qualifying children 
18.4 
13.14 
"(III) For taxable years beginning in 1993, the 
percentages are: 
••to the c » of an eligible individual with: 
^ T S n ' S ^ ^ : 
^
o
^
t
. 
1 qualifying child 
18.5 
13.21 
2 or more qualifying children 
19.5 
13.93 
"(D) SUPPLEMENTAL YOUNG CHILD CREDIT.—In the case of 
a taxpayer with a qualifying child who has not attained age 
1 as of the close of the calendar year in which or with which 
the taxable year of the tsixpayer ends— 
"(i) the credit percentage shall be incresised by 5 
percentage points, and 
"(ii) the phaseout percentage shall be increased by 
3.57 percentage points. 
If the taxpayer elects to take a child into account under this 
subparagraph, such child shall not be treated as a qualify-
ing individual under section 21. 
"(2) HEALTH INSURANCE CREDIT.— 
"(A) IN GENERAL.—The term 'health insurance credit' 
means an amount determined in the same manner as the 
basic earned income credit except that— 
"(i) the credit percentage shall be equal to 6 percent, 
and 
"(ii) the phaseout percentage shall be equal to 4.285 
percent. 
"(B) LIMITATION BASED ON HEALTH INSURANCE COSTS.—The 
amount of the health insurance credit determined under 
subparagraph (A) for any taxable year shall not exceed the 
amounts paid by the taxpayer during the tEixable year for 
insurance coverage— 
"(i) which constitutes medical care (within the mean-
ing of section 213(d)(lXC)), and 
"(ii) which includes at least 1 qualifying child. 
For purposes of this subparagraph, the rules of section 
213(d)(6) shall apply. 
"(C) SUBSIDIZED EXPENSES.—A taxpayer may not take into 
account under subparagraph (B) any amount to the extent 
that— 
104 STAT. 1388-410 
PUBLIC LAW 101-508—NOV. 5, 1990 
"(i) such amount is paid, reimbursed, or subsidized by 
the Federal Government, a State or local government, 
or any agency or instrumentality thereof; and 
"(ii) the payment, reimbursement, or subsidy of such 
Eunount is not includible in the gross income of the 
recipient. 
"(c) DEFINITIONS AND SPECIAL RULES.—For purposes of this 
section— 
"(1) EUGIBLE INDIVIDUAL.— 
"(A) IN GENERAL.—The term 'eligible individual' means 
any individual who has a qualifying child for the taxable 
year. 
"(B) QuAUFYiNG CHILD INELIGIBLE.—If an individual is 
the qualifying child of a taxpayer for any taxable year of 
such taxpayer beginning in a calendar year, such in^vidual 
shall not be treated as an eligible individual for any taxable 
year of such individual beginning in such calendar year. 
"(C) 2 OR MORE ELIGIBLE INDIVIDUALS.—If 2 Or morC 
individuals would (but for this subparagraph and after 
application of subparagraph (B)) be treated as eligible 
individuals with respect to the same qualifjdng child for 
taxable years beginning in the same calendar year, only the 
individual with the highest adjusted gross income for such 
taxable years shall be treated as an eligible individual with 
respect to such qualifying child. 
(D) EXCEPTION FOR INDIVIDUAL CLAIMING BENEFITS UNDER 
SECTION 911.—The term 'eligible individual' does not in-
clude any individual who claims the benefits of section 911 
(relating to citizens or residents living abroad) for the tax-
able year. 
"(2) EARNED INCOME.— 
"(A) The term 'earned income' means— 
"(i) wages, salaries, tips, and other employee com-
pensation, plus 
"(ii) the £unount of the taxpayer's net earnings from 
self-emplojmient for the taxable year (within the mean-
ing of section 1402(a)), but such net earnings shall be 
determined with regard to the deduction allowed to the 
taxpayer by section 164(f). 
"(B) For purposes of subparagraph (A)— 
"(i) the earned income of an individual shall be com-
puted without regard to any community property laws, 
"(ii) no amount received as a pension or annuity shall 
be taken into account, and 
"(iii) no amount to which section 871(a) applies (relat-
ing to income of nonresident alien individuals not con-
nected with United States business) shall be taken into 
account. 
"(3) QUALIFYING CHILD.— 
' (A) IN GENERAL.—The term 'qualifying child' means, 
with respect to any taxpayer for any taxable year, an 
individual— 
"(i) who bears a relationship to the taxpayer de-
scribed in subparagraph (B), 
"(ii) except as provided in subparagraph (BXiii), who 
has the same principal place of abode as the taxpayer 
for more than one-half of such taxable year, 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-411 
"(iii) who meets the age requirements of subpara-
graph (C), and 
"(iv) with respect to whom the taxpayer meets the 
identification requirements of subparagraph (D). 
"(B) RELATIONSHIP TEST.— 
"(i) IN GENERAL.—An individual bears a relationship 
to the taxpayer described in this subparsigraph if such 
individual is— 
"(I) a son or daughter of the taxpayer, or a 
descendant of either, 
"(II) a stepson or stepdaughter of the taxpayer, 
or 
"(III) an eligible foster child of the taxpayer. 
"(ii) MARRIED CHILDREN.—Clause (i) shall not apply to 
any individual who is married as of the close of the 
taxpayer's taxable year unless the taxpayer is entitled 
to a deduction under section 151 for such taxable year 
with respect to such individual (or would be so entitled 
but for paragraph (2) or (4) of section 152(e)). 
"(iii) EUGIBLE FOSTER CHILD.—For purposes of clause 
(iXIII), the term 'eligible foster child' means an individ-
ual not described in clause (i) (I) or (II) who— 
"(I) the taxpayer cares for as the taxpayer's own 
child, and 
"(II) has the same principal place of abode as the 
taxpayer for the taxpayer's entire taxable year. 
"(iv) ADOPTION.—For purposes of this subparagraph, 
a child who is legally adopted, or who is placed with the 
taxpayer by an authorized placement agency for adop-
tion by the taxpayer, shall be treated as a child by 
blood. 
"(C) AGE REQUIREMENTS.—An individual meets the 
requirements of this subparagraph if such individual— 
"(i) has not attained the £^e of 19 as of the close of 
the calendar year in which the teixable year of the 
taxpayer begins, 
"(ii) is a student (as defined in section 151(cX4)) who 
has not attained the age of 24 as of the close of such 
calendar year, or 
"(iii) is permanently and totally disabled (as defined 
in section 22(e)(3)) at any time during the taxable year. 
"(D) IDENTIFICATION REQUIREMENTS.— 
"(i) IN GENERAL.—The requirements of this subpara-
graph are met if^ 
"(I) the taxpayer includes the name £ind age of 
each qualifying child (without regard to this 
subparagraph) on the return of tax for the taxable 
year, and 
"(II) in the case of an individual who has at-
tained the age of 1 year before the close of the 
taxpayer's taxable year, the taxpayer includes the 
taxpayer identification number of such individual 
on such return of tax for such taxable year, 
"(ii) INSURANCE POUCY NUMBER.—In the case of any 
taxpayer with respect to which the health insurance 
credit is sdlowed under subsection (aX2), the Secretary 
may require a taxpayer to include an insurance policy 
104 STAT. 1388-412 
PUBLIC LAW 101-508—NOV. 5, 1990 
number or other adequate evidence of insurance in 
addition to any information required to be included in 
clause (i). 
"(iii) OTHER METHODS.—The Secretary may prescribe 
other methods for providing the information described 
in clause (i) or (ii). 
"(E) ABODE MUST BE IN THE UNITED STATES.—The require-
ments of subparagraphs (AXii) and (BXiiiXH) shall be met 
only if the principal place of abode is in the United States." 
(b) COORDINATION WITH CERTAIN MEANS-TESTED PROGRAMS.—Sec-
tion 32 is amended by adding at the end thereof the following new 
subsection: 
"0) COORDINATION WITH CERTAIN MEANS-TESTED PROGRAMS.—For 
purposes o
f
— 
"(1) the United States Housing Act of 1937, 
"(2) title V of the Housing Act of 1949, 
"(3) section 101 of the Housing and Urban Development Act of 
1965, 
"(4) sections 221(dX3), 235, and 236 of the National Housing 
Act, and 
"(5) the Food Stamp Act of 1977, 
any refund made to an individual (or the spouse of an individual) by 
reason of this section, and any pajonent made to such individual (or 
such spouse) by an employer under section 3507, shall not be treated 
as income (and shall not be taken into account in determining 
resources for the month of its receipt and the following month)." 
(c) ADVANCE PAYMENT OF CREDIT.—Subparagraphs (B) and (C) of 
section 3507(cX2) are amended to read as follows: 
"(B) if the employee is not married, or if no earned 
income eligibility certificate is in effect with respect to the 
spouse of the employee, shall treat the credit provided by 
section 32 as if it were a credit— 
"(i) of not more than the credit percentage under 
section 32(bXl) (without regard to subparagraph (D) 
thereof) for an eligible individual with 1 qualifying 
child and with earned income not in excess of the 
amount of earned income taken into account under 
section 32(aXl), which 
"(ii) phases out between the amount of earned 
income at which the phaseout begins under section 
32(bXlXBXii) and the amount of income at which the 
credit under section 32(aXl) phases out for an eligible 
individual with 1 qualif3dng child, or 
"(C) if an earned income eligibility certificate is in effect 
with respect to the spouse of the employee, shall treat the 
credit as if it were a credit determined under subparagraph 
(B) by substituting Vn of the amounts of earned income 
described in such subparagraph for such amounts." 
(d) COORDINATION WITH DEDUCTIONS.— 
(1) MEDICAL DEDUCTION.—Section 213 is amended by adding at 
the end thereof the following new subsection: 
"(f) COORDINATION WITH HEALTH INSURANCE CREDIT UNDER SEC-
TION 32.—The amount otherwise taken into account under subsec-
tion (a) as expenses paid for medical care shall be reduced by the 
amount (if any) of the health insurance credit allowable to the 
taxpayer for the taxable year under section 32." 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-413 
(2) SELF-EMPLOYED 
INDIVIDUALS.—Paragraph (3) of section 
162(1) is amended to read as follows: 
"(3) COORDINATION WITH MEDICAL DEDUCTION, ETC.— 
"(A) MEDICAL DEDUCTION.—Any amount paid by a teix-
payer for insurance to which paragraph (1) applies shall not 
be taken into account in computing the amount allowable 
to the taxpayer as a deduction under section 213(a). 
"(B) HEALTH INSURANCE CREDIT.—The amount otherwise 
taken into account under paragraph (1) as paid for insur-
ance which constitutes medical care shall be reduced by the 
amount (if any) of the health insurance credit allowable to 
the taxpayer for the taxable year under section 32." 
(e) CONFORMING AMENDMENTS.—Paragraph (2) of section 32(i) is 
amended— 
(1) by striking "or (ii)" in subparagraph (AXi) thereof, 
(2) by striking "clause (iii)" in subparagraph (A)(ii) and insert-
ing "clause (ii)", and 
(3) by amending subparsigraph (B) to read as follows: 
"(B) DOLLAR AMOUNTS.—The dollar amounts referred to 
in this subparagraph are— 
"(i) the $5,714 dollar amounts contained in subsection 
(bXl),and 
"(ii) the $9,000 amount contained in subsection 
(bXlXBXii)." 
(f) EFFECTIVE DATE.—The amendments made by this section shall 
26 use 32 note, 
apply to taxable years beginning after December 31,1990. 
SEC. 11112. REQUIREMENT OF IDENTIFYING NUMBER FOR CERTAIN 
DEPENDENTS. 
(a) GENERAL RULE.—Paragraph (2) of section 6109(e) (relating to 
furnishing number for certain dependents) is amended by stri^ng 
"2 years" and inserting "1 year". 
(b) EFFECTIVE DATE.—The amendment made by subsection (a) 26USC6109 
shall apply to returns for taxable years beginning after Decem- 
"°**-
ber 31,1990. 
SEC. 11113. STUDY OF ADVANCE PAYMENTS. 
26 USC 3507 
(a) IN GENERAL.—The Comptroller General of the United States 
shall, in consultation with the Secretary of the Treasury, conduct a 
study of advance payments required by section 3507 of the Internal 
Revenue Code of 1986 to determine— 
(1) the effectiveness of the advance pa)ntnent system (including 
an analysis of why so few employees take advantage of such 
system), and 
(2) the manner in which such system can be implemented to 
alleviate administrative complexity, if any, for small business, 
and 
(3) if there are any other problems in the administration of 
such system. 
(b) REPORT.—Not later than 1 year after the date of the enactment 
of this title, the Comptroller shall report the results of the study 
conducted under subsection (a), together with any recommendations, 
to the Committee on Finance of the United States Senate and the 
Committee on Ways and Means of the House of Representatives. 
104 STAT. 1388-414 
PUBLIC LAW 101-508—NOV. 5, 1990 
26 u s e 21 note. 
SEC. 11114. PROGRAM TO INCREASE PUBLIC AWARENESS. 
Not later than the first calendar year following the date of the 
enactment of this subtitle, the Secretary of the Treasury, or the 
Secretary's delegate, shall establish a taxpayer awareness program 
to inform the taxpaying public of the availability of the credit for 
dependent care sillowed under section 21 of the Internal Revenue 
Code of 1986 and the earned income credit and child health insur-
ance under section 32 of such Code. Such public awareness program 
shall be designed to assure that individuals who may be eligible are 
informed of the availability of such credit and filing procedures. The 
Secretary shall use appropriate means of communication to carry 
out the provisions of this section. 
SEC. 11115. EXCLUSION FROM INCOME AND RESOURCES OF EARNED 
INCOME TAX CREDIT UNDER TITLES IV, XVI, AND XIX OF 
THE SOCIAL SECURITY ACT. 
(a) EXCLUSIONS UNDER TITLE IV.— 
(1) EXCLUSIONS FROM RESOURCES.—Section 402(aX7)(B) of the 
Social Security Act (42 U.S.C. 602(a)(7)(B)) is amended— 
(A) by striking "or" before "(iii)"; and 
(B) by inserting ", or (iv) for the month of receipt and the 
following month, any refund of Federal income taxes made 
to such family by resison of section 32 of the Internal 
Revenue Code of 1986 (relating to earned income credit), 
and any payment made to such family by an employer 
under section 3507 of such Code (relating to advance pay-
ment of earned income credit)" before the semicolon. 
(2) EJXCLUSIONS FROM INCOME.—Section 402(a)(18) of the Social 
Security Act (42 U.S.C. 602(aX18)) is amended by inserting "or 
8(AXviii)" after "other than paragraph 8(AXv)". 
(b) EXCLUSIONS UNDER TITLE XVI.— 
(1) EXCLUSIONS FROM INCOME.—Section 1612(b) of the Social 
Security Act (42 U.S.C. 1382aa))), as amended by sections 5031(a) 
and 5035(a) of this Act, is amended— 
(A) by striking "and" at the end of paragraph (17); 
(B) by striking the period at the end of paragraph (18) and 
inserting "; and"; and 
(C) by adding at the end the following: 
"(19) any refund of Federal income tsixes made to such 
individual (or such spouse) by reason of section 32 of the In-
ternal Revenue Code of 1986 (relating to earned income tax 
credit), and any pa3mient made to such individual (or such 
spouse) by an employer under section 3507 of such Code (relat-
ing to advance pajmient of earned income credit).". 
(2) EXCLUSIONS FROM RESOURCES.—Section 1613(a) of the Social 
Security Act (42 U.S.C. 1382b(a)), as amended by sections 5031(b) 
and 50350)) of this Act, is amended— 
(A) by striking "and" at the end of paragraph (8); 
(B) by striking the period at the end of paragraph (9) and 
inserting "; and"; and 
(C) by adding at the end the following new paragraph: 
"(10) for the month of receipt and the following month, any 
refund of Federal income taxes made to such individual (or such 
spouse) by reason of section 32 of the Internal Revenue Code of 
1986 (relating to earned income tax credit), and any payment 
made to such individual (or such spouse) by an employer under 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-415 
section 3507 of such Code (relating to advance pa5rment of 
earned income credit).". 
(c) EXCLUSIONS UNDER TITLE XIX.—Pursuant to section 1902(a)(17) 
42 USC 1396a 
of the Social Security Act (42 U.S.C. 1396a(a)(17)), the Secretary of 
"ote. 
Health and Human Services shall promulgate regulations to exempt 
from any determination of income and resources (for the month of 
receipt and the following month) under title XIX of the Social 
Security Act any refund of Federal income taxes made to an individ-
ual by reason of section 32 of the Internal Revenue Code of 1986 
(relating to earned income tax credit), and any payment made to gin 
individual by an employer under section 3507 of such C!ode (relating 
to advance payment of earned income credit). 
(d) AFDC WAIVER OF OVERPAYMENT.—For the purposes of section 
42 USC 602 note. 
402(a)(18) of the Social Security Act (42 U.S.C. 602(a)(18)), a State 
agency designated under a State plan under section 402(a)(3) of such 
Act may waive any overpayment of aid that resulted from the 
receipt by a family of a refund of Federal income taxes by reason of 
section 32 of the Internal Revenue Code of 1986 (relating to earned 
income tax credit) or any pajnnent made to such family by an 
employer under section 3507 of such Code (relating to advance 
payment of earned income credit) during the period beginning on 
January 1,1990, and ending on December 31,1990. 
(e) EFFECTIVE DATE.—The amendments made by subsections (a) 
42 USC 602 note, 
though '^ (c) shall apply to determinations of income or resources 
made for any period after December 31,1990. 
SEC. 11116. COORDINATION WITH REFUND PROVISION. 
31 USC1324 
For purposes of section 1324(bX2) of title 31 of the United States 
C!ode, section 32 of the Internal Revenue Code of 1986 (as amended 
by this Act) shall be considered to be a credit provision of the 
Internal Revenue Code of 1954 enacted before January 1, 1978. 
Subtitle B—Excise Taxes 
PART 
I—TAXES 
RELATED 
TO 
HEALTH 
AND 
THE 
ENVIRONMENT 
SEC. 11201. INCREASE IN EXCISE TAXES ON DISTILLED SPIRITS, WINE, 
AND BEER. 
(a) DISTILLED SPIRITS.— 
(1) IN GENERAL.—Paragraphs (1) and (3) of section 5001(a) 
(relating to rate of tax on distilled spirits) are each amended by 
striking "$12.50" and inserting "$13.50". 
(2) TECHNICAL AMENDMENT.—Paragraphs (1) and (2) of section 
5010(a) (relating to credit for wine content and .ifor flavors 
content) are each amended by striking "$12.50" and inserting 
"$13.50". 
(b) WINE.— 
(1) TAX INCREASES.— 
(A) WINES CONTAINING NOT MORE THAN 14 PERCENT ALCO-
HOL.—Paragraph (1) of section 5041(b) (relating to rates of 
tax on wines) is amended by striking "17 cents and insert-
ing "$1.07". 
(B) WINES CONTAINING MORE THAN 14 (BUT NOT MORE 
THAN 21) PERCENT ALCOHOL.—Paragraph (2) of section 
^' So in original. Probably should be "through". 
104 STAT. 1388-416 
PUBLIC LAW 101-508—NOV. 5, 1990 
504103) is amended by striking "67 cents" and inserting 
"$1.57". 
(C) WINES CONTAINING MORE THAN 21 (BUT NOT MORE 
THAN 24) PERCENT ALCOHOL.—Par^aph (3) of section 
5041(b) is amended by striking "$2.25" and inserting 
"$3.15". 
(D) ARTIFICIALLY CARBONATED WINES.—Paragraph (5) of 
section 50410?) is amended by striking "$2.40" and inserting 
"$3.30". 
(2) CREDIT FOR SMALL DOMESTIC PRODUCERS.—Section 5041 
is 
amended by redesignating subsections (c), (d), and (e) as subsec-
tions (d), (e), and (f), respectively, and by inserting after subsec-
tion 0)) the following new subsection: 
"(c) CREDIT FOR SMALL DOMESTIC PRODUCERS.— 
"(1) ALLOWANCE OF CREDIT.—Except as provided in paragraph 
(2), in the CEise of a person who produces not more than 250,000 
wine gallons of wine during the calendar year, there shall be 
allowed as a credit against any tax imposed by this title (other 
than chapters 2, 21, and 22) of 90 cents per wine g£dlon on the 
1st 100,000 wine gallons of wine (other than wine described in 
subsection (bX4)) which are removed during such year for 
consumption or sale and which have been produced at qualified 
facilities in the United States. 
"(2) REDUCTION IN CREDIT.—The credit allowable by para-
graph (1) shall be reduced (but not below zero) by 1 percent for 
each 1,000 wine gallons of wine produced in excess of 150,000 
wine gallons of wine during the calendar year. 
"(3) 
TIME FOR DETERMINING AND ALLOWING CREDIT.—The 
credit allowable by paragraph (1)— 
"(A) shall be determined at the same time the tax is 
determined under subsection (a) of this section, and 
"(B) shall be allowable at the time any tax described in 
paragraph (1) is payable as if the credit allowable by this 
subsection constituted a reduction in the rate of such tax. 
"(4) CONTROLLED GROUPS.—Rules similar to rules of section 
5051(aX2XB) shedl apply for purposes of this subsection. 
"(5) DENIAL OF DEDUCTION.—Any deduction under subtitle A 
with respect to any tax against which a credit is allowed under 
this subjection shall only be for the amount of such tax as 
reduced by such credit. 
"(6) REGULATIONS.—The Secretary may prescribe such regula-
tions as may be necessary to prevent the credit provided in this 
subsection from benefiting any person who produces more than 
250,000 wine gallons of wine during a calendar year and to 
assure proper reduction of such credit for persons producing 
more than 150,000 wine gallons of wine during a calendar year.' 
(3) 
CONFORMING 
AMENDMENT.—Paragraph 
(3) 
of 
section 
5061(b) is amended to read as follows: 
"(3) section 5041(e),". 
(c) BEER.— 
(1) IN GENERAL.—Paragraph (1) of section 5051(a) (relating to 
imposition and rate of tax on beer) is amended by striking ' $9" 
and inserting "$18". 
(2) REGULATIONS.—Paragraph (2) of section 5051(a) is amended 
by adding at the end thereof the following new subparagraph: 
"(C) REGULATIONS.—The Secretary may prescribe such 
regulations as may be necessary to prevent the reduced 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-417 
rates provided in this paragraph from benefiting any 
person who produces more than 2,000,000 barrels of beer 
during a calendar year." 
(d) EFFECTIVE DATE.—The amendments made by this section shall 
26 use 5001 
take effect on January 1,1991. 
note, 
(e) FLOOR STOCKS TAXES.— 
26 use 500i 
(1) IMPOSITION OF TAX.— 
note. 
(A) IN GENERAL.—In the case of any tax-increased 
article— 
(i) on which tax was determined under part I of 
subchapter A of chapter 51 of the Internal Revenue 
Code of 1986 or section 7652 of such Code before Janu-
ary 1,1991, and 
(ii) which is held on such date for sale by any person, 
there shall be imposed a tax at the applicable rate on each 
such article. 
(B) APPUCABLE RATE.—For purposes of subparagraph (A), 
the applicable rate is— 
(i) $1 per proof gallon in the case of distilled spirits, 
(ii) $0.90 per wine gallon in the case of wine described 
in paragraph (1), (2), (3), or (5) of section 5041(b) of such 
Code, and 
(iii) $9 per barrel in the case of beer. 
In the case of a fraction of a gsillon or barrel, the tax 
„ 
imposed by subparagraph (A) shall be the same fraction as 
the amount of such tax imposed on a whole gallon or barrel. 
(C) TAX-INCREASED ARTICLE.—For purposes of this subsec-
tion, the term "tax-increased article" means distilled spir-
its, wine described in paragraph (1), (2), (3), or (5) of section 
5041(b) of such Code, and beer. 
(2) EXCEPTION FOR SMALL DOMESTIC PRODUCERS.— 
(A) In the case of wine held by the producer thereof on 
January 1, 1991, if a credit would have been allowable 
under section 5041(c) of such Code (as added by this section) 
on such wine had the amendments made by subsection (b) 
applied to all wine removed during 1990 and had the wine 
so held been removed for consumption on December 31, 
1990, the tax imposed by paragraph (1) on such wine shall 
be reduced by the credit which would have been so 
allowable. 
(B) In the case of beer held by the producer thereof on 
January 1, 1991, if the rate of the tax imposed by section 
5051 of such Code would have been determined under 
subsection (aX2) thereof had the beer so held been removed 
for consumption on December 31, 1990, the tax imposed by 
paragraph (1) on such beer shall not apply. 
(C) For purposes of this paragraph, an article shall not be 
treated as held by the producer if title thereto had at any 
time been transferred to any other person. 
(3) 
EXCEPTION FOR CERTAIN SMALL WHOLESALE OR RETAIL 
DEALERS.—No tax shall be imposed by paragraph (1) on tax-
increased articles held on January 1, 1991, by any dealer if^ 
(A) the aggregate liquid volume of tax-increased articles 
held by such dealer on such date does not exceed 500 wine 
gallons, and 
(B) such dealer submits to the Secretary (at the time and 
in the manner required by the Secretary) such information 
104 STAT. 1388-418 
PUBLIC LAW 101-508—NOV. 5, 1990 
as the Secretary shall require for purposes of this 
paragraph. 
(4) CREDIT AGAINST TAX.—Each dealer shall be allowed as a 
credit against the taxes imposed by paragra:ph (1) an amount 
equal to— 
(A) $240 to the extent such taxes are attributable to 
distilled spirits, 
(B) $270 to the extent such taxes are attributable to wine, 
and 
(C) $87 to the extent such taxes are attributable to beer. 
Such credit shall not exceed the amount of taxes imposed by 
paragraph (1) with respect to distilled spirits, wine, or beer, as 
the case may be, for which the dealer is liable. 
(5) LIABILITY FOR TAX AND METHOD OF PAYMENT.— 
(A) LIABILITY FOR TAX.—A person holding any tax-in-
creased article on January 1, 1991, to which the tax im-
posed by paragraph (1) applies shall be liable for such tax. 
(B) METHOD OF PAYMENT.—The tax imposed by paragraph 
(1) shall be paid in such manner as the Secretary shall 
prescribe by regulations. 
(C) TIME FOR PAYMENT.—The tax imposed by paragraph 
(1) shall be paid on or before June 30,1991. 
(6) CONTROLLED GROUPS.— 
(A) CORPORATIONS.—In the case of a controlled group— 
(i) the 500 wine gallon amount specified in paragraph 
(3), and 
(ii) the $240, $270, and $87 amounts specified in 
paragraph (4), 
shall be apportioned among the dealers who are component 
members of such group in such manner as the Secretary 
shall by regulations prescribe. For purposes of the preced-
ing sentence, the term "controlled group" has the meaning 
given to such term by subsection (a) of section 1563 of such 
Code; except that for such purposes the phrase "more than 
50 percent shall be substituted for the phrase "at least 80 
percent" each place it appears in such subsection. 
(B) NONINCORPORATED DEALERS UNDER COMMON CON-
TROL.—Under regulations prescribed by the Secretary, prin-
ciples similar to the principles of subparagraph (A) shall 
apply to a group of dealers under common control where 1 
or more of such dealers is not a corporation. 
(7) OTHER LAWS APPUCABLE.— 
(A) IN GENERAL.—All provisions of law, including pen-
alties, applicable to the comparable excise tax with respect 
to any tax-increased article shall, insofar as applicable and 
not inconsistent with the provisions of this subsection, 
apply to the floor stocks taxes imposed by paragraph (1) to 
the same extent as if such taxes were imposed by the 
comparable excise tax. 
(B) COMPARABLE EXCISE TAX.—For purposes of subpara-
graph (A), the term "comparable excise tax" means— 
(i) the tax imposed by section 5001 of such Code in the 
case of distilled spirits, 
(ii) the tax imposed by section 5041 of such Code in 
the case of wine, and 
(iii) the tax imposed by section 5051 of such Code in 
the case of beer. 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-419 
(8) DEFINITIONS.—For purposes of this subsection— 
(A) IN GENERAL.—Terms used in this subsection which 
are also used in subchapter A of chapter 51 of such Code 
shall have the respective meanings such terms have in such 
part. 
(B) PERSON.—The term "person" includes any State or 
political subdivision thereof, or any agency or instrumental-
ity of a State or political subdivision thereof. 
(C) SECRETARY.—The term "Secretary" means the Sec-
retary of the Treasury or his delegate. 
(9) TREATMENT OF IMPORTED PERFUMES CONTAINING DISTILLED 
SPIRITS.—For purposes of this subsection, any article described 
in section 5001(aX3) of such Code shall be treated as distilled 
spirits; except that the tax imposed by paragraph (1) shall be 
imposed on a wine gallon basis in lieu of a proof gallon basis. To 
the extent provided by regulations prescribed by the Secretary, 
the preceding sentence shall not apply to any article held on 
January 1, 1991, on the premises of a retail establishment. 
SEC. 11202. INCREASE IN EXCISE TAXES ON TOBACCO PRODUCTS. 
(a) CIGARS.—Subsection (a) of section 5701 is amended— 
(1) by striking "75 cents per thousand" in paragraph (1) and 
inserting "$1,125 cents per thousand (93.75 cents per thousand 
on cigars removed during 1991 or 1992)", and 
(2) by striking "equal to" and all that follows in paragraph (2) 
and inserting "equal to— 
"(A) 10.625 percent of the price for which sold but not 
more than $25 per thousand on cigars removed during 1991 
or 1992, and 
"(B) 12.75 percent of the price for which sold but not more 
than $30 per thousand on cigars removed after 1992." 
(b) CIGARETTES.—Subsection (b) of section 5701 is amended— 
(1) by striking "$8 per thousand" in paragraph (1) and insert-
ing "$12 per thousand ($10 per thousand on cigarettes removed 
during 1991 or 1992)", and 
(2) by striking "$16.80 per thousand" in paragraph (2) and 
inserting "$25.20 per thousand ($21 per thousand on cigarettes 
removed during 1991 or 1992)". 
(c) CIGARETTE PAPERS.—Subsection (c) of section 5701 is amended 
by striking ''Vn, cent" and inserting "0.75 cent (0.625 cent on ciga-
rette papers removed during 1991 or 1992)". 
(d) CIGARETTE TUBES.—Subsection (d) of section 5701 is amended 
by striking "1 cent" and inserting "1.5 cents (1.25 cents on cigarette 
tubes removed during 1991 or 1992)". 
(e) 
SMOKELESS TOBACCO.—Subsection (e) of section 5701 is 
amended— 
(1) by striking "24 cents" in paragraph (1) and inserting "36 
cents (30 cents on snuff removed during 1991 or 1992)", and 
(2) by striking "8 cents" in paragraph (2) and inserting "12 
cents (10 cents on chewing tobacco removed during 1991 or 
1992)". 
(f) PIPE TOBACCO.—Subsection (f) of section 5701 is amended by 
striking "45 cents" and inserting "67.5 cents (56.25 cents on pipe 
tobacco removed during 1991 or 1992)". 
(g) DETERMINATION OF PRICE.—Subsection (m) of section 5702 is 
amended to read as follows: 
104 STAT. 1388-420 
PUBLIC LAW 101-508—NOV. 5, 1990 
"(m) DETERMINATION OF PRICE ON CIGARS.—In determining price 
for purposes of section 5701(a)(2)— 
"(1) there shall be included any charge incident to placing the 
article in condition ready for use, 
"(2) there shall be excluded— 
"(A) the amount of the tax imposed by this chapter or 
section 7652, and 
"(B) if stated as a separate charge, the amount of any 
retail sales tax imposed by any State or political subdivision 
thereof or the District of Columbia, whether the liability for 
such tax is imposed on the vendor or vendee, and 
"(3) rules similar to the rules of section 4216(b) shall apply." 
26 use 5701 
(h) EFFECTIVE DATE.—The amendments made by this section shall 
^°^- 
apply with respect to articles removed after December 31, 1990. 
26 use 5701 
(i) FLOOR STOCKS TAXES ON CIGARETTES.-;-
"°**- 
(1) IMPOSITION OF TAX.—On cigarettes manufactured in or 
imported into the United States which are removed before any 
tax-increase date and held on such date for sale by any person, 
there shall be imposed the following taxes: 
(A) SMALL CIGARETTES.—On cigarettes, weighing not more 
than 3 pounds per thousand, $2 per thousand. 
(B) LARGE CIGARETTES.—On cigarettes weighing more 
than 3 pounds per thousand, $4.20 per thousand; except 
that, if more than 6V2 inches in length, they shall be 
taxable at the rate prescribed for cigarettes weighing not 
more than 3 pounds per thousand, counting each 2% 
inches, or fraction thereof, of the length of each as one 
cigarette. 
(2) EXCEPTION FOR CERTAIN AMOUNTS OF CIGARETTES.— 
(A) IN GENERAL.—No tax shall be imposed by paragraph 
(1) on cigarettes held on any tax-increase date by any 
person if— 
(i) the aggregate number of cigarettes held by such 
person on such date does not exceed 30,000, and 
(ii) such person submits to the Secretary (at the time 
and in the manner required by the Secretary) such 
information as the Secretary shall require for purposes 
of this subparagraph. 
For purposes of this subparagraph, in the case of cigarettes 
measuring more than QV2 inches in length, each 2% inches 
(or fraction thereof) of the length of each shall be counted 
as one cigarette. 
(B) AUTHORITY TO EXEMPT CIGARETTES HELD IN VENDING 
MACHINES.—To 
the 
extent 
provided 
in 
regulations 
prescribed by the Secretary, no tax shall be imposed by 
paragraph (1) on cigarettes held for retail sale on any tax-
increase date by any person in any vending machine. If the 
Secretary provides such a benefit with respect to any 
person, the Secretary may reduce the 30,000 amount in 
subparsigraph (A) and the $60 amount in paragraph (3) with 
respect to such person. 
(3) CREDIT AGAINST TAX.—Each person shall be allowed as a 
credit against the taxes imp(»sed by paragraph (1) an amount 
equal to $60. Such credit shall not exceed the amount of taxes 
imposed by paragraph (1) for which such person is liable. 
(4) LIABILITY FOR TAX AND METHOD OF PAYMENT.— 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-421 
(A) LIABILITY FOR TAX.—A person holding cigarettes on 
any tax-increase date to which any tax imposed by para-
graph (1) applies shall be liable for such tax. 
(B) METHOD OF PAYMENT.—The tax imposed by paragraph 
(1) shall be paid in such manner as the Secretary shall 
prescribe by regulations. 
(C) TIME FOR PAYMENT.—The tax imposed by paragraph 
(1) shall be paid on or before the 1st June 30 following the 
tax-increase date. 
(5) DEFINITIONS.—For purposes of this subsection— 
(A) TAX-INCREASE DATE.—The term "tax-increase date" 
means January 1,1991, and January 1,1993. 
(B) OTHER DEFINITIONS.—Terms used in this subsection 
which are also used in section 5702 of the Internal Revenue 
Code of 1986 shall have the respective meanings such terms 
have in such section. 
(C) SECRETARY.—The term "Secretary" means the Sec-
retary of the Treasury or his delegate. 
(6) CONTROLLED GROUPS.—Rules similar to the rules of section 
11201(eX6) shall apply for purposes of this subsection. 
(7) OTHER LAWS APPUCABLE.—All provisions of law, including 
penalties, applicable with respect to the taxes imposed by sec-
tion 5701 of such Code shall, insofar as applicable and not 
inconsistent with the provisions of this subsection, apply to the 
floor stocks taxes imposed by paragraph (1), to the same extent 
as if such taxes were imposed by such section 5701. 
SEC. 11203. ADDITIONAL CHEMICALS SUBJECT TO TAX ON OZONE-
DEPLETING CHEMICALS. 
(a) GENERAL RULE.— 
(1) The table set forth in section 4682(aX2) (defining ozone-
depleting chemical) is amended by striking the period after the 
last item and by adding at the end thereof the following new 
items: 
"Carbon tetrachloride 
Tetrachloromethane 
Methyl chloroform 
1,1,1-trichloroethane 
CFC-13 
CF3C1 
CFC-111 
C2FC15 
CFC-112 
C2F2C14 
CFC-211 
C3FC17 
CPC-212 
C3F2C16 
CFC-213 
C3F3C15 
CFC-214 
C3F4C14 
CFC-215 
C3F5C13 
CFC-216 
C3F6C12 
CFC-217 
C3F7CI." 
(2) The table set forth in section 46820t>) is amended by 
striking the period after the last item and by adding at the end 
thereof the following new items: 
"Carbon tetrachloride 
1.1 
Methyl chloroform 
0.1 
CFC-13 
1.0 
CFC-111 
1.0 
CFC-112 
1.0 
CFC-211 
1.0 
CFC-212 
1.0 
CFC-213 
1.0 
CFC-214 
1.0 
CFC-215 
1.0 
CFC-216 
1.0 
CFC-217 
1.0." 
104 STAT. 1388-422 
PUBLIC LAW 101-508—NOV. 5, 1990 
(b) SEPARATE APPUCATION OF EXPORT CREDIT LIMIT FOR NEWLY 
LISTED CHEMICALS.—Paragraph (3) of section 4682(d) is amended by 
adding at the end thereof the following new subparagraph: 
"(C) SEPARATE APPUCATION OF UMIT FOR NEWLY USTED 
CHEMICALS.— 
"(i) IN GENERAL,—Subparagraph (B) shall be applied 
separately with respect to newly listed chemicals and 
other chemicals. 
"(ii) APPLICATION TO NEWLY LISTED CHEMICALS.—In 
appljdng subparagraph (B) to newly listed chemicals— 
"(I) subparagraph (B) shall be applied by 
substituting '1989' for '1986' each place it appears, 
and 
"(II) clause (iXII) thereof shall be applied by 
substituting for the regulations referred to therein 
any regulations (whether or not prescribed by the 
Secretary) which the Secretary determines are 
comparable to the regulations referred to in such 
clause with respect to newly listed chemicals. 
"(iii) NEWLY USTED CHEMICAL.—For purposes of this 
subparagraph, the term 'newly listed chemical' means 
any substance which appears in the table contained in 
subsection (aX2) below Halon-2402." 
(c) SEPARATE BASE TAX AMOUNT FOR NEWLY LISTED CHEMICALS.— 
Subparagraphs (B) and (C) of section 4681(b)(1) are amended to read 
as follows: 
"(B) BASE TAX AMOUNT.— 
"(i) 
INITIALLY 
USTED 
CHEMICALS.—The base tax 
amount for purposes of subparagraph (A) with respect 
to any sale or use during a calendar year before 1995 
with respect to any ozone-depleting chemical other 
than a newly listed chemical (as defined in section 
4682(dX3XC)) is the amount determined under the fol-
_ lowing table for such calendar year: 
"Calendar Year 
Base Tax Amount 
1990 or 1991 
$1.37 
1992 
1.67 
1993 or 1994 
2.65. 
"(ii) NEWLY USTED CHEMICALS.—The base tax amount 
for purposes of subparagraph (A) with respect to any 
sale or use during a calendar year before 1996 with 
respect to any ozone-depleting chemical which is a 
newly listed chemical (as so defined) is the amount 
determined under the following table for such calendar 
year: 
"Calendar Year 
Base Tax Amount 
1991 or 1992 
$1.37 
1993 
1.67 
1994 
3.00 
1995 
3.10. 
"(C) BASE TAX AMOUNT FOR LATER YEARS.—The base tax 
amount for purposes of subparagraph (A) with respect to 
any sale or use of an ozone-depleting chemical during a 
calendar year after the last year specified in the table 
under subparagraph (B) applicable to such chemical shall 
be the base tax amount for such last year increased by 45 
cents for each year after such last year." 
(d) OTHER AMENDMENTS.— 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-423 
(1) The last sentence of section 4682(c)(2) is amended by 
inserting "(other than methyl chloroform)" after "ozone-deplet-
ing chemical". 
(2) Paragraph (3) of section 4682(h) is amended by striking 
"April 1" and inserting "June 30". 
(e) EFFECTIVE DATE.—The amendments made by this section shall 26 USC 4681 
take effect on January 1,1991. 
"°*®-
(f) DEPOSITS FOR 1ST QUARTER OF 1991.—No deposit of any tax 26 use 4682 
imposed by subchapter D of chapter 38 of the Internal Revenue Ck)de "°**-
of 1986 on any substance treated as an ozone-depleting chemical by 
reason of the amendment made by subsection (aXl) shall be required 
to be made before April 1,1991. 
PART II—USER-RELATED TAXES 
SEC. 11211. INCREASE AND EXTENSION OF HIGHWAY-RELATED TAXES 
AND TRUST FUND. 
(a) INCREASE IN TAX ON GASOUNE.— 
(1) IN GENERAL.—Subparagraph (A) of section 4081(a)(2) (relat-
ing to rate of tax) is amended— 
(A) by striking "and" at the end of clause (i), 
(B) by striking the period at the end of clause (ii) and 
inserting ", and", and 
(C) by adding at the end thereof the following new clause: 
"(iii) the deficit reduction rate." 
(2) RATES OF TAX.—Subparagraph (B) of section 4081(aX2) is 
amended— 
(A) by striking "9 cents a gallon, and" and inserting "11.5 
cents a gallon,", 
(B) by striking the period at the end of clause (ii) and 
inserting ", and", and 
(C) by adding at the end thereof the following new clause: 
"(iii) the deficit reduction rate is 2.5 cents a gallon." 
(3) TERMINATION OF DEFICIT REDUCTION RATE.—Subsection (d) 
of section 4081 is amended by adding at the end thereof the 
following new paragraph: 
"(3) DEFICIT REDUCTION RATE—On and after October 1, 1995, 
the deficit reduction rate under subsection (aX2) shall not 
apply." 
(4) 15-CENT TAX ON GASOUNE USED IN NONCOMMERCIAL AVIA-
TION.—Paragraph (3) of section 4041(c) is amended— 
(A) by striking "12 cents" and inserting "15 cents", and 
(B) by striking "the Highway Trust Fund financing rate" 
and inserting "the sum of the Highway Trust Fund financ-
ing rate plus the deficit reduction rate". 
(5) CONFORMING AMENDMENTS.— 
(A) Paragraph (1) of section 4081(c) is amended— 
(i) by striking "applied by" and all that follows 
through "in the case" and inserting "applied by 
substituting rates which are 10/9th of the otherwise 
applicable rates in the case", and 
(ii) by adding at the end thereof the following: "For 
purposes of this subsection, in the case of the Highway 
Trust Fund financing rate, the otherwise applicable 
rate is 6.1 cents a gallon." 
104 STAT. 1388-424 
PUBLIC LAW 101-508—NOV. 5, 1990 
(B) Paragraph (2) of section 4081(c) is amended by striking 
"at a rate equivalent to 3 cents" and inserting "at a High-
way Trust Fund financing rate equivalent to 6.1 cents". 
(C) Subsection (c) of section 4081 is amended by re-
designating parsigraph (4) as paragraph (5) and by inserting 
after paragraph (3) the following new paragraph: 
"(4) LOWER RATE ON GASOHOL MADE OTHER THAN FROM ETHA-
NOL.—In the case of gasohol none of the alcohol in which 
consists of ethanol, paragraphs (1) and (2) shall be applied by 
substituting '5.5 cents' for '6.1 cents'. 
(D) Subparagraph (B) of section 9503(bX4) is amended by 
striking "4081" and inserting "4041, 4081,". 
(E) Subparagraph (A) of section 9503(cX2) is amended by 
adding at the end thereof the following new sentence: 
"The amounts payable from the Highway Trust Fund 
under this subparagraph or paragraph (3) shall be deter-
mined by taking into account only the Highway Trust Fund 
financing rate applicable to any fuel." 
(F) Subsection (b) of section 9503 is amended by adding at 
the end thereof the following new paragraph: 
"(5) GENERAL REVENUE DEPOSITS OF CERTAIN TAXES ON ALCOHOL 
MIXTURES.—For purposes of this section, the amounts which 
would G)ut for this paragraph) be required to be appropriated 
under subparagraphs (A), (E), and (F) of paragraph (1) shall be 
reduced by— 
"(A) 0.6 cent per gallon in the case of taxes imposed on 
any mixture at lesist 10 percent of which is alcohol (as 
defined in section 4081(cX3)) if any portion of such alcohol is 
ethanol, and 
"(B) 0.67 cent per gallon in the case of gasoline or diesel 
fuel used in producing a mixture described in subparagraph 
(A)." 
26 use 4041 
(6) EFFECTIVE DATE.—Except as otherwise provided in this 
"°*®- 
subsection, the amendments made by this subsection shall apply 
to gasoline removed (as defined in section 4082 of the Internal 
Revenue Code of 1986) after November 30,1990. 
(b) INCREASE IN OTHER TAXES.— 
(1) DEFICIT REDUCTION RATE.— 
(A) Clause (i) of section 4091(bXlXA) is amended by insert-
ing "and the diesel fuel deficit reduction rate" after 
"financing rate". 
(B) Subsection (b) of section 4091 is amended by re-
designating paragraphs (4) and (5) as paragraphs (5) and (6), 
respectively, and by inserting after paragraph (3) the fol-
lowing new paragraph: 
"(4) DIESEL FUEL DEFICIT REDUCTION RATE.—For purposes of 
paragraph (1), except as provided in subsection (c), the diesel 
fuel deficit reduction rate is 2.5 cents per gallon." 
(C) Paragraph (6) of section 40910^), as redesignated by 
subparagraph (A), is amended by adding at the end thereof 
the following new subparagraph: 
"(D) The diesel fuel deficit reduction rate shall not apply 
on and after October 1,1995." 
(2) INCREASE IN HIGHWAY TRUST FUND FINANCING RATE.— 
Paragraph (2) of section 4091(b) is amended by striking "15 
cents and inserting "17.5 cents". 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-425 
(3) INCREASE IN TAX ON SPECIAL MOTOR FUELS.—Paragraph (2) 
of section 4041(a) is amended by striking "of 9 cents a gallon" 
and by inserting at the end thereof the following new sentence: 
"The rate of the tax imposed by this paragraph shall be the sum 
of the Highway Trust Fund financing rate and the deficit 
reduction rate in effect under section 4081 at the time of such 
sale or use." 
(4) DEFICIT REDUCTION TAX TO APPLY TO FUEL USED IN TRAINS.— 
(A) Paragraph (2) of section 4093(c) is amended by re-
designating subparagraph (B) as subparagraph (C) and by 
inserting after 
subparagraph (A) the following new 
subparagraph: 
"(B) DEFICIT REDUCTION TAX ON FUEL USED IN TRAINS.—In 
the case of fuel sold for use in a diesel-powered train, 
paragraph (1) also shall not apply to so much of the tax 
imposed by section 4091 as is attributable to the diesel fuel 
deficit reduction rate imposed by such section." 
(B)(i) Subsection (1) of section 6427 is amended by adding 
at the end thereof the following new paragraph: 
"(4) No REFUND OF DEFICIT REDUCTION TAX ON FUEL USED IN 
TRAINS.—In the case of fuel used in a diesel-powered train, 
paragraph (1) also shall not apply to so much of the tax imposed 
by section 4091 as is attributable to the diesel fuel deficit 
reduction rate imposed by such section." 
(ii) Paragraph (1) of section 6427(1) is amended by striking 
"paragraph (3)" and inserting "paragraphs (3) and (4)'. 
(5) INCREASES IN TAXES NOT TO APPLY TO CERTAIN BUSES.— 
Subparagraph (A) of section 6427(b)(2) is amended by striking 
"shall not exceed 12 cents" and inserting "shall be 3.1 cents per 
gallon less than the aggregate rate at which tax was imposed on 
such fuel by section 4041(a) or 4091, as the case may be". 
(6) CONFORMING AMENDMENTS.— 
(A) Paragraph (1) of section 4091(c) is amended— 
(i) by striking "9 cents" and inserting "12.1 cents" 
and by striking "10 cents" and inserting "13.44 cents", 
and 
(ii) by striking "shsill be 1/9 cent per gallon" and 
inserting "and the diesel fuel deficit reduction rate 
shall be 10/9th of the otherwise applicable such rates". 
(B) Paragraph (2) of section 4091(c) is amended by striking 
"9 cents" and inserting "12.1 cents". 
(CXi) Paragraph (1) of section 4041(a) is amended by 
striking "of 15 cents a gallon" and by inserting before the 
last sentence the following new sentence: 
"The rate of the tax imposed by this paragraph shall be the sum 
of the Highway Trust Fund financing rate and the diesel fuel 
deficit reduction rate in effect under section 4091 at the time of 
such sale or use." 
(ii) Subsection (a) of section 4041 is amended by striking 
paragraph (3). 
(D) Clause (i) of section 4041(bX2)(A) is amended to read as 
follows: 
"(i) the Highway Trust Fund financing rate ap-
plicable under subsection (a)(2) shall be 5.4 cents per 
gallon less than the otherwise applicable rate (6 cents 
per gallon in the case of a mixture none of the alcohol 
in which consists of ethanol), £md". 
-194 O - 91 - 27 : QL 3 Part 2 
104 STAT. 1388-426 
PUBLIC LAW 101-508—NOV. 5, 1990 
(EXi) Paragraph (1) of section 4041(k) is amended by 
striking subparagraphs (A), (B), and (C) and inserting the 
following new subparagraphs: 
"(A) the Highway Trust Fund financing rates under para-
graphs (1) and (2) of subsection (a) shall be the comparable 
rates under sections 4081(c) and 4091(c), as the case may be, 
"(B) no tax shall be imposed by subsection (c)(1), and 
"(C) no tax shall be imposed by subsection (c)(2)." 
(ii) Subsection (q) of section 6427 is amended to read as 
follows: 
"(q) GASOHOL USED IN NONCOMMERCIAL AVIATION.—Except £is pro-
vided in subsection (k), if— 
"(1) any tax is imposed by section 4081 at a rate determined 
under subsection (c) thereof on gasohol (as defined in such 
subsection), and 
"(2) such gasohol is used as a fuel in any aircraft in non-
commercial aviation (as defined in section 4041(cX4)), 
the Secretary shall pay (without interest) to the ultimate purchaser 
of such gasohol an amount equal to 1.4 cents (2 cents in the case of a 
mixture none of the alcohol in which consists of ethanol) multiplied 
by the number of gallons of gasohol so used." 
(F) Subparagraph (A) of section 4041(mXl) is amended to 
read £is follows: 
"(A) under subsection (aX2) the Highway Trust Fund 
financing rate shall be 5.75 cents per gallon and the deficit 
reduction rate shall be 1.25 cents per gallon, and". 
(G) Subsection (d) of section 9502 is amended by adding at 
the end thereof the following new paragraph: 
"(4) TRANSFERS FOR REFUNDS AND CREDITS NOT TO EXCEED 
TRUST FUND 
REVENUES ATTRIBUTABLE TO FUEL USED.—The 
amounts payable from the Airport and Airway Trust Fund 
under paragraph (2) or (3) shall not exceed the amounts re-
quired to be appropriated to such Trust Fund with respect to 
fuel so used." 
(H) Subparagraph (D) of section 9503(cX4) is amended by 
striking "(to the extent attributable to the Highway Trust 
Fund financing rate)" and by inserting before the period ", 
but only to the extent such taxes are attributable to the 
Highway Trust Fund financing rates under such sections". 
26 use 4041 
(7) EFFECTIVE DATE.—The amendments made by this subsec-
"°*®- 
tion shall take effect on December 1,1990. 
(c) EXTENSION OF TAXES.—The following provisions are each 
amended by striking "1993" each place it appears and inserting 
"1995": 
(1) Section 4051(c) (relating to tax on heavy trucks and trailers 
sold at retail). 
(2) Section 4071(d) (relating to t£ix on tires and tread rubber). 
(3) Section 4081(dXl) (relating to gasoline tax). 
(4) Section 4091(bX6XA) (relating to diesel fuel tax), as redesig-
nated by subsection (b). 
(5) Sections 4481(e), 4482(cX4), and 4482(d) (relating to high-
way use tax). 
(d) EXTENSION OF EXEMPTIONS.—The following provisions are each 
amended by striking "1993" each place it appears and inserting 
"1995": 
(1) Section 4041(fX3) (relating to exemptions for farm use). 
(2) Section 4041(g) (relating to other exemptions). 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-427 
(3) Section 4221(a) (relating to certain tax-free sales). 
(4) Section 4483(g) (relating to termination of exemptions for 
highway use tax). 
(5) Section 6420(h) (relating to gasoline used on farms). 
(6) Section 6421(i) (relating to gasoline used for certain non-
highway purposes, etc.). 
(7) Section 6427(gX5) (relating to advance repa5niient of in-
creased diesel fuel tax). 
(8) Section 6427(o) (relating to fuels not used for taxable 
purposes). 
(e) EXTENSION OF REDUCED RATES OF TAX ON FUELS (DONTAINING 
ALCOHOL.—The following provisions are each amended by striking 
"1993" each place it appears and inserting "2000": 
(1) Section 4041(bX2XC) (relating to qualified methanol and 
ethanol fuel). 
(2) Section 4041(kX3) (relating to fuels containing alcohol). 
(3) Section 4081(cX5) (relating to gasoline mixed with alcohol), 
as redesignated by subsection (a). 
(4) Subsections (cX3) and (d)(3) of section 4091 (relating to 
diesel fuel and aviation fuel mixed with alcohol and aviation 
fuel used to produce certain alcohol fuels). 
(f) OTHER PROVISIONS.— 
(1) FLOOR STOCKS REFUNDS.—Section 6412(aXl) (relating to 
floor stocks refunds) is amended— 
(A) by striking "1993" each place it appears and inserting 
"1995", and 
(B) by striking "1994" each place it appears and inserting 
"1996". 
(2) INSTALLMENT PAYMENTS OF HIGHWAY USE TAX.—Section 
6156(eX2) (relating to installment payments of tax on use of 
highway motor vehicles) is amended by striking "1993" and 
inserting "1995". 
(g) EXTENSION OF DEPOSITS INTO TRUST FUND.— 
(1) IN GENERAL.—Subsection (b), and paragraphs (2), (3), and 
(4) of subsection (c), of section 9503 (relating to the Highway 
Trust Fund) are each amended— 
(A) by striking "1993" each place it appears and inserting 
"1995", and 
(B) by striking "1994" each place it appears and inserting 
"1996". 
(2) CONFORMING AMENDMENTS TO LAND AND WATER CONSERVA-
TION FUND.—Section 201(b) of the Land and Water (Donservation 
Fund Act of 1965 (16 U.S.C. 4601-11) is amended— 
(A) by striking "1993" and inserting "1995", and 
(B) by striking "1994" each place it appears and inserting 
"1996". 
(h) INCREASE IN TRANSFERS TO MASS TRANSIT ACCOUNT.— 
(1) IN GENERAL.—Paragraph (2) of section 9503(e) is amended 
by striking "1 cent" and inserting "1.5 cents". 
(2) EFFECTIVE DATE.—The amendment made by paragraph (1) 
26 use 9503 
shall apply to amounts attributable to taxes imposed on or after 
"°**-
December 1,1990. 
(i) TRANSFERS OF SMALL-ENGINE FUEL TAXES INTO SPORT FISH 
RESTORATION ACCOUNT.— 
(1) IN GENERAL.—Section 9503(c) (relating to expenditures 
from highway trust fund) is amended by adding at the end 
thereof the following new paragraph: 
104 STAT. 1388-428 
PUBLIC LAW 101-508—NOV. 5, 1990 
"(5) TRANSFERS FROM THE TRUST FUND FOR SMALL-ENGINE FUEL 
TAXES.— 
"(A) IN GENERAL.—The Secretary shall pay from time to 
time from the Highway Trust Fund into the Sport Fish 
Restoration Account in the Aquatic Resources Trust Fund 
amounts (as determined by him) equivalent to the small-
engine fuel taxes received on or after December 1,1990, and 
before October 1,1995. 
"(B) SMALL-ENGINE FUEL TAXES.—For purposes of this 
paragraph, the term 'small-engine fuel taxes' means the 
taxes under section 4081 with respect to gasoline used as a 
fuel in the nonbusiness use of small-engine outdoor power 
equipment, but only to the extent such taxes are attrib-
utable to the Highway Trust Fund financing rate under 
such section." 
(2) CONFORMING AMENDMENT.—Section 9504(aX2) (relating to 
accounts in aquatic resources trust fund) is amended by insert-
ing "section 9503(cX5)," after "section 9503(cX4),". 
(3) EXPENDITURES FOR COASTAL WETLANDS RESTORATION.—Sec-
tion 9504(bX2) (relating to expenditures from sport fish restora-
tion account) is amended to read as follows: 
"(2) EXPENDITURES FROM ACCOUNT.—Amounts in the Sport 
Fish Restoration Account shall be available, as provided by 
appropriation Acts, for making expenditures— 
"(A) to carry out the purposes of the Act entitled 'An Act 
to provide that the United States shall aid the States in fish 
restoration and management projects, and for other pur-
poses', approved August 9, 1950 (as in effect on October 1, 
1988), and 
"(B) to carry out the purposes of any law which is 
substantially identical to S. 3252 of the 101st Congress, as 
introduced. 
Amounts transferred to such account under section 9503(cX5) 
may be used only for making expenditures described in subpara-
graph (B) of this paragraph. 
26 use 9503 
(4) EFFECTIVE DATE.—The amendments made by this subsec-
note. 
tion shall take effect on December 1,1990. 
26 use 4081 
0
*
) FLOOR STOCKS TAXES.— 
note. 
(1) IMPOSITION OF TAX.—In the case of— 
(A) gasoline and diesel fuel on which tax WEIS imposed 
under section 4081 or 4091 of such Code before December 1, 
1990, and which is held on such date by any person, or 
(B) diesel fuel on which no tax was imposed under section 
4091 of such Code at the Highway Trust Fund financing 
rate before December 1, 1990, and which is held on such 
date by any person for use as a fuel in a train, 
there is hereby imposed a floor stocks tax on such gasoline and 
diesel fuel. 
(2) RATE OF TAX.—The rate of the tax imposed by paragraph 
(1) shall be— 
(A) 5 cents per gallon in the case of fuel described in 
paragraph (IXA), and 
(B) 2.5 cents per gallon in the case of fuel described in 
paragraph (IXB). 
In the case of any fuel held for use in producing a mixture 
described in section 4081(cXl) or section 4091(cXlXA) of such 
Code, subparagraph (A) shall be applied by substituting "6.22 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-429 
cents" for "5 cents". If no alcohol in such mixture is ethanol, 
the preceding sentence shall be applied by substituting "5.56 
cents" for "6.22 cents". 
(3) LlABIUTY FOR TAX AND METHOD OF PAYMENT.— 
(A) LIABILITY FOR TAX.—A person holding gasoline or 
diesel fuel on December 1, 1990, to which the tex imposed 
by paragraph (1) applies shsill be liable for such tax. 
(B) METHOD OF PAYMENT.—The tax imposed by paragraph 
(1) shall be paid in such manner as the Secretary shall 
prescribe. 
(C) TIME FOR PAYMENT.—The tax imposed by paragraph 
(1) shall be paid on or before May 31,1991. 
(4) DEFINITIONS.—For purposes of this subsection— 
(A) HELD BY A PERSON.—Gasoline and diesel fuel shall be 
considered as "held by a person" if title thereto has passed 
to such person (whether or not delivery to the person has 
been made). 
(B) GASOLINE.—The term "gasoline" has the meaning 
given such term by section 4082 of such Code. 
(C) DIESEL FUEL.—The term "diesel fuel" has the meaning 
given such term by section 4092 of such Code. 
(D) SECRETARY.—The term "Secretary" means the Sec-
retary of the Treasury or his delegate. 
(5) EXCEPTION FOR EXEMPT USES.—The tsix imposed by para-
graph (1) shall not apply to gasoline or diesel fuel held by any 
person exclusively for any use to the extent a credit or refund of 
the tax imposed by section 4081 or 4091 of such Code, as the case 
may be, is allowable for such use. 
(6) EXCEPTION FOR FUEL HELD IN VEHICLE TANK.—No tax shall 
be imposed by paragraph (1) on gasoline or diesel fuel held in 
the tank of a motor vehicle or motorboat. 
(7) EXCEPTION FOR CERTAIN AMOUNTS OF FUEL.— 
(A) IN GENERAL.—No tax shall be imposed by paragraph 
( D -
(i) on gasoline held on December 1, 1990, by any 
person if the aggregate amount of gasoline held by such 
person on such date does not exceed 4,000 gallons, and 
(ii) on diesel fuel held on December 1, 1990, by any 
person if the aggregate amount of diesel fuel held by 
such person on such date does not exceed 2,000 gallons. 
The preceding sentence shall apply only if such person 
submits to the Secretary (at the time and in the manner 
required by the Secretary) such information as the Sec-
retary shall require for purposes of this paragraph. 
(B) EXEMPT FUEL.—For purposes of subparagraph (A), 
there shall not be taken into account fuel held by any 
person which is exempt from the tax imposed by paragraph 
(1) by reason of paragraph (5) or (6). 
(C) CONTROLLED GROUPS.—For purposes of this paragraph, 
rules similar to the rules of paragraph (6) of section 11201(e) 
of this Act shall apply. 
(8) OTHER LAWS APPUCABLE.—All previsions of law, including 
penalties, applicable with respect to the taxes imposed by sec-
tion 4081 of such (Dode in the case of gasoline and section 4091 of 
such Code in the case of diesel fuel shall, insofar as applicable 
and not inconsistent with the provisions of this subsection, 
apply with respect to the floor stock taxes imposed by para-
104 STAT. 1388-430 
PUBLIC LAW 101-508—NOV. 5, 1990 
graph (1) to the same extent £is if such taxes were imposed by 
such section 4081 or 4091. 
(9) TRANSFER OF PORTION OF FLOOR STOCKS REVENUE TO HIGH-
WAY TRUST FUND.—For purposes of determining the amount 
transferred to the Highway Trust Fund, the tax imposed by 
paragraph (1) on fuel described in subparagraph (A) thereof 
shall be treated as imposed at a Highway Trust Fund financing 
rate to the extent of 2.5 cents per gallon. 
SEC. 11212. IMPROVEMENTS IN ADMINISTRATION OF GASOLINE EXCISE 
TAX. 
(a) IN GENERAL.—Paragraph (1) of section 4081(a) is amended to 
read as follows: 
"(1) T A X ON REMOVAL, ENTRY, OR SALE.— 
"(A) IN GENERAL.—There is hereby imposed a tax at the 
rate specified in paragraph (2) on— 
"(i) the removal of gasoline from any refinery, 
"(ii) the removal of gasoline from any terminal, 
"(iii) the entry into the United States of gasoline for 
consumption, use, or warehousing, and 
"(iv) the sale of gasoline to any person who is not 
registered under section 4101 unless there was a prior 
taxable removal or entry of such gasoline under clause 
(i), (ii), or (iii). 
"(B) EXCEPTION FOR BULK TRANSFERS TO REGISTERED TERMI-
NALS.—The tax imposed by this paragraph shall not apply 
to any removal or entry of gasoline transferred in bulk to a 
terminal if the person removing or entering the gasoline 
and the operator of such terminal are registered under 
section 4101." 
(b) CHANGES IN REGISTRATION RULES.— 
(1) IN GENERAL.—Section 4101 is amended to read as follows: 
"SEC. 4101. REGISTRATION AND BOND. 
"(a) REGISTRATION.—Every person required by the Secretary to 
register under this section with respect to the tax imposed by section 
4081 or 4091 shall register with the Secretary at such time, in such 
form and manner, and subject to such terms and conditions, as the 
Secretary may by regulations prescribe. A registration under this 
section may be used only in accordance with regulations prescribed 
under this section. 
"(b) BONDS AND LIENS.— 
"(1) IN GENERAL.—Under regulations prescribed by the Sec-
retary, the Secretary may require, as a condition of permitting 
any person to be registered under subsection (a), that such 
person— 
"(A) give a bond in such sum as the Secretary determines 
appropriate, and 
'(B) agree to the imposition of a lien— 
"(i) on such property (or rights to property) of such 
person used in the trade or business for which the 
registration is sought, or 
(ii) with the consent of such person, on any other 
property (or rights to property) of such person as the 
Secretary determines appropriate. 
Rules similar to the rules of section 6323 shall apply to the 
lien imposed pursuant to this paragraph. 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-431 
"(2) RELEASE OR DISCHARGE OF UEN.—If a lien is imposed 
pursuant to parsigraph (1), the Secretary shall issue a certificate 
of discharge or a release of such lien in connection with a 
transfer of the property if there is furnished to the Secretary 
(and accepted by him) a bond in such sum as the Secretary 
determines appropriate or the transferor agrees to the imposi-
tion of a substitute lien under paragraph (IXB) in such sum as 
the Secretary determines appropriate. The Secretary shall re-
spond to any request to discharge or release a lien imposed 
pursuant to paragraph (1) in connection with a transfer of 
property not later than 90 days after the date the request for 
such a discharge or release is made. 
"(c) DENIAL, REVOCATION, OR SUSPENSION OF REGISTRATION.—Rules 
similar to the rules of section 4222(c) shall apply to registration 
under this section. 
"(d) INFORMATION REPORTING.—The Secretary may require— 
"(1) information reporting by any person registered under 
this section, Eind 
"(2) information reporting by such other persons as the Sec-
retary deems necessary to carry out this part." 
(2) CLARIFICATION OF GENERAL REGISTRATION RULES.—Subsec-
tion (c) of section 4222 is amended— 
(A) by striking "revoked or suspended" in the material 
preceding paragraph (1) and inserting "denied, revoked, or 
suspended , 
(B) by striking "revocation or suspension" each place it 
appears and inserting "denial, revocation, or suspension", 
and 
(C) by striking in the heading "REVOCATION OR SUSPEN-
SION" and inserting "DENIAL, REVOCATION, OR SUSPENSION". 
(3) DISCLOSURE PERMITTED OF REGISTRATION INFORMATION.— 
Subsection (k) of section 6103 is amended by adding at the end 
thereof the following new paragraph: 
"(7) DISCLOSURE OF EXCISE TAX REGISTRATION INFORMATION.— 
To the extent the Secretary determines that disclosure is nec-
essary to permit the effective administration of subtitle D, the 
Secretary may disclose— 
"(A) the name, address, and registration number of each 
person who is registered under any provision of subtitle D 
(and, in the case of a registered terminal operator, the 
address of each terminal operated by such operator), and 
"(B) the registration status of any person." 
(4) CONFORMING AMENDMENT.—Section 4093 is amended by 
striking subsection (e) (relating to special administrative rules) 
and by redesignating subsection (f) as subsection (e). 
(c) CERTAIN ADDITIONAL PERSONS LIABLE FOR TAX WHERE WILLFUL 
FAILURE TO PAY.—Subpart C of part III of subchapter A of chapter 
32 is amended by adding at the end thereof the following new 
section: 
"SEC. 4103. CERTAIN ADDITIONAL PERSONS LIABLE FOR TAX WHERE 
WILLFUL FAILURE TO PAY. 
"In any case in which there is a willful failure to pay the tax 
imposed by section 4081 or 4091, each person— 
"(1) who is an officer, employee, or agent of the taxpayer who 
is under a duty to assure the pa3mient of such tax and who 
willfully fails to perform such duty, or 
104 STAT. 1388-432 
PUBLIC LAW 101-508—NOV. 5, 1990 
"(2) who willfully causes the taxpayer to fail to pay such tax, 
shall be jointly and severally liable with the taxpayer for the tax to 
which such failure relates." 
(d) REFUNDS IN CERTAIN CASES.— 
(1) IN GENERAL.—Section 4081 is amended by adding at the 
end thereof the following new subsection: 
"(e) REFUNDS IN CERTAIN CASES.—Under regulations prescribed by 
the Secretary, if any person who paid the tax imposed by this section 
with respect to any gasoline establishes to the satisfaction of the 
Secretary that a prior tax was paid (and not credited or refunded) 
with respect to such gasoline, then an amount equal to the tax paid 
by such person shall be allowed as a refund (without interest) to 
such person in the same manner as if it were an overpayment of tax 
imposed by this section." 
(2) DENIAL OF CREDITS.—Subsection (d) of section 6416 is 
amended by adding at the end thereof the following new sen-
tence: "The preceding sentence shall not apply to the tax im-
posed by section 4081 in the case of refunds described in section 
4081(e).'^' 
(e) TECHNICAL AND CONFORMING AMENDMENTS.— 
(1) Paragraph (1) of section 6724(d) is amended by striking 
"or" at the end of clause (x), by striking ", or subsection (e)," in 
clause (xi), by striking the period at the end of clause (xi) and 
inserting ", or", and by inserting after clause (xi) the following 
new clause: 
"(xii) section 4101(d) (relating to information report-
ing with respect to fuels taxes)." 
(2) Subsection (a) of section 4081 is amended by striking 
paragraph (3). 
(3) The table of sections for subpart C of part III of subchapter 
A of chapter 32 is amended by adding at the end thereof the 
following new item: 
"Sec. 4103. Certain additional persons liable for tax where willful failure to 
pay." 
26 u s e 4081 
(f) EFFECTIVE DATES.— 
(1) IN GENERAL.—Except as provided in paragraph (2), the 
amendments made by this section shall take effect on July 1, 
1991. 
(2) REGISTRATION, ETC.—The amendments made by subsec-
tions (b), (c), and (e) (other than paragraph (2) thereof) shall take 
effect on t)ecember 1,1990. 
SEC. 11213. INCREASE AND EXTENSION OF AVIATION-RELATED TAXES 
AND TRUST FUND; REPEAL OF REDUCTION IN RATES. 
(a) INCREASE IN RATES ON TRANSPORTATION.— 
(1) TRANSPORTATION OF PERSONS.—Subsections (a) and (b) of 
section 4261 are each amended by striking "8 percent" and 
inserting "10 percent". 
(2) TRANSPORTATION OF PROPERTY.—Subsection (a) of section 
4271 is amended by striking "5 percent" and inserting "6.25 
percent". 
^LY^ "^^ei 
(3) EFFECTIVE DATE.—The amendments made by this subsec-
tion shall apply to transportation beginning after November 30, 
1990, but shall not apply to amounts paid on or before such date. 
(b) INCREASE IN RATES ON FUEL.— 
(1) IN GENERAL.—Paragraph 
(3) of section 
4091(b) is 
amended— 
note. 
note. 
PUBLIC LAW 101-508—NOV. 5,1990 
104 STAT. 1388-433 
(A) by striking "14 cents" and inserting "17.5 cents", and 
(B) by inserting "except as provided in subsection (d)," 
after "paragraph (1),". 
(2) CONFORMING AMENDMENTS.— 
(A) Paragraph (1) of section 4041(c) is amended by strik-
ing "14 cents" and inserting "17.5 cents". 
(B)(i) SubparEigraph (B) of section 4041(kXl), as amended 
by section 11211, is amended to read as follows: 
"(B) the rate of the tax imposed by subsection (cXD shall 
be the comparable rate under section 4091(d), and". 
(ii) Subparagraph (B) of section 4041(m)(l) is amended to 
read £is follows: 
"(B) the rate of the tax imposed by subsection (cXl) shall 
be the comparable rate under section 4091(dXl)." 
(CXi) Paragraphs (1) and (2) of section 4091(d) are 
amended to read as follows: 
"(1) IN GENERAL.—The Airport and Airway Trust Fund 
financing rate shall be— 
"(A) 4.1 cents per gallon in the case of the sale of any 
mixture of aviation fuel if— 
"(i) at least 10 percent of such mixture consists of 
alcohol (as defined in section 4081(cX3)), and 
"(ii) the aviation fuel in such mixture was not taxed 
under subparagraph (B), and 
"(B) 4.56 cents per gallon in the case of the sale of 
aviation fuel for use (at the time of such sale) in producing a 
mixture described in subparagraph (A). 
In the case of a sale described in subparagraph (B), the Leaking 
Underground Storage Tank Trust Fund financing rate shall be 
V
b cent per gallon. 
"(2) LATER SEPARATION.—If any person separates the aviation 
fuel from a mixture of the aviation fuel and alcohol on which 
tax was imposed under subsection (a) at the Airport and Airway 
Trust Fund financing rate equivalent to 4.1 cents per gallon by 
reason of this subsection (or with respect to which a credit or 
payment was allowed or made by reason of section 6427(fKl)), 
such person shall be treated as the producer of such aviation 
fuel. The amount of tax imposed on any sale of such aviation 
fuel by such person shall be reduced by the amount of tax 
imposed (and not credited or refunded) on any prior sale of such 
fuel." 
(ii) The heading for subsection (d) of section 4091 is 
amended by striking "EXEMPTION FROM" and inserting 
"REDUCED RATE OF". 
(D) Section 4091 is amended by adding at the end thereof 
the following new subsection: 
"(e) LOWER RATES OF TAX ON ALCOHOL MIXTURES NOT MADE FROM 
ETHANOL.—In the case of a mixture described in subsection 
(cXlXA)(i) or (d)(l)(A)(i) none of the alcohol in which is ethanol— 
"(1) subsections (c)(1)(A) and (c)(2), and subsections (dXlXA) 
and (dX2), shall each be applied by substituting rates which are 
0.6 cents less than the rates contained therein, and 
"(2) subsections (cXlXB) and (dXlXB) shall be applied by 
substituting rates which are 10/9 of the rates determined under 
paragraph (1)." 
(3) Subsection (f) of section 6427 is amended to read as follows: 
104 STAT. 1388-434 
PUBLIC LAW 101-508—NOV. 5, 1990 
"(t) GASOUNE, DIESEL FUEL, AND AVIATION FUEL USED TO PRODUCE 
CERTAIN ALCOHOL FUELS.— 
"(1) IN GENERAL.—Except as provided in subsection (k), if any 
gasoline, diesel fuel, or aviation fuel on which tax was imposed 
by section 4081 or 4091 at the regular tax rate is used by any 
person in producing a mixture described in section 4081(c), 
4091(cXlXA), or 4091(dXlXA) (as the case may be) which is sold 
or used in such person's trade or business the Secretary shall 
pay (without interest) to such person an amount equal to the 
excess of the regular tax rate over the incentive tax rate with 
respect to such fuel. 
"(2) DEFINITIONS.—For purposes of paragraph (1)— 
"(A) REGULAR TAX RATE.—The term 'regular tax rate' 
means— 
"(i) in the case of gasoline, the aggregate rate of tax 
imposed by section 4081 determined without regard to 
subsection (c) thereof, 
"(ii) in the case of diesel fuel, the aggregate rate of 
tax imposed by section 4091 on such fuel determined 
without regard to subsection (c) thereof, and 
"(iii) in the case of aviation fuel, the aggregate rate of 
tax imposed by section 4091 on such fuel determined 
without regard to subsection (d) thereof. 
"(B) INCENTIVE TAX RATE.—The term 'incentive tax rate' 
means— 
"(i) in the case of gasoline, the aggregate rate of tax 
imposed by section 4081 with respect to fuel described 
in subsection (cXD thereof, 
"(ii) in the case of diesel fuel, the aggregate rate of 
tax imposed by section 4091 with respect to fuel de-
scribed in subsection (cXl)(B) thereof, and 
"(iii) in the case of aviation fuel, the aggregate rate of 
tax imposed by section 4091 with respect to fuel de-
scribed in subsection (dXl)(B) thereof. 
"(3) COORDINATION WITH OTHER REPAYMENT PROVISIONS.—No 
amount shall be payable under paragraph (1) with respect to 
any gasoline, diesel fuel, or aviation fuel with respect to which 
an amount is payable under subsection (d), (e), or (1) of this 
section or under section 6420 or 6421. 
"(4) TERMINATION.—This subsection shall not apply with re-
spect to any mixture sold or used after September 30, 1995." 
26 use 4041 
(4) EFFECTIVE DATE.—The amendments made by this subsec-
"°*®- 
tion shall take effect on December 1,1990. 
26 use 4041 
(5) FLOOR STOCKS TAXES.— 
° 
(A) IMPOSITION OF TAX.—In the case of aviation fuel on 
which tax was imposed under section 4041(cXl) or 4091 of 
the Internal Revenue Code of 1986 before December 1,1990, 
and which is held on such date by any person, there is 
hereby imposed a floor stocks tax on such fuel. 
(B) RATE OF TAX.—The rate of the tax imposed by 
subparagraph (A) shall be 3.5 cents per gallon. 
(C) LIABILITY FOR TAX AND METHOD OF PAYMENT.— 
(i) LIABILITY FOR TAX.—A person holding fuel on 
December 1, 1990, to which the tax imposed by this 
paragraph applies shall be liable for such tax. 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-435 
(ii) METHOD OF PAYMENT.—The tax imposed by this 
paragraph shall be paid in such manner as the Sec-
retary shall prescribe. 
(iii) TIME FOR PAYMENT.—The tax imposed by this 
paragraph shall be paid on or before May 31, 1991. 
(D) DEFINITIONS.—For purposes of this paragraph— 
(i) HELD BY A PERSON.—Fuel shall be considered as 
"held by a person" if title thereto has passed to such 
person (whether or not delivery to the person has been 
made). 
(ii) AVIATION FUEL.—The term "aviation fuel" has 
the meaning given such term by section 4092(a) of such 
Code. 
(iii) SECRETARY.—The term "Secretary" means the 
Secretary of the Treasury or his delegate. 
(E) EXCEPTION FOR EXEMPT USES.—The tax imposed by this 
paragraph shall not apply to fuel held by any person exclu-
sively for any use which is a nontaxable use (as defined in 
section 6427(1) of such Code). 
(F) OTHER LAWS APPUCABLE.—All provisions of law, 
including penalties, applicable with respect to the taxes 
imposed by section 4091 of such Code shall, insofar as 
applicable and not inconsistent with the provisions of this 
paragraph, apply with respect to the floor stock taxes im-
posed by this paragraph to the same extent as if such taxes 
were imposed by such section 4091. 
(c) SPECIAL RULES FOR DEPOSITS OF TAX REVENUES.— 
(1) Section 9502 is amended by adding at the end thereof the 
following new subsection: 
"(e) SPECIAL RULES FOR TRANSFERS INTO TRUST FUND.— 
"(1) INCREASES IN TAX REVENUES BEFORE 1993 TO REMAIN IN 
GENERAL FUND.—In the case of taxes imposed before January 1, 
1993, the amounts which would (but for this paragraph) be 
required to be appropriated under paragraphs (1), (2), and (3) of 
subsection (b) shall be 3 cents per gallon less (3.5 cents per 
gallon less in the case of taxes imposed by section 4041(cXl) and 
4091) than the amounts which would (but for this sentence) be 
appropriated under such paragraphs. 
"(2) CERTAIN TAXES ON ALCOHOL MIXTURES TO REMAIN IN GEN-
ERAL FUND.—For purposes of this section, the amounts which 
would (but for this paragraph) be required to be appropriated 
under paragraphs (1), (2), and (3) of subsection (b) shall be 
reduced by— 
"(A) 0.6 cent per gallon in the case of taxes imposed on 
any mixture at least 10 percent of which is alcohol (as 
defined in section 4081(cX3)) if any portion of such alcohol is 
ethanol, and 
"(B) 0.67 cent per gallon in the case of fuel used in 
producing a mixture described in subparagraph (A)." 
(2) Paragraph (2) of section 9502(b) is amended bv inserting 
"and the deficit reduction rate" after "financing rate . 
(d) EXTENSION OF TAXES AND TRUST FUND.— 
(1) TRANSPORTATION TAXES.—Sections 4261(g) and 4271(d) are 
each amended by striking "January 1, 1991" and inserting 
"January 1,1996'\ 
(2) FUEL TAXES.— 
104 STAT. 1388-436 
PUBLIC LAW 101-508—NOV. 5, 1990 
(A) Subparagraph (B) of section 4091(bX6), as redesignated 
by section 11211, is amended by striking "January 1, 1991" 
and inserting "January 1,1996". 
(B) Paragraph (5) of section 4041(c) is amended by striking 
"December 31, 1990" and insertmg "December 31, 1995". 
(3) DEPOSITS INTO TRUST FUND.—Subsection (b) of section 9502 
(relating to transfer to Airport and Airway Trust Fund of 
amounts equivalent to certain taxes) is amended by striking 
"January 1,1991" each place it appears and inserting "January 
1,1996". 
(4) EXPENDITURE PURPOSES TO INCLUDE THE FEDERAL AVIATION 
ADMINISTRATION RESEARCH, ENGINEERING, AND DEVELOPMENT 
AUTHORIZATION ACT OF 1990 AND THE AVIATION SAFETY AND 
CAPACITY EXPANSION ACT OF 1990.—Subparagraph (A) of section 
9502(dXl) is amended by striking "(as such Acts were in effect 
on the date of the enactment of the Airport and Airway Safety 
and Capacity Expansion Act of 1987)" and inserting "or the 
Federal Aviation Administration Research, Engineering, and 
Development Authorization Act of 1990 or the Aviation Safety 
and Capacity Expansion Act of 1990 (as such Acts were in effect 
on the date of the enactment of the Aviation Ssifety and Capac-
ity Expansion Act of 1990)". 
(e) REPEAL OF REDUCTION IN RATES.— 
(1) Section 4283 (relating to reduction in aviation related 
taxes in certain cases) is hereby repealed. 
(2) The table of sections for part III of subchapter C of chapter 
33 is amended by striking the item relating to section 4283. 
(3) Subsection (c) of section 4041 is amended by striking 
paragraph (6). 
(f) COORDINATION WITH OTHER PROVISIONS.—No amendment or 
any other provision of this section shall take effect unless the 
Airport Noise and Capacity Act of 1990, the Aviation Safety and 
Capacity Expansion Act of 1990, and the Federal Aviation Adminis-
tration Research, Engineering, and Development Authorization Act 
of 1990 are enacted as part of this Act and are identical to the 
provisions of such Acts as included in the conference report on H.R. 
5835 of the 101st Congress. 
SEC. 11214. INCREASE IN HARBOR MAINTENANCE TAX. 
(a) I N GENERAL.—Subsection (b) of section 4461 is amended by 
striking "0.04 percent" and inserting "0.125 percent". 
26 u s e 4461 
(b) EFFECTIVE DATE.—The amendment made by subsection (a) 
''°*®- 
shall take effect on January 1,1991. 
SEC. 11215. EXTENSION OF LEAKING UNDERGROUND STORAGE TANK 
TRUST FUND TAXES. 
(a) IN GENERAL.—Paragraph (2) of section 4081(d) is amended to 
read as follows: 
"(2) 
LEAKING 
UNDERGROUND STORAGE TANK TRUST FUND 
FINANCING RATE.—The Leaking Underground Storage Tank 
Trust Fund financing rate under subsection (a)(2) shall not 
apply after December 31,1995." 
26 use 4081 
(b) EFFECTIVE DATE.—The amendment made by subsection (a) 
"o*®- 
shall take effect on December 1,1990. 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-437 
SEC. 11216. AMENDMENTS TO GAS GUZZLER TAX. 
(a) INCREASE IN RATE OF TAX.—Subsection (a) of section 4064 
(relating to gas guzzler tax) is amended to read as follows: 
"(a) IMPOSITION OF TAX.—There is hereby imposed on the sale by 
the manufacturer of each automobile a tax determined in accord-
ance with the following table: 
If the fuel economy of the model type 
in which the automobile falls is: 
The tax is: 
At least 22.5 
$0 
At least 21.5 but less than 22.5 
1,000 
At least 20.5 but less than 21.5 
1,300 
At least 19.5 but less than 20.5 
1,700 
At least 18.5 but less than 19.5 
2,100 
At least 17.5 but less than 18.5 
2,600 
At least 16.5 but less than 17.5 
3,000 
At least 15.5 but less than 16.5 
3,700 
At least 14.5 but less than 15.5 
4,500 
At least 13.5 but less than 14.5 
5,400 
At least 12.5 but less than 13.5 
6,400 
Less than 12.5 
7,700." 
(b) LIMOUSINES INCLUDED WITHOUT REGARD TO WEIGHT.—Subpara-
graph (A) of section 4064(bXl) is amended by adding at the end 
thereof the following new sentence: 
"In the case of a limousine, the preceding sentence shall be 
applied without regard to clause (ii)." 
(c) REPEAL OF EXCEPTION FOR LENGTHENING EXISTING AUTO-
MOBILES.—Subparagraph (B) of section 4064(bX5) (defining manufac-
turer) is amended to read as follows: 
"(B) LENGTHENING TREATED AS MANUFACTURE.—For pur-
poses of this section, subchapter G of this chapter, and 
section 6416(b)(3), the lengthening of an automobile by any 
person shall be treated as the manufacture of an auto-
mobile by such person." 
(d) REPEAL OF SPECIAL RULES FOR SMALL MANUFACTURERS.—Sec-
tion 4064 is amended by striking subsection (d). 
(e) EFFECTIVE DATES.— 
26 use 4064 
(1) SUBSECTIONS (a) AND (b).—The amendments made by "°*®-
subsections (a) and (b) shall apply to sales after December 31, 
1990. 
(2) SUBSECTION (C).—The amendments made by subsection (c) 
shall take effect on January 1,1991. 
(3) SUBSECTION (d).—The simendment made by subsection (d) 
shall take effect on the date of the enactment of this section. 
SEC. 11217. TELEPHONE EXCISE TAX MODIFIED AND MADE PERMANENT. 
(a) TAX MADE PERMANENT.—Paragraph (2) of section 4251(b) is 
amended by striking "percent;" and all that follows and inserting 
"percent." 
0)) ACCELERATION OF DEPOSIT REQUIREMENTS.— 
(1) IN GENERAL.—Subsection (e) of section 6302 (relating to 
time for deposit of taxes of airline tickets) is amended— 
(A) by inserting "COMMUNICATIONS SERVICES AND" before 
"AIRLINE", and 
(B) by inserting "section 4251 or" before "subsection (a) or 
(b)". 
(2) EFFECTIVE DATE.—The amendment made by paragraph (1) 26 USC 6302 
shall apply to pajnnents of taxes considered collected during ^^*^' 
semimonthly periods beginning after December 31,1990. 
104 STAT. 1388-438 
PUBLIC LAW 101-508—NOV. 5, 1990 
(c) ONE-TIME FILING OF TELEPHONE EXCISE TAX EXEMPTION CER-
TIFICATES.— 
(1) IN GENERAL.—Section 4253 is amended by adding at the 
end thereof the following new subsection: 
"(k) FILING OF EXEMPTION CERTIFICATES.— 
"(1) IN GENERAL.—In order to claim an exemption under 
subsection (c), (h), (i), or (j)> a person shall provide to the 
provider of communications services a statement (in such form 
and manner as the Secretary may provide) certifying that such 
person is entitled to such exemption. 
"(2) DURATION OF CERTIFICATE.—Any statement provided 
under paragraph (1) shall remain in effect until— 
"(A) the provider of communications services has actual 
knowledge that the information provided in such statement 
is false, or 
"(B) such provider is notified by the Secretary that the 
provider of the statement is no longer entitled to an exemp-
tion described in paragraph (1). 
If any information provided in such statement is no longer 
accurate, the person providing such statement shall inform the 
provider of communications services within 30 days of any 
change of information." 
26 u s e 4253 
(2) EFFECTIVE DATE.— 
"°*®' 
(A) IN GENERAL.—The amendment made by paragraph (1) 
shall apply to any claim for exemption made after the date 
of the enactment of this Act. 
(B) DURATION OF EXISTING CERTIFICATES.—Any annual cer-
tificate of exemption effective on the date of the enactment 
of this Act shall remain effective until the end of the 
annual period. 
26 u s e 5001 
SEC. 11218. FLOOR STOCKS TAX TREATMENT OF ARTICLES IN FOREIGN 
note. 
TRADE ZONES. 
Notwithstanding the Act of June 18, 1934 (48 Stat. 998, 19 U.S.C. 
81a) or any other provision of law, any article which is located in a 
foreign trade zone on the effective date of any increase in tax under 
the amendments made by this part or part I shall be subject to floor 
stocks taxes imposed by such parts i
f
— 
(1) internal revenue taxes have been determined, or customs 
duties liquidated, with respect to such article before such date 
pursuant to a request made under the 1st proviso of section 3(a) 
of such Act, or 
(2) such article is held on such date under the supervision of a 
customs officer pursuant to the 2d proviso of such section 3(a). 
PART III—TAXES ON LUXURY ITEMS 
SEC. 11221. TAXES ON LUXURY ITEMS. 
(a) IN GENERAL.—Chapter 31 (relating to retail excise taxes) is 
amended by redesignating subchapters A and B as subchapters B 
and C, respectively, and by inserting before subchapter B (as so 
redesignated) the following new subchapter: 
"SUBCHAPTER A—CERTAIN LUXURY ITEMS 
"Part I. Imposition of taxes. 
"Part II. Rules of general applicability. 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-439 
"PART I. IMPOSITION OF TAXES 
"Subpart A. Passenger vehicles, boats, and aircraft. 
"Subpart B. Jewelry and furs. 
"Subpart A—Passenger Vehicles, Boats, and Aircraft 
"Sec. 4001. Passenger vehicles. 
"Sec. 4002. Boats. 
"Sec. 4003. Aircraft. 
"Sec. 4004. Rules applicable to subpart A. 
"SEC. 4001. PASSENGER VEHICLES. 
"(a) IMPOSITION OF TAX.—There is hereby imposed on the 1st retail 
sale of any passenger vehicle a tax equal to 10 percent of the price 
for which so sold to the extent such price exceeds $30,000. 
"OJ) PASSENGER VEHICLE.— 
"(1) IN GENERAL.—For purposes of subsection (a), the term 
'passenger vehicle' means any 4-wheeled vehicle— 
"(A) which is manufactured primarily for use on public 
streets, roads, and highways, sind 
"(B) which is rated at 6,000 pounds unloaded gross vehicle 
weight or less. 
"(2) SPECIAL RULES.— 
"(A) TRUCKS AND VANS.—In the case of a truck or van, 
paragraph (1)(B) shall be applied by substituting 'gross 
vehicle weight' for 'unloaded gross vehicle weight'. 
"(B) LIMOUSINES.—In the case of a limousine, parsigraph 
(1) shall be applied without regard to subparagraph (B) 
thereof. 
"(c) EXCEPTIONS FOR TAXICABS, ETC.—The tax imposed by this 
section shall not apply to the sale of any passenger vehicle for use by 
the purchaser exclusively in the active conduct of a trade or busi-
ness of transporting persons or property for compensation or hire. 
"SEC. 4002. BOATS. 
"(a) IMPOSITION OF TAX.—There is hereby imposed on the 1st retail 
sale of any boat a tax equal to 10 percent of the price for which so 
sold to the extent such price exceeds $100,000. 
"(b) EXCEPTIONS.—The tax imposed by this section shall not apply 
to the sale of any boat for use by the purchaser exclusively in the 
active conduct o
f
— 
"(1) a trade or business of commercial fishing or transporting 
persons or property for compensation or hire, or 
"(2) any other trade or business unless the boat is to be used 
predominantly in any activity which is of a t5T)e generally 
considered 
to 
constitute 
entertainment, 
amusement, 
or 
recreation. 
"SEC. 4003. AIRCRAFT. 
"(a) IMPOSITION OF TAX.—There is hereby imposed on the 1st retail 
sale of any aircraft a tax equal to 10 percent of the price for which so 
sold to the extent such price exceeds $250,000. 
"(b) AIRCRAFT.—For purposes of this section, the term 'aircraft' 
means any aircraft— 
"(1) which is propelled by a motor, and 
"(2) which is capable of carrying 1 or more individuals. 
"(c) 8() PERCENT GENERAL BUSINESS USE.— 
104 STAT. 1388-440 
PUBLIC LAW 101-508—NOV. 5, 1990 
"(1) IN GENERAL.—The tax imposed by this section shall not 
apply to the sale of any aircraft if 80 percent of the use by the 
purchaser is in any trade or business. 
"(2) PROOF OF BUSINESS USE.—On the income tax return for 
each of the 1st 2 taxable years ending after the date an aircraft 
on which no tax was imposed by this section by resison of 
paragraph (1) was placed in service, the taxpayer filing such 
return shall demonstrate to the satisfaction of the Secretary 
that the use of such aircraft during each such year met the 
requirement of paragraph (1), 
"(3) IMPOSITION OF LUXURY TAX WHERE FAILURE OF PROOF.—If 
the requirement of paragraph (2) is not met for either of the 
taxable years referred to therein, the taxpayer filing such re-
turns shall pay the tax which would (but for paragraph (1)) have 
been imposed on such aircraft plus interest determined under 
subchapter C of chapter 67 during the period beginning on the 
date such tax would otherwise have been imposed. If such 
taxpayer fails to pay the tax imposed pursuant to the preceding 
sentence, no deduction shall be allowed under section 168 for 
any taxable year with respect to the aircraft involved. 
"(d) OTHER EXCEPTIONS.—The tax imposed by this section shall not 
apply to the sale of any aircraft for use by the purchaser 
exclusively— 
"(1) in the aerial application of fertilizers or other substances, 
"(2) in the case of a helicopter, in a use described in para-
graph (1) or (2) of section 4261(e), 
"(3) in a trade or business of providing flight training, or 
"(4) in a trade or business of transporting persons or property 
for compensation or hire. 
"SEC. 4004. RULES APPLICABLE TO SUBPART A. 
"(a) EXEMPTION FOR LAW ENFORCEMENT USES, ETC.—No tax shall 
be imposed under this subpart on the sale of any article— 
"(1) to the Federal Government, or a State or local govern-
ment, for use exclusively in police, firefighting, search and 
rescue, or other law enforcement or public safety activities, or 
in public works activities, or 
' (2) to any person for use exclusively in providing emergency 
medical services. 
"(b) SEPARATE PURCHASE OF ARTICLE AND PARTS AND ACCESSORIES 
THEREFOR.—Under regulations prescribed by the Secretary— 
"(1) IN GENERAL.—Except as provided in paragraph (2), if— 
"(A) the owner, lessee, or operator of any article taxable 
under this subpart (determined without regard to price) 
installs (or causes to be installed) any part or accessory on 
such article, and 
"(B) such installation is not later than the date 6 months 
after the date the article was 1st placed in service, 
then there is hereby imposed on such installation a tax equal 
to 10 percent of the price of such part or accessory and its 
installation. 
"(2) LIMITATION.—The tax imposed by paragraph (1) on the 
installation of any part or accessory shall not exceed 10 percent 
of the excess (if any) of— 
"(A) the sum of— 
"(i) the price of such part or accessory and its 
installation, 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-441 
"(ii) the aggregate price of the parts and accessories 
(and their installation) installed before such part or 
accessory, plus 
"(iii) the price for which the passenger vehicle, boat, 
or aircraft was sold, over 
"(B) $30,000 in the case of a passenger vehicle, $100,000 in 
the case of a boat, and $250,000 in the case of an aircraft, 
"(3) EXCEPTIONS.—Paragraph (1) shall not applj'^ if^ 
"(A) the part or accessory installed is a replacement part 
or accessory, or 
"(B) the aggregate price of the parts and accessories (and 
their installation) described in paragraph (1) with respect to 
the taxable article does not exceed $200 (or such other 
amount or amounts as the Secretary may by regulation 
prescribe). 
"(4) INSTALLERS SECONDARILY LIABLE FOR TAX.—The owners of 
the trade or business installing the parts or accessories shall be 
secondarily liable for the tax imposed by this subsection. 
"(c) IMPOSITION OF TAX ON SALES, ETC., WITHIN 2 YEARS OF ARTI-
CLES PURCHASED TAX-FREE.— 
*'(1) IN GENERAL.—If^ 
"(A) no tax was imposed under this subchapter on the 1st 
retail sale of any article by reason of its exempt use, and 
"(B) within 2 years after the date of such 1st retail sale, 
such article is resold by the purchaser or such purchaser 
makes a substantial non-exempt use of such article, 
then such sale or use of such article by such purchaser shall be 
treated as the 1st retail sale of such article for a price equal to 
its fair market value at the time of such sale or use. 
"(2) EXEMPT USE.—For purposes of this subsection, the term 
'exempt use' means any use of an article if the 1st retail sale of 
such article is not taxable under this subchapter by reason of 
such use. 
"Subpart B—Jewelry and Furs 
"Sec. 4006. Jewelry. 
"Sec. 4007. Furs. 
"SEC. 4006. JEWELRY. 
"(a) IMPOSITION OF TAX.—There is hereby imposed on the 1st retail 
sale of any jewelry a tax equal to 10 percent of the price for which so 
sold to the extent such price exceeds $10,000. 
"(b) JEWELRY.—For purposes of subsection (a), the term 'jewelry' 
means all articles commonly or commercially known as jewelry, 
whether real or imitation, including watches. 
"(c) MANUFACTURE FROM CUSTOMER'S MATERIAL.—If— 
"(1) a person, in the course of a trade or business, produces 
jewelry from material furnished directly or indirectly by a 
customer, and 
"(2) the jewelry is for the use of, and not for resale by, such 
customer, 
the delivery of such jewelry to such customer shall be treated as the 
1st retail sale of such jewelry for a price equal to its fair market 
value at the time of such delivery. 
104 STAT. 1388-442 
PUBLIC LAW 101-508—NOV. 5, 1990 
"SEC. 4007. FURS. 
"(a) IMPOSITION OF TAX.—There is hereby imposed on the 1st retail 
sale of the following articles a tax equal to 10 percent of the price for 
which so sold to the extent such price exceeds $10,000: 
"(1) Articles made of fur on the hide or pelt. 
"(2) Articles of which such fur is a major component. 
"(b) MANUFACTURE FROM CUSTOMER'S MATERIAL.—If— 
"(1) a person, in the course of a trade or business, produces an 
article of the kind described in subsection (a) from fur on the 
hide or pelt furnished, directly or indirectly, by a customer, and 
"(2) the article is for the use of, and not for resale by, such 
customer, 
the delivery of such article to such customer shall be treated as the 
1st retail sale of such article for a price equal to its fair market 
value at the time of such delivery. 
"PART 
II—RULES 
OF 
GENERAL 
APPLICABILITY 
"Sec. 4011. Definitions and special rules. 
"Sec. 4012. Termination. 
"SEC. 4011. DEFINITIONS AND SPECIAL RULES. 
"(a) 1ST RETAIL SALE.—For purposes of this subchapter, the term 
'1st retail sale' means the 1st sale, for a purpose other than resale, 
after manufacture, production, or importation. 
"Ot)) USE TREATED AS SALE.— 
"(1) IN GENERAL.—If any person uses an article taxable under 
this subchapter (including any use after importation) before the 
1st retail sale of such article, then such person shall be liable for 
tax under this subchapter in the same manner as if such article 
were sold at retail by him. 
"(2) EXEMPTION FOR FURTHER MANUFACTURE.—Paragraph (1) 
shall not apply to use of an article as material in the manufac-
ture or production of, or as a component part of, another article 
taxable under this subchapter to be manufactured or produced 
by him. 
"(3) EXEMPTION FOR DEMONSTRATION USE OF PASSENGER VE-
HICLES.—Paragraph (1) shall not apply to any use of a passenger 
vehicle £is a demonstrator for a potential customer while the 
potential customer is in the vehicle. 
"(4) EXCEPTION FOR USE AFTER IMPORTATION OF CERTAIN ARTI-
CLES.—Paragraph (1) shall not apply to the use of an article 
after importation if the user or importer establishes to the 
satisfaction of the Secretary that the 1st use of the article 
occurred before January 1, 1991, outside the United States. 
"(5) COMPUTATION OF TAX.—In the case of any person made 
liable for tax by paragraph (1), the tax shall be computed on the 
price at which similar articles are sold at retail in the ordinary 
course of trade, as determined by the Secretary. 
"(c) 
LEASES 
CONSIDERED 
AS SALES.—For purposes 
of 
this 
subchapter— 
(1) IN GENERAL.—Except as otherwise provided in this 
subsection, the lease of an article (including any renewal or any 
extension of a lease or any subsequent lease of such article) by 
any person shall be considered a sale of such article at retail. 
(2) SPECIAL RULES FOR CERTAIN LEASES OF PASSENGER VE-
HICLES, BOATS, AND AIRCRAFT.— 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-443 
"(A) TAX NOT IMPOSED ON SALE FOR LEASING IN A QUALI-
FIED LEASE.—The sale of a passenger vehicle, boat, or air-
craft to a person engaged in a leasing or rental trade or 
business of the article involved for leasing by such person in 
a queilified lease shall not be treated as the 1st retail sale of 
such article. 
"(B) QUALIFIED LEASE.—For purposes of subparagraph (A), 
the term 'qualified lease' means— 
"(i) any lease in the case of a boat or an aircraft, and 
"(ii) any long-term lease (as defined in section 4052) 
in the case of any passenger vehicle. 
"(C) SPECIAL RULES.—In the case of a qualified lease of 
an article which is treated as the 1st retail sale of such 
article— 
"(i) DETERMINATION OF PRICE.—The tax under this 
subchapter shall be computed on the lowest price for 
which the article is sold by retailers in the ordinary 
course of trade. 
"(ii) PAYMENT OF TAX.—Rules similar to the rules of 
section 4217(e)(2) shall apply. 
"(iii) No TAX WHERE EXEMPT USE BY LESSEE.—No tax 
shall be imposed on any lease payment under a quali-
fied lease if the lessee's use of the article under such 
lease is an exempt use (as defined in section 4004(c)) of 
such article. 
"(d) DETERMINATION OF PRICE.— 
"(1) IN GENERAL.—In determining price for purposes of this 
subchapter— 
"(A) there shall be included any charge incident to plac-
ing the article in condition ready for use, 
"(B) there shall be excluded— 
"(i) the amount 
of the tax imposed by this 
subchapter, 
"(ii) if stated as a separate charge, the amount of any 
retail sales tax imposed by any State or political sub-
division thereof or the District of Columbia, whether 
the liability for such tax is imposed on the vendor or 
vendee, and 
"(iii) the value of any component of such article i
f
— 
"(I) such component is furnished by the 1st user 
of such article, and 
"(II) such component has been used before such 
furnishing, and 
"(C) the price shall be determined without regard to any 
trade-in. 
Subparagraph (B)(iii) shall not apply for purposes of the taxes 
imposed by sections 4006 and 4007. 
"(2) OTHER RULES.—Rules similar to the rules of paragraphs 
(2) and (4) of section 4052(b) shall apply for purposes of this 
subchapter. 
"(e) PARTS AND ACCESSORIES SOLD WITH TAXABLE ARTICLE.—Parts 
and accessories sold on, in connection with, or with the sale of any 
article taxable under this subchapter shall be treated as part of the 
article. 
"(f) PARTIAL PAYMENTS, ETC.—In the case of a contract, sale, or 
arrangement described in paragraph (2), (3), or (4) of section 4216(c), 
104 STAT. 1388-444 
PUBLIC LAW 101-508—NOV. 5, 1990 
rules similar to the rules of section 4217(eX2) shall apply for pur-
poses of this subchapter. 
"SEC. 4012. TERMINATION. 
"The taxes imposed by this subchapter shall not apply to any sale 
or use after December 31,1999." 
(b) EXEMPTION FOR EXPORTS.— 
(1) The material preceding paragraph (1) of section 4221(a) is 
amended by striking "section 4051" and inserting "subchapter 
A or C of chapter 31". 
(2) Subsection (a) of section 4221 is amended by adding at the 
end thereof the following new sentence: "In the case of taxes 
imposed by subchapter A of chapter 31, paragraphs (1), (3), (4), 
and (5) shall not apply." 
(c) EXEMPTION FOR SALES TO THE UNITED STATES.—Section 4293 is 
amended by inserting "subchapter A of chapter 31," before "section 
4041". 
(d) TECHNICAL AMENDMENTS.— 
(1) Subsection (c) of section 4221 is amended by striking 
"section 4053(a)(6)" and inserting "section 4001(c), 4002(b), 
4003(c), 4004(a), or 4053(aX8)". 
(2) Paragraph (1) of section 4221(d) is amended by striking 
"the tax imposed by section 4051" and inserting "taxes imposed 
by subchapter A or C of chapter 31". 
(3) Subsection (d) of section 4222 is amended by striking 
"sections 4053(a)(6)" and inserting "sections 4001(c), 4002(b), 
4003(c), 4004(a), 4053(a)(6)". 
(e) CLERICAL AMENDMENT.—The table of subchapters for chapter 
31 is amended to read as follows: 
"Subchapter A. Certain luxury items. 
"Subchapter B. Special fuels. 
"Subchapter C. Heavy trucks and trailers." 
26 use 4001 
(f) EFFECTIVE DATE.— 
note. 
(1) IN GENERAL.—The amendments made by this section shall 
take effect on January 1,1991. 
(2) EXCEPTION 
FOR BINDING CONTRACTS.—In determining 
whether any tax imposed by subchapter A of chapter 31 of the 
Internal Revenue Code of 1986, as added by this section, applies 
to any sale after December 31, 1990, there shall not be taken 
into account the amount paid for any article (or any part or 
accessory therefor) if the purchaser held on September 30, 1990, 
a contract (which was binding on such date and at all times 
thereafter before the purchase) for the purchase of such article 
(or such part or accessory). 
PART 
IV—4-YEAR 
EXTENSION 
OF 
HAZARDOUS 
SUBSTANCE 
SUPERFUND 
SEC. 11231. 4-YEAR EXTENSION OF HAZARDOUS SUBSTANCE SUPERFUND. 
(a) EXTENSION OF TAXES.— 
(1) The following provisions of the Internal Revenue Code of 
1986 are each amended by striking "January 1, 1992" and 
inserting "January 1,1996": 
(A) Section 59A(e)(l) (relating to application of environ-
mental tax). 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-445 
(B) Paragraphs (1) and (3) of section 4611(e) (relating to 
application of Hazardous Substance Superfund finEincing 
rate). 
(2) Paragraph (2) of section 4611(e) of such Code is amended— 
(A) by striking "1989" and inserting "1993", 
(B) by striking "1990" each place it appears and inserting 
"1994", and 
(C) by striking "1991" each place it appears and inserting 
"1995". 
(b) INCREASE IN AGGREGATE TAX WHICH MAY BE COLLECTED.— 
Paragraph (3) of section 4611(e) of such Code is amended by striking 
"$6,650,000,000" 
each 
place 
it 
appears 
and 
inserting 
"$11,970,000,000" and by striking "December 31, 1991" and insert-
ing "December 31,1995". 
(c) EXTENSION OF REPAYMENT DEADLINE FOR SUPERFUND BORROW-
ING.—Subparagraph (B) of section 9507(dX3) is amended by striking 
"December 31,1991" and inserting "December 31,1995". 
(d) EXTENSION OF AUTHORIZATION OF APPROPRIATIONS TO TRUST 
FUND.—Subsection (b) of section 517 of the Superfund Revenue Act 
of 1986 (26 U.S.C. 9507 note) is amended by striking "and" at the end 
of paragraph (4), by striking the period at the end of paragraph (5) 
and inserting ", and", and by adding at the end thereof the following 
new parsigraphs: 
"(6) 1992, $250,000,000, 
"(7) 1993, $250,000,000, 
"(8) 1994, $250,000,000, and 
"(9) 1995, $250,000,000." 
Subtitle C—Other Revenue Increases 
PART I —INSURANCE PROVISIONS 
Subpart A—Provisions Related to Policy Acquisition 
Costs 
SEC. 11301. CAPITALIZATION OF POLICY ACQUISITION EXPENSES. 
(a) GENERAL RULE.—Part III of subchapter L of chapter 1 (relating 
to provisions of general application) is amended by adding at the end 
thereof the following new section: 
"SEC. 848. CAPITALIZATION OF CERTAIN POLICY ACQUISITION EX-
PENSES. 
"(a) GENERAL RULE.—In the case of an insurance company— 
"(1) specified policy acquisition expenses for any taxable year 
shall be capitalized, and 
"(2) such expenses shall be allowed as a deduction ratably 
over the 120-month period beginning with the first month in the 
second half of such taxable year. 
"(b) 5-YEAR AMORTIZATION FOR FIRST $5,000,000 OF SPECIFIED 
POLICY ACQUISITION EXPENSES.— 
"(1) IN GENERAL.—Paragraph (2) of subsection (a) shall be 
applied with respect to so much of the specified policy acquisi-
tion expenses of an insurance company for any taxable year as 
does not exceed $5,000,000 by substituting '60-month' for '120-
month'. 
104 STAT. 1388-446 
PUBLIC LAW 101-508—NOV. 5, 1990 
"(2) PHASE-OUT.—If the specified policy acquisition expenses of 
an insurance company exceed $10,000,000 for any tsixable year, 
the $5,000,000 amount under paragraph (1) shall be reduced O^ut 
not below zero) by the amount of such excess. 
"(3) SPECIAL RULE FOR MEMBERS OF CONTROLLED GROUP.—In 
the case of any controlled group-;-
"(A) all insurance companies which are members of such 
group shall be treated as 1 company for purposes of this 
subsection, and 
"(B) the amount to which paragraph (1) applies shall be 
allocated £imong such companies in such manner as the 
Secretary may prescribe. 
For purposes of the preceding sentence, the term 'controlled 
group' means any controlled group of corporations as defined in 
section 1563(a); except that subsections (aX4) and (bX2)(D) of 
section 1563 shall not apply, and subsection (bX2XC) of section 
1563 shall not apply to the extent it excludes a foreign corpora-
tion to which section 842 applies. 
"(4) EXCEPTION FOR ACQUISITION EXPENSES ATTRIBUTABLE TO 
CERTAIN REINSURANCE CONTRACTS.—Paragraph (1) shall not 
apply to any specified policy acquisition expenses ifor any tax-
able year which are attributable to premiums or other consider-
ation under any reinsurance contract. 
"(c) SPECIFIED POUCY ACQUISITION EXPENSES.—For purposes of 
this section— 
"(1) IN GENERAL.—The term 'specified policy acquisition ex-
penses' means, with respect to any taxable year, so much of the 
general deductions for such taxable year as does not exceed the 
sum of— 
"(A) 1.75 percent of the net premiums for such taxable 
year on specified insurance contracts which are annuity 
contracts, 
"(B) 2.05 percent of the net premiums for such taxable 
year on specified insurance contracts which are group life 
insurance contracts, and 
"(C) 7.7 percent of the net premiums for such taxable 
year on specified insurance contracts not described in 
subparagraph (A) or (B). 
"(2) GENERAL DEDUCTIONS.—The term 'general deductions' 
means the deductions provided in part VI of subchapter B (sec. 
161 and following, relating to itemized deductions) and in part I 
of subchapter D (sec. 401 and following, relating to pension, 
profit sharing, stock bonus plans, etc.). 
"(d) NET PREMIUMS.—For purposes of this section— 
"(1) IN GENERAL.—The term 'net premiums' means, with re-
spect to any category of specified insurance contracts set forth 
in subsection (cXl), the excess ,(if any) of— 
"(A) the gross amount of premiums and other consider-
ation on such contracts, over 
"(B) return premiums on such contracts and premiums 
and other consideration incurred for reinsurance of such 
contracts. 
The rules of section 803(b) shall apply for purposes of the 
preceding sentence. 
"(2) AMOUNTS DETERMINED ON ACCRUAL BASIS.—In the case of 
an insurance company subject to tax under part II of this 
subchapter, all computations entering into determinations of 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-447 
net premiums for any taxable year shall be made in the manner 
required under section 811(a) for life insurance companies. 
"(3) TREATMENT OF CERTAIN POUCYHOLDER DIVIDENDS AND SIMI-
LAR AMOUNTS.—Net premiums shall ba determined without 
regard to section 808(e) and without regard to other similar 
amounts treated as paid to, and returned by, the policyholder. 
"(4) SPECIAL RULES FOR REINSURANCE.— 
"(A) Premiums and other consideration incurred for re-
insurance shall be taken into account under paragraph 
(IXB) only to the extent such premiums and other consider-
ation are includible in the gross income of an insurance 
company taxable under this subchapter or are subject to 
tax under this chapter by reason of subpart F of part III of 
subchapter N. 
"(B) The Secretary shall prescribe such regulations as 
may be necessary to ensure that premiums and other 
consideration with respect to reinsurance are treated 
consistently by the ceding company and the reinsurer. 
"(e) CLASSIFICATION OF CONTRACTS.—For purposes of this section— 
"(1) SPECIFIED INSURANCE CONTRACT.— 
"(A) IN GENERAL.—Except as otherwise provided in this 
paragraph, the term 'specified insurance contract' means 
any life insurance, Einnuity, or noncancellable accident and 
health insurance contract (or any combination thereof). 
"(B) EXCEPTIONS.—The term 'specified insurance con-
tract' shall not include— 
"(i) any pension plan contract (as defined in section 
818(a)), 
"(ii) any flight insurance or similar contract, and 
"(iii) any qualified foreign contract (as defined in 
section 807(eX4) without regard to paragraph (5) of this 
subsection). 
"(2) GROUP LIFE INSURANCE CONTRACT.—The term 'group life 
insurance contract' means any life insurance contract— 
"(A) which covers a group of individuals defined by ref-
erence to emplojonent relationship, membership in an 
organization, or similar factor, 
(B) the premiums for which are determined on a group 
basis, and 
"(C) the proceeds of which are payable to (or for the 
benefit of) persons other than the employer of the insured, 
an organization to which the insured belongs, or other 
similar person. 
"(3) 
TREATMENT OF ANNUITY CONTRACTS COMBINED WITH 
NONCANCELLABLE 
ACCIDENT AND 
HEALTH 
INSURANCE.—Any 
annuity contract combined with noncancellable accident and 
health insurance shall be treated as a noncancellable accident 
and health insurance contract and not as an annuity contract. 
"(4) TREATMENT OF GUARANTEED RENEWABLE CONTRACTS.—The 
rules of section 816(e) shall apply for purposes of this section. 
"(5) TREATMENT OF REINSURANCE CONTRACT.—A contract 
which reinsures another contract shall be treated in the same 
manner as the reinsured contract. 
"(f) SPECIAL RULE WHERE NEGATIVE NET PREMIUMS.— 
"(1) IN GENERAL.—If for any taxable year there is a n^ative 
capitalization amount with respect to any category of specified 
insurance contracts set forth in subsection (cXD— 
104 STAT. 1388-448 
PUBLIC LAW 101-508—NOV. 5, 1990 
"(A) the amount otherwise required to be capitalized 
under this section for such taxable year with respect to any 
other category of specified insurance contracts shall be 
reduced (but not below zero) by such negative capitalization 
amount, and 
"(B) such negative capitalization amount (to the extent 
not taken into account under subparagraph (A))— 
"(i) shall reduce (but not below zero) the unamortized 
balance (as of the beginning of such taxable year) of the 
amounts previously capitalized under subsection (a) 
(beginning with the amount capitalized for the most 
recent taxable year), and 
"(ii) to the extent taken into account as such a 
reduction, shall be allowed as a deduction for such 
taxable year. 
"(2) 
NEGATIVE CAPITALIZATION AMOUNT.—For purposes 
of 
paragraph (1), the term 'negative capitalization amount' means, 
with respect to any category of specified insurance contracts, 
the percentage (applicable under subsection (c)(1) to such cat-
egory) of the amount (if any) by which— 
"(A) the amount determined under subparagraph (B) of 
subsection (dXD with respect to such category, exceeds 
"(B) the amount determined under subparagraph (A) of 
subsection (dXD with respect to such category. 
"(g) TREATMENT OF CERTAIN CEDING COMMISSIONS.—Nothing in 
any provision of law (other than this section) shall require the 
capitalization of any ceding commission incurred on or after 
September 30, 1990, under any contract which reinsures a specified 
insurance contract. 
"(h) 
SECRETARIAL 
AUTHORITY 
TO 
ADJUST 
CAPITAUZATION 
AMOUNTS.— 
"(1) IN GENERAL.—Except as provided in paragraph (2), the 
Secretary may provide that a type of insurance contract will be 
treated as a separate category for purposes of this section (and 
prescribe a percentage applicable to such category) if the Sec-
retary determines that the deferral of acquisition expenses for 
such tjrpe of contract which would otherwise result under this 
section is substantially greater than the deferral of acquisition 
expenses which would have resulted if actual acquisition ex-
penses (including indirect expenses) and the actual useful life 
for such type of contract had been used. 
"(2) ADJUSTMENT TO OTHER CONTRACTS.—If the Secretary exer-
cises his authority with respect to £iny type of contract under 
paragraph (1), the Secretary shall adjust the percentage which 
would otherwise have applied under subsection (cXD to the 
category which includes such type of contract so that the exer-
cise of such authority does not result in a decrease in the 
; 
amount of revenue received under this chapter by reason of this 
section for any fiscal year, 
"(i) 
TREATMENT 
OF 
QUAUFIED 
FOREIGN 
CONTRACTS UNDER 
ADJUSTED CURRENT EARNINGS PREFERENCE.—For purposes of deter-
mining adjusted current earnings under section 56(g), acquisition 
expenses with respect to contract described in clause (iii) of subsec-
tion (eXlXB) shall be capitalized and amortized in accordance with 
the treatment generally required under generally accepted account-
ing principles as if this subsection applied to such contracts for all 
taxable years. 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-449 
"(j) TRANSITIONAL RULE.—In the case of any taxable year which 
includes September 30, 1990, the amount taken into account as the 
net premiums (or negative capitalization amount) with respect to 
any category of specified insurance contracts shall be the amount 
which bears the same ratio to the amount which (but for this 
subsection) would be so taken into account as the number of days in 
such taxable year on or after September 30, 1990, bears to the total 
number of days in such taxable year." 
Qo) REPEAL OF SPECIAL TREATMENT OF ACQUISITION EXPENSES 
UNDER MINIMUM TAX.—Paragraph (4) of section 56(g) is amended by 
striking subparagraph (F) and redesignating subparagraphs (G) and 
(H) as subparagraphs (F) and (G), respectively. 
(c) CLERICAL AMENDMENT.—The table of sections for part III of 
subchapter L of chapter 1 is amended by adding at the end thereof 
the following new item: 
"Sec. 848. Capitalization of certain policy acquisition expenses." 
(d) EFFECTIVE DATE.— 
(1) IN GENERAL.—The amendments made by subsections (a) 26 USC 848 note. 
and (c) shall apply to taxable years ending on or after Septem-
ber 30, 1990. Any capitalization required by reason of such 
amendments shall not be treated as a change in method of 
accounting for purposes of the Internal Revenue Code of 1986. 
(2) SUBSECTION (b).— 
26 use 56 note. 
(A) IN GENERAL.—The amendment made by subsection (b) 
shall apply to taxable years beginning on or after Septem-
ber 30, 1990, except that, in the case of a small insurance 
company, such amendment shall apply to taxable years 
beginning after December 31, 1989. For purposes of this 
paragraph, the term "small insurance company" means 
any insurance company which meets the requirements of 
section 806(a)(3) of the Internal Revenue Code of 1986; 
except that paragraph (2) of section 806(c) of such Code shall 
not apply. 
(B) SPECIAL RULES FOR YEAR WHICH INCLUDES SEPTEMBER 
30, 1990.—In the case of any taxable year which includes 
September 30, 1990, the amount of acquisition expenses 
which is required to be capitalized under section 56(g)(4)(F) 
of the Internal Revenue Code of 1986 (as in effect before the 
amendment made by subsection (b)) by a company which is 
not a small insurance company shall be the amount which 
bears the same ratio to the amount which (but for this 
subparagraph) would be so required to be capitalized as the 
number of days in such taxable year before September 30, 
1990, bears to the total number of days in such taxable 
year. A similar reduction shall be made in the amount 
amortized for such taxable year under such section 
56(g)(4)(F). 
SEC. 11302. TREATMENT OF CERTAIN NONLIFE RESERVES OF LIFE INSUR-
ANCE COMPANIES. 
(a) GENERAL RULE.—Subsection (e) of section 807 (relating to 
special rules for computing reserves) is amended by adding at the 
end thereof the following new paragraph: 
"(7) SPECIAL RULES FOR TREATMENT OF CERTAIN NONLIFE 
RESERVES.— 
104 STAT. 1388-450 
PUBLIC LAW 101-508—NOV. 5, 1990 
"(A) IN GENERAL.—The amount taken into account for 
purposes of subsections (a) and (b) as— 
"(i) the opening balance of the items referred to in 
subparagraph (C), and 
"(ii) the closing balance of such items, 
shall be 80 percent of the amount which (without regard to 
this subparagraph) would have been taken into account as 
such opening or closing balance, as the case may be. 
"(B) TRANSITIONAL RULE.— 
"(i) IN GENERAL.—In the case of any taxable year 
beginning on or after September 30, 1990, and before 
September 30,1996, there shall be included in the gross 
income of any life insurance company an amount equal 
to 3 1/3 percent of such company's closing balance of 
the items referred to in subparagraph (C) for its most 
recent taxable year beginning before September 30, 
1990. 
"(ii) 
TERMINATION AS UFE INSURANCE COMPANY.— 
Except as provided in section 381(c)(22), if, for any 
taxable year beginning on or before September 30, 
1996, the taxpayer ceases to be a life insurance com-
pany, the aggregate inclusions which would have been 
made under clause (i) for such taxable year and subse-
quent taxable years but for such cessation shall be 
taken into account for the taxable year preceding such 
cessation year. 
"(C) DESCRIPTION OF ITEMS.—For purposes of this para-
graph, the items referred to in this subparagraph are the 
items described in subsection (c) which consist of unearned 
premiums and premiums received in advance under insur-
ance contracts not described in section 816(bXlXB)." 
26 use 807 note. 
(b) EFFECTIVE DATE.—The amendment made by subsection (a) 
shall apply to taxable years beginning on or after September 30, 
1990. 
SEC. 11303. TREATMENT OF LIFE INSURANCE RESERVES OF INSURANCE 
COMPANIES WHICH ARE NOT LIFE INSURANCE COMPANIES. 
(a) GENERAL RULE.—Paragraph (4) of section 832(b) (defining pre-
miums earned) is amended by striking "section 807, pertaining" and 
all that follows down through the period at the end of the first 
sentence which follows subparagraph (C) and inserting "section 
807.". 
(b) TECHNICAL AMENDMENT.—Subparagraph (A) of section 832(bX7) 
is amended— 
(1) by striking "amounts included in unearned premiums 
under the 2nd sentence of such subparagraph" and inserting 
"insurance contracts described in section 816(bXlXB)", and 
(2) by striking "such amounts into account" and inserting 
"such contracts into account". 
26 u s e 832 note. 
(c) EFFECTIVE D A T E . — 
(1) IN GENERAL.—The amendments made by this section shall 
apply to taxable years beginning on or after September 30,1990. 
(2) AMENDMENTS TREATED AS CHANGE IN METHOD OF ACCOUNT-
ING.—In the case of any taxpayer who is required by reason of 
the amendments made by this section to change his method of 
computing reserves— 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-451 
(A) such change shall be treated as a change in a method 
of accounting, 
(B) such change shall be treated as initiated by the 
taxpayer, 
(C) such change shall be treated as having been made 
with the consent of the Secretary, and 
(D) the net adjustments which are required by section 481 
of the Internal Revenue Code of 1986 to be taken into 
account by the taxpayer shall be taken into account over a 
period not to exceed 4 taxable years beginning with the 
taxpayer's first taxable year beginning on or after Septem-
ber 30,1990. 
(3) COORDINATION WITH SECTION 832(b)(4)(C).—The amend-
ments made by this section shall not affect the application of 
section 832(b)(4)(C) of the Internal Revenue Code of 1986. 
Subparts—Treatment of Salvage Recoverable 
SEC. 11305. TREATMENT OF SALVAGE RECOVERABLE. 
(a) GENERAL RULE.—Subparagraph (A) of section 832(b)(5) (defin-
ing losses incurred) is amended to read as follows: 
"(A) IN GENERAL.—The term 'losses incurred' means 
losses incurred during the taxable year on insurance con-
tracts computed as follows: 
"(i) To losses paid during the taxable year, deduct 
salvage and reinsurance recovered during the taxable 
year. 
"(ii) To the result so obtained, add all unpaid losses 
on life insurance contracts plus all discounted unpaid 
losses (as defined in section 846) outstanding at the end 
of the taxable year and deduct all unpaid losses on life 
insurance contracts plus all discounted unpaid losses 
outstanding at the end of the preceding taxable year. 
"(iii) To the results so obtained, add estimated sal-
vage and reinsurance recoverable as of the end of the 
preceding taxable year and deduct estimated salvage 
£md reinsurance recoverable as of the end of the tax-
able year. 
The amount of estimated salvage recoverable shall be deter-
mined on a discounted b£isis in accordance with procedures 
established by the Secretary." 
(b) CONFORMING AMENDMENT.—Subsection (g) of section 846 is 
amended by adding "and" at the end of paragraph (1), by striking 
paragraph (2), and by redesignating paragraph (3) as paragraph (2). 
(c) EFFECTIVE DATE.— 
26 use 832 note. 
(1) IN GENERAL.—The amendments made by this section shall 
apply to taxable years beginning after December 31,1989. 
(2) 
AMENDMENTS 
TREATED 
AS 
CHANGE 
IN 
METHOD 
OF 
ACCOUNTING.— 
(A) IN GENERAL.—In the case of any taxpayer who is 
required by reason of the amendments made by this section 
to change his method of computing losses incurred— 
(i) such change shall be treated as a change in a 
method of accounting, 
(ii) such change shall be treated as initiated by the 
taxpayer, and 
104 STAT. 1388-452 
PUBLIC LAW 101-508—NOV. 5, 1990 
(iii) such change shall be treated as having been 
made with the consent of the Secretary. 
(B) ADJUSTMENTS.—In applying section 481 of the In-
ternal Revenue Code of 1986 with respect to the change 
referred to in subparagraph (A)— 
(i) only 13 percent of the net amount of adjustments 
(otherwise required by such section 481 to be taken into 
account by the taxpayer) shall be taken into account, 
and 
(ii) the portion of such net adjustments which is 
required to be taken into account by the taxpayer (after 
the application of clause (i)) shall be taken into account 
over a period not to exceed 4 taxable years beginning 
with the taxpayer's 1st taxable year beginning after 
December 31,1989. 
(3) TREATMENT OF COMPANIES WHICH TOOK INTO ACCOUNT SAL-
VAGE RECOVERABLE.—In the case of any insurance company 
which took into account salvage recoverable in determining 
losses incurred for its last taxable year beginning before Janu-
ary 1, 1990, 87 percent of the discounted amount of estimated 
salvage recoverable as of the close of such last taxable year 
shall be allowed as a deduction ratably over its 1st 4 taxable 
years beginning after December 31,1989. 
(4) SPECIAL RULE FOR OVERESTIMATES.—If for any taxable year 
beginning after December 31,1989— 
(A) the amount of the section 481 adjustment which 
would have been required without regard to paragraph (2) 
and any discounting, exceeds 
(B) the sum of the amount of salvage recovered taken into 
account under section 832(bX5)(AXi) for the taxable year 
and any preceding taxable year beginning after December 
31, 1989, attributable to losses incurred with respect to any 
accident year beginning before 1990 and the undiscounted 
amount of estimated salvage recoverable as of the close of 
the taxable year on account of such losses, 
87 percent of such excess (adjusted for discounting used in 
determining the amount of salvage recoverable as of the close of 
the last taxable year of the taxpayer beginning before January 
1, 1990) shall be included in gross income for such taxable year. 
(5) EFFECT ON EARNINGS AND PROFITS.—The earnings 
and 
profits of any insurance company for its 1st taxable year begin-
ning after December 31, 1989, shall be increased by the amount 
of the section 481 adjustment which would have been required 
but for paragraph (2). For purposes of applying sections 56, 902, 
952(c)(1), and 960 of the Internal Revenue Code of 1986, earnings 
and profits of a corporation shall be determined by appljdng the 
principles of paragraph (2XB). 
Subpart C—Waiver of Estimated Tax Penalties 
26 use 6655 
SEC. 11307. WAIVER OF ESTIMATED TAX PENALTIES. 
No addition to tax shall be made under section 6655 of the 
Internal Revenue Code of 1986 for any period before March 16,1991, 
with respect to any underpayment to the extent such underpa3anent 
was created or increased by any provision of this part. 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-453 
PART II—COMPLIANCE PROVISIONS 
SEC. 11311. SUSPENSION OF STATUTE OF LIMITATIONS DURING PROCEED-
INGS TO ENFORCE CERTAIN SUMMONSES. 
(a) GENERAL RULE.—Section 6503 (relating to suspension of run-
ning of period of limitation) is amended by redesignating subsection 
(k) as subsection (1) and by inserting after subsection (j) the following 
new subsection: 
"(k) EXTENSION IN CASE OF CERTAIN SUMMONSES.— 
"(1) IN GENERAL.—If any designated summons is issued by the 
Secretary with respect to any return of tax by a corporation, the 
running of any period of limitations provided in section 6501 on 
the assessment of such tax shall be suspended— 
"(A) during any judicial enforcement period— 
"(i) with respect to such summons, or 
"(ii) with respect to any other summons which is 
issued during the 30-day period which begins on the 
date on which such designated summons is issued £md 
which relates to the same return as such designated 
summons, and 
"(B) if the court in any proceeding referred to in para-
graph (3) requires any compliance with a summons referred 
to in subparagraph (A), during the 120-day period beginning 
with the 1st day after the close of the suspension under 
subparagraph (A). 
If subparagraph (B) does not apply, such period shall in no event 
expire before the 60th day after the close of the suspension 
under subpareigraph (A). 
"(2) DESIGNATED SUMMONS.—For purposes of this subsection— 
"(A) IN GENERAL.—The term 'designated 
summons' 
means any summons issued for purposes of determining the 
amount of any tax imposed by this title if— 
"(i) such summons is issued at least 60 days before 
the day on which the period prescribed in section 6501 
for the Eissessment of such tax expires (determined with 
regard to extensions), and 
"(ii) such summons clearly states that it is a des-
ignated summons for purposes of this subsection. 
"(B) LIMITATION.—A summons which relates to any 
return shall not be treated as a designated summons if a 
prior summons which relates to such return was treated as 
a designated summons for purposes of this subsection. 
"(3) JUDICIAL ENFORCEMENT PERIOD.—For purposes of this 
subsection, the term 'judicial enforcement period means, with 
respect to any summons, the period— 
"(A) which begins on the day on which a court proceeding 
^ 
with respect to such summons is brought, and 
"(B) which ends on the day on which there is a final 
resolution as to the summoned person's response to such 
summons." 
0)) EFFECTIVE DATE.—The amendment made by subsection (a) 26USC6503 
shall apply to any tgix (whether imposed before, on, or after the date ^o*®. 
of the enactment of this Act) if the period prescribed by section 6501 
of the Internal Revenue Code of 1986 for the assessment of such tax 
(determined with regard to extensions) has not expired on such date 
of the enactment. 
104 STAT. 1388-454 
PUBLIC LAW 101-508—NOV. 5, 1990 
SEC. 11312. ACCURACY-RELATED PENALTY TO APPLY TO SECTION 482 
ADJUSTMENTS. 
(a) GENERAL RULE.—Subsection (e) of section 6662 (defining 
substantial valuation overstatement under chapter 1) is amended to 
read as follows: 
"(e) SUBSTANTIAL VALUATION MISSTATEMENT UNDER CHAPTER 1.— 
"(1) IN GENERAL.—For purposes of this section, there is a 
substantial valuation misstatement under chapter 1 if— 
"(A) the value of any property (or the adjusted basis of 
any property) claimed on any return of tax imposed by 
chapter 1 is 200 percent or more of the amount determined 
to be the correct amount of such valuation or adjusted basis 
(as the case may be), or 
"(BXi) the price for any property or services (or for the 
use of property) claimed on any such return in connection 
with any transaction between persons described in section 
482 is 200 percent or more (or 50 percent or less) of the 
amount determined under section 482 to be the correct 
amount of such price, or 
"(ii) the net section 482 transfer price adjustment for the 
taxable year exceeds $10,000,000. 
"(2) LIMITATION.—No penalty shall be imposed by reason of 
subsection (bX3) unless the portion of the underpajmient for the 
taxable 
year 
attributable 
to 
substantial 
valuation 
misstatements under chapter 1 exceeds $5,000 ($10,000 in the 
case of a corporation other than an S corporation or a personal 
holding company (as defined in section 542)). 
"(3) NET SECTION 482 TRANSFER PRICE ADJUSTMENT.—For pur-
poses of this subsection— 
"(A) IN GENERAL.—The term 'net section 482 transfer 
price adjustment' means, with respect to any taxable year, 
the net increase in taxable income for the taxable year 
(determined without regard to any amount carried to such 
taxable year from another taxable year) resulting from 
adjustments under section 482 in the price for any property 
or services (or for the use of property). 
"(B) CERTAIN ADJUSTMENTS EXCLUDED IN DETERMINING 
THRESHOLD.—For purposes of determining whether the 
$10,000,000 threshold requirement of paragraph (IXBXii) is 
met, there shall be excluded— 
"(i) any portion of the net increase in taxable income 
referred to in subparagraph (A) which is attributable to 
any redetermination of a price if it is shown that there 
was a reasonable cause for the taxpayer's determina-
tion of such price and that the taxpayer acted in good 
faith with respect to such price, and 
"(ii) any portion of such net increase which is attrib-
utable to any transaction solely between 
foreign 
corporations unless, in the case of any of such corpora-
tions, the treatment of such transaction affects the 
determination of income from sources within the 
United States or taxable income effectively connected 
with the conduct of a trade or business within the 
United States. 
"(C) SPECIAL RULE.—If the regular tax (as defined in 
section 55(c)) imposed by chapter 1 on the taxpayer is 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-455 
determined by reference to an amount other than taxable 
income, such amount shall be treated as the taxable income 
of such taxpayer for purposes of this paragraph." 
O
t
>
) CONFORMING AMENDMENTS.— 
(1) Paragraph (3) of section 6662(b) is amended to read as 
follows: 
"(3) Any substantial valuation misstatement under chapter 
1." 
(2) Subparagraph (A) of section 6662(hX2) is amended to read 
as follows: 
"(A) any substantial valuation misstatement under chap-
ter 1 as determined under subsection (e) by substituting— 
"(i) '400 percent' for '200 percent' each place it ap-
pears, 
"(ii) '25 percent' for '50 percent', and 
"(iii) '$20,000,000' for '$10,000,000',". 
(c) EFFECTIVE DATE.—The amendments made by this section shall 26 USC 6662 
apply to taxable years ending after the date of the enactment of this ^°^-
Act. 
SEC. 11313. TREATMENT OF PERSONS PROVIDING SERVICES. 
(a) GENERAL RULE.—Subsection (n) of section 6103 (relating to 
certain other persons) is amended— 
(1) by striking "and the programming" and inserting "the 
programming", and 
(2) by inserting after "of equipment," the following "and the 
providing of other services,". 
(b) EFFECTIVE DATE.—The amendment made by subsection (a) 26 USC 6103 
shall take effect on the date of the enactment of this Act. 
"
o
*
®
-
SEC. 11314. APPLICATION OF AMENDMENTS MADE BY SECTION 7403 OF 26 USC 6038A 
REVENUE RECONCILIATION ACT OF 1989 TO TAXABLE note. 
YEARS BEGINNING ON OR BEFORE JULY 10,1989. 
(a) GENERAL RULE.—The amendments made by section 7403 of the 
Revenue Reconciliation Act of 1989 shall apply to— 
(1) any requirement to furnish information under section 
6038A(a) of the Internal Revenue Code of 1986 (as amended by 
such section 7403) if the time for furnishing such information 
under such section is after the date of the enactment of this Act, 
(2) any requirement under such section 6038A(a) to maintain 
records which were in existence on or after March 20, 1990, 
(3) any requirement to authorize a corporation to act as a 
limited agent under section 6038A(eXl) of such Code (as so 
amended) if the time for authorizing such action is after the 
date of the enactment of this Act, and 
(4) any summons issued after such date of enactment, 
without r ^ a r d to when the taxable year (to which the information, 
records, authorization, or summons relates) began. Such amend-
ments shall also apply in any case to which they would apply 
without regard to this section. 
(b) CONTINUATION OF OLD FAILURES.—In the case of any failure 
with respect to a taxable year beginning on or before July 10, 1989, 
which first occurs on or before the date of the enactment of this Act 
but which continues after such date of enactment, section 
6038A(dX2) of the Internal Revenue Code of 1986 (as amended by 
subsection (c) of such section 7403) shall apply for purposes of 
determining the amount of the penalty imposed for 30-day periods 
104 STAT. 1388-456 
PUBLIC LAW 101-508—NOV. 5, 1990 
referred to in such section 6038A(dX2) which begin after the date of 
the enactment of this Act. 
SEC. 11315. OTHER REPORTING REQUIREMENTS. 
(a) GENERAL RULE.—Subpart A of part III of subchapter A of 
chapter 61 (relating to information concerning persons subject to 
special provisions) is amended by inserting after section 6038B the 
following new section: 
"SEC. 6038C. INFORMATION WITH RESPECT TO FOREIGN CORPORATIONS 
ENGAGED IN U.S. BUSINESS. 
"(a) REQUIREMENT.—If a foreign corporation (hereinafter in this 
section referred to as the 'reporting corporation') is engsiged in a 
trade or business within the United States at any time during a 
taxable year— 
"(1) such corporation shall furnish (at such time and in such 
manner as the Secretary shall by regulations prescribe) the 
information described in subsection (b), and 
"(2) such corporation shall maintain (at the location, in the 
manner, and to the extent prescribed in regulations) such 
records as may be appropriate to determine the liability of such 
corporation for tax under this title as the Secretary shall by 
regulations prescribe (or shall cause another person to so main-
tain such records). 
"(b) REQUIRED INFORMATION.—For purposes of subsection (a), the 
information described in this subsection is— 
"(1) the information described in section 6038A(b), and 
"(2) such other information as the Secretary may prescribe by 
regulations relating to any item not directly connected with a 
transaction 
for 
which 
information 
is 
required 
under 
paragraph (1). 
"(c) PENALTY FOR FAILURE TO FURNISH INFORMATION OR MAINTAIN 
RECORDS.—The provisions of subsection (d) of section 6038A shall 
apply to— 
"(1) any failure to furnish (within the time prescribed by 
regulations) any information described in subsection (b), and 
"(2) any failure to maintain (or cause another to maintain) 
records as required by subsection (a), 
in the same manner as if such failure were a failure to comply with 
the provisions of section 6038A. 
"(d) ENFORCEMENT OF REQUESTS FOR CERTAIN RECORDS.— 
"(1) AGREEMENT TO TREAT CORPORATION AS AGENT.—The rules 
of paragraph (3) shall apply to any transaction between the 
reporting corporation and any related party who is a foreign 
person unless such related party agrees (in such manner and at 
such time as the Secretary shall prescribe) to authorize the 
reporting corporation to act as such related party's limited 
agent solely for purposes of applying sections 7602, 7603, and 
7604 with respect to any request by the Secretary to examine 
records or produce testimony related to any such transaction or 
with respect to any summons by the Secretary for such records 
or testimony. The appearance of persons or production of 
records by reason of the reporting corporation being such an 
agent shall not subject such persons or records to legal process 
for any purpose other than determining the correct treatment 
under this title of any transaction between the reporting cor-
poration and such related party. 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-457 
"(2) RULES WHERE INFORMATION NOT FURNISHED,—If— 
"(A) for purposes of determining the amount of the 
reporting corporation's liability for tax under this title, the 
Secretary issues a summons to such corporation to produce 
(either directly or as an agent for a related party who is a 
foreign person) any records or testimony, 
"(B) such summons is not quashed in a proceeding begun 
under paragraph (4) of section 6038A(e) (as made applicable 
by paragraph (4) of this subsection) and is not determined to 
be invalid in a proceeding begun under section 7604(b) to 
enforce such summons, and 
"(C) the reporting corporation does not substantially 
comply in a timely manner with such summons and the 
Secretary has sent by certified or registered mail a notice to 
such reporting corporation that such reporting corporation 
has not so substantially complied, 
the Secretary may apply the rules of paragraph (3) with respect 
to any transaction or item to which such summons relates 
(whether or not the Secretary begins a proceeding to enforce 
such summons). If the reporting corporation fails to maintain 
(or cause another to maintain) records as required by subsection 
(a), and by reason of that failure, the summons is quashed in a 
proceeding described in subparagraph (B) or the reporting cor-
poration is not able to provide the records requested in the 
summons, the Secretary may apply the rules of paragraph (3) 
with respect to any transaction or item to which the records 
relate. 
"(3) APPUCABLE RULES.—If the rules of this parsigraph apply 
to £my transaction or item, the treatment of such transaction (or 
the amount and treatment of any such item) shall be deter-
mined by the Secretary in the Secretary's sole discretion from 
the Secretary's own knowledge or from such information as the 
Secretary may obtain through testimony or otherwise. 
"(4) 
JUDICIAL 
PROCEEDINGS.—The provisions 
of 
section 
6038A(eX4) shall apply with respect to any summons referred to 
in paragraph (2XA); except that subparagraph (D) of such sec-
tion shall be applied by substituting 'transaction or item' for 
'transaction'. 
"(e) DEFINITIONS.—For purposes of this section, the terms 'related 
party', 'foreign person', and 'records' have the respective meanings 
given to such terms by section 6038A(c)." 
(b) CONFORMING AMENDMENTS.— 
(1) Paragraph (1) of section 6038A(a) is amended by striking 
"or is a foreign corporation engaged in trade or business within 
the United States". 
(2) The table of sections for subpart A of part III of subchapter 
A of chapter 61 is amended by inserting after the item relating 
to section 6038B the following new item: 
"Sec. 6038C. Information with respect to foreign corporations engaged in U.S. biisi-
ness." 
(c) EFFECTIVE DATE.—The amendments made by this section shall 26 use 6038A 
apply to— 
note. 
(1) any requirement to furnish information under section 
6038C(a) of the Internal Revenue Code of 1986 (as added by this 
section) if the time for furnishing such information under such 
section is after the date of the enactment of this Act, 
39-194 O - 91 - 28 : QL 3 Part 2 
104 STAT. 1388-458 
PUBLIC LAW 101-508—NOV. 5, 1990 
(2) any requirement under such section 6038C(a) to maintain 
records which were in existence on or after March 20, 1990, 
(3) any requirement to authorize a corporation to act as a 
limited Eigent under section 6038C(dXl) of such Code (as so 
added) if the time for authorizing such action is after the date of 
the enactment of this Act, and 
(4) any summons issued after such date of enactment, 
without regard to when the taxable year (to which the information, 
records, authorization, or summons relates) began, 
26 u s e 482 note. 
SEC. 11316. STUDY OF SECTION 482. 
(a) GENERAL RULE.—The Secretary of the Treasury or his delegate 
shall conduct a study of the application and administration of 
section 482 of the Internal Revenue Code of 1986. Such study shall 
include examination of— 
(1) the effectiveness of the amendments made by this part in 
increasing levels of compliance with such section 482, 
(2) use of advanced determination agreements with respect to 
issues under such section 482, 
(3) possible legislative or administrative changes to assist the 
Internal Revenue Service in increasing compliance with such 
section 482, and 
(4) coordination of the administration of such section 482 with 
similar provisions of foreign tax laws and with domestic nontax 
laws. 
(b) REPORT.—Not later than March 1, 1992, the Secretary of the 
Treasury or his delegate shall submit to the Committee on Ways and 
Means of the House of Representatives and the Committee on 
Finance of the Senate a report on the study conducted under 
subsection (a), together with such recommendations as he may deem 
advisable. 
SEC. 11317. 10-YEAR PERIOD OF LIMITATION ON COLLECTION AFTER 
ASSESSMENT. 
(a) IN GENERAL.—Subsection (a) of section 6502 (relating to collec-
tion after assessment) is sunended— 
(1) by striking "6 years" in paragraph (1) and inserting "10 
years", and 
(2) by striking "6-year period" each place it appears in para-
graph (2) and inserting "10-year period . 
(b) CONFORMING AMENDMENT.—Paragraph (3) of section 6323(g) is 
amended by striking "6 years" each place it appears and inserting 
"10 years". 
26 use 6323 
(c) EFFECTIVE DATE.—The amendments made by this section shall 
note. 
apply to— 
(1) taxes assessed after the date of the enactment of this Act, 
and 
(2) taxes assessed on or before such date if the period specified 
in section 6502 of the Internal Revenue Code of 1986 (deter-
mined without regard to the amendments made by subsection 
(a)) for collection of such taxes has not expired as of such date. 
SEC. 11318. RETURN REQUIREMENT WHERE CASH RECEIVED IN TRADE 
OR BUSINESS. 
(a) CERTAIN MONETARY INSTRUMENTS TREATED AS CASH.—Subsec-
tion (d) of section 60501 (relating to returns relating to cash received 
in trade or business) is amended to read as follows: 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-459 
"(d) CASH INCLUDES FOREIGN CURRENCY AND CERTAIN MONETARY 
INSTRUMENTS.—For purposes of this section, the term 'cash' 
includes— 
"(1) foreign currency, and 
"(2) to the extent provided in regulations prescribed by the 
Secretary, any monetary instrument (whether or not in bearer 
form) with a face amount of not more than $10,000. 
Paragraph (2) shall not apply to any check drawn on the account of 
the writer in a financisd institution referred to in subsection 
(c)(lXB)." 
fl)) INCREASE IN PENALTY FOR INTENTIONAL DISREGARD OF REPORT-
ING REQUIREMENT.—Paragraph (2) of section 6721(e) (relating to 
penalty for intentional disregard) is amended— 
(1) by inserting "60501," after "6050H," in subparagraph (A), 
(2) by striking or" at the end of subparagraph (A), 
(3) by striking "and" at the end of subpareigraph (B) and 
inserting "or", and 
(4) by inserting after subparagraph (B) the following new 
subparagraph: 
"(C) in the case of a return required to be filed under 
section 60501(a) with respect to any transaction (or related 
transactions), the greater of— 
"(i) $25,000, or 
"(ii) the amount of cash (within the meaning of sec-
tion 60501(d)) received in such transaction (or related 
transactions) to the extent the amount of such cash 
does not exceed $100,000, and". 
(c) CLARIFICATION OF APPUCATION OF PROVISION PROHIBITING EVA-
SION TECHNIQUES.—The heading of subsection (f) of section 60501 is 
amended to read as follows: 
"(f) STRUCTURING TRANSACTIONS TO EVADE REPORTING REQUIRE-
MENTS PROHIBITED.—". 
(d) STUDY.—The Secretary of the Treasury or his delegate shall 
conduct a study on the operation of section 60501 of the Internal 
Revenue Code of 1986. Such study shall include an examination of— 
(1) the extent of compliance with the provisions of such 
section, 
(2) the effectiveness of the penalties in ensuring compliance 
with the provisions of such section, 
(3) methods to increase compliance with the provisions of such 
section and ways Form 8300 could be simplified, and 
(4) appropriate methods to increase the usefulness and avail-
ability of information submitted under the provisions of such 
section. 
Not later than March 31, 1991, the Secretary shall submit to the 
Committee on Ways and Means of the House of Representatives and 
the Committee on Finance of the Senate a report on the study 
conducted under this subsection, together with such recommenda-
tions as he may deem advisable. 
(e) EFFECTIVE DATES.— 
26 usc 6050i 
(1) The amendments made by subsections (a) and (b) shall note, 
apply to amounts received after the date of the enactment of 
this Act. 
(2) The amendment made by subsection (c) shall take effect on 
the date of the enactment of this Act. 
(3) Not later than June 1, 1991, the Secretary of the Treasury 
or his delegate shall prescribe regulations under section 
note. 
note. 
104 STAT. 1388-460 
PUBLIC LAW 101-508—NOV. 5, 1990 
6050I(dX2) of the Internal Revenue Code of 1986 (as amended by 
this section). 
SEC. 11319. 5-YEAR EXTENSION OF INTERNAL REVENUE SERVICE USER 
FEES. 
26 use 7801 
(a) GENERAL RULE.—Subsection (c) of section 10511 of the Revenue 
Act of 1987 (relating to fees for requests for ruling, determination, 
and similar letters) is amended by adding at the end thereof the 
following new sentence: "Subsection (a) shall also apply with respect 
to requests made after September 30, 1990, and before October 1, 
1995." 
26^YSC 7801 
(b) EFFECTIVE DATE.—The amendment made by this section shall 
take effect on September 29, 1990, except that no advance pajonent 
shall be required for any fee for any requests filed after September 
29, 1990, and before the 30th day after the date of the enactment of 
this Act. 
PART III—CORPORATE PROVISIONS 
SEC. 11321. RECOGNITION OF GAIN BY DISTRIBUTING CORPORATION IN 
CERTAIN SECTION 355 TRANSACTIONS. 
(a) GENERAL RULE.—Section 355 (relating to distribution of stock 
and securities of a controlled corporation) is amended by striking 
subsection (c) and inserting the following new subsections: 
"(c) TAXABILITY OF CORPORATION ON DISTRIBUTION.— 
"(1) IN GENERAL.—Except as provided in paragraph (2), no 
gain or loss shall be recognized to a corporation on any distribu-
tion to which this section (or so much of section 356 as relates to 
this section) applies and which is not in pursuance of a plan of 
reorg£mization. 
"(2) DISTRIBUTION OF APPRECIATED PROPERTY.— 
"(A) IN GENERAL.—If— 
"(i) in a distribution referred to in paragraph (1), the 
corporation distributes property other than qusdified 
property, and 
"(ii) the fair market value of such property exceeds 
its adjusted basis (in the hands of the distributing 
corporation), 
then gain shall be recognized to the distributing corpora-
tion as if such property were sold to the distributee at its 
fair market value. 
"(B) QUALIFIED PROPERTY.—For purposes of subparagraph 
(A), the term 'qualified property' means any stock or securi-
ties in the controlled corporation. 
"(C) TREATMENT OF UABILITIES.—If any property distrib-
uted in the distribution referred to in pareigraph (1) is 
subject to a liability or the shareholder assumes a liability 
of the distributing corporation in connection with the dis-
tribution, then, for purposes of subparagraph (A), the fair 
market value of such property shall be treated as not less 
than the amount of such liability. 
"(3) COORDINATION WITH SECTIONS 311 AND 336(a).—Sections 
311 and 336(a) shall not apply to any distribution referred to in 
paragraph (1). 
"(d) RECOGNITION OF GAIN ON CERTAIN DISTRIBUTIONS OF STOCK OR 
SECURITIES IN O^NTROLLED CORPORATION.— 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-461 
"(1) IN GENERAL.—In the case of a disqualified distribution, 
any stock or securities in the controlled corporation shall not be 
treated as qualified property for purposes of subsection (c)(2) of 
this section or section 361(cX2). 
"(2) DiSQUAUFiED DISTRIBUTION.—For purposes of this subsec-
tion, the term 'disqualified distribution' means any distribution 
to which this section (or so much of section 356 as relates to this 
section) applies if, immediately after the distribution— 
"(A) any person holds disqualified stock in the distribut-
ing corporation which constitutes a 50-percent or greater 
interest in such corporation, or 
"(B) any person holds disqualified stock in the controlled 
corporation (or, if stock of more than 1 controlled corpora-
tion is distributed, in any controlled corporation) which 
constitutes a 50-percent or greater interest in such corpora-
tion. 
"(3) DISQUALIFIED STOCK.—For purposes of this subsection, the 
term 'disqualified stock' means— 
"(A) any stock in the distributing corporation acquired by 
purchase after October 9,1990, and during the 5-year period 
ending on the date of the distribution, and 
"(B) any stock in any controlled corporation— 
"(i) acquired by purchase after October 9, 1990, and 
during the 5-year period ending on the date of the 
distribution, or 
"(ii) received in the distribution to the extent attrib-
utable to distributions on— 
"(I) stock described in subparagraph (A), or 
"(II) any securities in the distributing corpora-
tion acquired by purchsise after October 9, 1990, 
£ind during the 5-year period ending on the date of 
the distribution. 
"(4) 50-PERCENT OR GREATER INTEREST.—For purpOSeS of this 
subsection, the term '50-percent or greater interest' means stock 
possessing at least 50 percent of the total combined voting 
power of all classes of stock entitled to vote or at least 50 
percent of the total value of shares of all classes of stock. 
"(5) PURCHASE.—For purposes of this subsection— 
"(A) IN GENERAL.—Except as otherwise provided in this 
paragraph, the term 'purchase' means any acquisition but 
only i
f
— 
"(i) the basis of the property acquired in the hands of 
the acquirer is not determined (I) in whole or in part by 
reference to the adjusted basis of such property in the 
hands of the person from whom acquired, or (II) under 
section 1014(a), and 
"(ii) the property is not acquired in an exchange to 
which section 351, 354, 355, or 356 applies. 
"(B) CERTAIN SECTION 351 EXCHANGES TREATED AS PUR-
CHASES.—The term 'purchase' includes any acquisition of 
property in an exchange to which section 351 applies to the 
extent such property is acquired in exchange for— 
"(i) any cash or cash item, 
"(ii) any marketable stock or security, or 
"(iii) any debt of the transferor. 
"(C) CARRYOVER BASIS TRANSACTIONS.—If— 
104 STAT. 1388-462 
PUBLIC LAW 101-508—NOV. 5, 1990 
"(i) any person acquires property from another 
person who acquired such property by purchase (as 
determined under this paragraph with regard to this 
subparagraph), and 
"(ii) the adjusted basis of such property in the hands 
of such acquirer is determined in whole or in part by 
reference to the adjusted basis of such property in the 
hands of such other person, 
such acquirer shall be treated as having acquired such 
property by purchase on the date it was so acquired by such 
other person. 
"(6) SPECIAL RULE WHERE SUBSTANTIAL DIMINUTION OF RISK.— 
"(A) IN GENERAL.—If this paragraph applies to any stock 
or securities for any period, the running of any 5-year 
period set forth in subparagraph (A) or (B) of paragraph (3) 
(whichever applies) shall be suspended during such period. 
"(B) PROPERTY TO WHICH SUSPENSION APPLIES.—This para-
graph applies to any stock or securities for any period 
during which the holder's risk of loss with respect to such 
stock or securities, or with respect to any portion of the 
activities of the corporation, is (directly or indirectly) 
substantially diminished by— 
"(i) an option, 
"(ii) a short sale, 
"(iii) any special class of stock, or 
"(iv) any other device or transaction. 
"(1) AGGREGATION RULES.— 
"(A) IN GENERAL.—For purposes of this subsection, a 
person and all persons related to such person (within the 
meaning of 267(b) or 707(b)(1)) shall be treated as one 
person. 
"(B) PERSONS ACTING PURSUANT TO PLANS OR ARRANGE-
MENTS.—If two or more persons act pursuant to a plan or 
arrangement with respect to acquisitions of stock or securi-
ties in the distributing corporation or controlled corpora-
tion, such persons shall be treated as one person for 
purposes of this subsection. 
"(8) ATTRIBUTION FROM ENTITIES.— 
"(A) IN GENERAL.—Paragraph (2) of section 318(a) shall 
apply in determining whether a person holds stock or 
securities in any corporation (determined by substituting 
'10 percent' for '50 percent' in subparagraph (C) of such 
paragraph (2) and by treating any reference to stock as 
including a reference tosecurities). 
"(B) DEEMED PURCHASE RULE.—If— 
"(i) any person acquires by purchase an interest in 
any entity, and 
"(ii) such person is treated under subparagraph (A) 
as holding any stock or securities by reason of holding 
such interest, 
such stock or securities shall be treated as acquired by 
purchgise by such person on the later of the date of the 
purchase of the interest in such entity or the date such 
stock or securities are acquired by purchase by such entity. 
"(9) REGULATIONS.—The Secretary shall prescribe such regu-
lations as may be necessary to carry out the purposes of this 
subsection, including— 
PUBLIC LAW 101-508—NOV. 5,1990 
104 STAT. 1388-463 
"(A) regulations to prevent the avoidance of the purposes 
of this subsection through the use of related persons, 
intermediaries, 
pass-thru 
entities, 
options, or 
other 
arrangements, and 
"(B) regulations modifying the definition of the term 
'purchase." 
(b) TECHNICAL AMENDMENT.—Subsection (c) of section 361 is 
amended by adding at the end thereof the following new paragraph: 
"(5) CROSS REFERENCE.— 
"For provision providing for recognition of gain in certain distribu-
tions, see section 355(d)." 
(c) EFFECTIVE DATE.— 
26 use 355 note. 
(1) IN GENERAL.—Except as otherwise provided in this subsec-
tion, the amendments made by this section shall apply to 
distributions after October 9,1990. 
(2) BINDING CONTRACT EXCEPTION.—The amendments made by 
this section shall not apply to any distribution pursuant to a 
written binding contract in effect on October 9, 1990, and at all 
times thereafter before such distribution. 
(3) TRANSITIONAL RULES.—For purposes of subparagraphs (A) 
and (B) of section 355(dX3) of the Internal Revenue Code of 1986 
(as amended by subsection (a)), an acquisition shall be treated as 
occurring on or before October 9,1990, if— 
(A) such acquisition is pursuant to a written binding 
contract in effect on October 9, 1990, and at all times 
thereafter before such acquisition, 
(B) such acquisition is pursuant to a transaction which 
was described in documents filed with the Securities and 
Exchange Commission on or before October 9, 1990, or 
(C) such acquisition is pursuant to a transaction— 
(i) the material terms of which were described in a 
written public announcement on or before October 9, 
1990, 
(ii) which was the subject of a prior filing with the 
Securities and Exchange Commission, and 
(iii) which is the subject of a subsequent filing with 
the Securities and Exchange Commission before Janu-
ary 1,1991. 
SEC. 11322. MODIFICATIONS TO REGULATIONS ISSUED UNDER SECTION 
305(c). 
(a) GENERAL RULE.—Subsection (c) of section 305 (relating to 
certain transactions treated as distributions) is amended by adding 
at the end thereof the following new sentence: "Regulations pre-
scribed under the preceding sentence shall provide that— 
"(1) where the issuer of stock is required to redeem the stock 
at a specified time or the holder of stock has the option to 
require the issuer to redeem the stock, a redemption premium 
resulting from such requirement or option shall be treated as 
reasonable only if the amount of such premium does not exceed 
the amount determined under the principles of section 
1273(aX3), 
"(2) a redemption premium shall not fail to be treated as a 
distribution (or series of distributions) merely because the stock 
is callable, £ind 
"(3) in any case in which a redemption premium is treated as 
a distribution (or series of distributions), such premium shall be 
104 STAT. 1388-464 
PUBLIC LAW 101-508—NOV. 5. 1990 
taken into account under principles similar to the principles of 
section 1272(a)." 
26 u s e 305 note. 
(b) EFFECTIVE DATE.— 
(1) IN GENERAL.—Except as provided in paragraph (2), the 
amendment made by subsection (a) shall apply to stock issued 
after October 9,1990. 
(2) EXCEPTION.—The amendment made by subsection (a) shall 
not apply to any stock issued after October 9,1990, if— 
(A) such stock is issued pursuant to a written binding 
contract in effect on October 9, 1990, and at all times 
thereafter before such issuance, 
(B) such stock is issued pursuant to a registration or 
offering statement filed on or before October 9,1990, with a 
Federal or State agency regulating the offering or sale of 
securities and such stock is issued before the date 90 days 
after the date of such filing, or 
(C) such stock is issued pursuant to a plan filed on or 
before October 9, 1990, in a title 11 or similar case-<as 
defined in section 368(aX3XA) of the Internal Revenue Code 
of 1986). 
SEC. 11323. MODIFICATIONS TO SECTION 1060. 
(a) EFFECT OF ALLOCATION AGREEMENTS.—Subsection (a) of section 
1060 (relating to special allocation rules for certain asset allocations) 
is amended by adding at the end thereof the following new sentence: 
"If in connection with an applicable asset acquisition, the transferee 
and transferor agree in writing as to the allocation of any consider-
ation, or as to the fair market value of any of the assets, such 
agreement shall be binding on both the transferee and transferor 
unless the Secretary determines that such allocation (or fair market 
value) is not appropriate." 
(b) INFORMATION REQUIRED IN CASE OF CERTAIN TRANSFERS OF 
INTEREST IN ENTITIES.— 
(1) IN GENERAL.—Section 1060 is amended by redesignating 
subsection (e) as subsection (f) and by inserting after subsection 
(d) the following new subsection: 
"(e) INFORMATION REQUIRED IN CASE OF CERTAIN TRANSFERS OF 
INTERESTS IN ENTITIES.— 
"(1) IN GENERAL.—If— 
"(A) a person who is a 10-percent owner with respect to 
any entity transfers an interest in such entity, and 
(B) in connection with such transfer, such owner (or a 
related person) enters into an employment contract, cov-
ensint not to compete, royalty or lease agreement, or other 
agreement with the transferee, 
such owner and the transferee shall, at such time and in such 
manner as the Secretary may prescribe, furnish such informa-
tion as the Secretary may require. 
"(2) 10-PERCENT OWNER.—For purposes of this subsection— 
"(A) IN GENERAL.—The term '10-percent owner' means, 
with respect to any entity, any person who holds 10 percent 
or more (by value) of the interests in such entity imme-
diately before the transfer. 
"(B) CONSTRUCTIVE OWNERSHIP.—Section 318 shall apply 
in determining ownership of stock in a corporation. Similar 
principles shall apply in determining the ownership of 
interests in any other entity. 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-465 
"(3) RELATED PERSON.—For purposes of this subsection, the 
term 'related person' means any person who is related (within 
the meaning of section 267(b) or 707(bXl)) to the 10-percent 
owner." 
(2) TECHNICAL AMENDMENT.—Clause (x) of section 6724(dXlXB) 
is amended by striking "section 1060(b)", and inserting "subsec-
tion (b) or (e) of section 1060". 
(c) INFORMATION REQUIRED IN SECTION 338(hX10) TRANSACTIONS.— 
(1) IN GENERAL.—Paragraph (10) of section 338(h) is amended 
by adding at the end thereof the following new subparagraph: 
"(C) INFORMATION REQUIRED TO BE FURNISHED TO THE SEC-
RETARY.—Under regulations, where an election is made 
under subparagraph (A), the purchasing corporation and 
the common parent of the selling consolidated group shall, 
at such times and in such manner as may be provided in 
regulations, furnish to the Secretary the following informa-
tion: 
"(i) The amount allocated under subsection (bX5) to 
goodwill or going concern value. 
"(ii) Any modification of the amount described in 
clause (i). 
"(iii) Any other information as the Secretary deems 
necessary to carry out the provisions of this para-
graph." 
(2) CONFORMING AMENDMENT.—Subparagraph (B) of section 
6724(dXl) is amended by striking "or" at the end of clause (x), by 
striking the period at the end of clause (xi) and inserting ", or', 
and by inserting after clause (xi) the following new clause: 
"(xii) subparagraph (C) of section 338(hX10) (relating 
to information required to be furnished to the Sec-
retary in case of elective recognition of ggdn or loss)." 
(d) EFFECTIVE DATE.— 
26 use 338 note. 
(1) IN GENERAL.—Except as provided in paragraph (2), the 
amendments made by this section shall apply to acquisitions 
after October 9,1990. 
(2) BINDING CONTRACT EXCEPTION.—The amendments made by 
this section shall not apply to any acquisition pursuant to a 
written binding contract in effect on October 9, 1990, and at all 
times thereafter before such acquisition. 
SEC. 11324. MODIFICATION 
TO 
CORPORATION 
EQUITY 
REDUCTION 
LIMITATIONS ON NET OPERATING LOSS CARRYBACKS. 
(a) REPEAL OF EXCEPTION FOR ACQUISITIONS OF SUBSIDIARIES.— 
Clause (ii) of section 172(mX3XB) (relating to exceptions) is amended 
to read as follows: 
"(ii) EXCEPTION.—The term 'major stock acquisition' 
does not include a qualified stock purchase (within the 
meaning of section 338) to which an election under 
section 338 applies." 
(b) EFFECTIVE DATE.— 
26 USC172 note. 
(1) IN GENERAL.—Except as provided in paragraph (2), the 
amendment made by subsection (a) shall apply to acquisitions 
after October 9,1990. 
(2) BINDING CONTRACT EXCEPTION.—The amendment made by 
subsection (a) shall not apply to any acquisition pursuant to a 
written binding contract in effect on October 9, 1990, and at all 
times thereafter before such acquisition. 
104 STAT. 1388-466 
PUBLIC LAW 101-508—NOV. 5, 1990 
SEC. 11325. ISSUANCE OF DEBT OR STOCK IN SATISFACTION OF INDEBT-
EDNESS. 
(a) ISSUANCE OF DEBT INSTRUMENT.— 
(1) Subsection (e) of section 108 (relating to general rules for 
discharge of indebtedness) is amended by adding at the end 
thereof the following new paragraph: 
"(11) INDEBTEDNESS SATISFIED BY ISSUANCE OF DEBT IN-
STRUMENT.— 
(A) IN GENERAL.—For purposes of determining income of 
a debtor from discharge of indebtedness, if a debtor issues a 
debt instrument in satisfaction of indebtedness, such debtor 
shall be treated as having satisfied the indebtedness with 
an amount of money equal to the issue price of such debt 
instrument. 
(B) ISSUE PRICE.—For purposes of subparagraph (A), the 
issue price of any debt instrument shall be determined 
under sections 1273 and 1274. For purposes of the preceding 
sentence, section 1273(bX4) shall be applied by reducing the 
stated redemption price of any instrument by the portion of 
such stated redemption price which is treated as interest 
for purposes of this chapter." 
(2) Subsection (a) of section 1275 is amended by striking 
paragraph (4) and redesignating paragraph (5) as paragraph (4). 
(b) LIMITATION ON STOCK FOR DEBT EXCEPTION.— 
(1) IN GENERAL.—Subparagraph (B) of section 108(eX10) is 
amended to read as follows: 
"(B) EXCEPTION FOR CERTAIN STOCK IN TITLE i i CASES AND 
INSOLVENT DEBTORS.— 
"(i) IN GENERAL.—Subparagraph (A) shall not apply 
to any trsinsfer of stock of the debtor (other than 
disqualified stock)— 
"(I) by a debtor in a title 11 case, or 
"(II) by any other debtor but only to the extent 
such debtor is insolvent, 
"(ii) DISQUALIFIED STOCK.—For purposes of clause (i), 
the term 'disqualified stock' means any stock with a 
stated redemption price if— 
"(I) such stock has a fixed redemption date, 
"(II) the issuer of such stock has the right to 
redeem such stock at one or more times, or 
"(III) the holder of such stock has the right to 
require its redemption at one or more times." 
(2) CONFORMING AMENDMENT.—Paragraph (8) of section 108(e) 
is amended by adding at the end thereof the following new 
sentence: 
"Any stock which is disqualified stock (as defined in paragraph 
(lOXBXii)) shall not be treated as stock for purposes of this 
paragraph." 
26USC108note. 
(c) EFFECTIVE DATE.— 
(1) IN GENERAL.—Except as provided in paragraph (2), the 
amendments made by this section shall apply to debt in-
struments issued, and stock transferred, after October 9, 1990, 
in satisfaction of any indebtedness. 
(2) EXCEPTIONS.—The amendments made by this section shall 
not apply to any debt instrument issued, or stock transferred, in 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-467 
satisfaction of any indebtedness if such issuance or transfer (as 
the case may be)— 
(A) is in a title 11 or similar case (as defined in section 
368(aX3XA) of the Internal Revenue Code of 1986) which 
was fileid on or before October 9,1990, 
(B) is pursuant to a written binding contract in effect on 
October 9, 1990, and at all times thereafter before such 
issuance or transfer, 
(C) is pursuant to a transaction which was described in 
documents filed with the Securities and Exchange Commis-
sion on or before October 9,1990, or 
(D) is pursuant to a transaction— 
(i) the material terms of which were described in a 
written public announcement on or before October 9, 
1990, 
(ii) which was the subject of a prior filing with the 
Securities and Exchange (Commission, and 
(iii) which is the subject of a subsequent filing with 
the Securities and Exchange Commission before Janu-
ary 1,1991. 
PART IV—EMPLOYMENT TAX PROVISIONS 
SEC. 11331. INCREASE IN DOLLAR LIMITATION ON AMOUNT OF WAGES 
SUBJECT TO HOSPITAL INSURANCE TAX. 
(a) HOSPITAL INSURANCE TAX.— 
(1) IN GENERAL.—Paragraph (1) of section 
3121(a) is 
amended— 
(A) by striking "contribution and benefit base (as deter-
mined under section 230 of the Social Security Act)" each 
place it appears and inserting "applicable contribution base 
(as determined under subsection (x))", £ind 
(B) by striking "such contribution and benefit base" and 
inserting "such applicable contribution base". 
(2) APPLICABLE CONTRIBUTION BASE.—Section 3121 is amended 
by adding at the end thereof the following new subsection: 
"(x) APPUCABLE 
(CONTRIBUTION BASE.—For purposes of this 
chapter— 
"(1) OLD-AGE, SURVIVORS, AND DISABIUTY INSURANCE.—For 
purposes of the taxes imposed by sections 3101(a) and 3111(a), 
the applicable contribution base for any calendar year is the 
contribution and benefit base determined under section 230 of 
the Social Security Act for such calendar year. 
"(2) HOSPITAL INSURANCE.—For purposes of the taxes imposed 
by section 3101(b) and 3111(b), the applicable contribution base 
is— 
"(A) $125,000 for calendar year 1991, and 
"(B) for any calendar year after 1991, the applicable 
contribution base for the preceding year adjusted in the 
same manner as is used in adjusting the contribution and 
benefit base under section 230(b) of the Social Security 
Act." 
(b) SELF-EMPLOYMENT TAX.— 
(1) IN GENERAL.—Subsection (b) of section 1402 is amended by , 
striking "the contribution and benefit base (as determined 
under section 230 of the Social Security Act)" and inserting "the 
104 STAT. 1388-468 
PUBLIC LAW 101-508—NOV. 5, 1990 
applicable contribution base (as determined under subsection 
(k))". 
(2) APPUCABLE CONTRIBUTION BASE.—Section 1402 is amended 
by adding at the end thereof the following new subsection: 
"(k) APPUCABLE 
CONTRIBUTION BASE.—For purposes of this 
chapter— 
"(1) OLD-AGE, SURVIVORS, AND DISABILITY INSURANCE.—For 
purposes of the tax imposed by section 1401(a), the applicable 
contribution base for any calendar year is the contribution and 
benefit base determined under section 230 of the Social Security 
Act for such calendar year. 
"(2) HOSPITAL INSURANCE.—For purposes of the tax imposed 
by section 1401(b), the applicable contribution base for any 
calendar year is the applicable contribution base determined 
under section 3121(x)(2) for such calendar year." 
(c) RAILROAD RETIREMENT TAX.—Clause (i) of section 3231(eX2XB) 
is amended to read as follows: 
"(i) TIER i TAXES,— 
"(I) 
IN GENERAL.—Except 
as 
provided 
in 
subclause (II) of this clause and in clause (ii), the 
» 
term 'applicable base' means for any calendar year 
the contribution and benefit base determined 
under section 230 of the Social Security Act for 
such calendar year. 
"(II) HOSPITAL INSURANCE TAXES.—For purposes 
of applying so much of the rate applicable under 
section 3201(a) or 3221(a) (as the case may be) as 
does not exceed the rate of tax in effect under 
section 3101(b), and for purposes of appl3dng so 
much of the rate of tax applicable under section 
3211(a)(1) as does not exceed the rate of tax in 
effect under section 1401(b), the term 'applicable 
base' means for any calendar year the applicable 
contribution 
base 
determined 
under 
section 
3121(xX2) for such calendar year." 
(d) TECHNICAL AMENDMENT.— 
(1) Paragraph (3) of section 6413(c) is amended to read as 
follows: 
"(3) SEPARATE APPUCATION FOR HOSPITAL INSURANCE TAXES.— 
In appl3dng this subsection with respect to— 
"(A) the tax imposed by section 3101(b) (or any amount 
equivalent to such tax), and 
"(B) so much of the tax imposed by section 3201 as is 
determined at a rate not greater than the rate in effect 
under section 3101(b), 
the applicable contribution base determined under section 
3121(xX2) for any calendar year shall be substituted for 'con-
tribution and benefit base (as determined under section 230 of 
the Social Security Act)' each place it appears." 
(2) Sections 3122 and 3125 are each amended by striking 
"contribution and benefit base limitation" each place it appears 
and inserting "applicable contribution base limitation". 
26 use 1402 
(e) EFFECTIVE DATE.—The amendments made by this section shall 
»o*«- 
apply to 1991 and later calendar years. 
PUBLIC LAW 101-508—NOV. 5,1990 
104 STAT. 1388-469 
SEC. 11332. COVERAGE OF CERTAIN STATE AND LOCAL EMPLOYEES 
UNDER SOCIAL SECURITY. 
(a) EMPLOYMENT UNDER OASDL—Paragraph (7) of section 210(a) of 
the Social Security Act (42 U.S.C. 410(aX7)) is amended— 
(1) by striking "or" at the end of subparagraph (D); 
(2) by striking the semicolon at the end of subparagraph (E) 
and inserting ", or"; and 
(3) by adding at the end the following new subparagraph: 
"(F) service in the employ of a State (other than the 
District of Columbia, Guam, or American Samoa), of any 
political subdivision thereof, or of any instrumentality of 
any one or more of the foregoing which is wholly owned 
thereby, by an individual who is not a member of a retire-
ment system of such State, political subdivision, or 
instrumentality, except that the provisions of this subpara-
graph shall not be applicable to service performed— 
"(i) by an individual who is employed to relieve such 
individual from unemplo3mient; 
"(ii) in a hospital, home, or other institution by a 
patient or inmate thereof; 
"(iii) by any individual as an employee serving on a 
temporary basis in case of fire, storm, snow, earth-
quake, flood, or other similar emergency; 
"(iv) by an election official or election worker if the 
remuneration paid in a calendar year for such service 
is less than $100; or 
"(v) by an employee in a position compensated solely 
on a fee basis which is treated pursuant to section 
211(cX2XE) as a trade or business for purposes of inclu-
sion of such fees in net earnings from self emplojmient; 
for purposes of this subparagraph, except as provided in 
regulations prescribed by the Secretary of the Treasury, the 
term 'retirement system' has the meaning given such term 
by section 218(bX4);". 
(b) EMPLOYMENT UNDER FICA.—Paragraph (7) of section 3121(b) of 
the Internal Revenue (Dode of 1986 is amended— 
(1) by striking "or" at the end of subparagraph (D); 
(2) by striking the semicolon at the end of subparagraph (E) 
and inserting ", or"; and 
(3) by adding at the end the following new subparagraph: 
"(F) service in the employ of a State (other than the 
District of Columbia, Guam, or American Samoa), of any 
political subdivision thereof, or of any instrumentality of 
any one or more of the foregoing which is wholly owned 
thereby, by an individual who is not a member of a retire-
ment system of such State, political subdivision, or 
instrumentality, except that the provisions of this subpara-
graph shall not be applicable to service performed— 
"(i) by an individual who is employed to relieve such 
individual from unemplojmient; 
"(ii) in a hospital, home, or other institution by a 
patient or inmate thereof; 
"(iii) by any individual as an employee serving on a 
temporary basis in case of fire, storm, snow, earth-
quake, flood, or other similar emergency; 
104 STAT. 1388-470 
PUBLIC LAW 101-508—NOV. 5, 1990 
"(iv) by an election official or election worker if the 
remuneration paid in a calendar year for such service 
is less than $100; or 
"(v) by an employee in a position compensated solely 
on a fee basis which is treated pursuant to section 
1402(c)(2)(E) as a trade or business for purposes of 
inclusion of such fees in net earnings from self-employ-
ment; 
for purposes of this subparagraph, except as provided in 
regulations prescribed by the Secretary, the term 'retire-
ment system' has the meaning given such term by section 
218(b)(4) of the Social Security Act;", 
(c) MANDATORY EXCLUSION OF CERTAIN EMPLOYEES FROM STATE 
AGREEMENTS.—Section 218(c)(6) of the Social Security Act (42 U.S.C. 
418(c)(6)) is amended— 
(1) by striking "and" at the end of subparagraph (D); 
(2) by striking the period at the end of subparsigraph (E) and 
inserting in lieu thereof ", and"; and 
(3) by adding at the end the following new subparagraph: 
"(F) service described in section 210(a)(7)(F) which is in-
cluded as 'employment' under section 210(a).". 
26 use 3121 
(d) EFFECTIVE DATE.—The amendments made by this section shall 
"°*®- 
apply with respect to service performed after July 1,1991. 
SEC. 11333. EXTENSION OF FUTA SURTAX. 
(a) IN GENERAL.—Section 3301 (relating to rate of FUTA tax) is 
amended— 
(1) by striking "1988, 1989, and 1990" in paragraph (1) and 
inserting "1988 through 1995", and 
(2) by striking "1991" in paragraph (2) and inserting "1996". 
26 use 3301 
(b) EFFECTIVE DATE.—The amendments made by this section shall 
"°'®' 
apply to wages paid after December 31,1990. 
SEC. 11334. DEPOSITS OF PAYROLL TAXES. 
(a) IN GENERAL—«° Subsection (g) of section 6302 is amended to 
read as follows: 
"(g) DEPOSITS OF SOCIAL SECURITY TAXES AND WITHHELD INCOME 
TAXES.—If, under regulations prescribed by the Secretary, a person 
is required to make deposits of taxes imposed by chapters 21 and 24 
on the basis of eighth-month periods, such person shall make de-
posits of such taxes on the 1st banking day after any day on which 
such person has $100,000 or more of such taxes for deposit." 
(b) TECHNICAL AMENDMENT.—Paragraph (2) of section 7632(b) of 
26 use 6302 
the Revenue Reconciliation Act of 1989 is hereby repealed. 
^o*®- 
(c) EFFECTIVE DATE.—The amendments made by this section shall 
note 
apply to amounts required to be deposited after December 31, 1990. 
PART V—MISCELLANEOUS PROVISIONS 
SEC. 11341. INCREASE IN RATE OF INTEREST PAYABLE ON LARGE COR-
PORATE UNDERPAYMENTS. 
(a) GENERAL RULE.—Section 6621 (relating to determination of 
rate of interest) is amended by adding at the end thereof the 
following new subsection: 
"(c) INCREASE IN UNDERPAYMENT RATE FOR LARGE CORPORATE 
UNDERPAYMENTS.—. 
*
<
• So in original. Probably should be "GENERAL.^^". 
PUBLIC LAW 101-508-NOV. 5, 1990 
104 STAT. 1388-471 
"(1) IN GENERAL.—For puri)oses of determining the amount of 
interest payable under section 6601 on any large corporate 
underpayment for periods after the applicable date, paragraph 
(2) of subsection (a) shall be applied by substituting '5 percent-
age points' for *3 percentage points'. 
"(2) APPUCABLE DATE.—^For purposes of this subsection— 
"(A) IN GENERAL.—The applicable date is the 30th day 
after the earlier of— 
"(i) the date on which the 1st letter of proposed 
deficiency which allows the taxpayer an opportunity 
for administrative review in the Internal Revenue 
Service Office of AppeeQs is sent, or 
"(ii) the date on which the deficiency notice under 
section 6212 is sent. 
"(B) SPECIAL RULES.— 
"(i) NoNDEFiciENCY PROCEDURES.—In the case of any 
underpayment of any tax imposed by this subtitle to 
which the deficiency procedures do not apply, subpara-
graph (A) shall be applied by taking into account any 
letter or notice provided by the Secretary which noti-
fies the taxpayer of the assessment or proposed assess-
ment of the tak. 
"(ii) EXCEPTION WHERE AMOUNTS PAID IN PULL.—For 
purposes of subparagraph (A), a letter or notice shall be 
disregarded if, during the 30-day period beginning on 
the day on which it was sent, the taxpayer makes a 
pajmaent equal to the amount shown as due in such 
letter or notice, as the case may be. 
"(3) LARGE CORPORATE UNDERPAYMENT.—For purposes of this 
subsection— 
"(A) 
IN 
GENERAL.—The 
term 
large 
corporate 
underpayment' means any underpayment of a tax by a C 
corporation for any taxable period if the amount of such 
underpajmient for such period exceeds $100,000. 
"(B) TAXABLE PERIOD.—For purposes of subparagraph (A), 
the term 'taxable period' means— 
"(i) in the case of any tax imposed by subtitle A, the 
taxable year, or 
"(ii) in the case of any other tax, the period to which 
the underpajonent relates." 
(b) EFFECTIVE DATE.—The amendment made by subsection (a) 26 use 6621 
shall apply for purposes of determining interest for periods after "°*®-
December 31,1990. 
SEC. 11342. DENIAL OF DEDUCTION FOR UNNECESSARY COSMETIC SUR-
GERY. 
(a) IN GENERAL.—Section 213(d) (defining medical care) is attended 
by adding at the end thereof the following new paragraph: 
"(9) COSMETIC SURGERY.— 
"(A) IN GENERAL.—The term 'medical care' does not in-
clude cosmetic surgery or other similar procedures, unless 
the surgery or procedure is necessary to ameliorate a 
deformity arising from, or directly related to, a congenital 
abnormality, a personal injury resulting from an accident 
or trauma, or disfiguring disease. 
"(B) COSMETIC SURGERY DEFINED.—For purposes of this 
paragraph, the term 'cosmetic surgery' means any proce-
104 STAT. 1388-472 
PUBLIC LAW 101-508—NOV. 5, 1990 
dure which is directed at improving the patient's ap-
pearance and does not meaningfully promote the proper 
function of the body or prevent or treat illness or dis-
ease." 
26 use 213 note. 
(b) EFFECTIVE DATE.—The amendment made by this section shall 
apply to taxable years beginning after December 31,1990. 
SEC. 11343. SPECIAL RULES WHERE GRANTOR OF TRUST IS A FOREIGN 
PERSON. 
(a) IN GENERAL.—Section 672 (relating to definitions and rules) is 
amended by adding at the end thereof the following new subsection: 
"(f) SPECIAL RULE WHERE GRANTOR IS FOREIGN PERSON.— 
"(1) IN GENERAL,—If— 
"(A) but for this subsection, a foreign person would be 
treated as the owner of any portion of a trust, and 
"(B) such trust has a beneficiary who is a United States 
person, 
such beneficiary shall be treated as the grantor of such portion 
to the extent such beneficiary has made transfers of property by 
gift (directly or indirectly) to such foreign person. For purposes 
of the preceding sentence, any gift shall not be taken into 
account to the extent such gift would be excluded from taxable 
gifts under section 2503(b). 
"(2) REGULATIONS.—The Secretary shall prescribe such regu-
lations as may be necessary to carry out the purposes of this 
subsection." 
26 use 672 note. 
(b) EFFECTIVE DATE.—The amendments made by this section shall 
apply to— 
(1) any trust created after the date of the enactment of this 
Act, and 
(2) any portion of a trust created on or before such date which 
is attributable to amounts contributed to the trust after such 
date. 
SEC. 11344. TREATMENT OF CONTRIBUTIONS OF APPRECIATED PROP-
ERTY UNDER MINIMUM TAX. 
Subparagraph (B) of section 57(a)(6) (relating to appreciated prop-
erty charitable deduction) is amended by adding at the end thereof 
the following new sentence: "In the case of any taxable year begin-
ning in 1991, such term shall not include any tangible personal 
property." 
Subtitle D—1-Year Extension of Certain 
Expiring Tax Provisions 
SEC. 11401. ALLOCATION OF RESEARCH AND EXPERIMENTAL EXPENDI-
TURES. 
(a) EXTENSION.—Paragraph (5) of section 864(f) (relating to alloca-
tion of research and experimental expenditures) is amended to read 
as follows: 
"(5) YEARS TO WHICH RULE APPUES.—This subsection shall 
apply to the taxpayer's first 2 taxable years beginning after 
August 1,1989, and on or before August 1,1991." 
26 use 864 note. 
(b) EFFECTIVE DATE.—The amendment made by subsection (a) 
shall apply to taxable years beginning after August 1,1989. 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-473 
SEC. 11402. RESEARCH CREDIT. 
(a) EXTENSION.—Subsection (h) of section 41 (relating to credit for 
increasing research activities) is amended— 
(1) by striking "December 81, 1990" each place it appears and 
inserting "December 31,1991", and 
(2) by striking "January 1, 1991" each place it appears and 
inserting "January 1,1992". 
GD) CONFORMING AMENDMENTS.— 
(1) Subsection (a) of section 7110 of the Revenue Reconcili-
ation Act of 1989 is amended by striking paragraph (2). 
26 USC 41 note. 
(2) Subparagraph (D) of section 28(b)(1) is amended by striking 
"December 31,1990" and inserting "December 31,1991". 
(c) EFFECTIVE DATE.—The amendments made by this section shall 26 USC 28 note, 
apply to taxable years beginning after December 31,1989. 
SEC. 11403. EMPLOYER-PROVIDED EDUCATIONAL ASSISTANCE. 
(a) IN GENERAL.—Subsection (d) of section 127 (relating to edu-
cational assistance programs) is amended by striking "Septem-
ber 30,1990" and inserting "December 31,1991". 
(b) REPEAL OF LIMITATION ON GRADUATE LEVEL ASSISTANCE.— 
Section 127(c)(1) is amended by striking the last sentence. 
(c) CONFORMING AMENDMENT.—Subsection (a) of section 7101 of 
the Revenue Reconciliation Act of 1989 is amended by striking 26 USC 127 note, 
parsigraph (2). 
(d) EFFECTIVE DATES.— 
26 USC 127 note. 
(1) IN GENERAL.—Except as provided in paragraph (2), the 
amendments made by this section shall apply to taxable years 
beginning after December 31,1989. 
(2) SUBSECTION (b).—The amendment made by subsection (b) 
shall apply to taxable years beginning after December 31, 1990. 
SEC. 11404. GROUP LEGAL SERVICES PLANS. 
(a) IN GENERAL.—Subsection (e) of section 120 (relating to amounts 
received under qualified group legal services plans) is amended by 
striking "September 30, 1990" and inserting "December 31, 1991". 
O
t
>
) CONFORMING AMENDMENT.—Subsection (a) of section 7102 of 
the Revenue Reconciliation Act of 1989 is amended by striking 26 USC 120 note, 
paragraph (2). 
(c) EFFECTIVE DATE.—The amendments made by this section shall 26 USC 120 note, 
apply to taxable years beginning after December 31,1989. 
SEC. 11405. TARGETED JOBS CREDIT. 
(a) IN GENERAL.—Paragraph (4) of section 51(c) is amended by 
striking "September 30, 1990" and inserting "December 31, 1991". 
(b) AUTHORIZATION.—Paragraph (2) of section 261(f) of the Eco-
nomic Recovery Act of 1981 is amended by striking "fiscal year 26 USC 51 note. 
1982" and all that follows through "necessary" and inserting "each 
fiscal year such sums as may be necessary". 
(c) EFFECTIVE DATES.— 
26 USC 51 note. 
(1) CREDIT.—The amendment made by subsection (a) shall 
apply to individuals who begin work for the employer after 
September 30,1990. 
(2) AUTHORIZATION.—The amendment made by subsection (b) 
shall apply to fiscal years beginning after 1990. 
104 STAT. 1388-474 
PUBLIC LAW 101-508—NOV. 5, 1990 
SEC. 11406. ENERGY INVESTMENT CREDIT FOR SOLAR AND GEOTHERMAL 
PROPERTY. 
The table contained in section 46(bX2XA) (relating to energy 
percentage) is amended by striking "Sept. 30, 1990" in clauses (viii) 
and (ix) and inserting "Dec. 31,1991". 
SEC. 11407. LOW-INCOME HOUSING CREDIT. 
(a) EXTENSION.— 
(1) IN GENERAL.—Subsection (o) of section 42 (relating to low-
income housing credit) is amended— 
(A) by striking "1990" each place it appears in paragraph 
(1) and inserting "1991", and 
(B) by striking paragraph (2) and inserting the following 
new paragraph: 
"(2) EXCEPTION FOR BOND-FINANCED BUILDINGS IN PROGRESS.— 
For purposes of paragraph (IXB), a building shall be treated as 
placed in service before 1992 if^ 
"(A) the bonds with respect to such building are issued 
before 1992, 
"(B) the taxpayer's basis in the project (of which the 
building is a part) as of December 31, 1991, is more than 10 
percent of the taxpayer's reasonably expected basis in such 
project as of December 31,1993, and 
"(C) such building is placed in service before January 1, 
1994." 
(2) CONFORMING AMENDMENT.—Subsection (a) of section 7108 
26 use 42 note. 
of the Revenue Reconciliation Act of 1989 is amended by 
striking paragraph (2). 
26 use 42 note. 
(3) EFFECTIVE DATE.—The amendments made by this subsec-
tion shall apply to calendar years after 1989. 
(b) ADDITIONAL AMENDMENTS.— 
(1) CLARIFICATION OF TENANT RIGHTS OF IST REFUSAL.—Para-
graph (7) of section 42(i), as redesignated by subtitle G of this 
title, is amended by striking "the tenants of such building" and 
inserting "the tenants (in cooperative form or otherwise) or 
resident management corporation of such building or by a 
qualified nonprofit organization (as defined in subsection 
(hX5XC)) or government agency". 
(2) MONITORING 
NONCOMPUANCE.—Clause (iv) of section 
42(mXlXB) is amended to read as follows: 
"(iv) which provides a procedure that the agency (or 
an agent or other private contractor of such agency) 
will follow in monitoring for noncompliance with the 
provisions of this section and in notifying the Internal 
Revenue Service of such noncompliance which such 
agency becomes aware of." 
(3) TREATMENT OF SECTION 515 RENTS.—Subparagraph (B) of 
section 42(gX2) is amended by striking "and 
at the end of 
clause (ii), by striking the period at the end of clause (iii) and 
inserting ", and", and by inserting after clause (iii) the following 
new clause: 
"(iv) does not include any rental payment to the 
owner of the unit to the extent such owner pays an 
equivalent amount to the Farmers' Home Administra-
tion under section 515 of the Housing Act of 1949." 
(4) QUALIFIED CENSUS TRACT DETERMINATIONS WHERE DATA NOT 
AVAILABLE.—Subclause (I) of section 42(d)(5XC)(ii) is amended by 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-475 
adding at the end thereof the following new sentence: "If the 
Secretary of Housing and Urban Development determines that 
sufficient data for any period are not available to apply this 
clause on the basis of census tracts, such Secretary shall apply 
this clause for such period on the basis of enumeration 
districts." 
(5) EXCEPTION TO CREDIT DENIAL FOR MODERATE REHABIUTA-
TION ASSISTANCE.— 
(A) IN GENERAL.—The last sentence of paragraph (2) of 
section 42(c), as added by subtitle G of this title, is amended 
by inserting before the period "(other than assistance under 
the Stewart B. McKinney Homeless Assistance Act of 1988 
(as in effect on the date of the enactment of this sentence))". 
(6) AFDC RECIPIENT STUDENTS NOT TO DISQUALIFY UNIT.— 
Subparagraph (D) of section 42(i)(3) is amended to read as 
follows: 
"(D) CERTAIN STUDENTS NOT TO DISQUAUFY UNIT.—A unit 
shall not fail to be treated as a low-income unit merely 
because it is occupied by an individual who is— 
"(i) a student and receiving assistance under title IV 
of the Social Security Act, or 
"(ii) enrolled in a job training program receiving 
assistance under the Job Training Partnership Act or 
under other similar Federal, State, or local laws." 
(7) INTERMEDIARY COSTS CONSIDERED AT EVALUATION STAGE.— 
(A) IN GENERAL.—Subparagraph (B) of section 42(m)(2) is 
amended by striking "and" at the end of clause (i), by 
striking the period at the end of clause (ii) and inserting 
", and", and by adding at the end thereof the following: 
"(iii) the percenteige of the housing credit dollar 
amount used for project costs other than the cost of 
intermediaries. 
Clause (iii) shall not be applied so as to impede the develop-
ment of projects in hard-to-develop areas." 
(B) CONFORMING AMENDMENT.—Subparagraph (B) of sec-
tion 42(mXl) is amended by striking clause (ii) and by 
redesignating clauses (iii) and (iv) as clauses (ii) and (iii), 
respectively. 
(8) 10-YEAR RULE NOT TO APPLY T
O ACQUISITION OF CERTAIN 
SINGLE-FAMILY RESIDENCES.—Clause (ii) of section 42(d)(2)(D) is 
amended by striking "or" at the end of subclause (III), by 
striking the period at the end of subclause (IV) and inserting 
", or", and by adding at the end thereof the following: 
"(V) of a single-family residence by any individ-
ual who owned and used such residence for no 
other purpose than as his principal residence." 
(9) APPLICATION OF NONPROFIT SET-ASIDE.—Section 42(h)(5) is 
amended— 
(A) by inserting "own an interest in the project (directly 
or through a partnership) and" after "nonprofit organiza-
tion is to" in subparagraph (B), 
(B) by striking "and" at the end of clause (i) of subpara-
graph (C), by redesignating clause (ii) of such subparagraph 
as clause (iii), and by inserting after clause (i) of such 
subparagraph the following new clause: 
104 STAT. 1388-476 
PUBLIC LAW 101-508—NOV. 5, 1990 
' 
"(ii) such organization is determined by the State 
housing credit agency not to be affiliated with or con-
trolled by a for-profit organization; and", and 
(C) by inserting "ownership and" before 
"material 
participation" in subparagraph (D). 
26 u s e 42 note. 
(10) EFFECTIVE DATES.— 
(A) IN GENERAL.—Except as otherwise provided in this 
paragraph, the amendments made by this subsection shall 
apply to— 
(i) determinations under section 42 of the Internal 
Revenue Code of 1986 with respect to housing credit 
dollar amounts allocated from State housing credit 
ceilings for calendar years after 1990, or 
(ii) buildings placed in service after December 31, 
1990, to the extent paragraph (1) of section 42(h) of such 
Code does not apply to any building by reason of para-
graph (4) thereof, but only with respect to bonds issued 
after such date. 
(B) TENANT RIGHTS, ETC.—The amendments made by 
paragraphs (1), (6), (8), and (9) shall take effect on the date 
of the enactment of this Act. 
(C) MONITORING.—The amendment made by paragraph 
(2) shall take effect on January 1, 1992, and shall apply to 
buildings placed in service before, on, or after such date. 
(D) STUDY.—The Inspector (Jeneral of the Department of 
Housing and Urban Development and the Secretary of the 
Treasury shall jointly conduct a study of the effectiveness of 
the amendment made by paragraph (5) in canying out the 
purposes of section 42 of the Internal Revenue Code of 1986. 
The report of such study shall be submitted not later than 
January 1, 1993, to the Committee on Ways and Means of 
the House of Representatives and the Committee on Fi-
nance of the Senate. 
26 u s e 42 note. 
(c) ELECTION T o ACCELERATE CREDIT INTO 1990.— 
(1) IN GENERAL.—At the election of an individual, the credit 
determined under section 42 of the Internal Revenue Code of 
1986 for the taxpayer's first taxable year ending on or after 
October 25, 1990, shall be 150 percent of the amount which 
would (but for this paragraph) be so allowable with respect to 
investments held by such individual on or before October 25, 
1990. 
(2) REDUCTION IN AGGREGATE CREDIT TO REFLECT INCREASED 
1990 CREDIT.—The aggregate credit gdlowable to any person 
under section 42 of such Code with respect to any investment 
for taxable years after the first taxable year referred to in 
paragraph (1) shall be reduced on a pro rata basis by the 
amount of the increased credit allowable by reason of para-
graph (1) with respect to such first taxable year. The preceding 
sentence shall not be construed to affect whether any taxable 
year is part of the credit, compliance, or extended use periods. 
(3) ELECTION.—The election under paragraph (1) shall be 
made at the time and in the manner prescribed by the Sec-
retary of the Treasury or his delegate, and, once made, shall be 
irrevocable. In the case of a partnership, such election shall be 
made by the partnership. 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-477 
SEC. 11408. QUALIFIED MORTGAGE BONDS. 
(a) IN GENERAL.—Subparagraph (B) of section 143(aXl) (defining 
qualified mortgage bond) is amended by striking "September 30, 
1990" each place it appears and inserting "December 31, 1991". 
G)) MORTGAGE CREDIT CERTIFICATES.—Subsection (h) of section 25 
(relating to interest on certain home mortgages) is amended by 
striking "September 30, 1990" and inserting "December 31, 1991". 
(c) MODIFICATION AND SIMPUFICATION OF RECAPTURE RULES.— 
(1) MODIFICATION OF HOLDING PERIOD PERCENTAGE.— 
(A) Clause (i) of section 143(mX4XC) is amended to read as 
follows: 
"(i) IN GENERAL.—The term 'holding period percent-
age' means the percentage determined in accordance 
with the following table: 
"If the disposition occurs 
during a year after the 
The holding period 
testing date which is: 
percentage is: 
The 1st such year 
20 
The 2d such year 
40 
The 3d such year 
60 
The 4th such year 
80 
The 5th such year 
100 
The 6th such year 
80 
The 7th such year 
60 
The 8th such year 
40 
The 9th such year 
20." 
(B) Subparagraph (C) of section 143(mX4) is amended by 
striking clause (ii) and by redesignating clause (iii) as clause 
(ii). 
(C) Subparagraph (B) of section 143(mX2) is amended by 
striking "10 years" and inserting "9 years". 
(2) MODIFICATION OF RECAPTURE AMOUNT BASED ON TAXPAYER'S 
INCOME.— 
(A) Subparagraph (A) of section 143(mX4) is amended by 
striking "and" at the end of clause (i), by striking the period 
at the end of clause (ii) and inserting ", and", and by adding 
at the end thereof the following new clause: 
"(iii) the income percentage." 
(B) Paragraph (4) of section 143(m) is amended by adding 
at the end thereof the following new subparagraph: 
"(E) INCOME PERCENTAGE.—The term 'income percentage' 
means the percentage (but not greater than 100 percent) 
which— 
"(i) the excess of— 
"(I) the modified adjusted gross income of the 
taxpayer for the taxable year in which the disposi-
tion occurs, over 
"(II) the adjusted qualifying income for such tax-
able year, bears to 
"(ii) $5,000. 
The percentage determined under the preceding sentence 
shall be rounded to the nearest whole percentage point (or, 
if it includes a half of a percentage point, shall be increased 
to the nearest whole percentage point)." 
(CXi) Paragraph (5) of section 143(m) is amended by strik-
ing all that precedes subparagraph (C) and inserting the 
following: 
104 STAT. 1388-478 
PUBLIC LAW 101-508—NOV. 5, 1990 
"(5) ADJUSTED QUAUFYING INCOME; MODIFIED ADJUSTED GROSS 
INCOME.— 
"(A) ADJUSTED QUAUFyiNG INCOME.—For purposes of 
paragraph (4), the term 'adjusted qualif3dng income' means 
the product of— 
"(i) the highest family income which (as of the date 
the financing was provided) would have met the 
requirements of subsection (f) with respect to the resi-
dents, and 
"(ii) 1.05 to the nth power where 'n' equals the 
number of full years during the period beginning on 
the date the financing was provided and ending on the 
date of the disposition. 
For purposes of clause (i), highest family income shall be 
determined without regard to subsection (fK3XA) and on the 
basis of the number of members of the taxpayer's family as 
of the date of the disposition." 
(ii) Subparagraph (C) of section 143(m)(5) is redesignated 
as subparagraph (B) and is amended by striking "this para-
graph' and inserting "paragraph (4)". 
(3) QniER CHANGES.— 
(A) Paragraph (1) of section 143(m) is amended by striking 
"increased by and all that follows £uid inserting 'Increased 
by the lesser of— 
"(A) the recapture amount with respect to such indebted-
ness, or 
"(B) 50 percent of the gain (if any) on the disposition of 
such interest." 
(B) Paragraph (6) of section 143(m) is amended— 
(i) by striking "LIMITATION" in the heading and 
inserting "SPECIAL RULES RELATING TO LIMITATION , 
(ii) by striking the first sentence of subparagraph (A), 
and 
(iii) by striking "the preceding sentence" in subpara-
graph (A) and inserting "paragraph (1)". 
(C) Clause (ii) of section 143(mX7XB) is amended to read as 
follows: 
"(ii) the adjusted qualifying income (as defined in 
paragraph (5)) for each category of family size for each 
year of the 9-year period beginning on the date the 
financing was provided." 
26 u s e 143 note. 
(d) EFFECTIVE D A T E S . — 
(1) BONDS.—The amendment made by subsection (a) shall 
apply to bonds issued after September 30,1990. 
(2) CERTIFICATES.—The amendment made by subsection (b) 
shall apply to elections for periods after September 30, 1990. 
(3) SIMPLIFICATION.—The amendment made by subsection (c) 
shall take effect as if included in the amendments made by 
section 4005 of the Technical and Miscellaneous Revenue Act of 
1988. 
SEC. 11409. QUALIFIED SMALL ISSUE BONDS. 
(a) IN GENERAL.—Subparagraph (B) of section 144(aX12) (relating 
to termination dates) is amended by striking "September 30, 1990 ' 
and inserting "December 31,1991". 
26 use 144 note. 
0)) EFFECTIVE DATE.—The amendment made by this section shall 
apply to bonds issued after September 30,1990. 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-479 
SEC. 11410. HEALTH INSURANCE COSTS OF SELF-EMPLOYED INDIVID-
UALS. 
(a) IN GENERAL.—Paragraph (6) of section 162(1) (relating to spe-
cial rules for health insurance costs of self-employed individuals) is 
amended by striking "September 30,1990" and inserting "December 
31,1991". 
(b) CONFORMING AMENDMENT.—Subsection (a) of section 7107 of 
the Revenue Reconciliation Act of 1989 is amended by striking 26 USC162 note. 
paragraph (2). 
(c) EFFECTIVE DATE.—The amendments made by this section shall 26 USC162 note, 
apply to taxable years beginning after December 31,1989. 
SEC. 11411. EXPENSES FOR DRUGS FOR RARE CONDITIONS. 
Subsection (e) of section 28 (relating to clinical testing expenses 
for certain drugs for rare diseases or conditions) is amended by 
striking "December 31, 1990" and inserting "December 31, 1991'\ 
Subtitle E—Energy Incentives 
PART I—MODIFICATIONS OF EXISTING CREDITS 
SEC. 11501. EXTENSION AND MODIFICATION OF CREDIT FOR PRODUCING 
FUEL FROM NONCONVENTIONAL SOURCE. 
(a) EXTENSION.—Section 29(fKl) of the Internal Revenue Code of 
1986 (relating to application of section) is amended— 
(1) by striking "1991" in clauses (i) and (ii) of subparagraph 
(A) and inserting "1993", and 
(2) by striking "2001" in subparagraph (B) and inserting 
"2003". 
(b) MODIFICATION WITH RESPECT TO GAS FROM TIGHT FORMA-
TIONS.— 
(1) IN GENERAL.—Subpargigraph (B) of section 29(cX2) of such 
Code is amended to read as follows: 
"(B) SPECIAL RULES FOR GAS FROM TIGHT FORMATIONS.— 
The term 'gas produced from a tight formation' shall only 
include g£is from a tight formation— 
"(i) which, as of April 20, 1977, w£is committed or 
dedicated to interstate commerce (as defined in section 
2(18) of the Natural Gas Policy Act of 1978, as in effect 
on the date of the enactment of this clause), or 
"(ii) which is produced from a well drilled after such 
date of enactment." 
(2) EFFECTIVE DATE.—The amendment made by paragraph (1) 26 USC 29 note, 
shall apply to gas produced after December 31,1990. 
(c) COORDINATION WITH ENHANCED OIL RECOVERY CREDIT.— 
(1) IN GENERAL.—Section 29(b) is amended by redesignating 
paragraph (5) as paragraph (6) and by inserting after paragraph 
(4) the following new paragraph: 
"(5) CREDIT REDUCED FOR ENHANCED OIL RECOVERY CREDIT.— 
The amount allowable as a credit under subsection (a) with 
respect to any project for any taxable year (determined after 
application of paragraphs (1), (2), (3), and (4)) shall be reduced by 
the excess (if any) of— 
"(A) the aggregate amount allowed under section 38 for 
the taxable year and any prior taxable year by reason of 
104 STAT. 1388-480 
PUBLIC LAW 101-508—NOV. 5, 1990 
any enhanced oil recovery credit determined under section 
43 with respect to such project, over 
"(B) the aggregate amount recaptured with respect to the 
amount described in subparagraph (A) under this para-
graph for any prior taxable year." 
26 use 29 note. 
(2) EFFECTIVE DATE.—The amendment made by paragraph (1) 
shall apply to taxable years beginning after December 31, 1990. 
SEC. 11502. CREDIT FOR SMALL PRODUCERS OF ETHANOL; MODIFICA-
TION OF ALCOHOL FUELS CREDIT. 
(a) ALLOWANCE OF CREDIT.—Section 40(a) (relating to alcohol used 
as fuel) is amended— 
(1) by striking the period at the end of paragraph (2) and 
inserting ", plus", and 
(2) by adding at the end thereof the following new paragraph: 
"(3) in the case of an eligible small ethanol producer, the 
small ethanol producer credit." 
(b) SMALL ETHANOL PRODUCER CREDIT.—Subsection (b) of section 
40 is amended— 
(1) by redesignating paragraph (4) as paragraph (5), 
(2) by inserting after paragraph (3) the following new 
paragraph: 
"(4) S M A L L ETHANOL PRODUCER CREDIT.— 
"(A) IN GENERAL.—The small ethanol producer credit of 
any eligible small ethanol producer for any tsixable year is 
10 cents for each gallon of qualified ethanol fuel production 
of such producer. 
"(B) QUAUFIED ETHANOL FUEL PRODUCTION.—For purpOSeS 
of this paragraph, the term 'qualified ethemol fuel produc-
tion' means any alcohol which is ethanol which is produced 
by an eligible small ethanol producer, and which during the 
taxable year— 
"(i) is sold by such producer to another person— 
"(I) for use by such other person in the produc-
tion of a qualified mixture in such other person's 
trade or business (other than casual 
off-farm 
production), 
"(II) for use by such other person as a fuel in a 
trade or business, or 
"(III) who sells such ethanol at retail to another 
person and places such ethanol in the fuel tank of 
such other person, or 
"(ii) is used or sold by such producer for any purpose 
described in clause (i). 
"(C) LIMITATION.—The qualified ethanol fuel production 
of any producer for any taxable year shall not exceed 
15,000,000 gallons. 
"(D) ADDITIONAL DISTILLATION EXCLUDED.—The qualified 
ethanol fuel production of any producer for any taxable 
year shall not include any alcohol which is purchased by 
the producer and with respect to which such producer 
increases the proof of the alcohol by additional distilla-
tion."; and 
(3) by striking "AND ALCOHOL CREDIT" in the heading for such 
subsection and inserting ", ALCOHOL CREDIT, AND SMALL ETHA-
NOL PRODUCER CREDIT". 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-481 
(c) DEFINITIONS AND SPECIAL RULES FOR EUGIBLE SMALL ETHANOL 
PRODUCER CREDIT.—Section 40 is amended by adding at the end 
thereof the following new subsection: 
"(g) DEFINITIONS AND SPECIAL RULES FOR EUGIBLE SMALL ETHANOL 
PRODUCER CREDIT.—For purposes of this section— 
"(1) ELIGIBLE SMALL ETHANOL PRODUCER.—The term 'eligible 
small ethanol producer' means a person who, at all times during 
the taxable year, has a productive capacity for alcohol (as 
defined in subsection (d)(1)(A) without regard to clauses (i) and 
(ii)) not in excess of 30,000,000 gallons. 
"(2) AGGREGRATION RULE.—For purposes of the 15,000,000 
gallon limitation under subsection (b)(4)(C) and the 30,000,000 
gallon limitation under paragraph (1), all members of the same 
controlled group of corporations (within the meaning of section 
267(f)) and all persons under common control (within the mean-
ing of section 52(b) but determined by treating an interest of 
more than 50 percent as a controlling interest) shall be treated 
as 1 person. 
"(3) PARTNERSHIP, s CORPORATIONS, AND OTHER PASS-THRU ENTI-
TIES.—In the case of a partnership, trust, S corporation, or other 
pass-thru entity, the limitations contained in subsection (b)(4)(C) 
and paragraph (1) shall be applied at the entity level and at the 
partner or similar level. 
"(4) ALLOCATION.—For purposes of this subsection, in the case 
of a facility in which more than 1 person has an interest, 
productive capacity shall be allocated among such persons in 
such manner as the Secretary may prescribe. 
"(5) REGULATIONS.—The Secretary may prescribe such regula-
tions as may be necessary— 
"(A) to prevent the credit provided for in subsection (a)(3) 
from directly or indirectly benefiting any person with a 
direct or indirect productive capacity of more than 
30,000,000 gallons of alcohol during the taxable year, or 
"(B) to prevent any person from directly or indirectly 
benefiting with respect to more than 15,000,000 gallons 
during the taxable year." 
(d) ALCOHOL NOT USED AS FUEL.— 
(1) IN GENERAL.—Section 40(d)(3) is amended by redesignating 
subparagraph (C) £is subpargigraph (D) and by inserting after 
subparagraph (B) the following new subparagraph: 
"(C) PRODUCER CREDIT.—If— 
"(i) any credit W£is determined under subsection 
(aX3),and 
"(ii) any person does not use such fuel for a purpose 
described in subsection Ot>)(4)(B), 
then there is hereby imposed on such person a tax equal to 
10 cents a gallon for each gallon of such alcohol." 
(2) CONFORMING AMENDMENT.—Section 40(d)(3)(D), as redesig-
nated by paragraph (1), is amended by striking "subparagraph 
(A) or (B) and inserting "subparagraph (A), (B), or (C) . 
(e) REDUCED CREDIT FOR ETHANOL BLENDERS.— 
(1) IN GENERAL.—Section 40, as amended by subsection (c), is 
amended by adding at the end thereof the following new subsec-
tion: 
"(h) REDUCED CREDIT FOR ETHANOL BLENDERS.—In the case of any 
alcohol mixture credit or alcohol credit with respect to any alcohol 
which is ethanol— 
104 STAT. 1388-482 
PUBLIC LAW 101-508—NOV. 5, 1990 
"(1) subsections (bXlXA) and (bX2XA) shall be applied by 
substituting '54 cents' for '60 cents'; 
"(2) subsection (bX3) shall be applied by substituting '40 cents' 
for '45 cents' and '54 cents' for '60 cents'; and 
"(3) subparagraphs (A) and (B) of subsection (dX3) shall be 
applied by substituting '54 cents' for '60 cents' and '40 cents' for 
'45 cents'." 
(2) CONFORMING AMENDMENT.—Section 4003) is amended by 
inserting ", and except as provided in subsection (h)" in the 
matter preceding paragraph (1) thereof. 
(f) TERMINATION.—Subsection (e) of section 40 is amended to read 
as follows: 
"(e) TERMINATION.— 
"(1) IN GENERAL.—This section shall not apply to any sale or 
use— 
"(A) for any period after December 31, 2000, or 
"(B) for any period before January 1, 2001, during which 
the Highway Trust Fund financing rate under section 
4081(aX2) is not m effect. 
"(2) N o CARRYOVERS TO CERTAIN YEARS AFTER EXPIRATION.—If 
this section ceases to apply for any period by reason of para-
graph (1), no amount attributable to any sale or use before the 
first day of such period may be carried under section 39 by 
reason of this section (treating the amount allowed by reason of 
this section as the first amount allowed by this subpart) to any 
taxable year beginning after the 3-taxable-year period begin-
ning with the taxable year in which such first day occurs." 
(g) CONFORMING AMENDMENTS TO TARIFF SCHEDULE.— 
(1) Heading 9901.00.50 of the Harmonized Tariff Schedule of 
the United States (19 U.S.C. 3007) is amended— 
(A) by striking "15.85<f" each place it appears and insert-
mg "14.27<|;", 
(B) by striking "12.6$" and inserting "11.34<t", and 
(C) by striking the date in the effective period column and 
inserting "Before 10/1/2000, except that the rate for arti-
cles described in this heading shall not apply during any 
period before 10/1/2000 during which the Highway Trust 
Fund financing rate under section 4081(aX2) of the Internal 
Revenue Code of 1986 is not in effect." 
(2) Heading 9901.00.52 of the Harmonized Tariff Schedule of 
the United States is amended— 
(A) by striking "6.66<t" each place it appears and insert-
mg "5.99(t", 
(B) by striking "5.29<t" and inserting "4.76<f", and 
(C) by striking "The earlier of 12/31/92, or the date on 
which Treasury regulation § 1.40-1 is withdrawn or de-
clared invalid." in the effective period column and insert-
ing: "Before the earlier of 10/1/2000, or the date on which 
Treas. Reg. § 1.40-1 is withdrawn or declared invalid, 
except that the rate for articles described in this heading 
shall not apply during any period before 10/1/2000 during 
which the Highway Trust Fund financing rate under sec-
tion 4081(aX2) of the Internal Revenue Code of 1986 is not in 
effect." 
26 u s e 40 note. 
(h) EFFECTIVE D A T E S . — 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-483 
(1) Except as provided in paragraph (2), the amendments 
made by this section shall apply to alcohol produced, and sold or 
used, in taxable years beginning after December 81,1990. 
(2) The amendments made by subsection (g) shall apply to 
articles entered or withdrawn from warehouse on or after Janu-
ary 1,1991. 
PART 
II—ENHANCED 
OIL 
RECOVERY 
CREDIT 
SEC. 11511. TAX CREDIT FOR ENHANCED OIL RECOVERY. 
(a) IN GENERAL.—Subpart D of part IV of subchapter A of chapter 
1 (relating to business related credits) is amended by adding at the 
end thereof the following new section: 
"SEC. 43. ENHANCED OIL RECOVERY CREDIT. 
"(a) GENERAL RULE.—For purposes of section 88, the enhanced oil 
recovery credit for any taxable year is an amount equal to 15 
percent of the taxpayer's qusilified enhanced oil recovery costs for 
such taxable year. 
"(b) PHASE-OUT OF CREDIT AS CRUDE OIL PRICES INCREASE.— 
"(1) IN GENERAL.—The amount of the credit determined under 
subsection (a) for siny taxable year shall be reduced by an 
amount which bears the same ratio to the amount of such credit 
(determined without regard to this paragraph) as— 
"(A) the amount by which the reference price for the 
calendar year preceding the calendar year in which the 
taxable year begins exceeds $28, bears to 
"(B) $6. 
"(2) REFERENCE PRICE.—For purposes of this subsection, the 
term 'reference price' means, with respect to any calendar year, 
the reference price determined for such calendar year under 
section 29(dX2XC). 
"(3) INFLATION ADJUSTMENT.— 
"(A) IN GENERAL.—In the ceise of any taxable year begin-
ning in a calendar year after 1991, there shsdl be sub-
stituted for the $28 amount under paragraph (IXA) an 
Eimount equal to the product of— 
"(i) $28, multiplied by 
"(ii) the inflation adjustment factor for such calendar 
year. 
"(B) INFLATION ADJUSTMENT FACTOR.—The term 'inflation 
adjustment factor' means, with respect to any calendar 
year, a fraction the numerator of which is the GNP implicit 
price deflator for the preceding calendar year and the 
denominator of which is the GNP implicit price deflator for 
1990. For purposes of the preceding sentence, the term 
'GNP implicit price deflator' means the first revision of the 
implicit price deflator for the gross national product as 
computed and published by the Secretary of Commerce. Not 
later than April 1 of any calendar year, the Secretary shall 
publish the inflation adjustment factor for the preceding 
calendar year. 
"(c) QUAUFIED ENHANCED OIL RECOVERY COSTS.—For purposes of 
this section— 
"(1) IN GENERAL.—The term 'qualified enhginced oil recovery 
costs' means any of the following: 
104 STAT. 1388-484 
PUBLIC LAW 101-508—NOV. 5, 1990 
"(A) Any amount paid or incurred during the taxable 
year for tangible property— 
"(i) which is an integral part of a qualified enhanced 
oil recovery project, and 
"(ii) with respect to which depreciation (or amortiza-
tion in lieu of depreciation) is allowable under this 
chapter. 
"(B) Any intangible drilling and development costs— 
"(i) which are paid or incurred in connection with a 
qualified enhanced oil recovery project, and 
"(ii) with respect to which the taxpayer may make an 
election under section 263(c) for the taxable year. 
"(C) Any qualified tertiary injectant expenses which are 
paid or incurred in connection with a qualified enhanced oil 
recovery project and for which a deduction is allowable 
under section 193 for the taxable year. 
"(2) QUAUFIED ENHANCED OIL RECOVERY PROJECT.—For pur-
poses of this subsection— 
"(A) IN GENERAL.—The term 'qualified enhanced oil 
recovery project' means any project— 
* (i) which involves the application (in accordance 
with sound engineering principles) of 1 or more tertiary 
recovery methods (as defined in section 193(bX3)) which 
can reasonably be expected to result in more than an 
insignificant increase in the amount of crude oil which 
will ultimately be recovered, 
"(ii) which is located within the United States (within 
the meaning of section 638(1)), and 
"(iii) with respect to which the first injection of 
liquids, gases, or other matter commences after Decem-
ber 31,1990. 
"(B) CERTIFICATION.—A project shall not be treated as a 
qualified enhanced oil recovery project unless the operator 
submits to the Secretary (at such times and in such manner 
as the Secretary provides) a certification from a petroleum 
engineer that the project meets (and continues to meet) the 
requirements of subparagraph (A). 
"(3) AT-RISK UMITATION,—For purposes of determining quali-
fied enhanced oil recovery costs, rules similar to the rules of 
section 49(aXl), section 49(aX2)»_and section 49(b) shall apply. 
"(4) SPECIAL RULE FOR CERTAIN GAS DISPLACEMENT PROJECTS.— 
For purposes of this section, immiscible non-hydrocarbon gas 
displacement shall be treated as a tertiary recovery method 
under section 193(bX3). 
"(d) OTHER RULES.— 
"(1) DISALLOWANCE OF DEDUCTION.—Any deduction allowable 
under this chapter for any costs taken into account in comput-
ing the amount of the credit determined under subsection (a) 
shall be reduced by the amount of such credit attributable to 
such costs. 
"(2) BASIS ADJUSTMENTS.—For purposes of this subtitle, if a 
credit is determined under this section for any expenditure with 
respect to any property, the increase in the basis of such 
property which would (but for this subsection) result from such 
expenditure shall be reduced by the amount of the credit so 
allowed. 
"(e) ELECTION TO HAVE CREDIT NOT APPLY.— 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-485 
"(1) IN GENERAL.—A teixpayer may elect to have this section 
not apply for any taxable year. 
"(2) TIME FOR MAKING ELECTION.—An election under para-
graph (1) for any taxable year may be made (or revoked) at any 
time before the expiration of the 3-year period beginning on the 
lEist date prescribed by law for filing the return for such taxable 
year (determined without regard to extensions). 
"(3) MANNER OF MAKING ELECTION.—An election under para-
graph (1) (or revocation thereof) shall be made in such manner 
as the Secretary may by regulations prescribe." 
(b) ADDITION TO GENERAL BUSINESS CREDIT.— 
(1) IN GENERAL,—Section 38(b) (defining current year business 
credit) is amended by striking "plus" at the end of paragraph 
(4), by striking the period at the end of paragraph (5) and 
inserting ", plus", and by adding at the end thereof the follow-
ing new paragraph: 
"(6) the enhanced oil recovery credit under section 43(a)." 
(2) CARRYBACKS.—Section 39(d) is amended by adding at the 
end thereof the following new paragraph: 
"(5) N o CARRYBACK OF ENHANCED OIL RECOVERY CREDIT BEFORE 
1991.—No portion of the unused business credit for any taxable 
year which is attributable to the credit determined under sec-
tion 43(a) (relating to enhanced oil recovery credit) may be 
carried to a taxable year beginning before January 1, 1991." 
(3) DEDUCTION FOR UNUSED CREDIT.—Section 196(c) is eunended 
by striking "and" at the end of paragraph (3), by striking the 
period at the end of paragraph (4) and inserting ", and", and by 
adding at the end thereof the following new paragraph: 
"(5) the enhanced oil recovery credit determined under sec-
tion 43(a)." 
(c) CONFORMING AMENDMENTS.— 
(1) The table of sections for subpart D of part IV of subchapter 
A of chapter 1 is amended by adding at the end thereof the 
following new item: 
"Sec. 43. Enhfinced oil recovery credit." 
(2) Subsection (m) of section 6501 is amended by striking 
"44B" each place it appears and inserting "43 or 44B". 
(d) EFFECTIVE DATES.— 
26 USC 43 note. 
(1) IN GENERAL.—The amendments made by this section shall 
apply to costs paid or incurred in taxable years beginning after 
December 31,1990. 
(2) SPECIAL RULE FOR SIGNIFICANT EXPANSION OF PROJECTS.— 
For purposes of section 43(cX2XAXiii) of the Internal Revenue 
Code of 1986 (as added by subsection (a)), any significant expan-
sion after December 31, 1990, of a project begun before 
January 1, 1991, shall be treated as a project with respect to 
which the first injection commences after December 31, 1990. 
PART III—MODIFICATIONS OF PERCENTAGE 
DEPLETION 
SEC. 
1
1
5
2
1
. 
PERCENTAGE 
DEPLETION 
PERMITTED 
AFTER 
TRANSFER 
OF 
PROVEN 
PROPERTY. 
(a) IN GENERAL.—Subsection (c) of section 613A (relating to limita-
tions on percentage depletion in the case of oil and gas wells) is 
104 STAT. 1388-486 
PUBLIC LAW 101-508—NOV. 5, 1990 
amended by striking paragraphs (9) and (10) and by redesignating 
paragraphs (11), (12), and (13) as paragraphs (9), (10), and (11), 
respectively. 
(b) TECHNICAL AMENDMENT.—Paragraph (11) of section 613A(c), as 
redesignated by subsection (a), is amended by striking subpara-
graphs (C) and (D). 
26 use 613A 
(c) EFFECTIVE DATE.—The amendments made by this section shall 
°o**- 
apply to transfers after October 11,1990. 
SEC. 11522. NET INCOME LIMITATION ON PERCENTAGE DEPLETION IN-
CREASED FROM 50 PERCENT TO 100 PERCENT OF PROPERTY 
NET INCOME FOR OIL AND GAS PROPERTIES. 
(a) IN GENERAL.—The second sentence of subsection (a) of section 
613 (relating to percentage depletion) is amended by inserting "(100 
percent in the case of oil and gas properties)" after "50 percent". 
(b) CONFORMING AMENDMENTS.— 
(1) SubparEigraph (C) of section 613A(c)(7) is amended by 
striking "50-percent" and inserting "taxable income". 
(2) Section 614(d) is amended by striking "50 percent" and 
inserting "taxable income". 
26 use 613 note. 
(c) EFFECTIVE DATE.—The amendments made by this section shall 
apply to taxable years beginning after December 31,1990. 
SEC. 11523. INCREASE IN PERCENTAGE DEPLETION ALLOWANCE FOR 
MARGINAL PRODUCTION. 
(a) IN GENERAL.—Paragraph (6) of section 613A(c) is amended to 
read as follows: 
"(6) OIL AND NATURAL GAS PRODUCED FROM MARGINAL PROP-
ERTIES.— 
"(A) IN GENERAL.—Except as provided in subsection (d) 
and subparagraph (B), the allowance for depletion under 
section 611 shall be computed in accordance with section 
613 with respect to— 
"(i) so much of the taxpayer's average daily marginal 
production of domestic crude oil as does not exceed the 
taxpayer's depletable oil quantity (determined without 
regard to paragraph (3XAXii)), and 
"(ii) so much of the taxpayer's average daily mar-
ginal production of domestic natural gas as does not 
exceed the taxpayer's depletable natural gas quantity 
(determined without regard to paragraph (3XAXii)), 
and the applicable percentage shall be deemed to be speci-
fied in subsection (b) of section 613 for purposes of subsec-
tion (a) of that section. 
"(B) ELECTION TO HAVE PARAGRAPH APPLY TO PRO RATA 
PORTION OF MARGINAL PRODUCTION.—If the taxpayer elects 
to have this subparagraph apply for any taxable year, the 
rules of subparagraph (A) shall apply to the average daily 
marginal production of domestic crude oil or domestic natu-
ral gas of the taxpayer to which paragraph (1) would have 
applied without regard to this paragraph. 
"(C) APPLICABLE PERCENTAGE.—For purposes of subpara-
graph (A), the term 'applicable percentage' means the 
percentage (not greater than 25 percent) equal to the sum 
of— 
"(i) 15 percent, plus 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-487 
"(ii) 1 percentage point for each whole dollar by 
which $20 exceeds the reference price for crude oil for 
the calendar year preceding the calendar year in which 
the taxable year begins. 
For purposes of this paragraph, the term 'reference price' 
means, with respect to any calendar year, the reference 
price determined for such calendar year under section 
29(d)(2)(C). 
"(D) 
MARGINAL 
PRODUCTION.—The 
term 
'marginal 
production' means domestic crude oil or domestic natural 
gas which is produced during any taxable year from a 
property which— 
"(i) is a stripper well property for the calendar year 
in which the taxable year begins, or 
"(ii) is a property substantiedly all of the production 
of which during such calendar year is heavy oil. 
"(E) STRIPPER WELL PROPERTY.—For purposes of this para-
graph, the term 'stripper well property' means, with respect 
to any calendar year, any property with respect to which 
the amount determined by dividing— 
"(i) the average daily production of domestic crude oil 
and domestic natural gas from producing wells on such 
property for such calendar year, by 
"(ii) the number of such wells, 
is 15 barrel equivalents or less. 
"(F) HEAVY OIL.—For purposes of this paragraph, the 
term 'heavy oil' means domestic crude oil produced from 
any property if such crude oil had a weighted average 
gravity of 20 degrees API or less (corrected to 60 degrees 
Fahrenheit). 
"(G) AVERAGE DAILY MARGINAL PRODUCTION.—For pur-
poses of this subsection— 
"(i) the taxpayer's average daily marginal production 
* 
of domestic crude oil or natural gas for any taxable 
year shall be determined by dividing the taxpayer's 
aggregate marginal production of domestic crude oil or 
natural gas, as the case may be, during the taxable 
year by the number of days in such taxable year, and 
"(ii) in the case of a taxpayer holding a partial 
interest in the production from any property (including 
any interest held in any partnership), such taxpayer's 
production shall be considered to be that amount of 
such production determined by multiplying the total 
production of such property by the taxpayer's percent-
Eige participation in the revenues from such property." 
(b) 
CONFORMING 
AMENDMENTS.—Section 
613A(c)(3XA) 
is 
amended— 
(1) by striking clause (ii) and inserting: 
"(ii) except in the case of a taxpayer making an 
election under paragraph (6XB), the taxpayer's average 
daily marginal production for the taxable year.", and 
(2) by striking the last sentence. 
(c) EFFECTIVE DATE.—The amendments made by this section shall 
26 USC 613A 
apply to taxable years beginning after December 31,1990. 
note. 
104 STAT. 1388-488 
PUBLIC LAW 101-508—NOV. 5, 1990 
PART IV—MINIMUM TAX TREATMENT 
SEC. 11531. SPECIAL ENERGY DEDUCTION FOR MINIMUM TAX. 
(a) IN GENERAL.—Section 56 (relating to adjustments in computing 
alternative minimum taxable income) is amended by adding at the 
end thereof the following new subsection: 
"(h) ADJUSTMENT BASED ON ENERGY PREFERENCES.— 
"(1) IN GENERAL.—In computing the alternative minimum 
taxable income of any taxpayer other than an integrated oil 
company for any taxable year beginning after 1990, there shall 
be allowed as a deduction an amount equal to the lesser of— 
"(A) the alternative tax energy preference deduction, or 
"(B) 40 percent of alternative minimum taxable income. 
"(2) PHASE-OUT OF DEDUCTION AS OIL PRICES INCREASE.—The 
amount of the deduction under paragraph (1) (determined with-
out regard to this paragraph) shall be reduced (but not below 
zero) by the amount which bears the same ratio to such amount 
as— 
"(A) the excess of the reference price of crude oil for the 
calendar year preceding the calendar year in which the 
taxable year begins over $28, bears to 
"(B) $6. 
For purposes of this paragraph, the reference price for any 
calendar year shall be determined under section 29(dX2XC) and 
the $28 £unount under subparagraph (A) shall be adjusted at the 
same time and in the same manner as under section 43(bX3). 
"(3) ALTERNATIVE TAX ENERGY PREFERENCE DEDUCTION.—For 
purposes of paragraph (1), the term 'alternative tax energy 
preference deduction' means an amount equal to the sum of— 
"(A) in the case of the intangible drilling cost preference, 
an amount equal to the sum of^ 
"(i) 75 percent of the portion of the intangible drilling 
cost preference attributable to qualified exploratory 
costs, plus 
"(ii) 15 percent of the excess (if any) of— 
"(I) the intangible drilling cost preference, over 
"(II) the portion of the intangible drilling cost 
preference attributable to qualified exploratory 
costs, plus 
"(B) 50 percent of the marginal production depletion 
preference. 
"(4) INTANGIBLE DRILLING COST PREFERENCE.—For purposes of 
this subsection— 
"(A) IN GENERAL.—The term 'intangible drilling cost pref-
erence' means the amount by which alternative minimum 
taxable income would be reduced if it were computed with-
out regard to section 57(aX2) and subsection (gX4XDXi)-
"(B) PORTION ATTRIBUTABLE TO QUALIFIED EXPLORATORY 
COSTS.—For purposes of subparagraph (A), the portion of 
the intangible drilling cost preference attributable to quali-
fied exploratory costs is an eimount which bears the same 
ratio to the intangible drilling cost preference as— 
"(i) the qualified exploratory costs of the taxpayer for 
the taxable year, bear to 
PUBLIC LAW 101-508—NOV. 5,1990 
104 STAT. 1388-489 
"(ii) the total intangible drilling and development 
costs with respect to which the taxpayer may make an 
election under section 263(c) for the taxable year. 
"(5) 
MARGINAL PRODUCTION DEPLETION PREFERENCE.—For 
purposes of this subsection, the term 'marginal production 
depletion preference' means the amount by which alternative 
minimum taxable income would be reduced if it were computed 
as if section 57(a)(1) and subsection (g)(4XG) did not apply to any 
allowance for depletion determined under section 613A(cX6). 
"(6) QUALIFIED EXPLORATORY COSTS.—For purposes of this 
subsection— 
"(A) IN GENERAL.—The term 'qualified exploratory costs' 
means intangible drilling and development costs of a tax-
payer other than an integrated oil company which— 
"(i) the taxpayer may elect to deduct as expenses 
under section 263(c), and 
"(ii) are paid or incurred in connection with the 
drilling of an exploratory well located in the United 
States (within the meaning of section 638(1)). 
"(B) EXPLORATORY WELL.—The term 'exploratory well' 
means any of the following oil or gas wells: 
"(i) An oil or gas well which is completed (or if not 
completed, with respect to which drilling operations 
cease) before the completion of any other well which— 
"(I) is located within 1.25 miles from the well, 
and 
"(II) is capable of production in commercial 
quantities, 
"(ii) An oil or gas well which is not described in 
clause (i) but which has a total depth which is at least 
800 feet below the deepest completion depth of any well 
within 1.25 miles which is capable of production in 
commercial quantities. 
"(iii) An oil or gas well capable of production in 
commercial quantities which is not described in clause 
(i) or (ii) but which is completed into a new reservoir, 
except that this clause shall not apply to a gas well if 
the gas is produced (or to be produced) from Devonian 
shale, coal seams, or a tight formation (determined in a 
manner similar to the manner under section 29(c)(2)). 
A well shall not be treated as an exploratory well unless 
the operator submits to the Secretary (at such time and in 
such manner as the Secretary may provide) a certification 
from a petroleum engineer that the well is described in one 
of the preceding clauses. 
"(C) CERTAIN COSTS NOT INCLUDED.—The term 'qualified 
exploratory costs' shall not include any cost paid or 
incurred— 
"(i) in constructing, acquiring, transporting, erecting, 
or installing an offshore platform, or 
"(ii) with respect to the drilling of a well from an 
offshore platform unless it is the first well which pene-
trates a reservoir. 
"(D) INTEGRATED OIL COMPANY.—For purposes of this 
paragraph, the term 'integrated oil company means, with 
respect to any taxable year, any producer of crude oil to 
9-194 O - 91 - 29 : QL 3 Part 2 
104 STAT. 1388-490 
PUBLIC LAW 101-508—NOV. 5, 1990 
whom subsection (c) of section 613A does not apply by 
reason of paragraph (2) or (4) of section 613A(d). 
"(7) SPECIAL RULES.— 
"(A) ALTERNATIVE MINIMUM TAXABLE INCOME.—For pur-
poses of parsigraphs (IXB), (4)(A), and (5), alternative mini-
mum taxable income shall be determined without regard to 
the deduction allowable under this subsection and the alter-
native tax net operating loss deduction under subsection 
(aX4). 
"(B) GEOTHERMAL DEPOSITS.—For purposes of this subsec-
tion, intangible drilling and development costs shall not 
include costs with respect to wells drilled for any geo-
thermal deposits (as defined in section 613(e)(3)), 
"(8) REGULATIONS.—The Secretary may by regulation provide 
for appropriate adjustments in computing alternative minimum 
taxable income or adjusted current earnings for any taxable 
year following a taxable year for which a deduction was allowed 
under this subsection to ensure that no double benefit is allowed 
by reason of such deduction." 
(b) CONFORMING AMENDMENTS.— 
(1) Section 56(d)(1)(A) is amended to read as follows: 
"(A) the amount of such deduction shall not exceed the 
excess (if any) of— 
"(i) 90 percent of alternative minimum taxable 
income determined without regard to such deduction 
and the deduction under subsection (h), over 
"(ii) the deduction under subsection (h), and". 
(2) Section 59(aX2XAXii) is amended by inserting "and the 
alternative tax energy preference deduction under section 
56(h)" after "deduction". 
(3) Section 59A(bXl) is amended by inserting "or the alter-
native tax energy preference deduction under section 56(h)" 
before ", and". 
26 use 56 note. 
(c) EFFECTIVE DATE,—The amendments made by this section shall 
apply to taxable years beginning after December 31,1990. 
Subtitle F—Small Business Incentives 
PART I—TREATMENT OF ESTATE TAX FREEZES 
SEC. 11601. REPEAL OF SECTION 2036(c). 
(a) IN GENERAL.—Section 2036 (relating to transfers with retained 
life estate) is amended by striking subse^ction (c) and by redesignat-
ing subsection (d) as subsection (c). 
(b) CONFORMING AMENDMENTS.— 
(1) Section 2207B is amended— 
(A) by striking subsection (b) and redesignating sub-
sections (c), (d), and (e) as subsections (b), (c), and (d), 
respectively, 
(B) by striking "subsections (a) and (b)" in subsection (c) 
(as so redesignated) and inserting "subsection (a)", and 
(C) by striking "subsections (a), (b), and (c)" in subsection 
(c) (as so redesignated) and inserting "subsections (a) and 
(b)". 
(2) Section 2501(d) is amended by striking paragraph (3). 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-491 
(c) EFFECTIVE DATE.—The simendments made by this section shall 
26 USC 2036 
apply in the case of property transferred after December 17, 1987. note. 
SEC. 11602. SPECIAL VALUATION RULES. 
(a) IN GENERAL.—Subtitle B is amended by adding at the end 
thereof the following new chapter: 
"CHAPTER 14—SPECIAL VALUATION RULES 
"Sec. 2701. Special valuation rules in case of transfers of certain interests in corpo-
rations or partnerships. 
"Sec. 2702. Special valuation rules in case of transfers of interests in trusts. 
"Sec. 2703. Certain rights and restrictions disregarded. 
"Sec. 2704. Treatment of certain lapsing rights and restrictions. 
"SEC. 2701. SPECIAL VALUATION RULES IN CASE OF TRANSFERS OF CER-
TAIN INTERESTS IN CORPORATIONS OR PARTNERSHIPS. 
"(a) VALUATION RULES.— 
"(1) IN GENERAL.—Solely for purposes of determining whether 
a transfer of an interest in a corporation or partnership to (or 
for the benefit of) a member of the transferor's family is a gift 
(and the value of such transfer), the value of any right— 
"(A) which is described in subparagraph (A) or (B) of 
subsection (bXl), and 
"(B) which is with respect to any applicable retained 
interest that is held by the transferor or an applicable 
family member immediately after the transfer, 
shall be determined under paragraph (3). This paragraph shall 
not apply to the transfer of any interest for which market 
quotations are readily available (as of the date of transfer) on an 
established securities market. 
"(2) EXCEPTIONS FOR MARKETABLE RETAINED INTERESTS, ETC.— 
Paragraph (1) shall not apply to any right with respect to an 
applicable retained interest if— 
"(A) market quotations are readily available (as of the 
date of the transfer) for such interest on an established 
securities market, 
"(B) such interest is of the same class as the transferred 
interest, or 
"(C) such interest is proportionally the same as the trsins-
ferred interest, without regard to nonlapsing differences in 
voting power (or, for a partnership, nonlapsing differences 
with respect to management and limitations on liability). 
Subparagraph (C) shall not apply to any interest in a partner-
ship if the transferor or an applicable family member has the 
right to alter the liability of the transferee of the transferred 
property. Except as provided by the Secretary, any difference 
described in subparagraph (C) which lapses by reason of any 
Federal or State law shall be treated as a nonlapsing difference 
for purposes of such subparagraph. 
"(3) 
VALUATION 
OF 
RIGHTS TO 
WHICH 
PARAGRAPH 
(i) 
APPLIES.— 
"(A) IN GENERAL.—The value of any right described in 
paragraph (1), other than a distribution right which con-
sists of a right to receive a qualified pajonent, shall be 
treated as being zero. 
"(B) VALUATION OF QUALIFIED PAYMENTS.—If— 
104 STAT. 1388-492 
PUBLIC LAW 101-508—NOV. 5, 1990 
"(i) any applicable retained interest confers a dis-
tribution right which consists of the right to a qualified 
payment, and 
"(ii) there are 1 or more liquidation, put, call, or 
conversion rights with respect to such interest, 
the value of all such rights shall be determined as if each 
liquidation, put, call, or conversion right were exercised in 
the manner resulting in the lowest value being determined 
for ail such rights. 
"(4) MINIMUM VALUATION OF JUNIOR EQUITY.— 
"(A) IN GENERAL.—In the case of a transfer described in 
paragraph (1) of a junior equity interest in a corporation or 
partnership, such interest shall in no event be valued at an 
amount less than the value which would be determined if 
the total value of all of the junior equity interests in the 
entity were equal to 10 percent of the sum of— 
"(i) the total value of all of the equity interests in 
such entity, plus 
"(ii) the total amount of indebtedness of such entity 
to the transferor (or an applicable family member). 
"(B) DEFINITIONS.—For purposes of this paragraph— 
"(i) JUNIOR 
EQUITY INTEREST.—The term 
'junior 
equity interest' means common stock or, in the case of 
a partnership, any partnership interest under which 
the rights as to income and capital are junior to the 
rights of all other classes of equity interests. 
"(ii) EQUITY INTEREST.—The term 'equity interest' 
means stock or any interest as a partner, as the case 
may be. 
"(b) APPLICABLE RETAINED INTERESTS.—For purposes of this 
section— 
"(1) IN GENERAL.—The term 'applicable retained interest' 
means any interest in an entity with respect to which there is— 
"(A) a distribution right, but only if, immediately before 
the transfer described in subsection (a)(1), the transferor 
and applicable family members hold (after application of 
subsection (e)(3)) control of the entity, or 
"(B) a liquidation, put, call, or conversion right. 
"(2) CONTROL.—For purposes of paragraph (1)— 
"(A) CORPORATIONS.—In the case of a corporation, the 
term 'control' means the holding of at least 50 percent (by 
vote or value) of the stock of the corporation. 
"(B) PARTNERSHIPS.—In the case of a partnership, the 
term 'control' means— 
"(i) the holding of at least 50 percent of the capital or 
profits interests in the partnership, or 
"(ii) in the case of a limited partnership, the holding 
of any interest as a general partner. 
"(c) DISTRIBUTION AND OTHER RIGHTS; QUALIFIED PAYMENTS.—For 
purposes of this section— 
"(1) DISTRIBUTION RIGHT.— 
"(A) IN GENERAL.—The term 'distribution right' means— 
"(i) a right to distributions from a corporation with 
respect to its stock, and 
"(ii) a right to distributions from a partnership with 
respect to a partner's interest in the partnership. 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-493 
"(B) EXCEPTIONS.—The term 'distribution right' does not 
include— 
"(i) a right to distributions with respect to any junior 
equity interest {as defined in subsection (a)(4XB)(i)), 
"(ii) any liquidation, put, call, or conversion right, or 
"(iii) any right to receive any guaranteed payment 
described in section 707(c) of a fixed amount. 
"(2) LIQUIDATION, ETC. RIGHTS.— 
"(A) IN GENERAL.—The term 'liquidation, put, call, or 
conversion right' means any liquidation, put, call, or 
conversion right, or any similar right, the exercise or 
nonexercise of which affects the value of the transferred 
interest. 
"(B) EXCEPTION FOR FIXED RIGHTS.— 
"(i) IN GENERAL.—The term 'liquidation, put, call, or 
conversion right' does not include any right which 
must be exercised at a specific time and at a specific 
amount. 
"(ii) TREATMENT OF CERTAIN RIGHTS.—If a right is 
assumed to be exercised in a particular manner under 
subsection (aX3XB), such right shall be treated as so 
exercised for purposes of clause (i). 
"(C) EXCEPTION FOR CERTAIN RIGHTS TO CONVERT.—The 
term 'liquidation, put, call, or conversion right' does not 
include any right which— 
"(i) is a right to convert into a fixed number (or a 
fixed percentage) of shares of the same class of stock in 
a corporation as the transferred stock in such corpora-
tion under subsection (aXD (or stock which would be of 
the same class but for nonlapsing differences in voting 
power), 
"(ii) is nonlapsing, 
"(iii) is subject to proportionate adjustments for 
splits, combinations, reclassifications, 
and 
similar 
changes in the capital stock, and 
"(iv) is subject to adjustments similar to the adjust-
ments under subsection (d) for accumulated but unpaid 
distributions. 
A rule similar to the rule of the preceding sentence shall 
apply for partnerships. 
"(3) QUALIFIED PAYMENT.— 
"(A) IN GENERAL.—Except as otherwise provided in this 
paragraph, the term 'qualified payment' means any divi-
dend payable on a periodic basis under any cumulative 
preferred stock (or a comparable pajnnent under any part-
nership interest) to the extent that such dividend (or com-
parable payment) is determined at a fixed rate. 
"(B) TREATMENT OF VARIABLE RATE PAYMENTS.—For pur-
. poses of subparagraph (A), a pa5rment shall be treated as 
fixed as to rate if such payment is determined at a rate 
which bears a fixed relationship to a specified market 
interest rate. 
"(C) ELECTIONS.— 
"(i) WAIVER OF QUAUFIED PAYMENT TREATMENT.—A 
transferor or applicable family member may elect with 
respect to payments under any interest specified in 
104 STAT. 1388-494 
PUBLIC LAW 101-508—NOV. 5, 1990 
such election to treat such payments as pa3anents 
which are not qualified payments. 
"(ii) ELECTION TO HAVE INTEREST TREATED AS QUAU-
FiED PAYMENT.—A transferor or any applicable family 
member may elect to treat any distribution right as a 
qualified payment, to be paid in the amounts and at the 
times specified in such election. The preceding sentence 
shall apply only to the extent that the amounts and 
times so specified are not inconsistent with the under-
lying legal instrument giving rise to such right. 
"(iii) ELECTIONS IRREVOCABLE.—Any election under 
this subparagraph with respect to an interest shall, 
once made, be irrevocable. 
"(d) 
TRANSFER TAX TREATMENT OF CUMULATIVE BUT UNPAID 
DISTRIBUTIONS.— 
"(1) IN GENERAL.—If a taxable event occurs with respect to 
any distribution right to which subsection (a)(3)(B) applied, the 
following shall be increased by the amount determined under 
paragraph (2): 
"(A) The taxable estate of the transferor in the case of a 
taxable event described in paragraph (3)(A)(i). 
"(B) The taxable gifts of the transferor for the calendar 
year in which the taxable event occurs in the case of a 
taxable event described in paragraph (3)(A) (ii) or (iii). 
"(2) AMOUNT OF INCREASE.— 
"(A) IN GENERAL.—The amount of the increase deter-
mined under this paragraph shall be the excess (if any) of— 
"(i) the value of the qualified payments payable 
during the period beginning on the date of the transfer 
under subsection (a)(1) and ending on the date of the 
taxable event determined as i
f
— 
"(I) all such pajnnents were paid on the date 
payment was due, and 
(II) all such payments were reinvested by the 
transferor as of the date of pa3mtient at a yield 
equal to the discount rate used in determining the 
value of the applicable retained interest described 
in subsection (a)(1), over 
"(ii) the value of such pajonents paid during such 
period computed under clause (i) on the basis of the 
time when such payments were actually paid. 
"(B) LIMITATION ON AMOUNT OF INCREASE.— 
"(i) IN GENERAL.—The amount of the increase under 
subparagraph (A) shall not exceed the applicable 
percentage of the excess (if any) of— 
"(I) the value (determined as of the date of the 
taxable event) of all equity interests in the entity 
which are junior to the applicable retained in-
terest, over 
"(II) the value of such interests (determined as of 
the date of the transfer to which subsection (a)(1) 
applied). 
"(ii) APPUCABLE PERCENTAGE.—For purposes of clause 
(i), the applicable percentage is the percentage deter-
mined by dividing— 
"(I) the number of shares in the corporation held 
(as of the date of the taxable event) by the trans-
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-495 
feror which are applicable retained interests of the 
same class, by 
"(ID the total number of shares in such corpora-
tion (as of such date) which are of the same class as 
the class described in subclause (I). 
A similar percentage shall be determined in the case of 
interests in a partnership. 
"(iii) DEFINITION.—For purposes of this subpara-
graph, the term 'equity interest' has the meaning given 
such term by subsection (a)(4)(B). 
"(C) GRACE PERIOD.—For purposes of subparagraph (A), 
any payment of any distribution during the 4-year period 
beginning on its due date shall be treated as having been 
made on such due date. 
"(3) TAXABLE EVENTS.—For purposes of this subsection— 
"(A) IN GENERAL.—The term 'taxable event' means any of 
the following: 
"(i) The death of the transferor if the applicable 
retained interest conferring the distribution right is 
includible in the estate of the transferor. 
"(ii) The transfer of such applicable retained interest. 
"(iii) At the election of the taxpayer, the payment of 
any qualified payment after the period described in 
paragraph (2)(C), but only with respect to the period 
ending on the date of such payment. 
"(B) EXCEPTION WHERE SPOUSE IS TRANSFEREE.— 
"(i) 
DEATHTIME 
TRANSFERS.—Subparagraph 
(A)(i) 
shall not apply to any interest includible in the gross 
estate of the transferor if a deduction with respect to 
such interest is allowable under section 2056 or 
2106(a)(3). 
"(ii) LIFETIME TRANSFERS.—A transfer to the spouse 
of the transferor shall not be treated as a taxable event 
under subparagraph (A)(ii) if such transfer does not 
result in a taxable gift by reason of— 
"(I) any deduction allowed under section 2523, or 
"(II) consideration for the transfer provided by 
the spouse, 
"(iii) SPOUSE SUCCEEDS TO TREATMENT OF TRANS-
FEROR.—If an event is not treated as a taxable event by 
reason of this subparagraph, the transferee spouse or 
surviving spouse (as the case may be) shall be treated 
in the same manner as the transferor in applying this 
subsection with respect to the interest involved. 
"(4) SPECIAL RULES FOR APPLICABLE FAMILY MEMBERS.— 
"(A) FAMILY MEMBER TREATED IN SAME MANNER AS TRANS-
FEROR.—For purposes of this subsection, an applicable 
family member shall be treated in the same manner £is the 
transferor with respect to any distribution right retained by 
such family member to which subsection (a)(3)(B) applied. 
"(B) TRANSFER TO APPLICABLE FAMILY MEMBER.—In the 
case of a taxable event described in paragraph (3)(AXii) 
involving the transfer of an applicable retained interest to 
an applicable family member (other than the spouse of the 
transferor), the applicable family member shall be treated 
in the same manner as the transferor in applying this 
104 STAT. 1388-496 
PUBLIC LAW 101-508—NOV. 5, 1990 
subsection to distributions accumulating with respect to 
such interest after such taxable event. 
"(5) TRANSFER TO INCLUDE TERMINATION.—For purposes of this 
subsection, any termination of an interest shall be treated as a 
transfer. 
"(e) OTHER DEFINITIONS AND RULES.—For purposes of this 
section— 
"(1) MEMBER OF THE FAMILY.—The term 'member of the 
family' means, with respect to any transferor— 
"(A) the transferor's spouse, 
"(B) a lineal descendant of the transferor or the transfer-
or's spouse, and 
"(C) the spouse of any such descendant. 
"(2) APPLICABLE FAMILY MEMBER.—The term 
'applicable 
family member' means, with respect to any transferor— 
"(A) the transferor's spouse, 
"(B) an ancestor of the transferor or the transferor's 
spouse, and 
"(C) the spouse of any such ancestor. 
"(3) ATTRIBUTION RULES.— 
"(A) INDIRECT HOLDINGS AND TRANSFERS.—An individual 
shall be treated as holding any interest to the extent such 
interest is held indirectly by such individual through a 
corporation, partnership, trust, or other entity. If any 
individual is treated as holding any interest by reason of 
the preceding sentence, any transfer which results in such 
interest being treated as no longer held by such individual 
shall be treated as a transfer of such interest. 
"(B) CONTROL.—For purposes of subsections^^ (b)(1), an 
individual shall be treated as holding any interest held by 
i 
the individual's brothers, sisters, or lineal descendants. 
"(4) EFFECT OF ADOPTION.—A relationship by legal adoption 
shall be treated as a relationship by blood. 
"(5) CERTAIN CHANGES TREATED AS TRANSFERS.—Except as pro-
vided in regulations, a contribution to capital or a redemption, 
recapitalization, or other change in the capital structure of a 
corporation or partnership shall be treated as a transfer of an 
interest in such entity to which this section applies if the 
taxpayer or an applicable family member— 
"(A) receives an applicable retained interest in such 
entity pursuant to such contribution to capital or such 
redemption, recapitalization, or other change, or 
"(B) under regulations, otherwise holds, immediately 
after the transfer, an applicable retained interest in such 
entity. 
This paragraph shall not apply to any transaction (other than a 
contribution to capital) if the interests in the entity held by the 
transferor, applicable family members, and members of the 
transferor's family before and after the transaction are substan-
tially identical. 
"(6) ADJUSTMENTS.—Under regulations prescribed by the Sec-
retary, if there is any subsequent transfer, or inclusion in the 
gross estate, of any applicable retained interest which was 
valued under the rules of subsection (a), appropriate adjust-
ments shall be made for purposes of chapter 11, 12, or 13 to 
reflect the increase in the amount of any prior taxable gift 
made by the transferor or decedent by reason of such valuation. 
*' So in original. Probably should be "subsection". 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-497 
"(7) TREATMENT AS SEPARATE INTERESTS.—The Secretary may 
by regulation provide that any applicable retained interest shall 
be treated as 2 or more separate interests for purposes of this 
section. 
"SEC. 2702. SPECIAL VALUATION RULES IN CASE OF TRANSFERS OF IN-
TERESTS IN TRUSTS. 
"(a) VALUATION RULES.— 
"(1) IN GENERAL.—Solely for purposes of determining whether 
a transfer of an interest in trust to (or for the benefit of) a 
member of the transferor's family is a gift (and the value of 
such transfer), the value of any interest in such trust retained 
by the transferor or any applicable family member (as defined 
in section 2701(eX2)) shall be determined as provided in para-
graph (2). 
"(2) VALUATION OP RETAINED INTERESTS.— 
"(A) IN GENERAL.—The value of any retained interest 
which is not a qualified interest shall be treated as being 
zero. 
"(B) VALUATION OF QUALIFIED INTEREST.—The value of 
any retained interest which is a qualified interest shall be 
determined under section 7520. 
"(3) EXCEPTIONS.— 
"(A) IN GENERAL.—This subsection shall not apply to any 
transfer— 
"(i) to the extent such transfer is an incomplete 
transfer, or 
"(ii) if such transfer involves the transfer of an in-
terest in trust all the property in which consists of a 
residence to be used as a personal residence by persons 
holding term interests in such trust. 
"(B) INCOMPLETE TRANSFER.—For purposes of subpara-
graph (A), the term 'incomplete transfer' means any trans-
fer which would not be treated as a gift whether or not 
consideration was received for such transfer. 
"(b) QUALIFIED INTEREST.—For purposes of this section, the term 
'qualified interest' means— 
"(1) any interest which consists of the right to receive fixed 
amounts payable not less frequently than annually, 
"(2) any interest which consists of the right to receive 
amounts which are payable not less frequently than annually 
and are a fixed percentage of the fair market value of the 
property in the trust (determined annually), and 
"(3) any noncontingent remainder interest if all of the other 
interests in the trust consist of interests described in paragraph 
(Dor (2). 
"(c) CERTAIN PROPERTY TREATED AS HELD IN TRUST.—;For purposes 
of this section— 
"(1) IN GENERAL.—The transfer of an interest in property with 
respect to which there is 1 or more term interests shall be 
treated as a transfer of an interest in a trust. 
"(2) JOINT PURCHASES.—If 2 or more members of the same 
family acquire interests in any property described in paragraph 
(1) in the same transaction (or a series of related transactions), 
the person (or persons) acquiring the term interests in such 
property shall be treated as having acquired the entire property 
and then transferred to the other persons the interests acquired 
104 STAT. 1388-498 
PUBLIC LAW 101-508—NOV. 5, 1990 
by such other persons in the transaction (or series of trans-
actions). Such transfer shall be treated as made in exchange for 
the consideration (if any) provided by such other persons for the 
acquisition of their interests in such property. 
"(3) TERM INTEREST.—The term 'term interest' means— 
"(A) a life interest in property, or 
"(B) an interest in property for a term of years. 
"(4) VALUATION RULE FOR CERTAIN TERM INTERESTS.—If the 
nonexercise of rights under a term interest in tangible property 
would not have a substantial effect on the valuation of the 
remainder interest in such property— 
"(A) subparagraph (A) of subsection (aX2) shall not apply 
to such term interest, and 
"(B) the value of such term interest for purposes of 
applying subsection (a)(1) shall be the amount which the 
holder of the term interest establishes as the amount for 
which such interest could be sold to an unrelated third 
party. 
"(d) 
TREATMENT OF TRANSFERS OF INTERESTS IN PORTION OF 
TRUST.—In the CEise of a transfer of an income or remainder interest 
with respect to a specified portion of the property in a trust, only 
such portion shall be taken into account in applying this section to 
such transfer. 
"(e) MEMBER OF THE FAMILY.—For purposes of this section, the 
term 'member of the family' shall have the meaning given such 
term by section 2704(c)(2). 
"SEC. 2703. CERTAIN RIGHTS AND RESTRICTIONS DISREGARDED. 
"(a) GENERAL RULE.—For purposes of this subtitle, the value of 
any property shall be determined without regard to— 
"(1) any option, agreement, or other right to acquire or use 
the property at a price less than the fair market value of the 
property (without regard to such option, agreement, or right), or 
"(2) any restriction on the right to sell or use such property. 
"(b) EXCEPTIONS.—Subsection (a) shall not apply to any option, 
agreement, right, or restriction which meets each of the following 
requirements: 
"(1) It is a bona fide business arrangement. 
"(2) It is not a device to transfer such property to members of 
the decedent's family for less than full and adequate consider-
ation in money or money's worth. 
"(3) Its terms are comparable to similar arrangements en-
tered into by persons in an arms' length transaction. 
"SEC. 2704. TREATMENT OF CERTAIN LAPSING RIGHTS AND RESTRIC-
TIONS. 
"(a) TREATMENT OF LAPSED VOTING OR LIQUIDATION RIGHTS.— 
"(1) IN GENERAL,—For purposes of this subtitle, if— 
"(A) there is a lapse of any voting or liquidation right in a 
corporation or partnership, and 
'(B) the individual holding such right immediately before 
the lapse and members of such individual's family hold, 
both before and sifter the lapse, control of the entity, 
such lapse shall be treated as a transfer by such individual by 
gift, or a transfer which is includible in the gross estate of the 
decedent, whichever is applicable, in the amount determined 
under paragraph (2). 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-499 
"(2) AMOUNT OP TRANSFER.—For purposes of paragraph (1), 
the amount determined under this paragraph is the excess (if 
any) of— 
"(A) the value of all interests in the entity held by the 
individual described in paragraph (1) immediately before 
the lapse (determined £is if the voting and liquidation rights 
were nonlapsing), over 
"(B) the value of such interests immediately after the 
lapse. 
"(3) SIMILAR RIGHTS.—The Secretary may by regulations 
apply this subsection to rights similar to voting and liquidation 
rights. 
"(b) CERTAIN RESTRICTIONS ON LIQUIDATION DISREGARDED.— 
"(1) IN GENERAL.—For purposes of this subtitle, if— 
"(A) there is a transfer of an interest in a corporation or 
partnership to (or for the benefit of) a member of the 
transferor's family, and 
"(B) the transferor and members of the transferor's 
family hold, immediately before the trsinsfer, control of the 
entity, 
any applicable restriction shall be disregarded in determining 
the vsdue of the transferred interest. 
"(2) APPUCABLE RESTRICTION.—For purposes of this subsec-
tion, the term 'applicable restriction' means any restriction— 
"(A) which effectively limits the ability of the corporation 
or partnership to liquidate, and 
' (B) with respect to which either of the following applies: 
"(i) The restriction lapses, in whole or in part, after 
the transfer referred to in paragraph (1). 
"(ii) The transferor or any member of the transferor's 
family, either alone or collectively, has the right after 
such transfer to remove, in whole or in part, the 
restriction. 
"(3) EXCEPTIONS.—The term 'applicable restriction' shall not 
include— 
"(A) any commercially reasonable restriction which 
arises as part of any financing by the corporation or part-
nership with a person who is not related to the transferor 
or transferee, or a member of the family of either, or 
"(B) any restriction imposed, or required to be imposed, 
by any Federal or State law. 
"(4) OTHER RESTRICTIONS.—The Secretary may by regulations 
provide that other restrictions shall be disregarded in determin-
ing the value of the transfer of any interest in a corporation or 
partnership to a member of the transferor's family if such 
restriction has the effect of reducing the value of the trans-
ferred interest for purposes of this subtitle but does not ulti-
mately reduce the value of such interest to the transferee. 
"(c) DEFINITIONS AND SPECIAL RULES.—For purposes of this 
section— 
"(1) CONTROL.—The term 'control' has the meaning given 
such term by section 2701(bX2). 
"(2) MEMBER OF THE FAMILY.—The term 'member of the 
family' means, with respect to any individual— 
"(A) such individual's spouse, 
"(B) any ancestor or lineal descendant of such individual 
or such individual's spouse. 
104 STAT. 1388-500 
PUBLIC LAW 101-508—NOV. 5, 1990 
"(C) any brother or sister of the individual, and 
"(D) any spouse of any individual described in subpara-
graph (B) or (C). 
"(3) ATTRIBUTION.—The rule of section 2701(e)(3)(A) shall 
apply for purposes of determining the interests held by any 
individual." 
(b) EXTENSION OF STATUTE OF LIMITATIONS.—Subsection (c) of sec-
tion 6501 (relating to limitations on assessment and collection) is 
amended by adding at the end thereof the following new paragraph: 
"(9) GIFT TAX ON CERTAIN GIFTS NOT SHOWN ON RETURN.—If 
any gift of property the value of which is determined under 
section 2701 or 2702 (or any increase in taxable gifts required 
under section 2701(d)) is required to be shown on a return of tax 
imposed by chapter 12 (without regard to section 2503(b)), and is 
not shown on such return, any tax imposed by chapter 12 on 
such gift may be assessed, or a proceeding in court for the 
collection of such tax may be begun without assessment, at any 
time. The preceding sentence shall not apply to any item not 
shown as a gift on such return if such item is disclosed in such 
return, or in a statement attached to the return, in a manner 
adequate to apprise the Secretary of the nature of such item." 
(c) CONFORMING AMENDMENT.—The table of chapters for subtitle 
B is amended by adding at the end thereof the following item: 
"CHAPTEK 14. Special Valuation Rules." 
26 use 2701 
(d) STUDY.—The Secretary of the Treasury shall conduct a study 
note. 
Qf_ 
(1) the prevalence and tj^es of options and agreements used 
to distort the valuation of property for purposes of subtitle B of 
the Internal Revenue Code of 1986, and 
(2) other methods using discretionary rights to distort the 
value of property for such purposes. 
The Secretary shall, not later than December 31, 1992, report the 
results of such study, together with such legislative recommenda-
tions as the Secretary considers necessary, to the Committee on 
Finsmce of the Senate and the Committee on Ways and Means of the 
House of Representatives. 
26 use 2701 
(e) EFFECTIVE DATES.— 
"°*®- 
(1) SUBSECTION (a) .— 
(A) I N GENERAL.—The amendments made by subsection 
( a ) -
(i) to the extent such amendments relate to sections 
2701 and 2702 of the Internal Revenue Code of 1986 (as 
added by such amendments), shall apply to transfers 
after October 8,1990, 
(ii) to the extent such amendments relate to section 
2703 of such Code (as so added), shall apply to— 
(I) agreements, options, rights, or restrictions en-
tered into or granted after October 8, 1990, and 
(II) agreements, options, rights, or restrictions 
which are substantially modified after October 8, 
1990, and 
(iii) to the extent such amendments relate to section 
2704 of such C!ode (as so added), shall apply to restric-
tions or rights (or limitations on rights) created after 
October 8,1990. 
note. 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-501 
(B) EXCEPTION,—For purposes of subparagraph (A)(i), with 
respect to property transferred before October 9, 1990— 
(i) any failure to exercise a right of conversion, 
(ii) any failure to pay dividends, and 
' 
(iii) any failure to exercise other rights specified in 
regulations, 
shall not be treated £is a subsequent transfer. 
(2) SUBSECTION (b).—The amendment made by subsection (b) 26 USC 6501 
shall apply to gifts after October 8,1990. 
PART II—DISABLED ACCESS CREDIT 
SEC. 11611. CREDIT FOR COST OF PROVIDING ACCESS FOR DISABLED 
INDIVIDUALS. 
(a) GENERAL RULE.—Subpart D of part IV of subchapter A of 
chapter 1 (relating to business related credits), as amended by 
subtitle E, is amended by adding at the end thereof the following 
new section: 
"SEC 44. EXPENDITURES TO PROVIDE ACCESS TO DISABLED INDIVID-
UALS. 
"(a) GENERAL RULE.—For purposes of section 38, in the case of an 
eligible small business, the amount of the disabled access credit 
determined under this section for any taxable year shall be an 
amount equal to 50 percent of so much of the eligible access expendi-
tures for the taxable year as exceed $250 but do not exceed $10,250. 
"Qo) ELIGIBLE SMALL BUSINESS.—For purposes of this section, the 
term 'eligible small business' means any person i
f
— 
"(1) either— 
"(A) the gross receipts of such person for the preceding 
taxable year did not exceed $1,000,000, or 
"(B) in the case of a person to which subparagraph (A) 
does not apply, such person employed not more than 30 full-
time employees during the preceding taxable year, and 
"(2) such person elects the application of this section for the 
tEixable year. 
For purposes of paragraph (1)(B), an employee shall be considered 
full-time if such employee is employed at least 30 hours per week for 
20 or more calendar weeks in the taxable year. 
"(c) 
ELIGIBLE 
ACCESS 
EXPENDITURES.—For purposes of this 
section— 
"(1) IN GENERAL.—The term 'eligible access expenditures' 
means amounts paid or incurred by an eligible small business 
for the purpose of enabling such eligible small business to 
comply with applicable requirements under the Americans 
With Disabilities Act of 1990 (as in effect on the date of the 
enactment of this section). 
"(2) CERTAIN EXPENDITURES INCLUDED.—The term . 'eligible 
access expenditures' includes amounts paid or incurred— 
"(A) for the purpose of removing architectural, commu-
nication, physical, or transportation barriers which prevent 
a business from being accessible to, or usable by, individuals 
with disabilities, 
"(B) to provide qualified interpreters or other effective 
methods of making aurally delivered materials available to 
individuEds with hearing impairments, 
104 STAT. 1388-502 
PUBLIC LAW 101-508—NOV. 5, 1990 
"(C) to provide qualified readers, taped texts, and other 
effective methods of making visually delivered materials 
available to individuals with visual impairments, 
"(D) to acquire or modify equipment or devices for 
individuals with disabilities, or 
"(E) to provide other similar services, modifications, 
materials, or equipment. 
"(3) EXPENDITURES MUST BE REASONABLE.—Amounts paid or 
incurred for the purposes described in paragraph (2) shall in-
clude only expenditures which are reasonable and shall not 
include expenditures which are unnecessary to accomplish such 
purposes. 
"(4) EXPENSES IN CONNECTION WITH NEW CONSTRUCTION ARE 
NOT EUGiBLE.—The term 'eligible access expenditures' shall not 
include amounts described in paragraph (2)(A) which are paid or 
incurred in connection with any facility first placed in service 
after the date of the enactment of this section. 
"(5) EXPENDITURES MUST MEET STANDARDS.—The term 'eligible 
access expenditures' shall not include any amount unless the 
taxpayer establishes, to the satisfaction of the Secretary, that 
the resulting removal of any barrier (or the provision of any 
services, modifications, materials, or equipment) meets the 
standards promulgated by the Secretary with the concurrence 
of the Architectural and Transportation Barriers Compliance 
Board and set forth in regulations prescribed by the Secretary. 
"(d) DEFINITION OF DISABIUTY; SPECIAL RULES.—For purposes of 
this section— 
"(1) DISABIUTY.—The term 'disability' has the same meaning 
as when used in the Americans With Disabilities Act of 1990 (as 
in effect on the date of the enactment of this section). 
"(2) CONTROLLED GROUPS.— 
"(A) IN GENERAL.—All members of the same controlled 
group of corporations (within the meaning of section 52(a)) 
and all persons under common control (within the meaning 
of section 52(b)) shall be treated as 1 person for purposes of 
this section. 
"(B) DOLLAR LIMITATION.—The Secretary shall apportion 
the dollar limitation under subsection (a) among the mem-
bers of any group described in subparagraph (A) in such 
manner as the Secretary shall by regulations prescribe. 
"(3) PARTNERSHIPS AND S CORPORATIONS.—In the case of a 
partnership, the limitation under subsection (a) shall apply with 
respect to the partnership and each partner. A similar rule 
shall apply in the CEise of an S corporation and its shareholders. 
"(4) SHORT YEARS.—The Secretary shall prescribe such adjust-
ments as may be appropriate for purposes of paragraph (1) of 
subsection (b) if the preceding taxable year is a taxable year of 
less than 12 months. 
"(5) GROSS RECEIPTS.—Gross receipts for any taxable year 
shall be reduced by returns and allowances made during such 
year. 
"(6) TREATMENT OF PREDECESSORS.—The reference to any 
person in paragraph (1) of subsection (b) shall be treated as 
including a reference to any predecessor. 
"(7) DENIAL OF DOUBLE BENEFIT.—In the case of the amount of 
the credit determined under this section— 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-503 
"(A) no deduction or credit shall be allowed for such 
amount under any other provision of this chapter, and 
"(B) no increase in the adjusted basis of any property 
shall result from such amount. 
"(e) REGULATIONS.—The Secretary shall prescribe regulations nec-
essary to carry out the purposes of this section." 
(b) CREDIT MADE PART OF GENERAL BUSINESS CREDIT.— 
(1) IN GENERAL.—Subsection (b) of section 38, as amended by 
subtitle E, is amended by striking "plus" at the end of para-
graph (5), by striking the period at the end of paragraph (6) and 
inserting ", plus" and by adding at the end thereof the following 
new paragraph: 
"(7) in the case of an eligible small business (as defined in 
section 44(b)), the disabled access credit determined under sec-
tion 44(a)." 
(2) CARRYBACKS.—Section 39(d) is amended by adding at the 
end thereof the following new paragraph: 
"(5) No C
A
R
R
Y
B
A
C
K OF SECTION 44 CREDIT BEFORE ENACT-
MENT.—No portion of the unused business credit for any taxable 
year which is attributable to the disabled access credit deter-
mined under section 44 may be carried to a taxable year ending 
before the date of the enactment of section 44." 
(c) DEDUCTION REDUCED FOR ARCHITECTURAL AND TRANSPORTATION 
BARRIER REMOVAL EXPENSES.—Section 190(c) (relating to expendi-
tures to remove architectural and transportation barriers to the 
handicapped and elderly) is amended by striking "$35,000" and 
inserting "$15,000". 
(d) CLERICAL AMENDMENT.—The table of sections for subpart D of 
part IV of subchapter A of chapter 1, as amended by subtitle E, is 
amended by adding at the end thereof the following new item: 
"Sec. 44. Expenditures to provide access to disabled individuals." 
(e) EFFECTIVE DATES.— 
26 use 38 note. 
(1) IN GENERAL.—Except as provided in paragraph (2), the 
amendments made by this section shall apply to expenditures 
paid or incurred after the date of the enactment of this Act. 
(2) SUBSECTION (C) .—The amendment made by subsection (c) 
shall apply to taxable years beginning after the date of the 
enactment of this Act. 
PART III—OTHER PROVISIONS 
SEC. 11621. REVIEW OF IMPACT OF REGULATIONS ON SMALL BUSINESS. 
(a) GENERAL RULE.—Subsection (f) of section 7805 (relating to 
review of impact of regulations on small business) is amended to 
read as follows: 
"(f) REVIEW OF IMPACT OF REGULATIONS ON SMALL BUSINESS.— 
"(1) SUBMISSIONS TO SMALL BUSINESS ADMINISTRATION.—After 
publication of any proposed or temporary regulation by the 
Secretary, the Secretary shall submit such regulation to the 
Chief Counsel for Advocacy of the Small Business Administra-
tion for comment on the impact of such regulation on small 
business. Not later than the date 4 weeks after the date of such 
submission, the Chief Counsel for Advocacy shall submit com-
ments on such regulation to the Secretary. 
"(2) CONSIDERATION OF COMMENTS.—In prescribing any final 
regulation which supersedes a proposed or temporary regula-
104 STAT. 1388-504 
PUBLIC LAW 101-508—NOV. 5, 1990 
tion which had been submitted under this subsection to the 
Chief Counsel for Advocacy of the Small Business Administra-
tion— 
"(A) the Secretary shall consider the comments of the 
Chief Counsel for Advocacy on such proposed or temporary 
regulation, and 
"(B) the Secretary shall discuss any response to such 
comments in the preamble of such final regulation. 
"(3) SUBMISSION OF CERTAIN FINAL REGULATIONS.—In the case 
of the promulgation by the Secretary of any final regulation 
(other than a temporary regulation) which does not supersede a 
proposed regulation, the requirements of paragraphs (1) and (2) 
shall apply; except that— 
"(A) the submission under paragraph (1) shall be made at 
least 4 weeks before the date of such promulgation, and 
"(B) the consideration (and discussion) required under 
paragraph (2) shall be made in connection with the 
promulgation of such final regulation." 
26 use 7805 
(b) EFFECTIVE DATE.—The amendment made by subsection (a) 
"°*®" 
shall apply to regulations issued after the date which is 30 days after 
the date of the enactment of this Act. 
SEC. 11622. GRAPHIC PRESENTATION OF MAJOR CATEGORIES OF FED-
ERAL OUTLAYS AND INCOME. 
(a) GENERAL RULE,—Chapter 77 (relating to miscellaneous provi-
sions) is amended by adding at the end thereof the following new 
section: 
"SEC. 7523. GRAPHIC PRESENTATION OF MAJOR CATEGORIES OF FED-
ERAL OUTLAYS AND INCOME. 
"(a) GENERAL RULE.—In the case of any booklet of instructions for 
Form 1040, 1040A, or 1040EZ prepared by the Secretary for filing 
individual income tax returns for taxable years beginning in any 
calendar year, the Secretary shall include in a prominent place— 
"(1) a pie-shaped graph showing the relative sizes of the major 
outlay categories, and 
"(2) a pie-shaped graph showing the relative sizes of the major 
income categories. 
"Oa) DEFINITIONS AND SPECIAL RULES.—For purposes of subsection 
( a ) -
"(1) MAJOR OUTLAY CATEGORIES.—The term 'major outlay cat-
egories' means the following: 
"(A) Defense, veterans, and foreign affairs. 
"(B) Social security, medicare, and other retirement. 
"(C) Physical, human, and community development. 
"(D) Social programs. 
"(E) Law enforcement and general government. 
"(F) Interest on the debt. 
"(2) MAJOR INCOME CATEGORIES.—The term 'major income 
categories' means the following: 
"(A) Social security, medicare, and unemployment and 
other retirement taxes. 
"(B) Personal income taxes. 
"(C) Corporate income taxes. 
"(D) Borrowing to cover the deficit. 
"(E) Excise, customs, estate, gift, and miscellaneous taxes. 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-505 
"(3) REQUIRED FOOTNOTES.—The pie-shaped graph showing the 
major outlay categories shall include the following footnotes: 
"(A) A footnote to the category referred to in paragraph 
(1)(A) showing the percentage of the total outlays which is 
for defense, the percentage of total outlays which is for 
veterans, and the percentage of total outlays which is for 
foreign affairs. 
"(B) A footnote to the category referred to in paragraph 
(1)(C) showing that such category consists of agriculture, 
natural resources, environment, transportation, education, 
job training, economic development, space, energy, and gen-
eral science. 
"(C) A footnote to the category referred to in parsigraph 
(1)(D) showing the percentage of the total outlays which is 
for medicaid, food stamps, and aid to families with depend-
ent children and the percentage of total outlays which is for 
public health, unemployment, assisted housing, and social 
services. 
"(4) DATA ON WHICH GRAPHS ARE BASED.—The graphs required 
under subsection (a) shall be based on data for the most recent 
fiscal year for which complete data is available as of the comple-
tion of the preparation of the instructions by the Secretary." 
(b) CLERICAL AMENDMENT.—The table of sections for chapter 77 is 
amended by adding at the end thereof the following new item: 
"Sec. 7523. Graphic presentation of major categories of Federal outlays and 
income." 
(c) EFFECTIVE DATE.—The amendments made by this section shall 26 USC 7523 
apply to instructions prepared for taxable years beginning after '^°**-
1990. 
Subtitle G—Tax Technical Corrections 
SEC. 11700. COORDINATION WITH OTHER SUBTITLES. 
26 USC 1 note. 
For purposes of applying the amendments made by any subtitle of 
this title other than this subtitle, the provisions of this subtitle shall 
be treated as having been enacted immediately before the provisions 
of such other subtitles. 
SEC. 11701. AMENDMENTS RELATED TO REVENUE RECONCILIATION ACT 
OF 1989. 
(a) AMENDMENTS RELATED TO SECTION 7108.— 
(1)(A) Paragraph (2) of section 42(c) is amended by adding at 
the end thereof the following new sentence: "Such term does 
not include any building with respect to which moderate re-
habilitation assistance is provided, at any time during the 
compliance period, under section 8(e)(2) of the United States 
Housing Act of 1937." 
(B) Paragraph (1) of section 42(b) is amended by striking the 
last sentence. 
(2) Subclause (I) of section 42(d)(5)(C)(ii) is amended— 
(A) by inserting "which is designated by the Secretary of 
Housing and Urban Development and, for the most recent 
year for which census data are available on household 
income in such tract," after "census tract", and 
(B) by inserting before the period "for such year". 
104 STAT. 1388-506 
PUBLIC LAW 101-508—NOV. 5, 1990 
(3XA) Clause (i) of section 42(g)(2)(D) is amended by inserting 
before the period "and such unit continues to be rent-re-
stricted", 
26 use 42 note. 
(g) jn the case of a building to which (but for this subpara-
graph) the amendment made by subparagraph (A) does not 
apply, such amendment shall apply to— 
(i) determinations of qualified basis for taxable years 
beginning after the date of the enactment of this Act, and 
(ii) determinations of qualified basis for taxable years 
beginning on or before such date except that determina-
tions for such taxable years shall be made without regard to 
any reduction in gross rent after August 3, 1990, for any 
period before August 4,1990. 
(4) Clause (ii) of section 42(g)(2)(D) is amended by adding at the 
end thereof the following new sentence: "In the case of a project 
described in section 142(d)(4)(B), the preceding sentence shall be 
applied by substituting '170 percent' for '140 percent' and by 
substituting 'any low-income unit in the building is occupied by 
a new resident whose income exceeds 40 percent of area median 
gross income' for 'any residential unit in the building (of a size 
comparable to, or smaller than, such unit) is occupied by a new 
resident whose income exceeds such income limitation'." 
(5)(A) Subparagraph (A) of section 42(gX3) is amended by 
striking "the 12-month period beginning on the date the build-
ing is placed in service" and inserting "the 1st year of the credit 
period for such building". 
26 use 42 note. 
(Q) jn the case of a building to which the amendment made by 
subparagraph (A) does not apply, the period specified in section 
42(g)(3)(A) of the Internal Revenue Code of 1986 (as in effect 
before the amendment made by subparagraph (A)) shall not 
expire before the close of the taxable year following the taxable 
year in which the building is placed in service. 
(6)(A) The second sentence of section 42(h)(3XC) is amended by 
striking "the amount described in clause (i)" and inserting "the 
sum of the amounts described in clauses (i) and (iii)". 
(B) Subclause (II) of section 42(hX3)(D)(ii) is amended by strik-
ing "the amount described in clause (i)" and inserting "the sum 
of the amounts described in clauses (i) and (iii)". 
(7XA) Clause (i) of section 42(hX6XB) is amended by inserting 
before the comma "and which prohibits the actions described in 
subclauses (I) and (II) of subparagraph (E)(ii)". 
(B) Clause (ii) of section 42(h)(6XB) is amended by striking 
"requirement" and inserting "requirement and prohibitions'. 
(8XA) Subparagraph (B) of section 42(h)(6) is amended by 
redesignating clauses (iii) and (iv) as clauses (iv) and (v), respec-
tively, and by inserting after clause (ii) the following new 
clause: 
"(iii) which prohibits the disposition to any person of any 
portion of the building to which such agreement applies 
unless all of the building to which such agreement applies 
is disposed of to such person,". 
(B) Paragraph (6) of section 42(h) is amended by striking 
subparagraph (J) and by redesignating subparagraphs (K) and 
(L) as subparagraphs (J) and (K), respectively. 
(C) Subclause (II) of section 42(h)(6)(E)(ii) is amended by insert-
ing before the period "not otherwise permitted under this 
section". 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-507 
(D) Subparagraph (F) of section 42(h)(6) is Eimended by insert-
ing "the nonlow-income portion of the building for fair market 
value and" before "the low-income portion". 
(9) Subclause (I) of section 42(h)(6)(E)(i) is amended by insert-
ing before the comma "unless the Secretary determines that 
such acquisition is part of an arrangement with the taxpayer a 
purpose of which is to terminate such period". 
(10) Paragraph (8) of section 42(i) is redesignated as paragraph 
(7). 
(11) Paragraph (2) of section 7108(r) of the Revenue Reconcili-
ation Act of 1989 is amended by inserting before the period "but 26 USC 42 note, 
only with respect to bonds issued after such date". 
(12) Paragraph (6) of section 7108(r) of the Revenue Reconcili-
ation Act of 1989 is amended by inserting "after" after "issued". 
(b) AMENDMENTS RELATED TO SECTION 7202.— 
(1) Subparagraph (A) of section 163(e)(5) is amended by strik-
ing the last sentence and inserting the following: "For purposes 
of this paragraph, rules similar to the rules of subsection 
(i)(3)(B) shall apply in determining the amount of the original 
issue discount and when the original issue discount is paid." 
(2) Paragraph (3) of section 163(i) is amended— 
(A) by striking "(or stock)" each place it appears in 
suljparagraph (B), and 
(B) by adding at the end thereof the following new sen-
tence: "Except for purposes of paragraph (1)(B), any 
reference to an obligation in subparagraph (B) of this 
parsigraph shall be treated as including a reference to 
stock." 
(c) AMENDMENTS RELATED TO SECTION 7210.— 
(1) Subparagraph (C) of section 163(j)(2) is amended by striking 
"less such" £md inserting "reduced (but not below zero) by 
such". 
(2) Clause (ii) of section 163(j)(2)(A) is amended by striking 
"and on such other days" and inserting "or on any other day". 
(d) AMENDMENTS RELATED TO SECTION 7211.—Clause (iii) of section 
172(b)(l)(M) is amended— 
(1) by striking "a C corporation" in the material preceding 
sulDclause (I), 
(2) by striking "which acquires" in subclause (I) and inserting 
"a C corporation which acquires", 
(3) by striking "a corporation" in subclause (II) and inserting 
"a C corporation", and 
(4) by striking "any successor corporation" in subclause (III) 
and inserting "any C corporation which is a successor". 
(e) AMENDMENTS RELATED TO SECTION 7301.— 
(1) Paragraph (2) of section 4978B(e) is amended to read as 
follows: 
"(2) SECTION 133 SECURITIES.—The term 'section 133 securities' 
means employer securities acquired by an employee stock 
ownership plan in a transaction to which section 133 applied." 
(2) Subsection (d) of section 4978B is amended by adding at the 
end thereof the following new paragraph: 
"(4) COORDINATION WITH OTHER TAXES.—This section shall not 
apply to any disposition which is subject to tax under section 
4978 or section 4978A (as in effect on the day before the date of 
enactment of this section)." 
104 STAT. 1388-508 
PUBLIC LAW 101-508—NOV. 5, 1990 
if) AMENDMENT RELATED TO SECTION 7401.—Paragraph (2) of sec-
tion 6038(e) is amended by adding at the end thereof the following 
new sentence: "In the case of a specified foreign corporation (as 
defined in section 898), the taxable year of such corporation shall be 
treated as its annual accounting period." 
(g) AMENDMENTS RELATED TO SECTION 7506.— 
(1) The 
material 
preceding 
subclause 
(I) in 
section 
4682(d)(3)(B)(i) is amended by striking "or produced" and insert-
ing ", produced, or imported". 
(2) Subclause (I) of section 4682(dX3)(B)(i) is amended to read 
as follows: 
"(I) the amount equal to the 1986 export percentage 
of the aggregate tax which would (but for this subsec-
tion and subsection (g)) be imposed by this subchapter 
with respect to the maximum quantity of ozone-deplet-
ing chemicals permitted to be manufactured or pro-
duced by such person during such calendar year under 
regulations prescribed by the Environmental Protec-
tion Agency (other than chemicals with respect to 
which subclause (II) applies),". 
(3) Subclause (II) of section 4682(d)(3)(B)(i) is amended by 
striking "tax imposed" and inserting "tax which would (but for 
this subsection and subsection (g)) be imposed". 
(4) Clause (i) of section 4682(d)(3)(B) is amended by striking the 
period at the end of subclause (II) and inserting ", and" and by 
adding at the end thereof the following new subclause: 
"(III) the aggregate tax which was imposed by this 
subchapter with respect to ozone-depleting chemicals 
imported by such person during the calendar year.". 
(5) The last sentence of clause (ii) of section 4682(dX3)(B) is 
amended to read as follows: "The percentage determined under 
the preceding sentence shall be computed by taking into 
account the sum of such person's direct 1986 exports (as 
determined by the Environmental Protection Agency) and such 
person's indirect 1986 exports (as allocated to such person by 
such Agency in determining such person's consumption and 
production rights for ozone-depleting chemicals).". 
(h) AMENDMENT RELATED TO SECTION 7601.—Effective with respect 
to transfers after August 3, 1990, paragraph (3) of section 1031(f) is 
amended by striking "section 267(b)" and inserting "section 267(b) or 
707(bXl)". 
(i) AMENDMENT RELATED TO SECTION 7622.—Paragraph (4) of sec-
tion 1253(d) is amended by striking "or any period of amortization 
under this section" and inserting under this section or any period 
of amortization under this subtitle for any pajonent described in this 
section". 
0
*
) AMENDMENTS RELATED TO SECTION 7652.— 
(1) Subclause (II) of section 148(f)(4XB)(i) is amended to read as 
follows: 
"(II) the requirements of paragraph (2) are met 
with respect to amounts not required to be spent as 
provided in subclause (I) (other than earnings on 
amounts in any bona fide debt service fund)." 
(2) The last sentence of clause (i) of section 148(f)(4XB) is 
amended by striking "replacement fund" and all that follows 
and inserting "replacement fund, and gross proceeds which 
arise after such 6 months and which were not reasonably 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-509 
anticipated as of the date of issuance, shall not be considered 
gross proceeds for purposes of subclause (I) only." 
(3) Paragraph (4) of section 148(f) is amended— 
(A) by redesignating subparagraphs (C) and (D) as sub-
paragraphs (D) and (E), respectively, and 
(B) by inserting after subparagraph (B) the following new 
subparagraph: 
"(C) EXCEPTION FROM REBATE FOR CERTAIN PROCEEDS TO BE 
USED T
O FINANCE CONSTRUCTION EXPENDITURES.— 
"(i) IN GENERAL.—Ih the CEise of a construction issue, 
paragraph (2) shall not apply to the avEiilable construc-
tion proceeds of such issue if the spending require-
ments of clause (ii) are met. 
"(ii) 
SPENDING 
REQUIREMENTS.—The 
spending 
requirements of this clause are met if at least— 
"(I) 10 percent of the available construction pro-
ceeds of the construction issue are spent for the 
governmental purposes of the issue within the 6-
month period beginning on the date the bonds are 
issued, 
"(II) 45 percent of such proceeds are spent for 
such purposes within the 1-year period beginning 
on such date, 
"(III) 75 percent of such proceeds are spent for 
such purposes within the 18-month period begin-
ning on such date, and 
"(IV) 100 percent of such proceeds are spent for 
such purposes within the 2-year period beginning 
on such date. 
"(iii) EXCEPTION FOR REASONABLE RETAIN 
AGE.—The 
spending requirement of clause (ii)(IV) shall be treated 
as met i
f
— 
"(I) such requirement would be met at the close 
of such 2-year period but for a reasonable retainage 
(not exceeding 5 percent of the available construc-
tion proceeds of the construction issue), and 
"(II) 100 percent of the available construction 
proceeds of the construction issue are spent for the 
governmental purposes of the issue within the 3-
year period beginning on the date the bonds are 
issued. 
"(iv) CONSTRUCTION ISSUE.—For purposes of this 
subparagraph, the term 'construction issue' means any 
issue if— 
"(I) at least 75 percent of the available construc-
tion proceeds of such issue are to be used for 
construction expenditures with respect to property 
which is to be owned by a governmental unit or a 
501(c)(3) orgEinization, and 
"(II) all of the bonds which are part of such issue 
are qualified 501(c)(3) bonds, bonds which are not 
private activity bonds, or private activity bonds 
issued to finance property to be owned by a govern-
mental unit or a 501(c)(3) organization. 
For purposes of this subparagraph, the term 'construc-
tion' includes reconstruction and rehabilitation, and 
104 STAT. 1388-510 
PUBLIC LAW 101-508—NOV. 5, 1990 
rules similar to the rules of section 142(bXl)(B) shall 
apply. 
"(v) PORTIONS OF ISSUES USED FOR CONSTRUCTION.— 
If— 
"(I) all of the construction expenditures to be 
financed by an issue are to be financed from a 
portion thereof, and 
"(II) the issuer elects to treat such portion as a 
construction issue for purposes of this subpara-
graph, 
then, 
for 
purposes 
of 
this 
subparagraph 
and 
subparagraph (B), such portion shall be treated as a 
separate issue. 
"(vi) AVAILABLE CONSTRUCTION PROCEEDS.—For pur-
poses of this subparagraph— 
"(I) IN GENERAL.—The term 'available construc-
tion proceeds' means the amount equal to the issue 
price (within the meaning of sections 1273 and 
1274) of the construction issue, increased by earn-
ings on the issue price, earnings on amounts in any 
reasonably required reserve or replacement fund 
not funded from the issue, and earnings on all of 
the foregoing earnings, and reduced by the amount 
of the issue price in any reasonably required re-
serve or replacement fund and the issuance costs 
financed by the issue. 
"(II) EARNINGS ON RESERVE INCLUDED ONLY FOR 
CERTAIN PERIODS.—The term 'available construc-
tion proceeds' shall not include amounts earned on 
any reasonably required reserve or replacement 
fund after the earlier of the close of the 2-year 
period described in clause (ii) or the date the 
construction is substantially completed. 
"(Ill) PAYMENTS ON ACQUIRED PURPOSE OBUGA-
TiONS EXCLUDED.—The term'available construction 
proceeds' shall not include pa3nnents on any obliga-
tion acquired to carry out the governmental pur-
poses of the issue and shall not include earnings on 
such payments. 
"(IV) 
ELECTION TO REBATE ON EARNINGS ON RE-
SERVE.—At the election of the issuer, the term 
'available construction proceeds' shall not include 
earnings on any reasonably required reserve or 
replacement fund, 
"(vii) ELECTION TO PAY PENALTY IN UEU OF REBATE.— 
"(I) IN GENERAL.—At the election of the issuer, 
paragraph. (2) shall not apply to available construc-
tion proceeds which do not meet the spending 
requirements of clause (ii) if the issuer pays a 
penalty, with respect to each 6-month period after 
the date the bonds were issued, equal to IVa per-
cent of the amount of the available construction 
proceeds of the issue which, as of the close of such 
6-month period, is not spent as required by clause 
(ii). 
"(II) TERMINATION.—The penalty imposed by this 
clause shall cease to apply only as provided in 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-511 
clause (viii) or after the latest maturity date of any 
bond in the issue (including any refunding bond 
with respect thereto), 
"(viii) ELECTION TO TERMINATE iVa PERCENT PEN-
ALTY.—At the election of the issuer (made not later 
than 90 days gifter the earlier of the end of the initial 
temporary period or the date the construction is 
substantially completed), the penalty under clause (vii) 
shall not apply to any 6-month period after the initial 
temporary period under subsection (c) if the require-
ments of subclauses (I), (II), and (III) are met. 
"(I) 3 PERCENT PENALTY.—The requirement of 
this subclause is met if the issuer pays a penalty 
equal to 3 percent of the amount of available 
construction proceeds of the issue which is not 
spent for the governmental purposes of the issue as 
of the close of such initial temporary period multi-
plied by the number of years (including fractions 
thereof in the initial temporary period. 
"(II) YIELD RESTRICTION AT CLOSE OF TEMPORARY 
PERIOD.—The requirement of this subclause is met 
if the amount of the available construction pro-
ceeds of the issue which is not spent for the govern-
mental purposes of the issue as of the close of such 
initial temporary period is invested at a 3deld not 
exceeding the yield on the issue or which is in-
vested in any tax-exempt bond which is not invest-
ment property. 
"(Ill) REDEMPTION OF BONDS AT EARUEST CALL 
DATE.—The requirement of this subclause is met if 
the amount of the available construction proceeds 
of the issue which is not spent for the govern-
mental purposes of the issue as of the earliest date 
on which bonds may be redeemed is used to redeem 
bonds on such date, 
"(ix) ELECTION TO TERMINATE iVa PERCENT PENALTY 
BEFORE END OF TEMPORARY PERIOD.—If— 
"(I) the construction to be financed by a construc-
tion issue is substantially completed before the end 
of the initial temporary period, 
"(II) the issuer identifies an amount of available 
construction proceeds which will not be spent for 
the governmental purposes of the issue, 
"(III) the issuer has made the election under 
clause (viii), and 
"(IV) the issuer makes an election under this 
clause before the close of the initial temporary 
period and not later than 90 days after the date the 
construction is substantially completed, 
then clauses (vii) and (viii) shall be applied to the 
available construction proceeds so identified as if the 
initial temporary period ended as of the date the elec-
tion is made. 
"(x) FAILURE TO PAY PENALTIES.—In the case of a 
failure (which is not due to willful neglect) to pay any 
penalty required to be paid under clause (vii) or (viii) in 
the amount or at the time prescribed therefor, the 
104 STAT. 1388-512 
PUBLIC LAW 101-508—NOV. 5, 1990 
Secretary may treat such failure as not occurring if, in 
addition to pajdng such penalty, the issuer pays a 
penalty equal to the sum of— 
"(I) 50 percent of the amount which was not paid 
in accordance with clauses (vii) and (viii), plus 
"(11) interest (at the underpa3anent rate estab-
lished under section 6621) on the portion of the 
amount which was not paid on the date required 
for the period beginning on such date. 
The Secretary may waive all or any portion of the 
penalty under this clause. Bonds which are part of an 
issue with respect to which there is a failure to pay the 
amount required under this clause (and any refunding 
bond with respect thereto) shall be treated as not being, 
and as never having been, tax-exempt bonds. 
"(xi) ELECTION FOR POOLED FINANCING BONDS.—At the 
election of the issuer of an issue the proceeds of which 
are to be used to make or finance loans (other than 
nonpurpose investments) to 2 or more persons, the 
periods described in clauses (ii) and (iii) shall begin 
on— 
"(I) the date the loan is made, in the case of loans 
made within the 1-year period after the date the 
bonds are issued, and 
"(II) the date following such 1-year period, in the 
case of loans made after such 1-year period. 
If such an election applies to an issue, the requirements 
of paragraph (2) shall apply to amounts earned before 
the beginning of the periods determined under the 
preceding sentence. 
"(xii) PAYMENTS OF PRINCIPAL NOT TO AFFECT REQUIRE-
MENTS.—For purposes of this subparagraph, pa3mients 
of principal on the bonds which are part of the 
construction issue shall not be treated as an expendi-
ture of the available construction proceeds of the issue, 
"(xiii) REFUNDING BONDS.— 
"(I) IN GENERAL.—Except as provided in this 
clause, clause (viiXII), and the last sentence of 
clause (x), this subparagraph shall not apply to any 
refunding bond and no proceeds of a refunded bond 
shall be treated for purposes of this subparagraph 
as proceeds of a refunding bond. 
(II) DETERMINATION OF CONSTRUCTION PORTION 
OF ISSUE.—For purposes of clause (v), any portion of 
an issue which is used to refund any issue (or 
portion thereof) shall be treated as a separate 
issue. 
"(Ill) COORDINATION WITH REBATE REQUIREMENT 
ON REFUNDING BONDS.—The requirements of para-
graph (2) shall be treated as met with respect to 
earnings for any period if a penalty is paid under 
clause (vii) or (viii) with respect to such earnings 
for such period. 
"(xiv) 
DETERMINATION 
OF 
INITIAL 
TEMPORARY 
PERIOD.—For purposes of this subpargraph, the end of 
the initial temporary period shall be determined with-
out regard to section 149(dX3XAXiv). 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-513 
"(xv) ELECTIONS.—Any election under this subpara-
graph (other than clauses (viii) and (ix)) shall be made 
on or before the date the bonds are issued; and, once 
made, shall be irrevocable. 
"(xvi) TIME FOR PAYMENT OF PENALTIES.—Any penalty 
under this subparagraph shall be paid to the United 
States not later than 90 days after the period to which 
the penalty relates." 
(4) Clause (iv) of section 148(f)(4)(B) is amended to read as 
follows: 
"(iv) PAYMENTS OF PRINCIPAL NOT TO AFFECT REQUIRE-
MENTS.—For purposes of this subparagraph, payments 
of principal on the bonds which are part of an issue 
shall not be treated EIS expended for the governmental 
purposes of the issue." 
(5) Subparagraph (D) of section 148(c)(2) is amended— 
(A) by striking "subsection (f)(4)(B)(iv)(IV)" and inserting 
"subsection (f)(4)(C)(iv)", and 
(B) by striking "subsection (f)(4)(B)(iv)(VIII)" and insert-
ing "subsection (f)(4)(C)(v)". 
(6) Subsection (c) of section 7652 of the 1989 Act is amended by 26 USC148. 
striking "Subparagraph (A) of section 148(c)(2)" and inserting 
"Section 148(c)(2)". 
(7) In the case of a bond issued before the date of the enact- 26 USC 148 note, 
ment of this Act, the period for making the election under 
section 148(f)(4)(C)(viii) of the Internal Revenue Code of 1986 (as 
added by this subsection) shall not expire before the date which 
is 180 days after such date of enactment. 
(8) Section 148(f)(4)(C)(xiii)(II) of such Code (as added by this 26 USC 148 note, 
subsection) shall apply only to refunding bonds issued after 
August 3,1990. 
(k) AMENDMENT RELATED TO SECTION 7811.—The second sentence 
of section 403(b)(12)(A) is amended by inserting "involving a one-
time irrevocable election" after "similar arrangement". 
(1) AMENDMENTS RELATED TO SECTION 7815.— 
(1) Subsection (d) of section 2056 is amended by redesignating 
the paragraph relating to reformations permitted as paragraph 
(5). 
(2) The period during which a proceeding may be commenced 26 USC 2056 
under section 2056(d)(5)(A)(ii) of the Internal Revenue Code of "°*®-
1986 (as redesignated by paragraph (1)) shall not expire before 
the date 6 months after the date of the enactment of this Act. 
(3) Paragraph (16) of section 7815(d) of the Revenue Reconcili-
ation Act of 1989 is amended by inserting "(or would have been 26 USC 2040 
so treated if the donor were a citizen of the United States)" after ^°^-
"of such Code". 
(m) AMENDMENT RELATED TO SECTION 7881.—Paragraph (13) of 
section 4975(d) is amended by inserting before the semicolon at the 
end thereof the following: "or which is exempt from section 406 of 
such Act by reason of section 408(b) of such Act". 
(n) EFFECTIVE DATE.—Except as otherwise provided in this section, 26 USC 42 note, 
any amendment made by this section shall take effect as if included 
in the provision of the Revenue Reconciliation Act of 1989 to which 
such amendment relates. 
104 STAT. 1388-514 
PUBLIC LAW 101-508—NOV. 5, 1990 
SEC. 11702. AMENDMENTS RELATED TO TECHNICAL AND MISCELLANE-
OUS REVENUE ACT OF 1988. 
(a) AMENDMENTS RELATED TO SECTION 1006.— 
(1) Paragraph (5) of section 367(a) is amended by striking 
"section 361" and inserting "subsection (a) or QD) of section 361". 
(2) Subsection (d) of section 453B is amended to read as 
follows: 
"(d) EXCEPTION FOR DISTRIBUTIONS TO WHICH SECTION 337(a) AP-
PUES.—Subsection (a) shall not apply to any distribution to which 
section 337(a) applies." 
(b) AMENDMENTS RELATED TO SECTION 1008.— 
(1) Subparagraph (B) of section 447(g)(4) is amended to read as 
follows: 
"(B) QUAUFIED FARMING TRADE O
R BUSINESS.— 
"(i) IN GENERAL.—The term 'qualified farming trade 
or business' means the trade or business of farming— 
"(I) sugar cane, 
"(II) any plant with a preproductive period (as 
defined in section 263A(e)(3)) of 2 years or less, and 
"(III) any other plant (other than any citrus or 
almond tree) if an election by the corporation 
under this subparagraph is in effect. 
In the case of a partnership and for purposes of para-
graph (3)(A), subclauses (II) and (III) shall not apply. 
"(ii) EFFECT OF ELECTION.—For purposes of para-
graphs (1) and (2) of section 263A(e), any election under 
this subparagraph shall be treated as if it were an 
election under subsection (d)(3) of section 263A. 
"(iii) ELECTION.—Unless the Secretary otherwise con-
sents, an election under this subparagraph may be 
made only for the corporation's 1st taxable year which 
begins after December 31, 1986, and during which the 
corporation engages in a farming business. Any such 
election, once made, may be revoked only with the 
consent of the Secretary." 
(2) Subparagraph (A) of section 447(g)(1) is amended by strik-
ing "qualified farming trade or business" and inserting "trade 
or business of farming^'. 
(c) AMENDMENT RELATED TO SECTION 1012.—Subsection (b) of sec-
tion 6114 is amended by striking "by regulations". 
(d) AMENDMENTS RELATED TO SECTION 1014.— 
(1) Subparagraph (B) of section 59(jXl) is amended by insert-
ing "(or, if greater, the child's share of the unused parental 
minimum tax exemption)" before the period at the end thereof. 
(2) Subsection (j) of section 59 is amended by adding at the end 
thereof the following new paragraph: 
"(3) UNUSED PARENTAL MINIMUM TAX EXEMPTION.— 
"(A) IN GENERAL.—For purposes of this subsection, the 
term 'unused parental minimum tax exemption' means the 
excess (if any) of— 
"(i) the exemption amount applicable to the parent 
under section 55(d), over 
"(ii) the parent's alternative minimum 
taxable 
income. 
"(B) CERTAIN RULES MADE APPLICABLE.—A child's share of 
any unused parental minimum tax exemption shall be 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-515 
determined under rules similar to the rules of section 
l(i)(3)(B), and rules similar to the rules of paragraphs (3)(D) 
and (5) of section l(i) shall apply for purposes of this 
paragraph." 
(3) Subparagraph (D) of section 59(j)(2), is amended by striking 
"paragraphs (5) and (6)" and inserting "paragraphs (3)(D), (5), 
and (6)". 
(e) AMENDMENTS RELATED TO SECTION 1018.— 
(1) Subsection (e) of section 468B is amended by striking "This 
section" and inserting "This section (other than subsection (g))". 
(2) Subsection (c) of section 355 is amended to read as follows: 
"(c) TAXABIUTY OF CORPORATION ON DISTRIBUTION.— 
"(1) IN GENERAL.—Except as provided in paragraph (2), no 
gain or loss shall be recognized to a corporation on any distribu-
tion to which this section (or so much of section 356 £is relates to 
this section) applies and which is not in pursuance of a plan of 
reorganization. 
"(2) DISTRIBUTION OF APPRECIATED PROPERTY.— 
"(A) IN GENERAL.—If— 
"(i) in a distribution referred to in paragraph (1), the 
corporation distributes property other than stock or 
\ 
securities in the controlled corporation, and 
"(ii) the fair market value of such property exceeds 
its adjusted basis (in the hands of the distributing 
corporation), 
then gain shall be recognized to the distributing corpora-
tion as if such property were sold to the distributee at its 
fair market value. 
"(B) TREATMENT OF LIABILITIES.—If any property distrib-
uted in the distribution referred to in paragraph (1) is 
subject to a liability or the shareholder assumes a liability 
of the distributing corporation in connection with the dis-
tribution, then, for purposes of subparagraph (A), the fair 
market value of such property shall be treated as not less 
than the amount of such liability. 
"(3) COORDINATION WITH SECTIONS 311 AND 336(a).—Sections 
311 and 336(a) shall not apply to any distribution referred to in 
parsigraph (1)." 
(f) AMENDMENT RELATED TO SECTION 3011.—Paragraph (1) of sec-
tion 4980B(d) is amended to read as follows: 
"(1) any failure of a group health plan to meet the require-
ments of subsection (f) with respect to any qualified beneficiary 
if the qualifying event with respect to such beneficiary occurred 
during the calendar year immediately following a calendar year 
during which all employers maintaining such plan normally 
employed fewer than 20 employees on a typical business day,". 
(g) AMENDMENTS RELATED TO SECTION 5033.— 
(1) Subsection (i) of section 2523 is amended by adding at the 
end thereof the following new sentence: "This subsection shall 
not apply to any transfer resulting from the acquisition of 
rights under a joint and survivor annuity described in subsec-
tion (f)(6)." 
(2)(A) Paragraph (1) of section 2056A(a) is amended to read as 
follows: 
"(1) the trust instrument— 
104 STAT. 1388-516 
PUBLIC LAW 101-508—NOV. 5, 1990 
"(A) requires that at least 1 trustee of the trust be an 
individual citizen of the United States or a domestic cor-
poration, and 
"(B) provides that no distribution (other than a distribu-
tion of income) may be made from the trust unless a trustee 
who is an individual citizen of the United States or a 
domestic corporation has the right to withhold from such 
distribution the tax imposed by this section on such 
distribution,". 
(B) Subsection (b) of section 2056A is amended by adding at 
the end thereof the following new paragraphs: 
"(14) COORDINATION WITH TERMINABLE INTEREST RULES.—Any 
interest in a qualified domestic trust shall not be treated as 
failing to meet the requirements of paragraph (5) or (7) of 
section 2056(b) merely by reason of any provision of the trust 
instrument permitting the withholding from any distribution of 
an amount to pay the tax imposed by paragraph (1) on such 
distribution. 
"(15) No T
A
X ON CERTAIN DISTRIBUTIONS.—No tax shall be 
imposed by paragraph (1) on any distribution to the surviving 
spouse to the extent such distribution is to reimburse such 
surviving spouse for any tax imposed by subtitle A on any item 
of income of the trust to which such surviving spouse is not 
entitled under the terms of the trust." 
(3)(A) Subsection (d) of section 2056A is amended by adding at 
the end thereof the following new sentence: "No election may be 
made under this section on any return if such return is filed 
more than one year after the time prescribed by law (including 
extensions) for filing such return." 
26 use 2056A 
(B) The amendment made by subparagraph (A) shall not 
^°^- 
apply to any election made before the date 6 months after the 
date of the enactment of this Act. 
(4) Subparagraph (A) of section 2056A(b)(10) is amended by 
striking 'Wtion 2032" and inserting "section 2011, 2014, 2032" 
(5) Paragraph (3) of section 2056(d) is amended by striking 
"section 2056A(b)(6)" and inserting "section 2056A(b)(7)". 
(h) AMENDMENTS RELATED TO SECTION 6009.— 
(1) Subparagraph (B) of section 135(b)(2) is amended by strik-
ing "each dollar amount" and inserting "the $40,000 and 
$60,000 amounts". 
(2) Subparagraph (C) of section 135(b)(2) is amended by strik-
ing "(A) or". 
(i) AMENDMENTS RELATED TO SECTION 6282.—Subsection (e) of 
section 216 is amended— 
(1) by striking "ASSOCIATIONS" in the subsection heading and 
inserting "CORPORATIONS", and 
(2) by striking "association" and inserting "corporation". 
26 use 59 note. 
(j) EFFECTIVE DATE.—Any amendment made by this section shall 
take effect as if included in the provision of the Technical and 
Miscellaneous Revenue Act of 1988 to which such amendment 
relates. 
SEC. 11703. MISCELLANEOUS AMENDMENTS. 
(a) 
SALES TO COMPLY 
WITH 
CONFLICT-OF-INTEREST 
REQUIRE-
MENTS.— 
(1) IN GENERAL.—Subsection (a) of section 1043 is amended by 
striking "reduced by any basis adjustment under subsection (c) 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-517 
attributable to a prior sale" and inserting "to the extent not 
previously taken into account under this subsection". 
(2) EFFECTIVE DATE.—The amendment made by paragraph (1) 26 USC 1043 
shall apply to sales after November 30,1989. 
^o^-
(b) CONFORMING AMENDMENT TO REPEAL OF SECTION 89.— 
(1) IN GENERAL.—Subparagraph (B) of section 414(nX2) is 
amended by striking "(6 months in the case of core health 
benefits)". 
(2) EFFECTIVE DATE.—The amendment made by subsection (a) 26 USC 414 note, 
shall take effect as if included in the amendments made by 
section 1151 of the Tax Reform Act of 1986. 
(c) AMENDMENTS TO GENERATION-SKIPPING TRANSFER TAX.— 
(1) Subparagraph (B) of section 2642(c)(2) is amended by strik-
ing "such individual dies before the trust is terminated" and 
inserting "the trust does not terminate before the individual 
dies". 
(2) Paragraph (2) of section 2642(c) is amended by adding at 
the end thereof the following new sentence: "Rules similar to 
the rules of section 2652(c)(3) shall apply for purposes of 
subparagraph (A)." 
(3) Subparagraph (C) of section 1433(b)(2) of the Tax Reform 26 USC 2601 
Act of 1986 shall not exempt any generation-skipping transfer ^°^-
from the amendments made by subtitle D of title XVI of such 
Act to the extent such transfer is attributable to property 
transferred by gift or by reason of the death of another person 
to the decedent (or trust) referred to in such subparagraph after 
August 3,1990. 
(4) The amendments made by paragraphs (1) and (2) shall 26 USC 2642 
apply to transfers after March 31,1988. 
'^°^-
(d) TREATMENT OF CERTAIN PARTNERSHIP INTEREST UNDER SECTION 
1031.— 
(1) IN GENERAL.—Paragraph (2) of section 1031(a) is amended 
by adding at the end thereof the following new sentence: "For 
purposes of this section, an interest in a partnership which has 
in effect a valid election under section 761(a) to be excluded 
from the application of all of subchapter K shall be treated as 
' 
an interest in each of the assets of such partnership and not as 
an interest in a partnership." 
(2) EFFECTIVE DATE.—The amendment made by paragraph (1) 26 USC 1031 
shall apply to transfers after July 18,1984. 
^°^-
(e) TREATMENT OF CERTAIN SEPARATED EMPLOYEES.— 
(1) IN GENERAL.—Paragraph (6) of section 79(d) is amended by 
striking "any retired employee" and inserting "any former 
employee". 
(2) EFFECTIVE DATE.—The amendment made by paragraph (1) 26 USC 79 note, 
shall apply to employees separating from service after the date 
of the enactment of this Act. 
(f) 
TREATMENT OF CERTAIN 
MEDICAL CARE 
REIMBURSEMENTS 
UNDER WAGE WITHHOLDING.— 
(1) IN GENERAL.—Subsection (a) of section 3401 is amended by 
striking "or" at the end of paragraph (18), by striking the period 
at the end of paragraph (19) and inserting "; or", and by adding 
at the end thereof the following new paragraph: 
"(20) for any medical care reimbursement made to or for the 
benefit of an employee under a self-insured medical reimburse-
ment plan (within the meaning of section 105(h)(6))." 
104 STAT. 1388-518 
PUBLIC LAW 101-508—NOV. 5, 1990 
26 use 3401 
(2) EFFECTIVE DATE.—The amendment made by paragraph (1) 
°°*®- 
shall apply as if included in the amendments made by section 
1151 of the Tax Reform Act of 1986 but shall not apply to any 
amount paid before the date of the enactment of this Act which 
the employer treated as wages for purposes of chapter 24 of the 
Internal Revenue Code of 1986 when paid. 
(g) TREATMENT OF CERTAIN INTERESTS UNDER WINDFALL PROFIT 
TAX.— 
(1) IN GENERAL.—Paragraph (1) of section 1879(o) of the Tax 
Reform Act of 1986 is amended by striking "held by" and 
inserting "held by the Protestant Episcopal Church Foundation 
of the Diocese of Oklahoma or held by". 
(2) EFFECTIVE DATE.—The amendment made by paragraph (1) 
shall take effect as if included in section 1879(o) of the Tax 
Reform Act of 1986. 
SEC. 11704. MISCELLANEOUS CLERICAL CHANGES. 
(a) GENERAL RULE.— 
(1) Clause (ii) of section 56(g)(4XD) is amended by striking 
"year" and inserting "years". 
(2) The heading of subparagraph (B) of section 172(m)(4) is 
amended by striking 
"SUBSECTION 
( B ) ( 2 ) " and 
inserting 
"SUBSECTION (b) (2)". 
(3) Paragraph (2) of section 351(e) is amended by striking "are 
used" and inserting "is used". 
(4) The heading of subparagraph (B) of section 413(c)(7) is 
amended by striking "ASSET" and inserting "ASSETS". 
(5) Subparagraph (C) of section 461(iX3) is amended to read as 
follows: 
"(C) 
any 
tax 
shelter 
(as 
defined 
in 
section 
6662(d)(2XCXii))." 
(6) Subparagraph (A) of section 469(mX3) is amended by strik-
ing "preenactment" and inserting "pre-enactment". 
(7) Subsection (c) of section 597 is amended by striking "The 
purposes o f and inserting "For purposes of. 
(8) The last sentence of subsection (a) of section 860D is 
amended by inserting a closing parenthesis before the period at 
the end thereof. 
(9) Subparagraph (A) of section 860Gr(aX3) is amended by 
striking the comma after "secured". 
(10) Subparagraph (B) of section 927(gX2) is amended by strik-
ing "prescribed" and inserting "prescribe". 
(11) Paragraph (1) of section 936(e) is amended by striking 
"subsection (aXl)" each place it appears and inserting "subsec-
tion (aX2)". 
(12) Subparagraph (C) of section 1017(bX4) is amended by 
striking "subparagraph" and inserting "subparagraphs". 
(13) The material preceding subparagraph (A) of section 
1245(aX3) is amended by striking "or (3)" and inserting "or (3))". 
(14) Paragraph (2) of section 1441(b) is amended by inserting 
"section" before "170(bXlXAXii)". 
(15) Clause (ii) of section 2056A(bX2XB) is amended by striking 
"therefore" and inserting "therefor". 
(16) TTie item relating to section 2056A in the table of sections 
for part IV of subchapter A of chapter 11 is amended by striking 
"trusts" and inserting "trust". 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-519 
(17) Subclause (I) of section 2642(dX2XBXi) is amended by 
striking "state" and inserting "State". 
(18) The heading of chapter 23A is amended by striking 
"CHAPTER 
23A. 
RAILROAD" 
and 
inserting 
"CHAPTER 
23A— 
RAILROAD". 
(19) Paragraphs (9) and (10) of section 3231(e) are redesignated 
as paragraphs (8) and (9), respectively. 
(20) Subparagraph (D) of section 4093(c)(4) is amended by 
striking "reduced tax sale" and inserting "reduced-tax sale". 
(21) Paragraph (3) of section 5061(b) is amended to read as 
follows: 
"(3) section 5041(e),". 
(22) Paragraph (3) of section 6013(e) is amended by striking 
"section 6661(bX2XA)" and inserting "section 6662(dX2)(A)". 
(23) Subsection (c) of section 6038A is amended by redesignat-
ing paragraphs (4), (5), and (6) as paragraphs (3), (4), and (5), 
respectively. 
(24) Paragraph (3) of section 6039D(d) is amended by striking 
all that follows "plan (and not" and inserting "the employer)." 
(25) Paragraph (4) of section 6045(e) is amended by striking 
"broker" and inserting "reporting person". 
(26) The heading for subsection (a) of section 6323 is amended 
by striking "PURCHASES" and inserting "PURCHASERS". 
(27) Subsection (a) of section 6332 is amended by striking 
"subsections (b) and (c)" and inserting "this section". 
(28) The Isist sentence of section 6655(gX3) is amended by 
striking sill that follows: "'11 months"' and inserting "in clause 
(iXIV).'^ 
(29) Paragraph (3) of section 7519(c) is amended by striking 
"payable on later o f and inserting "payable on the later of. 
(30) The section 7521 added by section 6233 of the Technical 
and Miscellaneous Revenue Act of 1988 is redesignated as sec-
tion 7522. 
(31) The table of sections for chapter 77 is amended by strik-
ing the item added by such section 6233 and inserting the 
following: 
"Sec. 7522. Content of tax due, deficiency, and other notices." 
(32) Subparagraph (B) of section 7608(cXl) is amended by 
striking the comma after "operations". 
(33) Subparagraph (C) of section 7608(cX5) is amended— 
(A) by striking "interested" in clause (iXD and inserting 
"interest", and 
(B) by striking "title 3" in clause (ii) and inserting "title 
31". 
(34) Subparagraph (C) of section 7701(jXl) is apiended by 
hi 
striking so much of such subparagraph as precedes "contribu-
tions to the Thrift" and inserting the following: 
"(C) subject to section 401(kX4XB) and any dollar limita-
tion on the application of section 402(aX8),". 
(35) Paragraph (1) of section 1012(t) of the Technical and 
Miscellaneous Revenue Act of 1988 is amended by inserting "(as 26 USC 892. 
amended by paragraph (2))" after "clause (ii)". 
(36) Subparagraph (F) of section 1014(gX4) of the Technical 
and Miscellaneous Revenue Act of 1988 is amended by striking 26 USC 892. 
"subparagraph" in clause (ii) and inserting "paragraph". 
104 STAT. 1388-520 
PUBLIC LAW 101-508—NOV. 5, 1990 
(37) Paragraph (28) of section 1018(u) of the Technical and 
26 use 857. 
Miscellaneous Revenue Act of 1988 is amended by inserting 
"net" before "capital loss" each place it appears. 
(38) Subparagraph (C) of section 2001(dX6) of the Technical 
26 use 4091. 
and Miscellaneous Revenue Act of 1988 is amended by striking 
"a gallon" and inserting "per geillon". 
(39) Paragraph (3) of section 5033(a) of the Technical and 
Miscellaneous Revenue Act of 1988 is amended by striking 
"chapter 1" and inserting "chapter 11". 
(40) Paragraph (2) of section 232(a) of the Railroad Retirement 
45 use 231n 
Revenue Act of 1983 is amended by striking "section 516(b)" 
"°**- 
each place it appears and inserting "section 7106(b)". 
26 use 56 note. 
(b) EFFECTIVE DATE.—The amendments made by this section shall 
take effect on the date of the enactment of this Act. 
Subtitle H—Repeal of Expired or Obsolete 
Provisions 
PART I—REPEAL OF EXPIRED OR OBSOLETE 
PROVISIONS 
Subpart A—General Provisions 
SEC. 11801. REPEAL OF EXPIRED OR OBSOLETE PROVISIONS. 
(a) REPEALS.—The following provisions are hereby repealed: 
(1) Section 23 (relating to residential energy credit). 
(2) Paragraph s^ (i), (2), (3), and (4) of section 39(d) (relating to 
transitional rules). 
(3) Subsection (f) of section 56 (relating to adjustments for 
book income of corporations). 
(4) Subsection (h) of section 63 (relating to transitional rule for 
taxable years beginning in 1987). 
(5) Subsection (i) of section 83 (relating to transitional rules). 
(6) Section 110 (relating to income tax paid by lessee corpora-
tion). 
(7) Section 113 (relating to mustering-out pajonents for mem-
bers of the Armed Forces). 
(8) Section 114 (relating to sports programs conducted for the 
American National Red Cross). 
(9) Section 124 (relating to qualified transportation provided 
by employers). 
, 
(10) Section 128 (relating to interest on certain savings certifi-
cates). 
(11) Subsection (i) of section 170 (relating to rule for 
nonitemization of deductions). 
(12) Section 184 (relating to amortization of certain railroad 
rolling stock). 
(13) Section 188 (relating to amortization of certain expendi-
tures for child care facilities). 
(14) Subsection (d) of section 190 (relating to application of 
section). 
(15) Section 250 (relating to certain pajmients to the National 
Railroad Passenger Ck)rporation). 
(16) Subsection (b) of section 263 (relating to expenditures for 
advertising and good will). 
"^ So in original. Probably should be "Paragraphs". 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-521 
(17) Subsection (e) of section 305 (relating to dividend reinvest-
ment in stock of public utilities). 
(18) Subsection (h) of section 306 (relating to stock received in 
transactions to which 1939 Ck)de applies). 
(19) Part IV of subchapter C of chapter 1 (relating to insol-
vency reorganizations). 
(20) Section 422 (relating to qualified stock options). 
(21) Section 424 (relating to restricted stock options). 
(22) Subsection (d) of section 503 (relating to special rule for 
loans). 
(23) Paragraph (14) of section 512(b) (relating to modifications 
applicable in computing unrelated business taxable income). 
(24) Subsection (c) of section 545 (relating to special adjust-
ment to taxable income). 
(25) Paragraphs (2), (3), and (4) of section 582(c) (relating to 
bond, etc., losses and gains of financial institutions). 
(26) Paragraph (2) of section 585(b) (relating to percentage 
method). 
(27) Subsection (i) of section 617 (relating to certain pre-1970 
exploration expenditures). 
(28) Part II of subchapter I of chapter 1 (relating to payments 
to encourage exploration, etc., for defense purposes). 
(29) Subparagraphs (C) and (D) of section 861(a)(1) (relating to 
source rule for interest). 
(30) Subsection (k) of section 897 (relating to foreign corpora-
tions acquired before enactment). 
(31) Subsection (e) of section 904 (relating to transitional rules 
for carrybacks and carryovers on the per-country limitation). 
(32) Subsections (e) and (fK3)(C) of section 907 (relating to 
transitional rules). 
(33) Section 1039 (relating to certain sales of low-income 
housing projects). 
(34) Part VIII of subchapter O of chapter 1 (relating to 
distributions pursuant to Bank Holding Company Act). 
(35) Section 1238 (relating to amortization in excess of 
depreciation). 
(36) Subsection (c) of section 1401 (relating to credit against 
self-employment taxes). 
(37) Chapter 4 (relating to rules applicable to recovery of 
excessive profits on Government contracts). 
(38) Section 1564 (relating to transitional rules in the case of 
certain controlled corporations). 
(39) Subsection (b) of section 2010 (relating to phase-in of 
credit). 
(40) Subsection (b) of section 2505 (relating to phase-in of 
credit), 
(41) Paragraph (3) of section 3402(a) (relating to changes made 
by section 101 of the Economic Recovery Tax Act of 1981). 
(42) Section 3510 (relating to credit for increased social secu-
rity employee taxes and railroad retirement tier 1 employee 
taxes imposed during 1984). 
(43) Paragraph (3) of section 6018(a) (relating to phase-in of 
filing requirement amount). 
(44) Section 6158 (relating to installment payment of tax 
attributable to divestitures pursuant to Bank Holding Company 
Act Amendments of 1970). 
39-194 O - 91 - 30 : QL 3 Part 2 
104 STAT. 1388-522 
PUBLIC LAW 101-508—NOV. 5, 1990 
(45) Subchapter E of chapter 64 (relating to collection of State 
individual income taxes). 
(46) Subsection (e) of section 6427 (relating to use in certain 
taxicabs). 
(47) Section 6428 (relating to 1981 rate reduction tax credit). 
(48) Chapter 37 (relating to excise tax on sugar). 
(b) CLERICAL AMENDMENTS.— 
(1) The table of sections for subpart A of part IV of subchapter 
A of chapter 1 is amended by striking the item relating to 
section 23. 
(2) The table of sections for part III of subchapter B of chapter 
1 is amended by striking the items relating to sections 110, 113, 
114,124, and 128. 
(3) The table of sections for part VI of subchapter B of chapter 
1 is amended by striking the items relating to sections 184 and 
188. 
(4) The table of sections for part VIII of subchapter B of 
chapter 1 is amended by striking the item relating to section 
250. 
(5) The table of parts for subchapter C of chapter 1 is amended 
by striking the item relating to part IV. 
(6) The table of sections for part II of subchapter D of chapter 
1 is amended by striking the items relating to sections 422 and 
424. 
(7) The table of parts for subchapter I of chapter 1 is amended 
by striking the item relating to part II. 
(8) The table of sections for part III of subchapter O of chapter 
1 is amended by striking the item relating to section 1039. 
(9) The table of parts for subchapter O of chapter 1 is 
amended by striking the item relating to part VIII. 
(10) The table of sections for part IV of subchapter P of 
chapter 1 is amended by striking the item relating to section 
1238. 
(11) The table of chapters for subtitle A is amended by 
striking the item relating to chapter 4. 
(12) Tlie table of sections for part II of subchapter B of chapter 
6 is amended by striking the item relating to section 1564. 
(13) The table of sections for subchapter A of chapter 62 is 
amended by striking the item relating to section 6158. 
(14) The table of subchapters for chapter 64 is amended by 
striking the item relating to subchapter E. 
(15) The table of sections for subchapter B of chapter 65 is 
amended by striking the item relating to section 6428. 
(16) The table of sections for chapter 25 is amended by strik-
ing the item relating to section 3510. 
(17) The table of chapters for subtitle D is amended by 
striking the item relating to chapter 37. 
(c) CONFORMING AMENDMENTS.— 
(1) AMENDMENT RELATING TO REPEAL OF SECTION 23.—Subsec-
tion (a) of section 1016 is amended by striking paragraph (20) 
and by redesignating the following paragraphs accordingly. 
(2) AMENDMENTS RELATING TO REPEAL OF SECTION 56(f).— 
(A) Paragraph (1) of section 56(c) is amended to read as 
follows: 
"(1) ADJUSTMENT FOR ADJUSTED CURRENT EARNINGS.—Alter-
native minimum taxable income shall be adjusted as provided 
in subsection (g)." 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-523 
(B) Paragraphs (1) and (2) of section 59(g) are each 
amended by striking "beginning after 1989". 
(C) Clause (iii) of section 56(gX4XC) is amended to read as 
follows: 
"(iii) TREATMENT OF TAXES ON DIVIDENDS FROM 936 
CORPORATIONS.— 
"(I) IN GENERAL.—For purposes of determining 
the alternative minimum foreign tax credit, 75 
percent of any withholding or income tax paid to a 
possession of the United States with respect to 
dividends received from a corporation eligible for 
the credit provided by section 936 shall be treated 
as a tax paid to a foreign country by the corpora-
tion receiving the dividend. 
"(II) LIMITATION.—If the aggregate amount of 
the dividends referred to in subclause (I) for any 
taxable year exceeds the excess referred to in para-
graph (1), the amount treated as tax paid to a 
foreign country under subclause (I) shall not 
exceed the amount which would be so treated with-
out regard to this subclause multiplied by a frac-
tion the numerator of which is the excess referred 
to in paragraph (1) and the denominator of which 
is the aggregate amount of such dividends. 
"(Ill) TREATMENT OF TAXES IMPOSED ON 936 COR-
PORATION.—For purposes of this clause, taxes paid 
by any corporation eligible for the credit provided 
by section 936 to a possession of the United States 
shall be treated as a withholding tax paid with 
respect to any dividend paid by such corporation to 
the extent such taxes would be treated as paid by 
the corporation receiving the dividend under rules 
similar to the rules of section 902 (and the amount 
of any such dividend shall be increased by the 
amount so treated)." 
(D) Paragraph (1) of section 59(a) is amended by inserting 
"and" at the end of subparagraph (B), by striking subpara-
graph (C), and by redesignating subparagraph (D) as 
subparagraph (C). 
(E) Paragraph (2) of section 59A(b) is amended by striking 
"(and the last sentence of section 56(fX2XB))". 
(3) AMENDMENT RELATING TO REPEAL OF SECTION 124.—Subsec-
tion (f) of section 125 is amended by striking "section 117, 124," 
and inserting "section 117,". 
(4) AMENDMENT RELATING TO REPEAL OF SECTION 128.—Para-
graph (2) of section 265(a) is amended by striking "subtitle" and 
all that follows down through the period at the end thereof and 
inserting "subtitle." 
(5) AMENDMENT RELATING TO REPEAL OF SECTION I70(i).— 
Section 170 is amended by redesignating subsections (j), (k), (1), 
(m), and (n) as subsections (i), (j), (k), (1), and (m), respectively. 
(6) AMENDMENTS RELATING TO REPEAL OF AMORTIZATION PROVI-
SIONS.— 
(A) Subsection (a) of section 48 is amended by striking 
paragraph (8). 
104 STAT. 1388-524 
PUBLIC LAW 101-508—NOV. 5, 1990 
(B) Subsection (f) of section 642 is amended by striking 
"sections 169, 184, 187, and 188" and inserting "section 
169". 
(C) Paragraph (2) of section 861(e) is amended by striking 
"referred to in subparagraph (B) of section 184(d)(1)" and 
inserting "all of whose stock is owned by one or more 
domestic common carriers by railroad". 
(D) Subparagraph (B) of section 1082(a)(2) is amended by 
striking "169,184, or 188" and inserting "169". 
(E) Subparagraph (C) of section 1245(a)(3) is amended by 
striking 
188," and inserting "188 (as in effect before its 
repeal by the Revenue Reconciliation Act of 1990),". 
(F) Paragraph (3) of section 1250(b) is amended by striking 
"188," and inserting "188 (as in effect before its repeal by 
the Revenue Reconciliation Act of 1990),". 
(7) AMENDMENTS RELATING TO REPEAL OF SECTION 305(e).— 
(A) Paragraph (1) of section 305(d) is amended by striking 
"(other than subsection (e))". 
(B) Subsection (f) of section 305 is redesignated as subsec-
tion (e). 
(8) AMENDMENTS RELATED TO REPEAL OF SPECIAL TREATMENT OF 
INSOLVENCY REORGANIZATIONS.— 
(A) Subsection (b) of section 47 is amended by inserting 
"or" at the end of paragraph (1), by striking out ", or" at 
the end of paragraph (2), and inserting a period, and by 
striking paragraph (3). 
(B) Subparagraph (B) of section 168(iX7) is amended by 
striking "371(a), 374(a),". 
(C) Subparagraph (D) of section 2470t>)(2) is amended by 
striking , a transaction to which section 371 (relating to 
insolvency reorganization) applies,". 
(D) Subsection (d) of section 354 is hereby repealed. 
(E) Clause (i) of section 356(dX2XB) is amended by striking 
"or(d)". 
(FXi) Section 357 is amended by striking "351, 361, 371, or 
374" each place it appears and inserting "351 or 361". 
(ii) Paragraph (2) of section 357(c) is amended by inserting 
"or" at the end of subparagraph (A), by striking subpara-
graph (B), and by redesignating subparagraph (C) as 
subparagraph (B). 
(G) Section 358 is amended— 
(i) in subsection (a), by striking "361, 37101)), or 374" 
and inserting "or 361", and 
(ii) by strifing subsection Ot>)(3). 
(H) Paragraph (3) of section 1245(b) is amended by strik-
ing "371(a), 374(a),". 
(I) Paragraph (3) of section 1250(d) is amended by striking 
"371(a), 374(a),". 
(9) AMENDMENTS RELATING TO REPEAL OF SECTIONS 422 AND 
424.— 
(AXi) Section 422A is redesignated as section 422 and 
section 425 is redesignated as section 424. 
(ii) The table of sections for part II of subchapter D of 
chapter 1 is amended by redesignating the items relating to 
sections 422A and 425 as items relating to sections 422 and 
424, respectively. 
(B) Section 421 is amended— 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-525 
(i) in subsection (a)— 
(I) by striking "422(a), 422A(a), 423(a), or 424(a)" 
and inserting "422(a) or 423(a)", 
(II) by striking "except as provided in section 
422(cXl)," in paragraph (1), and 
(III) by striking "425(a) in paragraph (2) and 
inserting "424(a)"; 
(ii) in subsection (b)— 
(I) by striking "422(a), 422A(a), 423(a), or 424(a)" 
and inserting "422(a) or 423(a)", and 
(II) by striking "422(a)(1), 422A(a)(l), 423(a)(1), or 
424(a)(1)," and inserting "422(a)(1) or 423(aXl)."; 
(iii) in subsection (c)— 
(I) by striking "422(a), 422A(a), 423(a), and 424(a)" 
in paragraph (IXA) and inserting "422(a) and 
423(a)", 
(II) by striking "sections 423(c) and 424(cXl)" in 
paragraph (1)(B) and inserting "section 423(c)", 
(III) by striking "422(cXl), 423(c), or 424(cXl)" 
each place it appears in paragraphs (2) and (3)(A) 
and inserting "423(c)", 
(IV) by striking "sections 422(cXl), 423(c), and 
424(cXl)" in paragraph (3XB) and inserting "section 
423(c)", and 
(V) by striking "such sections" in paragraph 
(3)(B) and inserting "such section". 
(C) Section 422 (as redesignated by subparagraph (A)) is 
amended— 
(i) by striking "425(a)" in subsection (a)(2) and insert-
ing "424(a)", and 
(ii) by striking paragraph (5) of subsection (c) and by 
redesignating paragraphs (6), (7), and (8), of subsection 
(c) as paragraphs (5), (6), and (7), respectively. 
(D) Subsection (a) of section 423 is amended— 
(i) by striking "(other than a restricted stock option 
granted pursuant to a plan described in section 
424(cX3XB))", and 
(ii) by striking "425(a)" and inserting "424(a)". 
(E) Subsection (b) of section 423 is amended by striking 
"425(d)" in paragraph (3) and inserting "424(d)". 
(F) Section 424 (as redesignated by subparagraph (A)) is 
amended— 
(i) by striking "425(a)" in subsection (a) and inserting 
"424(a)", 
(ii) by striking "422(aXl), 422A(aXl), 423(aXl), or 
424(aXl)" in subsection 
(cX3XAXii) and 
inserting 
"422(aXl) or 423(aXl)", 
(iii) by striking "422(bX7), 422A(bX6), 423(bX3), and 
424(bX3)" in subsection (d) and inserting "422(bX6) and 
423(bX3)". 
(iv) in subsection (g)— 
(I) by striking "422(aX2), 422A(aX2), 423(aX2), and 
424(aX2)" and inserting "422(aX2) and 423(aX2)", 
and 
(II) by striking "425(a)" and inserting "424(a)", 
and 
(v) in subsection (h)— 
104 STAT. 1388-526 
PUBLIC LAW 101-508—NOV. 5, 1990 
(I) by striking paragraph (2) and inserting the 
following: 
"(2) SPECIAL RULE FOR SECTION 423 OPTIONS.—In the case of the 
transfer of stock pursuant to the exercise of an option to which 
section 423 applies and which has been so modified, extended, or 
renewed, the fair market value of such stock at the time of the 
granting of the option shall be considered as whichever of the 
following is the highest— 
"(A) the fair market value of such stock on the date of the 
original granting of the option, 
"(B) the fair market value of such stock on the date of the 
making of such modification, extension, or renewal, or 
"(C) the fair market value of such stock at the time of the 
making of any intervening modification, extension, or re-
newal. ' 
(II) by striking "sections 422(b)(6), 423(b)(9), and 
424(b)(2)" in paragraph (3)(B) and inserting "sec-
tion 423(b)(9)", and 
(III) by striking the sentence following para-
graph (3)(C). 
(G) Paragraph (3) of section 56(b) is amended— 
(i) by striking "section 422A" and inserting "section 
422", and 
(ii) by striking "section 422A(c)(2)" and inserting 
"section 422(c)(2)'° 
(H) Clause (ii) of section 1042(cX2XB) is amended by strik-
ing "section 83, 422, 422A, 423, or 424 applies" and inserting 
"section 83, 422, or 423 applied (or to which section 422 or 
424 (as in effect on the day before the date of the enactment 
of the Revenue Reconciliation Act of 1990) applied)". 
(I)(i) Subparagraph (B) of section 402(aX3) is amended by 
striking "section 425" and inserting "section 424". 
(ii) Clause (i) of section 402(aX6)(B) is amended by striking 
"section 425(f)" and inserting "section 424(f)". 
(J) Section 6039 is amended— 
(i) by striking paragraphs (1) and (2) of subsection (a) 
and inserting the following: 
"(1) which in any calendar year transfers a share of stock 
pursuant to such person's exercise of an incentive stock option, 
or 
"(2) which in any calendar year records (or has by its agent 
recorded) a transfer of the legal title of a share of stock acquired 
by the transferor pursuant to his exercise of £in option described 
in section 423(c) (relating to special rule where option price is 
between 85 percent and 100 percent of value of stock),", 
(ii) by striking 
a qualified stock option, incentive 
stock option, a restricted stock option, or an" in subsec-
tion (bXD and inserting "an incentive stock option or 
an", and 
(iii) by amending subsection (c) to read as follows: 
"(c) CROSS REFERENCES.— 
"For deflnition of— 
"(1) the term 'incentive stock option', see section 422(b), and 
"(2) the term 'employee stock purchase plan' see section 423(b)." 
(10) AMENDMENTS RELATING TO REPEAL OF SECTION 545(C).— 
(A) Paragraph (15) of section 381(c) is hereby repealed. 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-527 
(B) Section 545 is amended by redesignating subsection (d) 
£is subsection (c). 
(11) AMENDMENTS RELATING TO REPEAL OF PARAGRAPHS 
(2), 
(3), AND (4) OF SECTION 582(c).—Subsection (c) of section 582 is 
amended— 
(A) by striking "paragraph (5)" in paragraph (1) and 
inserting "paragraph (2)", and 
(B) by redesignating paragraph (5) as paragraph (2). 
(12) 
AMENDMENTS RELATING TO REPEAL OF SECTION 
585 
(b) (2).— 
(A) Paragraph (4) of section 57(a) is amended by striking 
"585 or". 
(B) Subparagraph (A) of section 291(e)(1) is hereby 
repealed. 
(C) Paragraph (1) of section 585(b) is amended by striking 
"shall not exceed" and all that follows down through the 
period at the end thereof and inserting "shall not exceed 
the addition to the reserve for losses on loans determined 
under the experience method as provided in paragraph (2)." 
(D) Subsection (b) of section 585 is amended by redesig-
nating paragraphs (3) and (4) as paragraphs (2) and (3), 
respectively. 
(E) Paragraph (3) of section 585(b) (as redesignated by 
subparagraph (A)) is amended to read as follows: 
"(3) REGULATIONS; DEFINITION OF LOAN.—The Secretary shall 
define the term loan and prescribe such regulations as may be 
necessary to carry out the purposes of this section." 
(F) Paragraphs (1) (A) and (E) of section 593(b) are each 
amended by striking "section 585(b)(3)" and inserting "sec-
tion 585(b)(2)". 
(13) AMENDMENT RELATING TO REPEAL OF SECTION 617 (i).— 
Section 617 is amended by redesignating subsection (j) as subsec-
tion (i). 
(14) 
AMENDMENTS RELATING TO REPEAL OF SECTION 
861 
(a)(i) (c) AND (D).—Paragraph (1) of section 861(a) is amended 
by inserting "and" at the end of subparagraph (A) and by 
striking the comma at the end of subparagraph (B) and insert-
ing a period. 
(15) AMENDMENTS RELATING TO REPEAL OF SECTION 1039.— 
(A) Paragraphs (l)(A)(i) and (2XBXii) of section 1250(a) are 
each amended by inserting "(as in effect on the day before 
the date of the enactment of the Revenue Reconciliation 
Act of 1990" after "section 1039(b)(1)(B)". 
(B) Subsection (d) of section 1250 is amended by striking 
paragraph (8). 
(C) Section 1250 is amended by striking subsection (g) and 
by redesignating subsections (h) and (i) as subsections (g) 
and (h), respectively. 
(16) AMENDMENT RELATING TO REPEAL OF SECTION 1401(C).— 
Section 1401 is amended by redesignating subsection (d) as 
subsection (c). 
(17) AMENDMENTS RELATING TO RENEGOTIATION PROVISIONS.— 
(A) Section 6422 is amended by striking paragraph (6) and 
redesignating the succeeding paragraphs accordingly. 
(B) Subparagraph (A) of section 6511(d)(2) is amended by 
striking "; except that" and all that follows down through 
104 STAT. 1388-528 
PUBLIC LAW 101-508—NOV. 5, 1990 
the period at the end of the first sentence and inserting a 
period. 
(C) Section 6515 is amended by striking paragraph (2) and 
redesignating the succeeding paragraphs accordingly. 
(18) AMENDMENT RELATING TO REPEAL OF SECTION 1564.—Para-
graph (5) of section 535(c) is amended by striking "sections 1561 
and 1564" and inserting "section 1561". 
(19) AMENDMENTS RELATED TO REPEAL OF UNIFIED 
CREDIT 
PHASE-IN PROVISIONS.— 
(A) Section 2010 is amended by redesignating subsections 
(c) and (d) as subsections (b) and (c), respectively. 
(B) Section 2505 is amended by redesignating subsections 
(c) and (d) as subsections (b) and (c), respectively. 
(C) Subsection (a) of section 6018 is amended by re-
designating paragraphs (4) and (5) as paragraphs (3) and (4), 
respectively. 
(20) AMENDMENTS RELATED TO REPEAL OF SECTION 6158.— 
(A) Section 6503 is amended by striking subsection (h) and 
redesignating subsections (i), (j), and (k) as subsections (h), 
(i), and (j), respectively. 
(B)Paragraph(2)of section 6601(b) is amended— 
(i) by striking "or 6158(a)" in the material preceding 
subparagraph (A), 
(ii) by striking "or 6158(a), as the case may be" in 
subparagraph (A), and 
(iii) by striking the last sentence. 
(21) AMENDMENTS RELATING TO REPEAL OF SUBCHAPTER E OF 
CHAPTER 64.— 
(A) Section 6405 is amended by striking subsection (d). 
(B) Section 7463 is amended by striking subsection (f). 
(22) AMENDMENTS RELATING TO REPEAL OF CHAPTER 37.— 
(A) Subsection (b) of section 6302 is amended by striking 
"chapter 21" and all that follows down through "chapter 
37," and inserting "chapter 21, 31, 32, or 33, or by section 
4481". 
(B)(i) Section 6418 is hereby repealed. 
(ii) The table of sections for subchapter B of chapter 65 is 
amended by striking the item relating to section 6418. 
(C) Subsection (e) of section 6511 is hereby repealed. 
(D)(i) Section 7240 is hereby repealed. 
(ii) The table of sections for part II of subchapter A of 
chapter 75 is amended by striking the item relating to 
section 7240. 
(E)(i) Subsection (a) of section 7655 is amended by striking 
the semicolon at the end of paragraph (2) and inserting a 
period and by striking paragraph (3). 
(ii) Subsection (b) of section 7655 is amended by striking 
the semicolon at the end of paragraph (2) and inserting a 
period and by striking paragraph (3). 
(23) AMENDMENTS RELATED TO REPEAL OF SECTION 6427(e).— 
(A) Paragraph (1) of section 6427(i) is amended by striking 
"(e),". 
(B) Subparagraph (A) of section 6427(i)(2) is amended to 
read as follows: 
"(A) IN GENERAL.—If $1,000 or more is payable under 
subsections (a), (b), (d), (g), (h), and (q) to any person with 
respect to fuel used (or a qualified diesel powered highway 
PUBLIC LAW 101-508—NOV. 5,1990 
104 STAT. 1388-529 
vehicle purchased) during any of the first 3 quarters of his 
taxable year, a claim may be filed under this section with 
respect to fuel used (or a qualified diesel powered highway 
vehicle purchased), during such quarter." 
(C) Paragraph (2) of section 6427(i) is amended by striking 
subparagraph (B) and redesignating subparagraph (C) as 
subparagraph (B). 
SEC. 11802. MISCELLANEOUS PROVISIONS. 
(a) REPEAL OF SECTION 72(tX2XC).—Subsection (t) of section 72 is 
amended— 
(1) by striking subparagraph (C) of paragraph (2), 
(2) by redesignating subparagraph (D) of paragraph (2) as 
subparagraph (C), and 
(3) by striking "(C), and (D)" in paragraph (3XA) and inserting 
"and(C)". 
(b) REPEAL OF OBSOLETE PROVISIONS IN SECTION 274.— 
(1) Paragraph (2) of section 274(1) is amended to read as 
follows: 
"(2) SKYBOXES, ETC.—In the case of a skybox or other private 
luxury box leased for more than 1 event, the amount edlowable 
£is a deduction under this chapter with respect to such events 
shall not exceed the sum of the face value of non-luxury box 
seat tickets for the seats in such box covered by the lease. For 
purposes of the preceding sentence, 2 or more related leases 
shall be treated as 1 lease." 
(2) Subsection (n) of section 274 is amended— 
(A) in paragraph (2)— 
(i) by striking subparagraph (D) and redesignating 
subparagraphs (E) and (F) as subparagraphs (D) and (E), 
respectively, 
(ii) by striking "described in subparagraph (E)" and 
inserting "described in subparsigraph (D)", and 
(iii) by striking "of subparagraph (F)" and inserting 
"of subparagraph (E)", and 
(B) by striking paragraph (3). 
(c) REPEAL OF SECTION 468(aX2XBXii).—Subparagraph (B) of section 
468(a)(2) is amended to read as follows: 
"(B) INCREASE FOR INTEREST.—A reserve shall be in-
creased each taxable year by an amount equal to the 
amount of interest which would have been earned during 
such taxable year on the opening balance of such reserve 
for such taxable year if such interest were computed— 
"(i) at the Federal short-term rate or rates (deter-
mined under section 1274) in effect, and 
"(ii) by compounding semiannually." 
(d) REPEAL OF OBSOLETE PROVISIONS IN SECTION 556(bXl).— 
(1) Paragraph (1) of section 556(b) is amended by striking the 
last 2 sentences. 
(2) The gimendment made by paragraph (1) shall not apply to 26 USC 556 note, 
any corporation with respect to which an election under the 
second sentence of section 556(bXl) of the Internal Revenue 
Code of 1986 (as in effect before the amendment made by 
paragraph (1)) is in effect unless such corporation elects to have 
such amendment apply and agrees to such adjustments as the 
Secretary of the Treasury or his delegate may require. 
104 STAT. 1388-530 
PUBLIC LAW 101-508—NOV. 5, 1990 
(E) EUMINATION OF UNNECESSARY SECTION RELATING TO JURY 
DUTY PAY REMITTED TO EMPLOYER.— 
(1) Paragraph (13) of section 62(a) is amended to read as 
follows: 
"(13) JURY DUTY PAY REMITTED TO EMPLOYER.—Any deduc-
tion allowable under this chapter by reason of an individual 
remitting any portion of any jury pay to such individual's 
employer in exchange for pa3nnent by the employer of com-
pensation for the period such individual was performing jury 
duty. For purposes of the preceding sentence, the term 'jury 
pay' means any payment received by the individual for the 
discharge of jury duty." 
(2) Part VII of subchapter B of chapter 1 is amended by 
striking out section 220 and redesignating section 221 as section 
220. 
(3) The table of sections for part VII of subchapter B of 
chapter 1 is amended by striking the items relating to sections 
220 and 221 and inserting in lieu thereof the following: 
"Sec. 220. Cross reference." 
(f) OTHER PROVISIONS.— 
(1) Section 541 is amended by striking "(38.5 percent in the 
case of taxable years beginning in 1987)". 
(2) Subsection (e) of section 665 is amended to read as follows: 
"(e) PRECEDING TAXABLE YEAR.—For purposes of this subpart— 
"(1) In the C£ise of a foreign trust created by a United States 
person, the term 'preceding taxable year' does not include any 
taxable year of the trust to which this part does not apply. 
"(2) In the case of a preceding taxable year with respect to 
which a trust qualified, without regard to this subpart, under 
the provisions of subpart B, for purposes of the application of 
this subpart to such trust for such taxable year, such trust shall, 
in accordance with regulations prescribed by the Secretary, be 
treated as a trust to which subpart C applies.' 
(3) Subsection (c) of section 668 is amended to read as follows: 
"(c) INTEREST CHARGE NOT DEDUCTIBLE.—The interest charge 
determined under this section shall not be allowed as a deduction 
for purposes of any tax imposed by this title." 
(4) Paragraph (1) of section 1503(c) is amended by striking the 
last 2 sentences thereof. 
(5) Paragraph (2) of section 2032A(a) is amended to read as 
follows: 
"(2) LIMITATION ON AGGREGATE REDUCTION IN FAIR MARKET 
VALUE.—The aggregate decrease in the value of qualified real 
property taken into account for purposes of this chapter which 
results from the application of paragraph (1) with respect to any 
decedent shall not exceed $750,000.'^ 
Subpart B—Modifications to Specific Provisions 
SEC. 11811. ELIMINATION OF EXPIRED PROVISIONS IN SECTION 172. 
(a) GENERAL RULE.—Subsection (b) of section 172 is gmiended to 
read as follows: 
"(b) NET OPERATING Loss CARRYBACKS AND CARRYOVERS.— 
"(1) YEARS TO WHICH LOSS MAY BE CARRIED.— 
"(A) GENERAL RULE.—Except as otherwise provided in 
this paragraph, a net operating loss for any taxable year— 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-531 
"(i) shall be a net operating loss carryback to each of 
the 3 taxable years preceding the taxable year of such 
loss, and 
"(ii) shall be a net operating loss carryover to each of 
the 15 taxable years following the taxable year of the 
loss. 
"(B) SPECIAL RULES FOR REIT'S.— 
"(i) IN GENERAL.—A net operating loss for a REIT 
year shall not be a net operating loss carryback to any 
taxable year preceding the taxable year of such loss, 
"(ii) SPECIAL RULE.—In the case of any net operating 
loss for a taxable year which is not a REIT year, such 
loss shall not be carried back to any taxable year which 
is a REIT year. 
"(iii) REIT YEAR.—For purposes of this subparagraph, 
the term 'REIT year' means any taxable year for which 
the provisions of part II of subchapter M (relating to 
real estate investment trusts) apply to the taxpayer. 
"(C) SPECIFIED UABIUTY LOSSES.—In the case of a taxpayer 
which has a specified liability loss (as defined in subsection 
(f)) for a taxable year, such specified liability loss shall be a 
net operating loss carryback to each of the 10 taxable years 
preceding the taxable year of such loss. 
"(D) BAD DEBT LOSSES OF COMMERCIAL BANKS.—In the case 
of any b£ink (as defined in section 585(aX2)), the portion of 
the net operating loss for any taxable year beginning after 
December 31, 1986, and before January 1, 1994, which is 
attributable to the deduction allowed under section 166(a) 
shall be a net operating loss carryback to each of the 10 
taxable years preceding the taxable year of the loss and a 
net operating loss carryover to each of the 5 taxable years 
following the taxable year of such loss. 
"(E) EXCESS INTEREST LOSS.— 
"(i) IN GENERAL.—If— 
"(I) there is a corporate equity reduction trans-
action, and 
"(II) an applicable corporation has a corporate 
equity reduction interest loss for any loss limita-
tion year ending after August 2,1989, 
then the corporate equity reduction interest loss shall 
be a net operating loss carryback and carryover to the 
taxable years described in subparagraph (A), except 
that such loss shall not be carried back to a taxable 
year preceding the taxable year in which the corporate 
equity reduction transaction occurs. 
"(ii) Loss UMiTATiON YEAR.—For purposes of clause (i) 
and subsection (m), the term 'loss limitation year' 
means, with respect to any corporate equity reduction 
transaction, the taxable year in which such transaction 
occurs and each of the 2 succeeding taxable years. 
"(iii) 
APPUCABLE 
CORPORATION.—For purposes of 
clause (i), the term 'applicable corporation' means— 
"(I) a C corporation which acquires stock, or 
the stock of which is acquired in a major stock 
acquisition. 
104 STAT. 1388-532 
PUBLIC LAW 101-508—NOV. 5, 1990 
"(11) a C corporation making distributions with 
respect to, or redeeming, its stock in connection 
with an excess distribution, or 
"(III) a C corporation which is a successor of a 
corporation described in subclause (I) or (II), 
"(iv) OTHER DEFINITIONS.— 
"For deHiiitions of terms used in this subparagraph, see subsection (h). 
"(2) AMOUNT OF CARRYBACKS AND CARRYOVERS.—The entire 
amount of the net operating loss for any taxable year (herein-
after in this section referred to as the 'loss year') shall be 
carried to the earliest of the taxable years to which (by reason of 
paragraph (1)) such loss may be carried. The portion of such loss 
which shall be carried to each of the other taxable years shall 
be the excess, if any, of the amount of such loss over the sum of 
the taxable income for each of the prior taxable years to which 
such loss may be carried. For purposes of the preceding sen-
tence, the taxable income for any such prior taxable year shall 
be computed— 
"(A) with the modifications specified in subsection (d) 
other than paragraphs (1), (4), and (5) thereof, and 
"(B) by determining the amount of the net operating loss 
deduction without regard to the net operating loss for the 
loss year or for any taxable year thereafter, 
and the taxable income so computed shall not be considered to 
be less than zero. 
"(3) ELECTION TO WAIVE CARRYBACK.—Any taxpayer entitled 
to a carryback period under paragraph (1) may elect to relin-
quish the entire carryback period with respect to a net operat-
ing loss for any taxable year. Such election shall be made in 
such manner as may be prescribed by the Secretary, and shall 
be made by the due date (including extensions of time) for filing 
the taxpayer's return for the taxable year of the net operating 
loss for which the election is to be in effect. Such election, once 
made for any taxable year, shall be irrevocable for such taxable 
year." 
(b) CONFORMING AMENDMENTS.— 
(1) Section 172 is amended by striking subsections (g), (h), (i), 
and (k), and by redesignating subsections (j), (1), (m), and (n) as 
subsections (f), (g), (h), and (i), respectively. 
(2)(A) Subsection (f) of section 172 (as redesignated by para-
graph (1)) is amended to read as follows: 
"(f) RULES RELATING TO SPECIFIED LIABILITY Loss.—For purposes of 
this section— 
"(1) IN GENERAL.—The term 'specified liability loss' means the 
sum of the following amounts to the extent taken into account 
in computing the net operating loss for the taxable year: 
(A) Any amount allowable as a deduction under section 
162 or 165 which is attributable to— 
"(i) product liability, or 
"(ii) expenses incurred in the investigation or settle-
ment of, or opposition to, claims against the taxpayer 
on account of product liability. 
"(B) Any amount (not described in subparagraph (A)) 
allowable as a deduction under this chapter with respect to 
a liability which arises under a Federal or State law or out 
of any tort of the taxpayer i
f
— 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-533 
"(i) in the case of a liability arising out of a Federal 
or State law, the act (or failure to act) giving rise to 
such liability occurs at legist 3 years before the begin-
ning of the taxable year, or 
"(ii) in the case of a liability arising out of a tort, such 
liability arises out of a series of actions (or failures to 
act) over an extended period of time a substantial 
portion of which occurs at least 3 years before the 
beginning of the taxable year. 
A liability shall not be taken into account under subpara-
graph (B) unless the taxpayer used an accrual method of 
accounting throughout the period or periods during which 
the acts or failures to act giving rise to such liability 
occurred. 
"(2) LIMITATION.—The amount of the specified liability loss for 
any taxable year shall not exceed the amount of the net operat-
ing loss for such taxable year. 
"(3) SPECIAL RULE FOR NUCLEAR POWERPLANTS.—Except as 
provided in regulations prescribed by the Secretary, that por-
tion of a specified liability loss which is attributable to amounts 
incurred in the decommissioning of a nuclear powerplant (or 
any unit thereof) may, for purposes of subsection (bXl)(C), be 
carried back to each of the taxable years during the period— 
"(A) beginning with the tsixable year in which such plant 
(or unit thereof) was placed in service, and 
"(B) ending with the taxable year preceding the loss year. 
"(4) PRODUCT LIABIUTY.—The term 'product liability' means— 
"(A) liability of the taxpayer for damages on account of 
physical injury or emotional harm to individuals, or 
damage to or loss of the use of property, on account of any 
defect in any product which is manufactured, leased, or sold 
by the taxpayer, but only if 
"(B) such injury, harm, or damage arises after the tax-
payer has completed or terminated operations with respect 
to, and has relinquished possession of, such product. 
"(5) COORDINATION WITH SUBSECTION (b) (2).—For purposes of 
appl5dng subsection (bX2), a specified liability loss for any tax-
able year shall be treated as a separate net operating loss for 
such taxable year to be taken into account after the remaining 
portion of the net operating loss for such taxable year. 
"(6) ELECTION.—Any taxpayer entitled to a 10-year carryback 
under subsection (bXlXC) from any loss year may elect to have 
the carryback period with respect to such loss year determined 
without regard to subsection (bXlXC). Such election shall be 
made in such manner as may be prescribed by the Secretary 
and shall be made by the due date (including extensions of time) 
for filing the taxpayer's return for the taxable year of the net 
operating loss. Such election, once made for any taxable year, 
shall be irrevocable for that taxable year." 
(B) The portion of any loss which is attributable to a deferred 
26 USC172 note, 
statutory or tort liability loss (as defined in section 172(k) of the 
Internal Revenue Code of 1986 as in effect on the day before the 
date of the enactment of this Act) may not be carried back to 
any taxable year beginning before January 1,1984, by reason of 
the amendment made by subparagraph (A). 
(3) Paragraph (2) of section 172(g) (as redesignated by para-
graph (1)) is amended to read as follows: 
104 STAT. 1388-534 
PUBLIC LAW 101-508—NOV. 5, 1990 
"(2) COORDINATION WITH SUBSECTION (b) (2).—For purposes of 
subsection (b)(2), the portion of a net operating loss for any 
taxable year which is attributable to the deduction allowed 
under section 166(a) shall be treated in a manner similar to the 
manner in which a specified liability loss is treated." 
(4) Subparagraph (B) of section 172(h)(4) (as redesignated by 
paragraph (1)) is amended to read as follows: 
"(B) COORDINATION WITH SUBSECTION (b)(2).—For pur-
poses of subsection (b)(2) 
"(i) a corporate equity reduction interest loss shall be 
treated in a manner similar to the manner in which a 
specified liability loss is treated, and 
"(ii) in determining the net operating loss deduction 
for any prior taxable year referred to in the 3rd sen-
tence of subsection (b)(2), the portion of any net operat-
ing loss which may not be carried to such taxable year 
under subsection (b)(1)(E) shall not be taken into ac-
count." 
26 use 172 note. 
(c) EFFECTIVE DATE.—The amendments made by this section shall 
apply to net operating losses for taxable years beginning after 
December 31,1990. 
SEC. 11812. ELIMINATION OF OBSOLETE PROVISIONS IN SECTION 167. 
(a) GENERAL RULE.—Section 167 is amended— 
(1) by striking subsections (b), (c), (d), (e), (f), (j), (k), (1), (m), (p), 
and (q) and by redesignating subsections (g), (h), (r),'and (s) as 
subsections (c), (d), (e), and (f), respectively, and 
(2) by inserting after subsection (a) the following new sub-
section: 
"(b) CROSS REFERENCE.— 
"For determination of depreciation deduction in case of property to 
which section 168 applies, see section 168." 
(b) CONFORMING AMENDMENTS.— 
(1) Subsection (e) of section 167 (as redesignated by subsection 
(a)) is amended by striking "(h)" each place it appears in 
paragraphs (3)(B) and (4)(B) and inserting "(d)". 
(2)(A) Subparagraph (A) of section 168(e)(2) is amended to read 
as follows: 
"(A) RESIDENTIAL RENTAL PROPERTY.— 
"(i) RESIDENTIAL RENTAL PROPERTY.—The term 'resi-
dential rental property' means any building or struc-
ture if 80 percent or more of the gross rental income 
from such building or structure for the taxable year is 
rental income from dwelling units, 
"(ii) DEFINITIONS.—For purposes of clause (i)— 
"(I) the term 'dwelling unit' means a house or 
apartment used to provide living accommodations 
in a building or structure, but does not include a 
unit in a hotel, motel, or other establishment more 
than one-half of the units in which are used on a 
transient basis, and 
"(II) if any portion of the building or structure is 
occupied by the taxpayer, the gross rental income 
from such building or structure shall include the 
rental value of the portion so occupied." 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-535 
(B) Paragraph (10) of section 168(i) is amended to read as 
follows: 
"(10) PuBUC UTiUTY PROPERTY.—The term 'public utility prop-
erty' means property used predominantly in the trade or busi-
ness of the furnishing or sale of— 
"(A) electrical energy, water, or sewage disposal services, 
"(B) gas or steam through a local distribution system, 
"(C) telephone services, or other communication services 
if furnished or sold by the Communications Satellite Cor-
poration for purposes authorized by the Communications 
Satellite Act of 1962 (47 U.S.C. 701), or 
"(D) transportation of gas or steam by pipeline, 
if the rates for such furnishing or sale, as the case may be, have 
been established or approved by a State or political subdivision 
thereof, by any agency or instrumentality of the United States, 
or by a public service or public utility commission or other 
similar body of any State or political subdivision thereof." 
(C) Paragraph (2) of section 168(f) is amended by striking 
"section 167(1)(8)(A)" and inserting "subsection (iXlO)". 
(D) Paragraph (1) of section 168(i) is amended by adding at the 
end thereof the following new sentence: "The reference in this 
paragraph to subsection (m) of section 167 shall be treated as a 
reference to such subsection as in effect on the day before the 
date of the enactment of the Revenue Reconciliation Act of 
1990." 
(E) Clause (ii) of section 168(i)(9)(A) is amended by striking 
"(determined without regard to section 167(1))". 
(3) Sections 42(d)(2)(D)(iXI) and 42(d)(5XB) are each amended 
by striking "section 167(k)" and inserting "section 167(k) (as in 
effect on the day before the date of the enactment oif the 
Revenue Reconciliation Act of 1990)". 
(4) Subparagraph (D) of section 56(a)(1) is 
amended by 
striking "section 167(1X3XA)" and inserting "section 168(iX10)'\ 
(5) Paragraph (2) of section 312(k) is amended to read as 
follows: 
"(2) EXCEPTION.—If for any taxable year a method of deprecia-
tion w£is used by the taxpayer which the Secretary has deter-
mined results in a reasonable allowance under section 167(a) 
and which is the unit-of-production method or other method not 
expressed in a term of years, then the adjustment to earnings 
and profits for depreciation for such year shall be determined 
under the method so used (in lieu of the straight line method)." 
(6)(A) Paragraph (6) of section 381(c) is amended by striking 
"subsections (b), (J), and (k) of section 167" and inserting "sec-
tions 167 and 168 . 
(B) Subsection (c) of section 381 is amended by striking para-
graph (24) and redesignating paragraphs (25) and (26) as para-
graphs (24) and (25), respectively. 
(7) Subparagraph (C) of section 404(aXl) is amended by strik-
ing "section 167(lX3XAXiii)" and inserting "section 168(iX10XC)". 
(8) Clause (i) of section 460(e)(6XA) is amended by striking 
"section 167(k)" and inserting "section 168(eX2XA)(ii)". 
(9) Subsection (e) of section 642 is amended by striking 
"167(h)" and inserting "167(d)". 
(10) Paragraph (2) of section 1016(a) is amended by striking 
"under section 167(bXl)" and inserting "under the straight line 
method". 
104 STAT. 1388-536 
PUBLIC LAW 101-508—NOV. 5, 1990 
(11) Subsection (a) of section 1250 is amended by redesignating 
paragraph (4) as paragraph (5) and by inserting after paragraph 
(3) the following new paragraph: 
"(4) SPECIAL RULE.—For purposes of this subsection, any ref-
erence to section 167(k) or 1670')(2)(B) shall be treated as a 
reference to such section as in effect on the day before the date 
of the enactment of the Revenue Reconciliation Act of 1990." 
(12) Paragraph (4) of section 1250(b) is amended by striking 
"167(k)" each place it appears and inserting "167(k) (as in effect 
on the day before the date of the enactment of the Revenue 
Reconciliation Act of 1990)". 
(13) Subparagraph (B) of section 7701(eX5) is amended by 
inserting before the period at the end thereof the following: "(as 
in effect on the day before the date of the enactment of the 
Revenue Reconcilation Act of 1990)". 
26 u s e 42 note. 
(c) EFFECTIVE D A T E . — 
(1) IN GENERAL.—Except as provided in paragraph (2), the 
amendments made by this section shall apply to property placed 
in service after the date of the enactment of this Act. 
(2) EXCEPTION.—The amendments made by this section shall 
not apply to any property to which section 168 of the Internal 
Revenue Code of 1986 does not apply by reason of subsection 
(f)(5) thereof. 
(3) EXCEPTION FOR PREVIOUSLY GRANDFATHER EXPENDITURES.— 
The amendments made by this section shall not apply to re-
habilitation expenditures described in section 252(f)(5) of the 
Tax Reform Act of 1986 (as added by section 1002(1)(31) of the 
Technical and Miscellaneous Revenue Act of 1988). 
SEC. 11813. ELIMINATION OF EXPIRED OR OBSOLETE INVESTMENT TAX 
CREDIT PROVISIONS. 
(a) GENERAL RULE.—Subpart E of part IV of subchapter A of 
chapter 1 is amended to read as follows: 
"Subpart E—Rules for Computing Investment Credit 
"Sec. 46. Amount of credit. 
"Sec. 47. Rehabilitation credit. 
"Sec. 48. Energy credit; reforestation credit. 
"Sec. 49. At-risk rules. 
"Sec. 50. Other special rules. 
"SEC. 46. AMOUNT OF CREDIT. 
^^ For purposes of section 38, the amount of the investment credit 
determined under this section for any taxable year shall be the sum 
of-
"(1) the rehabilitation credit, 
"(2) the energy credit, and 
"(3) the reforestation credit. 
"SEC. 47. REHABILITATION CREDIT. 
"(a) GENERAL RULE.—For purposes of section 46, the rehabilitation 
credit for any taxable year is the sum of— 
"(1) 10 percent of the qualified rehabilitation expenditures 
with respect to any qualified rehabilitated building other than a 
certified historic structure, and 
"(2) 20 percent of the qualified rehabilitation expenditures 
with respect to any certified historic structure. 
** So in original. Probably should be " "For". 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-537 
"(b) WHEN EXPENDITURES TAKEN INTO ACCOUNT.— 
"(1) IN GENERAL.—Qualified rehabilitation expenditures with 
respect to any qualified rehabilitated building shall be taken 
into account for the teixable year in which such qualified re-
habilitated building is placed in service. 
"(2) COORDINATION WITH SUBSECTION (d).—The amount which 
would (but for this paragraph) be taken into account under 
paragraph (1) with respect to any qualified rehabilitated build-
ing shall be reduced (but not below zero) by any amount of 
qualified rehabilitation expenditures taken into account under 
subsection (d) by the taxpayer or a predecessor of the taxpayer 
(or, in the case of a sale and leaseback described in section 
50(a)(2)(C), by the lessee), to the extent any amount so taken into 
account has not been required to be recaptured under section 
50(a). 
"(c) DEFINITIONS.—For purposes of this section— 
"(1) OUAUFIED REHABILITATED BUILDING.— 
(A) IN GENERAL.—The term 'qualified 
rehabilitated 
building' means any building (and its structural compo-
nents) if— 
"(i) such building has been substantially rehabili-
tated, 
"(ii) such building was placed in service before the 
beginning of the rehabilitation, 
'(iii) in the case of any building other than a certified 
historic structure, in the rehabilitation process— 
"(I) 50 percent or more of the existing external 
walls of such building are retained in place as 
external walls, 
"(II) 75 percent or more of the existing external 
walls of such building are retained in place as 
internal or external walls, and 
"(III) 75 percent or more of the existing internal 
structural framework of such building is retained 
in place, and 
"(iv) depreciation (or amortization in lieu of deprecia-
tion) is allowable with respect to such building. 
"(B) BUILDING MUST BE FIRST PLACED IN SERVICE BEFORE 
1936.—In the case of a building other than a certified 
historic structure, a building shall not be a qualified re-
habilitated building unless the building was first placed in 
service before 1936. 
"(C) SUBSTANTIALLY REHABILITATED DEFINED.— 
"(i) IN GENERAL.—For purposes of subparagraph 
(A)(i), a building shall be treated as having been 
substantially rehabilitated only if the qualified re-
habilitation expenditures during the 24-month period 
selected by the taxpayer (at the time and in the 
manner prescribed by regulation) and ending with or 
within the taxable year exceed the greater of— 
"(I) the adjusted basis of such building (and its 
structural components), or 
"(II) $5,000. 
The adjusted basis of the building (and its structural 
components) shall be determined as Of the beginning of 
the 1st day of such 24-month period, or of the holding 
period of the building, whichever is later. For purposes 
104 STAT. 1388-538 
PUBLIC LAW 101-508—NOV. 5, 1990 
of the preceding sentence, the determination of the 
beginning of the holding period shall be made without 
regard to any reconstruction by the taxpayer in connec-
tion with the rehabilitation. 
"(ii) SPECIAL RULE FOR PHASED REHABILITATION.—In 
the case of any rehabilitation which may reasonably be 
expected to be completed in phases set forth in ar-
chitectural plans and specifications completed before 
the rehabilitation begins, clause (i) shall be applied bv 
substituting '60-month period' for '24-month period. 
"(iii) LESSEES.—The Secretary shall prescribe by 
regulation rules for applying this subparagraph to 
lessees. 
"(D) 
RECONSTRUCTION.—Rehabilitation 
includes 
re-
construction. 
"(2) QuAUFiED REHABILITATION EXPENDITURE DEFINED.— 
'(A) IN GENERAL.—The term 'qualified rehabilitation 
expenditure' means any amount properly chargeable to 
capital account— 
"(i) for property for which depreciation is allowable 
under section 168 and which is— 
"(I) nonresidential real property, 
"(II) residential rental property, 
"(III) real property which has a class life of more 
than 12.5 years, or 
"(IV) an addition or improvement to property 
described in subclause (I), (II), or (III), and 
"(ii) in connection with the rehabilitation of a quali-
fied rehabilitated building. 
"(B) CERTAIN EXPENDITURES NOT INCLUDED.—The term 
'qualified rehabilitation expenditure' does not include— 
"(i) STRAIGHT UNE DEPRECIATION MUST BE USED.—Any 
expenditure with respect to which the tsixpayer does 
not use the straight line method over a recovery period 
determined under subsection (c) or (g) of section 168. 
The preceding sentence shall not apply to any expendi-
ture to the extent the alternative depreciation system 
of section 168(g) applies to such expenditure by reason 
of subparagraph (B) or (C) of section 168(gXl). 
"(ii) COST OF ACQUISITION.—The cost of acquiring any 
building or interest therein. 
"(iii) ENLARGEMENTS.—Any expenditure attributeble 
to the enlargement of an existing building. 
"(iv) 
CERTIFIED 
HISTORIC 
STRUCTURE, 
ETC.—Any 
expenditure attributeble to the rehabilitation of a cer-
tified historic structure or a building in a registered 
historic district, unless the rehabilitation is a certified 
rehabilitation (within the meaning of subparagraph 
(O). The preceding sentence shall not apply to a build-
ing in a registered historic district if— 
"(I) such building was not a certified historic 
structure, 
"(II) the Secretory of the Interior certified to the 
Secretary that such building is not of historic 
significance to the district, and 
"(III) if the certification referred to in subclause 
(II) occurs after the beginning of the rehabilitetion 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-539 
of such building, the taxpayer certifies to the Sec-
retary that, at the beginning of such rehabilitation, 
he in good faith was not aware of the requirements 
of subclause (II). 
"(v) TAX-EXEMPT USE PROPERTY.— 
"(I) IN GENERAL.—Any expenditure in connection 
with the rehabilitation of a building which is 
allocable to the portion of such property which is 
(or may reasonably be expected to be) tax-exempt 
use property (within the meaning of section 168(h)). 
"(II) CLAUSE NOT TO APPLY FOR PURPOSES OF PARA-
GRAPH (i)(c).—This clause shall not apply for 
purposes of determining under paragraph (1)(C) 
whether a building has been substantially rehabili-
tated. 
"(vi) EXPENDITURES OF LESSEE.—Any expenditure of a 
lessee of a building if, on the date the rehabilitation is 
completed, the remaining term of the lease (determined 
without regard to any renewal periods) is less than the 
recovery period determined under section 168(c). 
"(C) CERTIFIED REHABIUTATION.—For purposes of subpara-
graph (B), the term 'certified rehabilitation' means any 
rehabilitation of a certified historic structure which the 
Secretary of the Interior has certified to the Secretary as 
being consistent with the historic character of such prop-
erty or the district in which such property is located. 
(D) NONRESIDENTIAL REAL PROPERTY; RESIDENTIAL RENTAL 
PROPERTY; CLASS LIFE.—For purposes of subparagraph (A), 
the terms 'nonresidential real property,' 'residential rental 
property,' and 'class life' have the respective meanings 
given such terms by section 168. 
"(3) CERTIFIED HISTORIC STRUCTURE DEFINED.— 
"(A) IN GENERAL.—The term 'certified historic structure' 
means any building (and its structural 
components) 
which— 
"(i) is listed in the National Register, or 
"(ii) is located in a registered historic district and is 
certified by the Secretary of the Interior to the Sec-
retary as being of historic significance to the district. 
"(B) REGISTERED HISTORIC DISTRICT.—The term 'registered 
* 
historic district' means— 
"(i) any district listed in the National Register, and 
"(ii) any district— 
"(I) which is designated under a statute of the 
appropriate State or local government, if such stat-
ute is certified by the Secretary of the Interior to 
the Secretary as containing criteria which will 
substantially achieve the purpose of preserving 
and rehabilitating buildings of historic significance 
to the district, and 
"(II) which is certified by the Secretary of the 
Interior to the Secretary as meeting substantially 
all of the requirements for the listing of districts in 
the National Register. 
'(d) PROGRESS EXPENDITURES.— 
"(1) IN GENERAL.—In the case of any building to which this 
subsection applies, except as provided in paragraph (3)— 
104 STAT. 1388-540 
PUBLIC LAW 101-508—NOV. 5, 1990 
"(A) if such building is self-rehabilitated property, any 
quali^ed rehabilitation expenditure with respect to such 
building shall be taken into account for the taxable year for 
which such expenditure is properly chargeable to capital 
account with respect to such building, and 
"(B) if such building is not self-rehabilitated property, 
any qualified rehabilitation expenditure with respect to 
such building shall be taken into account for the taxable 
year in which paid. 
"(2) PROPERTY TO WHICH SUBSECTION APPUES.— 
"(A) IN GENERAL.—This subsection shall apply to any 
building which is being rehabilitated by or for the taxpayer 
if— 
"(i) the normal rehabilitation period for such build-
ing is 2 years or more, and 
'(ii) it is reasonable to expect that such building will 
be a qualified rehabilitated building in the hands of the 
taxpayer when it is placed in service. 
Clauses (i) and (ii) shall be applied on the basis of facts 
known as of the close of the taxable year of the taxpayer in 
which the rehabilitation begins (or, if later, at the close of 
the first taxable year to which an election under this 
subsection applies). 
"(B) NORMAL REHABILITATION PERIOD.—For purposes of 
subparagraph (A), the term 'normal rehabilitation period' 
means the period reasonably expected to be required for the 
rehabilitation of the building— 
"(i) beginning with the date on which physical work 
on the rehabilitation begins (or, if later, the first day of 
the first taxable year to which an election under this 
subsection applies), and 
"(ii) ending on the date on which it is expected that 
the property will be available for placing in service. 
"(3) SPECIAL RULES FOR APPLYING PARAGRAPH (i).—For pur-
poses of paragraph (1)— 
"(A) COMPONENT PARTS, ETC.—Property which is to be a 
component part of, or is otherwise to be included in, any 
building to which this subsection applies shall be taken into 
account— 
'• 
"(i) at a time not earlier than the time at which it 
becomes irrevocably devoted to use in the building, and 
"(ii) as if (at the time referred to in clause (i)) the 
taxpayer had expended an amount equal to that por-
tion of the cost to the taxpayer of such component or 
other property which, for purposes of this subpart, is 
properly chargeable (during such taxable year) to cap-
ital account with respect to such building. 
"(B) CERTAIN BORROWING DISREGARDED.—Any amount 
borrowed directly or indirectly by the taxpayer from the 
person rehabilitating the property for him shall not be 
treated as an amount expended for such rehabilitation. 
"(C) 
LIMITATION FOR BUILDINGS WHICH ARE NOT SELF-
REHABILITATED.— 
"(i) IN GENERAL.—In the case of a building which is 
not self-rehabilitated, the amount taken into account 
under paragraph (IXB) for any taxable year shall not 
exceed the amount which represents the portion of the 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-541 
overall cost to the taxpayer of the rehabilitation which 
is properly attributable to the portion of the rehabilita-
tion which is completed during such taxable year, 
"(ii) CARRY-OVER OF CERTAIN AMOUNTS.—In the case of 
a building which is not a self-rehabilitated building, if 
for the taxable year— 
"(I) the amount which (but for clause (i)) would 
have been taken into account under paragraph 
(1)(B) exceeds the limitation of clause (i), then the 
amount of such excess shall be taken into account 
under parsigraph (1)(B) for the succeeding taxable 
year, or 
"(II) the limitation of clause (i) exceeds the 
amount taken into account under paragraph (IXB), 
then the amount of such excess shall increase the 
limitation of clause (i) for the succeeding taxable 
year. 
"(D) 
DETERMINATION OF PERCENTAGE OF COMPLETION.— 
The determination under subparagraph (C)(i) of the portion 
of the overall cost to the taxpayer of the rehabilitation 
which is properly attributable to rehabilitation completed 
during any taxable year shall be made, under regulations 
prescribed by the Secretary, on the basis of engineering or 
architectural estimates or on the basis of cost accounting 
records. Unless the taxpayer establishes otherwise by clear 
and convincing evidence, the rehabilitation shall be deemed 
to be completed not more rapidly than ratably over the 
normal rehabilitation period. 
"(E) No PROGRESS EXPENDITURES FOR CERTAIN PRIOR PERI-
ODS.—No qualified rehabilitation expenditures shall be 
taken into account under this subsection for any period 
before the first day of the first taxable year to which an 
election under this subsection applies. 
"(F) No PROGRESS EXPENDITURES FOR PROPERTY FOR Y
E
A
R IT 
IS PLACED IN SERVICE, ETC.—In the case of any building, no 
qualified rehabilitation expenditures shall be taken into 
account under this subsection for the earlier of— 
"(i) the taxable year in which the building is placed 
in service, or 
"(ii) the first taxable year for which recapture is 
required under section 50(aX2) with respect to such 
property, 
or for any taxable year thereafter. 
"(4) SELF-REHABILITATED BUILDING.—For purposes of this 
subsection, the term 'self-rehabilitated building' means any 
building if it is reasonable to believe that more than half of the 
qualified rehabilitation expenditures for such building will be 
made directly by the taxpayer. 
"(5) ELECTION.—This subsection shall apply to any taxpayer 
only if such taxpayer has made an election under this para-
graph. Such an election shall apply to the taxable year for 
which made and all subsequent taxable years. Such £in election, 
once made, may be revoked only with the consent of the 
Secretary. 
•SEC. 48. ENERGY CREDIT; REFORESTATION CREDIT. 
"(a) ENERGY CREDIT.— 
104 STAT. 1388-542 
PUBLIC LAW 101-508—NOV. 5, 1990 
"(1) IN GENERAL.—For purposes of section 46, the energy 
credit for any taxable year is the energy percentage of the basis 
of each energy property placed in service during such taxable 
year. 
"(2) ENERGY PERCENTAGE.— 
"(A) IN GENERAL.—Except as provided in subparagraph 
(B), the energy percentage is 10 percent. 
"(B) TERMINATION.—Effective with respect to periods 
after December 31, 1991, the energy percentage is zero. For 
purposes of the preceding sentence, rules similar to the 
rules of section 48(m) (as in effect on the day before the date 
of the enactment of the Revenue Reconciliation Act of 1990) 
shall apply. 
"(C) 
COORDINATION WITH REHABILITATION CREDIT.—The 
energy percentage shall not apply to that portion of the 
basis of any property which is attributable to qualified 
rehabilitation expenditures. 
"(3) ENERGY PROPERTY,—For purposes of this subpart, the 
term 'energy property' means any property— 
"(A) which is— 
"(i) equipment which uses solar energy to generate 
electricity, to heat or cool (or provide hot water for use 
in) a structure, or to provide solar process heat, or 
"(ii) equipment used to produce, distribute, or use 
energy derived from a geothermal deposit (within the 
meaning of section 613(eX2)), but only, in the case of 
electricity generated by geothermal power, up to (but 
not including) the electrical transmission stage, 
"(BXi) the construction, reconstruction, or erection of 
which is completed by the taxpayer, or 
"(ii) which is acquired by the taxpayer if the original use 
of such property commences with the taxpayer, 
"(C) with respect to which depreciation (or amortization 
in lieu of depreciation) is allowable, and 
"(D) which meets the performance and quality standards 
(if any) which— 
"(i) have been prescribed by the Secretary by regula-
tions (after consultation with the Secretary of Energy), 
and 
"(ii) are in effect at the time of the acquisition of the 
property. 
The term 'energy property' shall not include any property 
which is public utility property (as defined in section 46(fK5) as 
in effect on the day before the date of the enactment of the 
Revenue Reconciliation Act of 1990). 
"(4) 
SPECIAL RULE FOR PROPERTY FINANCED BY SUBSIDIZED 
ENERGY FINANCING OR INDUSTRIAL DEVELOPMENT BONDS.— 
"(A) REDUCTION OF BASIS.—For purposes of applying the 
energy percentage to any property, if such property is 
financed in whole or in part by— 
"(i) subsidized energy financing, or 
"(ii) the proceeds of a private activity bond (within 
the meaning of section 141) the interest on which is 
exempt from tax under section 103, 
the amount taken into account as the basis of such property 
shall not exceed the amount which (but for this subpara-
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-543 
graph) would be so taken into account multiplied by the 
fraction determined under subpar£igraph (B). 
"(B) DETERMINATION OF FRACTION.—For purposes of 
subparagraph (A), the fraction determined under this 
subparagraph is 1 reduced by a fraction— 
"(i) the numerator of which is that portion of the 
basis of the property which is allocable to such financ-
ing or proceeds, and 
(ii) the denominator of which is the basis of the 
property. 
"(C) SUBSIDIZED ENERGY FINANCING.—For purposes of 
subparagraph (A), the term 'subsidized energy financing' 
means financing provided under a Federal, State, or local 
program a principal purpose of which is to provide sub-
sidized financing for projects designed to conserve or 
produce energy. 
"(5) 
CERTAIN 
PROGRESS 
EXPENDITURE 
RULES 
MADE AP-
PLICABLE.—Rules similar to the rules of subsections (cX4) and (d) 
of section 46 (as in effect on the day before the date of the 
enactment of the Revenue Reconciliation Act of 1990) shall 
apply for purposes of this subsection. 
"(b) REFORESTATION CREDIT.— 
"(1) IN GENERAL.—For purposes of section 46, the reforest-
ation credit for any taxable year is 10 percent of the portion of 
the amortizable basis of any qualified timber property which 
was acquired during such taxable year and which is taken into 
account under section 194 (after the application of section 
194(bXl)). 
"(2) DEFINITIONS.—For purposes of this subpart, the terms 
'amortizable basis' and 'qualified timber property' have the 
respective meanings given to such terms by section 194. 
'SEC. 49. AT-RISK RULES. 
"(a) GENERAL RULE.— 
"(1) CERTAIN NONRECOURSE FINANCING EXCLUDED FROM CREDIT 
BASE,— 
"(A) LIMITATION.—The credit base of any property to 
which this paragraph applies shall be reduced by the non-
qualified nonrecourse financing with respect to such credit 
base (as of the close of the taxable year in which placed in 
service). 
"(B) PROPERTY TO WHICH PARAGRAPH APPUES.—This para-
graph applies to any property which— 
"(i) is placed in service during the taxable year by a 
taxpayer described in section 465(aXl), and 
"(ii) is used in connection with an activity with re-
spect to which any loss is subject to limitation under 
section 465. 
"(C) CREDIT BASE DEFINED.—For purposes of this para-
graph, the term 'credit base' means— 
"(i) the portion of the basis of any qualified rehabili-
tated building attributable to qualified rehabilitation 
expenditures, 
'(ii) the basis of any energy property, and 
"(iii) the amortizable basis of any qualified timber 
property. 
"(D) NONQUALIFIED NONRECOURSE FINANCING.— 
104 STAT. 1388-544 
PUBLIC LAW 101-508—NOV. 5, 1990 
"(i) IN GENERAL.—For purposes of this paragraph and 
paragraph (2), the term 'nonqualified 
nonrecourse 
financing' means any nonrecourse financing which is 
not qualified commercial financing. 
"(ii) QUAUFIED COMMERCIAL FINANCING.—For pur-
poses of this paragraph, the term 'qualified commercial 
financing' means any financing with respect to any 
property i
f
— 
"(I) such property is acquired by the taxpayer 
from a person who is not a related person, 
"(II) the amount of the nonrecourse financing 
with respect to such property does not exceed 80 
percent of the credit base of such property, and 
"(III) such financing is borrowed from a qualified 
person or represents a loan from any Federal, 
State, or local government or instrumentality 
thereof, or is guaranteed by any Federal, State, or 
local government. 
Such term shall not include any convertible debt. 
"(iii) NONRECOURSE FINANCING.—For purposes of this 
subparagraph, the term 'nonrecourse financing* in-
cludes— 
"(I) any amount with respect to which the tax-
payer is protected against loss through guarantees, 
stop-loss agreements, or other similar arrange-
ments, and 
"(II) except to the extent provided in regulations, 
any amount borrowed from a person who has an 
interest (other than as a creditor) in the activity in 
which the property is used or from a related person 
to a person (other than the taxpayer) having such 
an interest. 
In the case of amounts borrowed by a corporation from 
a shareholder, subclause (II) shall not apply to an 
interest as a share-holder. 
"(iv) QUALIFIED PERSON.—For purposes of this para-
graph, the term 'qualified person* means any person 
which is actively and regularly engaged in the business 
of lending money and which is not— 
"(I) a related person with respect to the tax-
payer, 
"(II) a person from which the taxpayer acquired 
the property (or a related person to such person), 
or 
"(III) a person who receives a fee with respect to 
the taxpayer's investment in the property (or a 
related person to such person). 
"(v) RELATED PERSON.—For purposes of this subpara-
graph, the term 'related person' has the meaning given 
such term by section 465(bX3XC). Except as otherwise 
provided in regulations prescribed by the Secretary, the 
determination of whether a person is a related person 
shsdl be made as of the close of the taxable year in 
which the property is placed in service. 
"(E) APPUCATION TO PARTNERSHIPS AND S CORPORATIONS.— 
For purposes of this paragraph and paragraph (2)— 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-545 
"(i) IN GENERAL.—Except as otherwise provided in 
this subparagraph, in the case of any partnership or S 
corporation, the determination of whether a partner's 
or shareholder's allocable share of any financing is 
nonqualified nonrecourse financing shall be made at 
the partner or shareholder level. 
"(ii) SPECIAL RULE FOR CERTAIN RECOURSE FINANCING 
OF s CORPORATION.—A shareholder of an S corporation 
shall be treated as liable for his allocable share of any 
financing provided by a qualified person to such cor-
poration i
f
— 
"(I) such financing is recourse financing (deter-
mined at the corporate level), and 
"(II) such financing is provided with respect to 
qualified business property of such corporation. 
"(iii) QUALIFIED BUSINESS PROPERTY.—For purposes of 
clause (ii), the term'qualified business property means 
any property if— 
"(I) such property is used by the corporation in 
the active conduct of a trade or business, 
"(II) during the entire 12-month period ending on 
the last day of the taxable year, such corporation 
had at least 3 full-time employees who were not 
owner-employees 
(as 
defined 
in 
section 
465(cX7)(E)(i)) and substantially all the services of 
whom were services directly related to such trade 
or business, and 
"(III) during the entire 12-month period ending 
on the last day of such taxable year, such corpora-
tion had at least 1 full-time employee substantially 
all of the services of whom were in the active 
management of the trade or business, 
"(iv) 
DETERMINATION OF ALLOCABLE SHARE.—The 
determination of any partner's or shareholder's alloca-
ble share of any financing shall be made in the same 
manner as the credit allowable by section 38 with 
respect to such property. 
"(F) SPECIAL RULES FOR ENERGY PROPERTY.—Rules similar 
to the rules of subparagraph (F) of section 46(cX8) (as in 
effect on the day before the date of the enactment of the 
Revenue Reconciliation Act of 1990) shall apply for pur-
poses of this paragraph. 
"(2) SUBSEQUENT DECREASES IN NONQUAUFIED NONRECOURSE 
FINANCING WITH RESPECT TO THE PROPERTY.— 
"(A) IN GENERAL.—If, at the close of a taxable year 
following the taxable year in which the property was placed 
, in service, there is a net decrease in the amount of non-
qualified nonrecourse financing with respect to such prop-
erty, such net decrease shall be taken into account as an 
increase in the credit base for such property in accordance 
with subparagraph (C). 
"(B) CERTAIN TRANSACTIONS NOT TAKEN INTO ACCOUNT.— 
For purposes of this paragraph, nonqualified nonrecourse 
financing shall not be treated as decreased through the 
surrender or other use of property financed by nonqualified 
nonrecourse financing. 
"(C) MANNER IN WHICH TAKEN INTO ACCOUNT.— 
104 STAT. 1388-546 
PUBLIC LAW 101-508—NOV. 5, 1990 
"(i) CREDIT DETERMINED BY REFERENCE TO TAXABLE 
YEAR PROPERTY PLACED IN SERVICE.—For pUrpoSeS 
o f 
determining the amount of credit allowable under sec-
tion 38 and the amount of credit subject to the early 
disposition or cessation rules under section 50(a), any 
increase in a taxpayer's credit base for any property by 
reason of this paragraph shall be taken into account as 
if it were property placed in service by the taxpayer in 
the taxable year in which the property referred to in 
subparagraph (A) was first placed in service. 
"(ii) CREDIT ALLOWED FOR YEAR OF DECREASE IN NON-
QUALIFIED NONRECOURSE FINANCING.—Any Credit allow-
able under this subpart for any increase in qualified 
investment by reason of this paragraph shall be treated 
as earned during the taxable year of the decrease in the 
amount of nonqualified nonrecourse financing. 
"(b) INCREASES IN NONQUAUFIED NONRECOURSE FINANCING.— 
"(1) IN GENERAL,—If, as of the close of the taxable year, there 
is a net increase with respect to the taxpayer in the amount of 
nonqualified nonrecourse financing (within the meaning of 
subsection (aXl)) with respect to any property to which subsec-
tion (a)(1) applied, then the tax under this chapter for such 
taxable year shall be increased by an amount equal to the 
aggregate decrease in credits allowed under section 38 for all 
prior taxable years which would have resulted from reducing 
the credit base (as defined in subsection (aXlXC)) taken into 
account with respect to such property by the amount of such net 
increase. For purposes of determining the amount of credit 
subject to the early disposition or cessation rules of section 50(a), 
the net increase in the amount of the nonqualified nonrecourse 
financing with respect to the property shall be treated as reduc-
ing the property's credit base in the year in which the property 
was first placed in service. 
"(2) TRANSFERS OF DEBT MORE THAN i YEAR AFTER INITIAL 
BORROWING 
NOT TREATED 
AS INCREASING 
NONQUALIFIED 
NONRECOURSE FINANCING.—For purposes of paragraph (1), the 
amount of nonqualified nonrecourse financing (within the 
meaning of subsection (a)(1)(D)) with respect to the taxpayer 
shall not be treated as increased by reason of a transfer of (or 
agreement to transfer) any evidence of any indebtedness if such 
transfer occurs (or such agreement is entered into) more than 1 
year after the date such indebtedness wsis incurred. 
"(3) SPECIAL RULES FOR CERTAIN ENERGY PROPERTY.—Rules 
similar to the rules of section 47(d)(3) (as in effect on the day 
before the date of the enactment of the Revenue Reconciliation 
Act of 1990) shall apply for purposes of this subsection. 
"(4) SPECIAL RULE.—Any increase in tax under paragraph (1) 
shall not be treated as tax imposed by this chapter for purposes 
of determining the amount of any credit allowable under sub-
part A, B, D, or G. 
"SEC. 50. OTHER SPECIAL RULES. 
"(a) RECAPTURE IN CASE OF DISPOSITIONS, ETC.—Under regulations 
prescribed by the Secretary— 
"(1) EARLY DISPOSITION, ETC.— 
"(A) GENERAL RULE.—If, during any taxable year, invest-
ment credit property is disposed of, or otherwise ceases to 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-547 
be investment credit property with respect to the taxpayer, 
before the close of the recapture period, then the tax under 
this chapter for such taxable year shall be increased by the 
recapture percentage of the aggregate decresise in the cred-
its allowed under section 38 for all prior taxable years 
which would have resulted solely from reducing to zero any 
credit determined under this subpart with respect to such 
property. 
"(B) RECAPTURE PERCENTAGE.—For purposes of subpara-
graph (A), the recapture percentage shall be determined in 
accordance with the following table: 
"If the property ceases to be 
The recapture 
investment credit property within— 
percentage is: 
(i) One full year after placed in service 
100 
(ii) One full year after the close of the period described 
in clause (i) 
80 
(iii) One full year after the close of the period de-
scribed in clause (ii) 
60 
(iv) One full year after the close of the period de-
scribed in clause (iii) 
40 
(v) One full year after the close of the period described 
in clause (iv) 
20 
"(2) 
PROPERTY CEASES TO QUAUFY FOR PROGRESS EXPENDI-
TURES.— 
"(A) IN GENERAL.—If during any taxable year any build-
ing to which section 47(d) applied ceases (by reason of sale 
or other disposition, cancellation or abandonment of con-
tract, or otherwise) to be, with respect to the taxpayer, 
property which, when placed in service, will be a qualified 
rehabilitated building, then the tax under this chapter for 
such taxable year shall be increased by an amount equal to 
the aggregate decrease in the credits allowed under section 
38 for all prior taxable years which would have resulted 
solely from reducing to zero the credit determined under 
this subpart with respect to such building. 
"(B) CERTAIN EXCESS CREDIT RECAPTURED.—Any amount 
which would have been applied as a reduction under para-
graph (2) of section 47(b) but for the fact that a reduction 
under such paragraph cannot reduce the amount taken into 
account under section 47(b)(1) below zero shall be treated £is 
an amount required to be recaptured under subparagraph 
(A) for the taxable year during which the building is placed 
in service. 
"(C) CERTAIN SALES AND LEASEBACKS.—Under regulations 
prescribed by the Secretary, a sale by, and leaseback to, a 
taxpayer who, when the property is placed in service, will 
be a lessee to whom the rules referred to in subsection (c)(4) 
apply shall not be treated as a cessation described in 
subparsigraph (A) to the extent that the amount which will 
be passed through to the lessee under such rules with 
respect to such property is not less than the qualified 
rehabilitation expenditures properly taken into account by 
the lessee under section 47(d) with respect to such property. 
"(D) COORDINATION WITH PARAGRAPH (D.—If, after prop-
erty is placed in service, there is a disposition or other 
cessation described in paragraph (1), then paragraph (1) 
shall be applied as if any credit which was allowable by 
104 STAT. 1388-548 
PUBLIC LAW 101-508—NOV. 5, 1990 
reason of section 47(d) and which has not been required to 
be recaptured before such disposition, cessation, or change 
in use were allowable for the taxable year the property was 
placed in service. 
"(E) SPECIAL RULES.—Rules similar to the rules of this 
paragraph shall apply in cases where qualified progress 
expenditures were taken into account under the rules re-
ferred to in section 48(a)(5XA). 
"(3) CARRYBACKS AND CARRYOVERS ADJUSTED.—In the case of 
any cessation described in paragraph (1) or (2), the carrybacks 
and carryovers under section 39 shall be adjusted by reason of 
such cessation. 
"(4) SUBSECTION NOT TO APPLY IN CERTAIN CASES.—Paragraphs 
(1) and (2) shall not apply to— 
"(A) a transfer by reason of death, or 
"(B) a transaction to which section 381(a) applies. 
For purposes of this subsection, property shall not be treated as 
ceasing to be investment credit property with respect to the 
taxpayer by reason of a mere change in the form of conducting 
the trade or business so long as the property is retained in such 
trade or business as investment credit property and the tax-
payer retains a substantial interest in such trade or business. 
"(5) DEFINITIONS AND SPECIAL RULES.— 
"(A) INVESTMENT CREDIT PROPERTY.—For purposes of this 
subsection, the term 'investment credit property' means 
any property eligible for a credit determined under this 
subpart. 
"(B) TRANSFER BETWEEN SPOUSES OR INCIDENT TO DI-
VORCE.—In the case of any transfer described in subsection 
(a) of section 1041— 
"(i) the foregoing provisions of this subsection shall 
not apply, £ind 
"(ii) the same tax treatment under this subsection 
with respect to the transferred property shall apply to 
the transferee as would have applied to the transferor. 
"(C) SPECIAL RULE.—Any increase in tax under paragraph 
(1) or (2) shall not be treated as tax imposed by this chapter 
for purposes of determining the amount of any credit allow-
able under subpart A, B, D, or G. 
"(b) CERTAIN PROPERTY NOT EUGIBLE.—No credit shall be deter-
mined under this subpart with respect to— 
"(1) PROPERTY USED OUTSIDE UNITED STATES.— 
"(A) IN GENERAL.—Except as provided in subparagraph 
(B), no credit shall be determined under this subpart with 
respect to any property which is used predominantly out-
side the United States. 
"(B) EXCEPTIONS.—Subparagraph (A) shall not apply to 
any property described in section 168(g)(4). 
"(2) PROPERTY USED FOR LODGING.—No credit shall be deter-
mined under this subpart with respect to any property which is 
used predominantly to furnish lodging or in connection with the 
furnishing of lodging. The preceding sentence shall not apply 
to— 
"(A) nonlodging commercial facilities which are available 
to persons not using the lodging facilities on the same basis 
as they are available to persons using the lodging facilities.®* 
** So in original. Probably should be "facilities;". 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-549 
"(B) property used by a hotel or motel in connection with 
the trade or business of furnishing lodging where the 
predominant portion of the accommodations is used by 
transients; 
"(C) a certified historic structure to the extent of that 
portion of the basis which is attributable to qualified re-
habilitation expenditures; and 
"(D) any energy property. 
"(3) PROPERTY USED BY CERTAIN TAX-EXEMPT ORGANIZATION.— 
No credit shall be determined under this subpart with respect to 
any property used by an organization (other than a cooperative 
described in section 521) which is exempt from the tax imposed 
by this chapter unless such property is used predominantly in 
an unrelated trade or business the income of which is subject to 
tax under section 511. If the property is debt-financed property 
(as defined in section 514(b)), the amount taken into account for 
purposes of determining the amount of the credit under this 
subpart with respect to such property shall be that percentage 
of the amount (which but for this paragraph would be so taken 
into account) which is the same percentage as is used under 
section 514(a), for the year the property is placed in service, in 
computing the amount of gross income to be taken into account 
during such taxable year with respect to such property. If any 
qualified rehabilitated building is used by the tax-exempt 
organization pursuant to a lease, this paragraph shall not apply 
for purposes of determining the amount of the rehabilitation 
credit. 
"(4) PROPERTY USED BY GOVERNMENTAL UNITS OR FOREIGN 
PERSONS OR ENTITIES.— 
"(A) IN GENERAL.—No credit shall be determined under 
this subpart with respect to any property used— 
"(i) by the United States, any State or political sub-
division thereof, any possession of the United States, or 
any agency or instrumentality of any of the foregoing, 
or 
"(ii) by any foreign person or entity (as defined in 
section 168(h)(2)(C)), but only with respect to property 
to which section 168(hX2XAXiii) applies (determined 
after the application of section 168(h)(2)(B)). 
"(B) EXCEPTION FOR SHORT-TERM LEASES.—This paragraph 
and paragraph (3) shall not apply to any property by reason 
of use under a lease with a term of less than 6 months 
(determined under section 168(iX3)). 
"(C) EXCEPTION FOR QUAUFIED REHABILITATED BUILDINGS 
LEASED T
O GOVERNMENTS, ETC.—If any qualified rehabili-
tated building is leased to a governmental unit (or a foreign 
person or entity) this paragraph shall not apply for pur-
poses of determining the rehabilitation credit with respect 
to such building. 
"(D) SPECIAL RULES FOR PARTNERSHIPS, ETC.—For purposes 
of this paragraph and paragraph (3), rules similar to the 
rules of paragraphs (5) and (6) of section 168(h) shall apply. 
"(E) CROSS REFERENCE.— 
"For special rules for the application of this paragraph and paragraph 
(3), see section 168(h)." 
'(c) BASIS ADJUSTMENT TO INVESTMENT CREDIT PROPERTY.— 
104 STAT. 1388-550 
PUBLIC LAW 101-508—NOV. 5, 1990 
"(1) IN GENERAL.—For purposes of this subtitle, if a credit is 
determined under this subpart with respect to any property, the 
basis of such property shall be reduced by the amount of the 
credit so determined. 
"(2) CERTAIN DISPOSITIONS.—If during any taxable year there 
is a recapture amount determined with respect to any property 
the basis of which was reduced under paragraph (1), the basis of 
such property (immediately before the event resulting in such 
recapture) shall be increased by an amount equal to such 
recapture amount. For purposes of the preceding sentence, the 
term 'recapture amount' means any incre£ise in tax (or adjust-
ment in carrybacks or carryovers) determined under subsection 
(a). 
"(3) SPECIAL RULE.—In the case of any energy credit or re-
forestation credit— 
"(A) only 50 percent of such credit shall be taken into 
account under paragraph (1), and 
"(B) only 50 percent of any recapture amount attrib-
utable to such credit shall be taken into account under 
paragraph (2). 
"(4) RECAPTURE OF REDUCTIONS.— 
"(A) IN GENERAL.—For purposes of sections 1245 and 
1250, any reduction under this subsection shall be treated 
as a deduction allowed for depreciation, 
"(B) SPECIAL RULE FOR SECTION 1250.—For purposes of 
section 1250(b), the determination of what would have been 
the depreciation adjustments under the straight line 
method shall be made as if there had been no reduction 
under this section. 
"(5) ADJUSTMENT IN BASIS OF INTEREST IN PARTNERSHIP OR S 
CORPORATION.—The adjusted basis of— 
"(A) a partner's interest in a partnership, and 
"(B) stock in an S corporation, 
shall be appropriately adjusted to take into account adjustments 
made under this subsection in the basis of property held by the 
partnership or S corporation (as the case may be). 
"(d) CERTAIN RULES MADE APPUCABLE.—For purposes of this sub-
part, rules similar to the rules of the following provisions (as in 
effect on the day before the date of the enactment of the Revenue 
Reconciliation Act of 1990) shall apply: 
"(1) Section 46(e) (relating to limitations with respect to cer-
tain persons). 
"(2) Section 46(f) (relating to limitation in case of certain 
regulated companies). 
"(3) Section 46(h) (relating to special rules for cooperatives). 
"(4) Paragraphs (2) and (3) of section 48(b) (relating to special 
rule for sale-leasebacks). 
"(5) Section 48(d) (relating to certain leased property), 
"(6) Section 48(f) (relating to estates and trusts). 
"(7) Section 48(r) (relating to certain 501(d) organizations)." 
(b) CONFORMING AMENDMENTS,— 
dXA) Subclause (III) of section 29a)X3XAXi) is amended by 
striking "section 48(1X11XC)" and inserting "section 48(aX4XC)'\ 
(B) Paragraph (4) of section 29(b) is amended by striking 
"section 47" each place it appears and inserting "section 49(b) or 
50(a)". 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-551 
(C) Paragraph (3) of section 29(c) is amended to read as 
follows: 
"(3) BiOMASS.—The term 'biomass' means any organic mate-
rial other than— 
"(A) oil and natural gas (or any product thereof), and 
"(B) coal (including lignite) or any product thereof." 
(2)(A) Paragraph (1) of section 38(b) is amended by striking 
"section 46(a)" and inserting "section 46". 
(B) Subsection (c) of section 38 is amended by striking para-
graph (2) and by redesignating paragraph (3) as paragraph (2). 
(C) Subparagraph (C) of section 38(c)(2) (as redesignated by 
subparagraph (B)) is amended— 
(i) by inserting "(as in effect on the day before the date of 
the enactment of the Revenue Reconciliation Act of 1990)" 
after "46(e)(1)", and 
(ii) by inserting "(as so in effect)" after "46(e)(2)". 
(D) Subsection (d) of section 38 is amended— 
(i) by striking "sections 46(f), 47(a), 196(a), and any other 
provision" and inserting "any provision", 
(ii) by amending paragraph (2) to read as follows: 
"(2) COMPONENTS OF INVESTMENT CREDIT.—The order in which 
the credits listed in section 46 are used shall be determined on 
the basis of the order in which such credits are listed in section 
46 as of the close of the taxable year in which the credit is 
used.", and 
(iii) by amending subparagraph (B) of paragraph (3) to 
read as follows: 
"(B) the credit determined under section 46— 
"(i) to the extent attributable to the employee plan 
percentage (as defined in section 46(a)(2)(E) as in effect 
on the day before the date of the enactment of the Tax 
Reform Act of 1984) shall be treated as a credit listed 
after paragraph (1) of section 46, and 
"(ii) to the extent attributable to the regular percent-
age (as defined in section 46(b)(1) as in effect on the day 
before the date of the enactment of the Revenue Rec-
onciliation Act of 1990) shall be treated as the first 
credit listed in section 46." 
(3) Subsection (k) of section 42 is amended— 
(A) in paragraph (1)— 
(i) by striking "46(cX8)" and inserting "49(a)(1)", 
(ii) by striking "46(c)(9)" and inserting "49(a)(2)", and 
(iii) by striking "47(d)(1)" and inserting "49(b)(1)", 
and 
(B) by striking "46(cX8XDXiv)(II)" in paragraphs (2XAXii) 
and (2)(D) and inserting "49(aXlXDXiv)(II)". 
(4) Subsection (e) of section 52 is amended by striking "section 
46" and inserting "section 46 (as in effect on the day before the 
date of the enactment of the Revenue Reconciliation Act of 
1990)". 
(5) Paragraph (1) of section 55(c) is amended by striking 
"section 47 ' and inserting "section 49(b) or 50(a)". 
(6) Subparagraph (B) of section 108(gXl) is amended by 
striking 
"section 
46(cX8XDXiv)" 
and 
inserting 
"section 
49(aXlXDXiv)". 
(7) Paragraph (4) of section 145(d) is amended— 
104 STAT. 1388-552 
PUBLIC LAW 101-508—NOV. 5, 1990 
(A) by striking "section 48(gXlXC)" each place it appears 
and inserting "section 47(c)(1)(C)", and 
(B) by striking "section 48(g)(l)(CXi)" and inserting "sec-
tion 47(cXl)(CXi)^'. 
(8) Subparagraph (B) of section 147(dX3) is amended by strik-
ing "section 48(gX2)(B)" and inserting "section 47(cX2)(B)'\ 
(9XA) Clause (vi) of section 168(eX3)(B) is amended— 
(i) by striking "paragraph (3XAXviii), (3XAXix) or (4) of 
section 48(1)" in subclause (I) and inserting "subparagraph 
(A) of section 48(a)(3) (or would be so described if 'solar and 
wind' were substituted for 'solar' in clause (i) thereof)", and 
(ii) by inserting "(as in effect on the day before the date of 
the enactment of the Revenue Reconciliation Act of 1990)" 
after "48(1)" in subclause (II). 
(BXi) Subparagraph (D)(i) of section 168(eX3) is amended by 
striking "section 48(p)" and inserting "subsection (i)(13)". 
(ii) Subsection (i) of section 168 is amended by adding at the 
end thereof the following new paragraph: 
"(13) SINGLE PURPOSE AGRICULTURAL OR HORTICULTURAL STRUC-
TURE.— 
"(A) IN GENERAL.—The term 'single purpose agricultural 
or horticultural structure' means— 
"(i) a single purpose livestock structure, and 
"(ii) a single purpose horticultural structure. 
"(B) DEFINITIONS.—For purposes of this paragraph— 
"(i) SINGLE PURPOSE UVESTOCK STRUCTURE.—The term 
'single purpose livestock structure' means any enclo-
sure or structure specifically designed, constructed, and 
used— 
"(I) for housing, raising, and feeding a particular 
type of livestock and their produce, and 
(II) for housing the equipment (including any 
replacements) necessary for the housing, raising, 
and feeding referred to in subclause (I). 
"(ii) 
SINGLE PURPOSE HORTICULTURAL STRUCTURE.— 
The term 'single purpose horticultural 
structure' 
means— 
"(I) a greenhouse specifically designed, con-
structed, and used for the commercial production 
of plants, and 
(II) a structure specifically designed, con-
structed, and used for the commercial production 
of mushrooms, 
"(iii) STRUCTURES WHICH INCLUDE WORK SPACE.—An 
enclosure or structure which provides work space shall 
be treated as a single purpose agricultural or horti-
cultural structure only if such work space is solely 
for— 
"(I) the stocking, caring for, or collecting of live-
stock or plants (as the case may be) or their 
produce, 
"(II) the maintenance of the enclosure or struc-
ture, and 
"(III) the maintenance or replacement of the 
equipment or stock enclosed or housed therein. 
"(iv) 
LIVESTOCK.—The term 
'livestock' 
includes 
poultry." 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-553 
(C) Paragraph (4) of section 168(g) is amended to read as 
follows: 
"(4) EXCEPTION FOR CERTAIN PROPERTY USED OUTSIDE UNITED 
STATES.—Subparagraph (A) of paragraph (1) shall not apply to— 
"(A) any aircraft which is registered by the Adminis-
trator of the Federal Aviation Agency and which is oper-
ated to and from the United States or is operated under 
contract with the United States; 
"(B) rolling stock which is used within and without the 
United States and which is— 
"(i) of a domestic railroad corporation providing 
transportation subject to subchapter I of chapter 105 of 
title 49, or 
"(ii) of a United States person (other than a corpora-
tion described in clause (i)) but only if the rolling stock 
is not leased to one or more foreign persons for periods 
aggregating more than 12 months in any 24-month 
period; 
"(C) any vessel documented under the laws of the United 
States which is operated in the foreign or domestic com-
merce of the United States; 
"(D) any motor vehicle of a United States person (as 
defined in section 7701(a)(30)) which is operated to and from 
the United States; 
"(E) any container of a United States person which is 
used in the transportation of property to and from the 
United States; 
"(F) any property (other than a vessel or an aircraft) of a 
United States person which is used for the purpose of 
exploring for, developing, removing, or transporting re-
sources from the outer Continental Shelf (within the mean-
ing of section 2 of the Outer Continental Shelf Lands Act, as 
amended and supplemented; (43 U.S.C. 1331)); 
"(G) any property which is owned by a domestic corpora-
tion (other than a corporation which has an election in 
effect under section 936) or by a United States citizen (other 
than a citizen entitled to the benefits of section 931 or 933) 
and which is used predominantly in a possession of the 
United States by such a corporation or such a citizen, or by 
a corporation created or organized in, or under the law of, a 
possession of the United States; 
"(H) any communications satellite (as defined in section 
103(3) of the Communications Satellite Act of 1962, 47 
U.S.C. 702(3)), or any interest therein, of a United States 
person; 
"(I) any cable, or any interest therein, of a domestic 
corporation engaged in furnishing telephone service to 
which section 168(i)(10)(C) applies (or of a wholly owned 
domestic subsidiary of such a corporation), if such cable is 
part of a submarine cable system which constitutes part of 
a communication link exclusively between the United 
States and one or more foreign countries; 
"(J) any property (other than a vessel or an aircraft) of a 
United States person which is used in international or 
territorial waters within the northern portion of the West-
ern Hemisphere for the purpose of exploring for, develop-
39-194 O - 91 - 31 : QL 3 Part 2 
104 STAT. 1388-554 
PUBLIC LAW 101-508—NOV. 5, 1990 
ing, removing, or transporting resources from ocean waters 
or deposits under such waters; 
"(K) any property described in section 48(aX3XA)(iii) 
which is owned by a United States person and which is used 
in international or territorial waters to generate energy for 
use in the United States; and 
"(L) any satellite (not described in subparagraph (H)) or 
other spacecraft (or any interest therein) held by a United 
States person if such satellite or other spacecraft was 
launched from within the United States. 
For purposes of subparagraph (J), the term 'northern portion of 
the Western Hemisphere' means the area l5dng west of the 30th 
meridian west of Greenwich, east of the international dateline, 
and north of the Equator, but not including any foreign country 
which is a country of South America." 
(10) Subparagraph (B) of section 170(h)(4) is amended by strik-
ing "section 48(g)(3XB)" and inserting "section 47(cX3XB)". 
(11)(A) Paragraph (1) of section 179(d) is amended by striking 
"section 38 property" and inserting "section 1245 property (as 
defined in section 1245(aX3))". 
(B) Paragraph (5) of section 179(d) is amended to read as 
follows: 
"(5) SECTION NOT TO APPLY TO CERTAIN NONCORPORATE LES-
SORS.—This section shall not apply to any section 179 property 
which is purchased by a person who is not a corporation and 
with respect to which such person is the lessor unless— 
"(A) the property subject to the lease has been manufac-
tured or produced by the lessor, or 
"(B) the term of the lease (taking into account options to 
renew) is less than 50 percent of the class life of the 
property (as defined in section 168(iXl)), and for the period 
consisting of the first 12 months after the date on which the 
property is transferred to the lessee the sum of the deduc-
tions with respect to such property which are allowable to 
the lessor solely by reason of section 162 (other than rents 
and reimbursed amounts with respect to such property) 
exceeds 15 percent of the rental income produced by such 
property." 
(12XA) Paragraph (1) of section 196(c) is amended— 
(i) by striking "section 46(a)" and inserting "section 46", 
and 
(ii) by striking "section 48(q)" and inserting "section 
50(c)". 
(B) Paragraph (1) of section 196(d) is amended— 
(i) by striking "section 46(a)" and inserting "section 46", 
and 
(ii) by striking "other than a credit to which section 
48(qX3) applies" and inserting "other than the rehabilita-
tion credit". 
(13XA) Subsection (a) of section 280F is amended— 
(i) by striking paragraphs (1) and (4) and redesignating 
paragraphs (2) and (3) as paragraphs (1) and (2), respec-
tively, and 
(ii) by striking "the credit determined under section 46(a) 
or" in paragraph (2XB) (as redesignated by clause (i)). 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-555 
(B) Subsection (b) of section 280F is amended by striking 
parEigraph (1) and redesignating the following paragraphs 
accordingly. 
(C) The paragraph heading for paragraph (1) of section 280F(c) 
is amended by striking "credits and". 
(D) Subparagraph (A) of section 280F(d)(3) is amended by 
striking "the amount of any credit allowable under section 38 to 
the employee or". 
(E) The section heading of section 280F is amended by striking 
"INVESTMENT TAX CREDIT AND". 
(F) The table of sections for part IX of subchapter B of chapter 
1 is amended by striking "investment credit and" in the item 
relating to section 280F. 
(14) Paragraph (5) of section 312(k) is amended by striking 
"section 48(q)" and inserting "section 50(c)". 
(15) Subparagraph (D) of section 465(bX6) is amended by strik-
ing "46(c)(8)(D)(iv)" each place it appears and 
inserting 
"49(a)(l)(D)(iv)". 
(16)(A) Paragraphs (3XB) and (6XB)(ii) of section 469(i) are each 
amended by striking "rehabilitation investment credit (within 
the meaning of section 48(o))" and inserting "rehabilitation 
credit determined under section 47". 
(B) Paragraph (1) of section 469(k) is amended by striking 
"rehabilitation investment credit (within the meaning of section 
48(o))" and inserting "rehabilitation credit determined under 
section 47". 
(17) Subparagraph (A) of section 861(eXl) is amended by strik-
ing "which is section 38 property (or would be section 38 prop-
erty but for section 48(aX5)" and inserting "which is section 
1245 property (as defined in section 1245(a)(3))". 
(18) Subparagraph (B) of section 865(c)(3) is amended by strik-
ing "section 48(aX2XB)" and inserting "section 168(gX4)". 
(19) Paragraph (21) of section 1016(a) is amended by striking 
"section 48(q) and inserting "section 50(c)". 
(20) Subparagraph (A) of section 1033(gX3) is amended by 
striking "with respect to which the investment credit deter-
mined under section 46(a) is or has been claimed or". 
(21) Subparagraph (D) of section 1245(aX3) is amended by 
striking "section 48(p)" and inserting "section 168(iX13)". 
(22) Subsection (b) of section 1274A is amended by inserting 
", as in effect on the day before the date of the enactment of the 
Revenue Reconciliation Act of 1990" after "section 48(b)". 
(23) Subsection (d) of section 1371 is sunended— 
(A) by striking "section 47(b)" in parsigraph (1) and insert-
ing "section 50(aX4)", and 
(B) by striking "section 47" in paragraphs (2) and (3) and . 
inserting "section 49(b) or 50(a)". 
(24) Section 1388 is amended by striking subsection (k). 
(25) Subpargigraph (B) of section 1503(eX3) is amended by 
striking "section 48(q)" and inserting "section 50(c)". 
(26) The table of subparts for part IV of subchapter A of 
chapter 1 is amended by striking the item relating to subpart E 
and inserting the following: 
"Subpart E. Rules for computing investment credit." 
(c) EFFECTIVE DATE.— 
26 use 29 note. 
104 STAT. 1388-556 
PUBLIC LAW 101-508—NOV. 5, 1990 
(1) IN GENERAL.—Except as provided in paragraph (2), the 
amendments made by this section shall apply to property placed 
in service after December 31,1990. 
(2) EXCEPTIONS.—The amendments made by this section shall 
not apply to— 
(A) any transition property (as defined in section 49(e) of 
the Internal Revenue Code of 1986 (as in effect on the day 
before the date of the enactment of this Act), 
(B) any property with respect to which qualified progress 
expenditures were previously taken into account under 
section 46(d) of such Code (as so in effect), and 
(C) any property described in section 46(bX2XC) of such 
Code (as so in effect). 
SEC. 11814. ELIMINATION OF OBSOLETE PROVISIONS IN SECTION 243(b). 
(a) IN GENERAL.—Subsection (b) of section 243 is amended to read 
as follows: 
"(b) QUALIFYING DIVIDENDS.— 
"(1) IN GENERAL.—For purposes of this section, the term 
'qualifying dividend' means any dividend received by a corpora-
tion— 
"(A) if at the close of the day on which such dividend is 
received, such corporation is a member of the same affili-
ated group as the corporation distributing such dividend, 
and 
"(B) if— 
"(i) such dividend is distributed out of the earnings 
and profits of a taxable year of the distributing corpora-
tion which ends after December 31, 1963, for which an 
election under section 1562 was not in effect, and on 
each day of which the distributing corporation and the 
corporation receiving the dividend were members of 
such affiliated group, or 
"(ii) such dividend is paid by a corporation with 
respect to which an election under section 936 is in 
effect for the taxable year in which such dividend is 
paid. 
"(2) AFFIUATED GROUP.—For purposes of this subsection, the 
term 'affiliated group' has the meaning given such term by 
section 1504(a), except that for such purposes sections 1504(bX2), 
1504(bX4), and 1504(c) shall not apply. 
"(3) SPECIAL RULE FOR GROUPS WHICH INCLUDE LIFE INSURANCE 
COMPANIES.— 
"(A) IN GENERAL.—In the case an affiliated group which 
includes 1 or more insurance companies under section 801, 
no dividend by any member of such group shall be treated 
as a qualif3dng dividend unless an election under this para-
graph is in effect for the taxable year in which the dividend 
is received. The preceding sentence shall not apply in the 
case of a dividend described in paragraph (lXB)(ii). 
"(B) EFFECT OF ELECTION.—If an election under this para-
graph is in effect with respect to any affiliated group— 
"(i) part II of subchapter B of chapter 6 (relating to 
certain controlled corporations) shall be applied with 
respect to the members of such group without regard to 
sections 1563(a)(4) and 1563(bX2XD), and 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-557 
"(ii) for purposes of this subsection, a distribution by 
any member of such group which is subject to tax 
under section 801 shall not be treated as a qualifying 
dividend if such distribution is out of earnings and 
profits for a taxable year for which an election under 
this paragraph is not effective and for which such 
distributing corporation was not a component member 
of a controlled group of corporations within the mean-
ing of section 1563 solely by reason of section 
1563(b)(2)(D). 
"(C) ELECTION.—An election under this paragraph shall 
be made by the common parent of the affiliated group and 
at such time and in such manner as the Secretary shall by 
regulations prescribe. Any such election shall be binding on 
all members of such group and may be revoked only with 
the consent of the Secretary." 
(b) CONFORMING AMENDMENT.—Clause (i) of section 1504(c)(2)(B) is 
amended— 
(1) by striking "section 243(b)(6)" and inserting "section 
243(b)(3)", and 
(2) by striking "section 243(b)(5)" and inserting "243(b)(2)". 
(c) EFFECTIVE DATE.— 
26 use 243 note. 
(1) IN GENERAL.—The amendments made by this section shall 
apply to taxable years beginning after December 31,1990. 
(2) TREATMENT OP OLD ELECTIONS.—For purposes of section 
243(b)(3) of the Internal Revenue Code of 1986 (as amended by 
subsection (a)), any reference to an election under such section 
shall be treated as including a reference to an election under 
section 243(b) of such Code (as in effect on the day before the 
date of the enactment of this Act). 
SEC. 11815. ELIMINATION OF EXPIRED PROVISIONS IN PERCENTAGE 
DEPLETION. 
i 
(a) SECTION 613A.— 
' 
(1) GENERAL 
RULE.—Subsection (c) of section 
613A is 
amended— 
(A) by striking "the applicable percentage (determined in 
accordance with the table contained in paragraph (5))" in 
paragraph (1) and inserting "15 percent", 
(B) by amending subparagraph (B) of paragraph (3) to 
read as follows: 
"(B) TENTATIVE QUANTITY.—For purposes of subpara-
graph (A), the tentative quantity is 1,000 barrels.", and 
(C) by striking paragraphs (5), and (7)(E). 
(2) CONFORMING AMENDMENTS.— 
(A) Subparagraphs (A) and (B) of section 613A(cX7) are 
each amended by striking "specified in paragraph (5)" and 
inserting "specified in paragraph (1)". 
(B) Paragraphs (8)(B), (8)(C), and (9) are each amended by 
striking "determined under the table contained in para-
graph (3)(B)" each place it appears and inserting "deter-
mined under paragraph (3XB)". 
(b) SECTION 613(e).— 
(1) Subsection (e) of section 613 is amended by striking para-
graph (2) and by redesignating paragraphs (3) and (4) as para-
graphs (2) and (3), respectively. 
104 STAT. 1388-558 
PUBLIC LAW 101-508—NOV. 5, 1990 
(2) Subparagraph (B) of section 613(eXl) is amended to read as 
follows: 
"(B) 15 percent shall be deemed to be the percentage 
specified in subsection (b),". 
(3) Sections 57(a)(2)(D)(ii), 263(c), and 465(c)(1)(E) are each 
amended by striking "section 613 (e)(3)" and inserting "section 
613(e)(2)". 
SEC. 11816. ELIMINATION OF EXPIRED PROVISIONS IN SECTION 29. 
(a) GENERAL RULE.—Paragraph (1) of section 29(c) is amended by 
inserting "and" at the end of subparagraph (B), by striking the 
comma at the end of subparagraph (C) and inserting a period, and by 
striking subparagraphs (D) and (E). . 
(b) CONFORMING AMENDMENTS.— 
(1) Subsection (c) of section 29 is amended by striking para-
graphs (4) and (5). 
(2) Paragraph (4) of section 29(d) is amended to read as 
follows: 
"(4) GAS FROM GEOPRESSURED BRINE, DEVONIAN SHALE, COAL 
SEAMS, O
R A TIGHT FORMATION.—The amount of the credit allow-
able under subsection (a) shall be determined without regard to 
any production attributable to a property from which gas from 
Devonian shale, coal seams, geopressured brine, or a tight 
formation was produced in marketable quantities before Janu-
ary 1,1980." 
(3) Subsection (d) of section 29 is amended by striking 
paragraph (5) and redesignating the following paragraphs 
accordingly. 
(4) Paragraph (5) of section 29(d) (as redesignated by para-
graph (3)) is amended by striking "subparagraph (C), (D), or (E)" 
and inserting "subparagraph (C)". 
(5) Subsection (f) of section 29 is amended to read as follows: 
"(f) APPUCATION OF SECTION.—This section shall apply with re-
spect to qualified fuels— 
"(1) which are— 
"(A) produced from a well drilled after December 31, 
1979, and before January 1,1993, or 
"(B) produced in a facility placed in service after Decem-
ber 31,1979, and before January 1,1993, and 
"(2) which are sold before January 1, 2003." 
Subpart C—Effective Date 
26 u s e 29 note. 
SEC. 11821. EFFECTIVE DATE. 
(a) GENERAL RULE.—Except as otherwise provided in this part, the 
amendments made by this part shall take effect on the date of the 
enactment of this Act. 
(b) SAVINGS PROVISION.—If— 
(1) any provision amended or repealed by this part applied 
to— 
(A) any transaction occurring before the date of the 
enactment of this Act, 
(B) any property acquired before such date of enactment, 
or 
(C) any item of income, loss, deduction, or credit taken 
into account before such date of enactment, and 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-559 
(2) the treatment of such transaction, property, or item under 
such provision would (without regard to the amendments made 
by this part) affect liability for tax for periods ending after such 
date of enactment, 
nothing in the amendments made by this part shall be construed to 
affect the treatment of such transaction, property, or item for 
purposes of determining liability for tax for periods ending after 
such date of enactment. 
PART II—PROVISIONS RELATING TO 
STUDIES 
SEC. 11831. EXTENSION OF DATE FOR FILING REPORTS ON CERTAIN 
STUDIES. 
(a) GENERAL RULE.—The date for the submission of the report on 
any study listed in subsection (b) is hereby extended to the due date 
for such study determined under subsection (b). 
(b) LIST OF STUDIES AND DUE DATES.— 
In the case of the study required under: 
The due date is: 
Section 1211(d) of the Tax Reform Act of 1986 (relating to 
26 USC 865 note. 
source rule on sales of personal property) 
January 1, 1992 
Section 407 of the Compact of Free Association Act of 1985 (re- 
48 USC 1681 
lating to tax provisions on Micronesia Compact of Free Asso- 
note. 
ciation) 
January 1, 1991 
Section 634 of the Tax Reform Act of 1986 (relating to reform 
26 USC 301 note. 
of subchapter C) 
January 1, 1992 
Section 9301(cX3) of the Omnibus Budget Reconciliation Act of 
1987 (relating to full funding limitation) 
April 15, 1991 
Section 6056 of the Technical and Miscellaneous Revenue Act 
of 1988 (relatingjo minimum participation rules) 
February 15,1991 
Section 6072 of the Technical and Miscellaneous Revenue Act of 
1988 (relating to treatment of certain technical personnel) 
February 15,1991 
Section 6305(e) of the Technical and Miscellaneous Revenue 
Act of 1988 (relating to treatment of certain family services 
26 USC 3121 
providers) 
January 1, 1992 note. 
Section 6064(dX4) of the Technical and Miscellaneous Revenue 
Act of 1988 (relating to deferred compensation plans of State 
26 USC 457 note, 
and local governments and tax-exempt organizations) 
January 1, 1992 
Section 6067(b) of the Technical and Miscellaneous Revenue 
Act of 1988 (relating to spin-off of defined benefit plan assets 
26 USC 414 note, 
to bridge banks) 
January 1, 1992 
Section 7612(f) of the Revenue Reconciliation Act of 1989 (re-
lating to depreciation treatment of certain vehicles) 
April 15, 1991 
Section 1012(cX2) of the Tax Reform Act of 1986 (relating to 
26 USC 833 note, 
fraternal beneficiary associations) 
July 1, 1992 
Section 1025 of the Tax Reform Act of 1986 (relating to proper- 
26 USC 832 note. 
ty and casualty insurance companies) 
January 1, 1992 
SEC. 11832. REPEAL OF CERTAIN STUDIES. 
The following provisions are hereby repealed: 
(1) Section 5041(f) of the Technical and Miscellaneous Reve-
nue Act of 1988 (relating to long-term contracts). 
26 USC 382 note. 
(2) Section 560 of the Deficit Reduction Act of 1984 (relating to 26 USC 382 note, 
employee welfare benefit plans). 
(3) Section 621(d) of the Tax Reform Act of 1986 (relating to 26 USC 382 note, 
depreciation, built-in deductions, and informal bankruptcy 
workouts). 
(4) Section 702 of the Tax Reform Act of 1986 (relating to book 26 USC 56 note, 
earnings and profits adjustments). 
(5) Section 675(d) of the Tax Reform Act of 1986, as amended 26 USC 860A 
by section 1006(w) of the Technical and Miscellaneous Revenue ^°^-
104 STAT. 1388-560 
PUBLIC LAW 101-508—NOV. 5, 1990 
Act of 1988 (relating to impact of REMIC provisions on thrift 
industry). 
SEC. 11833. MODIFICATIONS TO STUDY OF AMERICANS WORKING ABROAD. 
(a) DUE DATE FOR REPORTS.—Subsection (a) of section 208 of the 
26 use 911 note. Foreign Earned Income Act of 1978 (as amended by section 114 of 
the Economic Recovery Tax Act of 1981) is amended by striking so 
much of such subsection as precedes "the Secretary of the Treasury" 
and inserting the following: 
"(a) GENERAL RULE.—As soon as practicable after December 31, 
1993, and as soon as practicable after the close of each fifth calendar 
year thereafter,". 
(b) INFORMATION FROM FEDERAL AGENCIES.—Subsection (b) of such 
section 208 (as so amended) is amended by striking "shall furnish" 
and inserting "shall keep such records and furnish". 
SEC. 11834. INCREASE IN THRESHOLD FOR JOINT COMMITTEE REPORTS 
ON REFUNDS AND CREDITS. 
(a) GENERAL RULE.—Subsections (a) and (b) of section 6405 are 
each amended by striking "$200,000" and inserting "$1,000,000". 
26 u s e 6405 
(b) EFFECTIVE DATE.—The amendment made by subsection (a) 
°°*®- 
shall take effect on the date of the enactment of this Act, except that 
such amendment shall not apply with respect to any refund or 
credit with respect to a report has been made before such date of 
enactment under section 6405 of the Internal Revenue Code of 1986. 
Subtitle I—Public Debt Limit 
SEC. 11901. INCREASE IN PUBLIC DEBT LIMIT. 
Subsection (b) of section 3101 of title 31, United States Code, is 
amended by striking the dollar limitation contained in such subsec-
tion and inserting "$4,145,000,000,000". 
31 use 3101 
(b) RESTORATION OF TRUST FUNDS FOR 1990.— 
"°*®- 
(1) I N GENERAL.— 
(A) OBUGATIONS ISSUED.—Except as provided in para-
graph (2), within 30 days after the expiration of any debt 
issuance suspension period to which this subsection applies, 
the Secretary of the Treasury shall issue to each Federal 
fund obligations under chapter 31 of title 31, United States 
Code, which bear such issue dates, interest rates, and matu-
rity dates as are necessary to ensure that, after such obliga-
tions are issued, the holdings of such Federal fund will 
replicate to the maximum extent practicable the obliga-
tions that would have been held by such Federal fund if 
any— 
(i) failure to invest amounts in such Federal fund (or 
any disinvestment) resulting from the limitation of 
section 3101(b) of title 31, United States Code, had not 
occurred, and 
(ii) issuance of such obligations had occurred imme-
diately on the expiration of the debt issuance suspen-
sion period. 
(B) INTEREST CREDITED.—On the first normal interest 
pajnnent date or within 30 days after the expiration of any 
debt issuance suspension period (whichever is later) to 
which this subsection applies, the Secretary of the Treasury 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-561 
shall credit to each Federal fund an amount determined by 
the Secretary, after taking into account the actions taken 
pursuant to subparagraph (A), to be equal to the income 
lost by such Federal fUnd by reason of any failure to invest 
amounts in such Federal fund (or any disinvestment) result-
ing from the limitation of such section 3101(b), including 
any income lost between the expiration of the debt issuance 
suspension period and the date of the credit. 
(2) INTEREST ON MARKET-BASED OBUGATIONS.—With respect to 
any Federal fund which invests in market-based special obliga-
tions, on the expiration of a debt issuance suspension period to 
which this subsection applies, the Secretary of the Treasury 
shall immediately credit to such fund an eimount equal to the 
interest that would have been earned by such fund during the 
debt issuance suspension period if the daily balance in such 
fund that the Secretary was unable to invest by reason of the 
limitation of such section 3101(b) had been invested each day 
during such period, overnight, in obligations under chapter 31 
of title 31, United States Code, earning interest at a rate 
determined by the Secretary in accordance with the standard 
practice of the Department of the Treasury. 
(3) DEBT ISSUANCE SUSPENSION PERIODS TO WHICH SUBSECTION 
APPUES.—This subsection shall apply to debt issuance suspen-
sion periods beginning on or after October 15, 1990, and ending 
before January 1,1991. 
(4) CREDITED AMOUNTS TREATED AS INTEREST.—All amounts 
credited under this subsection shall be treated as interest on 
obligations issued under chapter 31 of title 31, United States 
Code, for all purposes of Federal law. 
(5) DEFINITIONS.—For purposes of this subsection— 
(A) DEBT ISSUANCE SUSPENSION PERIOD.—The term "debt 
issuance suspension period" means any period for which 
the Secretary of the Treasury determines that the issuance 
of obligations of the United States sufficient to conduct the 
orderly financial operations of the United States may not 
be made without exceeding the limitation imposed by sec-
tion 31010)) of title 31, United States Code. 
(B) FEDERAL FUND.—The term "Federal fund" means any 
Federal trust fund or Government account established 
pursuant to Federal law to which the Secretary of the 
Treasury has issued or is expressly authorized by law di-
rectly to issue obligations under chapter 31 of title 31, 
United States Code, in respect of public money, money 
otherwise required to be deposited in the Treasury, or 
amounts appropriated; except that such term shall not 
include the Civil Service Retirement and Disability Fund or 
the Thrift Savings Fund of the Federal Employees' Retire-
ment System. 
104 STAT. 1388-562 
PUBLIC LAW 101-508—NOV. 5, 1990 
TITLE XII—PENSIONS 
Subtitle A—Treatment of Reversions of 
QualiHed Plan Assets to Employers 
SEC. 12001. INCREASE IN REVERSION TAX. 
26 use 4980. 
Section 4980(a) (relating to tax on reversion of quEilified plan 
assets to employer) is amended by striking "15 percent" and insert-
ing "20 percent'^'. 
SEC. 12002. ADDITIONAL TAX IF NO REPLACEMENT PLAN. 
(a) IN GENERAL.—Section 4980 is amended by adding at the end 
thereof the following new subsection: 
"(d) INCREASE IN TAX FOR FAILURE TO ESTABUSH REPLACEMENT 
PLAN OR INCREASE BENEFITS.— 
"(1) IN GENERAL.—Subsection (a) shall be applied by substitut-
ing '50 percent' for '20 percent' with respect to any employer 
reversion from a qualified plan unless— 
"(A) the employer establishes or maintains a qualified 
replacement plan, or 
"(B) the plan provides benefit increases meeting the 
requirements of paragraph (3). 
"(2) QuAUFiED REPLACEMENT PLAN.—For purposes of this 
subsection, the term 'qualified replacement plan' means a quali-
fied plan established or maintained by the employer in connec-
tion with a qualified plan termination (hereinafter referred to 
—---^ 
as the 'replacement plan') with respect to which the following 
requirements are met: 
"(A) PARTICIPATION REQUIREMENT.—At least 95 percent of 
the active participEints in the terminated plan who remain 
as employees of the employer after the termination are 
active participants in the replacement plan. 
"(B) ASSET TRANSFER REQUIREMENT.— 
- 
"(i) 25 PERCENT CUSHION.—A direct transfer from the 
terminated plan to the replacement plan is made 
before any employer reversion, and the transfer is in 
an amount equal to the excess (if any) of— 
"(I) 25 percent of the maximum amount which 
the employer could receive as an employer rever-
sion without regard to this subsection, over 
"(II) the amount determined under clause (ii). 
"(ii) 
REDUCTION FOR INCREASE IN BENEFITS.—The 
amount determined under this clause is an amount 
equal to the present value of the aggregate increases in 
the accrued benefits under the terminated plan of any 
participants or beneficiaries pursuant to a plan amend-
ment which— 
"(I) is adopted during the 60-day period ending 
on the date of termination of the qualified plan, 
and 
"(II) takes effect immediately on the termination 
date, 
"(iii) TREATMENT OF AMOUNT TRANSFERRED.—In the 
case of the transfer of any amount under clause (i)— 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-563 
"(I) such amount shall not be includible in the 
gross income of the employer, 
"(11) no deduction shall be allowable with respect 
to such transfer, and 
"(III) such transfer shall not be treated as an 
employer reversion for purposes of this section. 
"(C) ALLOCATION REQUIREMENTS.— 
"(i) IN GENERAL.—In the case of any defined contribu-
tion plan, the portion of the amount transferred to the 
replacement plan under subparagraph (B)(i) is— 
"(I) allocated under the plan to the accounts of 
participants in the plan year in which the transfer 
occurs, or 
"(II) credited to a suspense account and allocated 
from such account to accounts of participants no 
less rapidly than ratably over the 7-plan-year 
period beginning with the year of the transfer. 
"(ii) COORDINATION WITH SECTION 415 LIMITATION.—If, 
by reason of any limitation under section 415, any 
amount credited to a suspense account under clause 
(i)(II) may not be allocated to a participant before the 
close of the 7-year period under such clause— 
"(I) such amount shall be allocated to the ac-
counts of other participants, and 
"(II) if any portion of such amount may not be 
allocated to other participants by reason of any 
such limitation, shall be allocated to the partici-
pant as provided in section 415. 
"(iii) TREATMENT OF INCOME.—Any income on any 
amount credited to a suspense account under clause 
(i)(II) shall be allocated to accounts of participants no 
less rapidly than ratably over the remainder of the 
period determined under such clause (after application 
of clause (ii)). 
"(iv) 
UNALLOCATED AMOUNTS AT TERMINATION.—If 
any amount credited to a suspense account under 
clause (i)(II) is not allocated as of the termination date 
of the replacement plan— 
"(I) such amount shall be allocated to the ac-
counts of participants as of such date, except that 
any amount which may not be allocated by reason 
of any limitation under section 415 shall be allo-
cated to the accounts of other participants, and 
"(II) if any portion of such amount may not be 
allocated to other participants under subclause (I) 
by reason of such limitation, such portion shall be 
treated as an employer reversion to which this 
section applies. 
"(3) PRO RATA BENEFIT INCREASES.— 
"(A) IN GENERAL.—The requirements of this paragraph 
are met if a plan amendment to the terminated plan is 
adopted in connection with the termination of the plan 
which provides pro rata increases in the accrued benefits of 
all qualified participants which— 
"(i) have an aggregate present value not less than 20 
percent of the msiximum amount which the employer 
104 STAT. 1388-564 
PUBLIC LAW 101-508—NOV. 5, 1990 
could receive as an employer reversion without regard 
to this subsection, and 
"(ii) take effect immediately on the termination date. 
"(B) PRO RATA INCREASE.—For purposes of subpareigraph 
(A), a pro rata increase is an increase in the present value 
of the accrued benefit of each qualified participant in an 
amount which bears the same ratio to the aggregate 
amount determined under subparagraph (A)(i) as— 
"(i) the present value of such participant's accrued 
benefit (determined without regard to this subsection), 
bears to 
"(ii) the aggregate present value of accrued benefits 
of the terminated plan (as so determined). 
Notwithstanding the preceding sentence, the aggregate in-
creases in the present value of the accrued benefits of 
qualified participants who are not active participants shall 
not exceed 40 percent of the aggregate amount determined 
under subparagraph (A)(i) by substituting 'equal to' for 'not 
less than'. 
"(4) COORDINATION WITH OTHER PROVISIONS.— 
"(A) LIMITATIONS.—A benefit may not be increased under 
paragraph (2)(B)(ii) or (3)(A), and an amount may not be 
allocated to a participant under paragraph (2)(C), if such 
increase or allocation would result in a failure to meet any 
requirement under section 401(a)(4) or 415. 
"(B) TREATMENT AS EMPLOYER CONTRIBUTIONS.—Any in-
crease in benefits under paragraph (2)(B)(ii) or (3)(A), or any 
allocation of any amount (or income allocable thereto) to 
any account under paragraph (2)(C), shall be treated as an 
annual benefit or annual addition for purposes of section 
415. 
"(C) 10-YEAR PARTICIPATION REQUIREMENT.—ExCept aS 
provided by the Secretary, section 415(b)(5)(D) shall not 
apply to any increase in benefits by reason of this subsec-
tion to the extent that the application of this subparagraph 
does not discriminate in favor of highly compensated 
employees (as defined in section 414(q)). 
"(5) DEFINITIONS AND SPECIAL RULES.—For purposes of this 
subsection— 
"(A) QUAUFIED PARTICIPANT.—The term 'qualified partici-
pant' means an individual who— 
"(i) is an active participant, 
"(ii) is a participant or beneficiary in pay status as of 
the termination date, 
"(iii) is a participant not described in clause (i) or 
. 
(ii)-
"(I) who has a nonforfeitable right to an accrued 
benefit under the terminated plan as of the termi-
nation date, and 
"(II) whose service, which was creditable under 
the terminated plan, terminated during the period 
beginning 3 years before the termination date and 
ending with the date on which the final distribu-
tion of assets occurs, or 
"(iv) is a beneficiary of a participant described in 
clause (iii)(II) and has a nonforfeitable right to an 
PUBLIC LAW 101-508—NOV. 5,1990 
104 STAT. 1388-565 
accrued benefit under the terminated plan as of the 
termination date. 
"(B) PRESENT VALUE.—Present value shall be determined 
as of the termination date and on the same basis as liabil-
ities of the plan are determined on termination. 
"(C) REALLOCATION OF INCREASE.—Except as provided in 
paragraph (2XC), if any benefit increase is reduced by 
reason of the leist sentence of paragraph (3XA)(ii) or para-
graph (4), the amount of such reduction shall be allocated to 
the remaining participants on the same bsisis as other 
increases (and shall be treated as meeting any allocation 
requirement of this subsection). 
"(D) PLANS TAKEN INTO ACCOUNT.—For purposes of deter-
mining whether there is a qualified replacement plan 
under paragraph (2), the Secretary may provide that— 
"(i) 2 or more plans may be treated as 1 plan, or 
"(ii) a plan of a successor employer may be taken into 
account. 
"(E) SPECIAL RULE FOR PARTICIPATION REQUIREMENT.—For 
purposes of paragraph (2XA), all employers treated as 1 
employer under section 414 (b), (c), (m), or (o) shall be 
treated as 1 employer. 
"(6) SUBSECTION NOT TO APPLY TO EMPLOYER IN BANKRUPTCY.— 
This subsection shall not apply to an employer who, as of the 
termination date of the qualified plan, is in bankruptcy liquida-
tion under chapter 7 of title 11 of the United States Code or in 
similar proceedings under State law." 
(b) AMENDMENTS TO EMPLOYEE RETIREMENT INCOME SECURITY 
ACT.— 
(1) FIDUCIARY RESPONSIBIUTY.—Section 404 of the Employee 
Retirement Income Security Act of 1974 (29 U.S.C. 1104) is 
amended by adding at the end thereof the following new sub-
section: 
"(d)(1) If, in connection with the termination of a pension plan 
which is a single-employer plan, there is an election to establish or 
maintain a qualified replacement plan, or to increase benefits, as 
provided under section 4980(d) of the Internal Revenue Code of 1986, 
a fiduciary shall discharge the fiduciary's duties under this title and 
title IV in accordance with the following requirements: 
"(A) In the C£ise of a fiduciary of the terminated plan, any 
requirement— 
"(i) under section 4980(dX2XB) of such Code with respect 
to the transfer of sissets from the terminated plan to a 
qualified replacement plan, and 
"(ii) under section 4980(dX2)(B)(ii) or 4980(dX3) of such 
Code with respect to any increase in benefits under the 
terminated plan. 
"(B) In the case of a fiduciary of a qualified replacement plan, 
any requirement— 
(i) under section 4980(d)(2XA) of such Code with respect 
to participation in the qualified replacement plan of active 
participants in the terminated plan, 
"(ii) under section 4980(dX2XB) of such Code with respect 
to the receipt of assets from the terminated plan, and 
"(iii) under section 4980(dX2XC) of such Code with respect 
to the allocation of assets to participants of the qualified 
replacement plan. 
104 STAT. 1388-566 
PUBLIC LAW 101-508—NOV. 5, 1990 
"(2) For purposes of this subsection— 
"(A) any term used in this subsection which is also used in 
section 4980(d) of the Internal Revenue Code of 1986 shall have 
the same meaning as when used in such section, and 
"(B) any reference in this subsection to the Internal Revenue 
Code of 1986 shall be a reference to such Code as in effect 
immediately after the enactment of the Omnibus Budget Rec-
onciliation Act of 1990." 
(2) CONFORMING AMENDMENTS.— 
(A) 
Section 
404(a)(1)(D) 
of 
such 
Act 
(29 
U.S.C. 
1104(a)(1)(D)) is amended by striking "or title IV" and 
inserting "and title IV". 
(B) Section 4044(d) of such Act (29 U.S.C. 1344(d)) is 
amended by adding at the end thereof the following new 
paragraph: 
"(4) Nothing in this subsection shall be construed to limit the 
requirements of section 4980(d) of the Internal Revenue Code of 1986 
(as in effect immediately after the enactment of the Omnibus 
Budget Reconciliation Act of 1990) or section 404(d) of this Act with 
respect to any distribution of residual assets of a single-employer 
plan to the employer." 
(C) Section 3 of such Act (29 U.S.C. 1002) is amended by 
adding at the end thereof the following new paragraph: 
"(41) The term 'single-employer plan' means a plan which is not a 
multiemployer plan." 
26 u s e 4980 
SEC. 12003. EFFECTIVE DATE. 
(a) IN GENERAL.—Except as provided in subsection (b), the amend-
ments made by this subtitle shall apply to reversions occurring after 
September 30,1990. 
(b) EXCEPTION.—The amendments made by this subtitle shall not 
apply to any reversion after September 30,1990, if— 
(1) in the case of plans subject to title IV of the Employee 
Retirement Income Security Act of 1974, a notice of intent to 
terminate under such title was provided to participants (or if no 
participants, to the Pension Benefit Guaranty Corporation) 
before October 1,1990, 
(2) in the case of plans subject to title I (and not to title IV) of 
such Act, a notice of intent to reduce future accruals under 
section 204(h) of such Act was provided to participants in 
connection with the termination before October 1,1990, 
(3) in the case of plans not subject to title I or IV of such Act, a 
request for a determination letter with respect to the termi-
nation was filed with the Secretary of the Treasury or the 
Secretary's delegate before October 1,1990, or 
(4) in the case of plans not subject to title I or IV of such Act 
and having only 1 participant, a resolution terminating the plan 
was adopted by the employer before October 1,1990. 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-567 
Subtitle B—Transfers to Retiree Health 
Accounts 
SEC. 12011. TRANSFER OP EXCESS PENSION ASSETS TO RETIREE HEALTH 
ACCOUNTS. 
(a) IN GENERAL.—Part I of subchapter D of chapter 1 (relating to 
pension, profit-sharing, and stock bonus plans) is amended by adding 
at the end thereof the following new subpart: 
''Subpart E—Treatment of Transfers to Retiree Health 
Accounts 
"Sec. 420. Transfers of excess pension assets to retiree health accounts. 
"SEC. 420. TRANSFERS OF EXCESS PENSION ASSETS TO RETIREE HEALTH 26 USC 420. 
ACCOUNTS. 
"(a) GENERAL RULE.—If there is a qualified transfer of any excess 
pension assets of a defined benefit plan (other than a multiemployer 
plan) to a health benefits account which is part of such plan— 
"(1) a trust which is part of such plan shall not be treated as 
failing to meet the requirements of subsection (a) or (h) of 
section 401 solely by reason of such transfer (or any other action 
authorized under this section), 
"(2) no amount shall be includible in the gross income of the 
employer maintaining the plan solely by reason of such 
transfer, 
"(3) such transfer shall not be treated— 
"(A) as an employer reversion for purposes of section 
4980, or 
"(B) as a prohibited transaction for purposes of section 
4975, and 
"(4) the limitations of subsection (d) shall apply to such 
employer. 
"(b) QuAUPiED TRANSFER.—For purposes of this section— 
"(1) IN GENERAL.—The term 'qualified transfer' means a 
transfer— 
"(A) of excess pension assets of a defined benefit plan to a 
health benefits account which is part of such plan in a 
taxable year beginning after December 31,1990, 
"(B) which does not contravene any other provision of 
law, and 
"(C) with respect to which the following requirements are 
met in connection with the plan— 
"(i) the use requirements of subsection (cXl), 
"(ii) the vesting requirements of subsection (c)(2), and 
"(iii) the minimum cost requirements of subsection 
(0(3). 
"(2) ONLY i TRANSFER PER YEAR.— 
"(A) IN GENERAL.—No more than 1 transfer with respect 
to any plan during a taxable year may be treated as a 
qualified transfer for purposes of this section. 
"(B) EXCEPTION.—A transfer described in paragraph (4) 
shall not be taken into account for purposes of subpara-
graph (A). 
104 STAT. 1388-568 
PUBLIC LAW 101-508—NOV. 5, 1990 
"(3) LIMITATION ON AMOUNT TRANSFERRED.—The amount of 
excess pension assets which may be transferred in a qualified 
transfer shall not exceed the amount which is reasonably esti-
mated to be the amount the employer maintaining the plan will 
pay (whether directly or through reimbursement) out of such 
account during the taxable year of the transfer for qualified 
current retiree health liabilities. 
"(4) SPECIAL RULE FOR 1990.— 
"(A) IN GENERAL.—Subject to the provisions of subsection 
(c), a transfer shall be treated as a qualified transfer if such 
transfer— 
"(i) is made after the close of the taxable year preced-
ing the employer's first taxable year beginning after 
December 31,1990, and before the earlier of— 
"(I) the due date (including extensions) for the 
filing of the return of teix for such preceding tax-
able year, or 
"(II) the date such return is filed, and 
"(ii) does not exceed the expenditures of the employer 
for qualified current retiree health liabilities for such 
preceding taxable year. 
"(B) DEDUCTION REDUCED.—The amount of the deductions 
otherwise allowable under this chapter to an employer for 
the taxable year preceding the employer's first taxable year 
beginning after December 31, 1990, shall be reduced by the 
amount of any qualified transfer to which this paragraph 
applies. 
"(C) COORDINATION WITH REDUCTION RULE.—Subsection 
(eXlXB) shall not apply to a transfer described in subpara-
graph (A). 
"(5) EXPIRATION.—No transfer in any taxable year beginning 
after December 31, 1995, shall be treated as a qualified transfer. 
"(c) REQUIREMENTS OF PLANS TRANSFERRING ASSETS.— 
"(1) USE OF TRANSFERRED ASSETS.— 
"(A) IN GENERAL.—Any assets transferred to a health 
benefits account in a qualified transfer (and any income 
allocable thereto) shall be used only to pay qualified cur-
rent retiree health liabilities (other than liabilities of key 
employees not taken into account under subsection (e)(lXD)) 
for the taxable year of the transfer (whether directly or 
through reimbursement). 
"(B) AMOUNTS NOT USED TO PAY FOR HEALTH BENEFITS.— 
"(i) IN GENERAL.—Any assets transferred to a health 
benefits account in a qualified transfer (and any 
income allocable thereto) which are not used as pro-
vided in subparagraph (A) shall be transferred put of 
the account to the transferor plan. 
"(ii) TAX TREATMENT OF AMOUNTS.—Any amount 
transferred out of an account under clause (i)— 
"(I) shall not be includible in the gross income of 
the employer for such taxable year, but 
"(II) shall be treated as an employer reversion 
for purposes of section 4980 (without regard to 
subsection (d) thereof). 
"(C) ORDERING RULE.—For purposes of this section, any 
amount paid out of a health benefits account shall be 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-569 
treated £is paid first out of the assets and income described 
in subparagraph (A). 
"(2) REQUIREMENTS RELATING TO PENSION BENEFITS ACCRUING 
BEFORE TRANSFER.— 
"(A) IN GENERAL.—The requirements of this paragraph 
are met if the plan provides that the accrued pension 
benefits of any participant or beneficiary under the plan 
become nonforfeitable in the same manner which would be 
required if the plan had terminated immediately before the 
qualified transfer (or in the case of a participant who 
separated during the 1-year period ending on the date of the 
transfer, immediately before such separation). 
"(B) SPECIAL RULE FOR 1990.—In the case of a qualified 
transfer described in subsection (b)(4), the requirements of 
this paragraph are met with respect to any participant who 
separated from service during the taxable year to which 
such transfer relates by recomputing such participant's 
benefits as if subparagraph (A) had applied immediately 
before such separation. 
"(3) MINIMUM COST REQUIREMENTS.— 
"(A) IN GENERAL.—The requirements of this paragraph 
are met if each group health plan or arrangement under 
which applicable health benefits are provided provides that 
the applicable employer cost for each taxable year during 
the cost maintenance period shall not be less than the 
higher of the applicable employer costs for each of the 2 
taxable years immediately preceding the taxable year of 
the qualified transfer. 
"(B) APPUCABLE EMPLOYER COST.—For purposes of this 
paragraph, the term 'applicable employer cost means, with 
respect to any taxable year, the amount determined by 
dividing— 
(i) the qualified current retiree health liabilities of 
the employer for such taxable year determined— 
"(I) without regard to any reduction under 
subsection (e)(1)(B), and 
"(II) in the case of a taxable year in which there 
was no qualified transfer, in the same manner as if 
there had been such a transfer at the end of the 
taxable year, by 
"(ii) the number of individuals to whom coverage for 
applicable health benefits was provided during such 
taxable year. 
"(C) 
ELECTION TO COMPUTE COST SEPARATELY.—An 
em-
ployer may elect to have this paragraph applied separately 
with respect to individuals eligible for benefits under title 
XVIII of the Social Security Act at any time during the 
taxable year and with respect to individuals not so eligible. 
"(D) COST MAINTENANCE PERIOD.—For purposes of this 
paragraph, the term 'cost maintenance period' means the 
period of 5 taxable years beginning with the taxable year in 
which the qualified transfer occurs. If a taxable year is in 2 
or more overlapping cost maintenance periods, this para-
graph shall be applied by taking into account the highest 
applicable employer cost required to be provided under 
subparagraph (A) for such taxable year. 
'(d) LIMITATIONS ON EMPLOYER.—For purposes of this title— 
104 STAT. 1388-570 
PUBLIC LAW 101-508—NOV. 5, 1990 
"(1) DEDUCTION LIMITATIONS.—No deduction shall be al-
lowed— 
"(A) for the transfer of any amount to a health benefits 
account in a qualified transfer (or any retransfer to the 
plan under subsection (c)(1)(B)), 
"(B) for qualified current retiree health liabilities paid 
out of the assets (and income) described in subsection (c)(1), 
or 
"(C) for any amounts to which subparagraph (B) does not 
apply and which are paid for qualified current retiree 
health liabilities for the taxable year to the extent such 
amounts are not greater than the excess (if any) of— 
"(i) the amount determined under subparagraph (A) 
(and income allocable thereto), over 
"(ii) the amount determined under subparagraph (B). 
"(2) No CONTRIBUTIONS ALLOWED.—An employer may not 
contribute after December 31, 1990, any amount to a health 
benefits account or welfare benefit fund (as defined in section 
419(e)(1)) with respect to qualified current retiree health liabil-
ities for which transferred assets are required to be used under 
subsection (c)(1). 
"(e) DEFINITION AND SPECIAL RULES.—For purposes of this sec-
tion— 
"(1) QUAUFIED CURRENT RETIREE HEALTH LIABILITIES.—For 
purposes of this section— 
"(A) IN GENERAL.—The term 'qualified current retiree 
health liabilities' means, with respect to any taxable year, 
the aggregate amounts (including administrative expenses) 
which would have been allowable as a deduction to the 
employer for such taxable year with respect to applicable 
health benefits provided during such taxable year if— 
"(i) such benefits were provided directly by the em-
plover, and 
(ii) the employer used the cash receipts and 
disbursements method of accounting. 
For purposes of the preceding sentence, the rule of section 
419(c)(3)(B) shall apply. 
"(B) REDUCTIONS FOR AMOUNTS PREVIOUSLY SET ASIDE.— 
The amount determined under subparagraph (A) shall be 
reduced by any amount previously contributed to a health 
benefits account or welfare benefit fund (as defined in 
section 419(e)(1)) to pay for the qualified current retiree 
health liabilities. The portion of any reserves remaining as 
of the close of December 31,1990, shall be allocated on a pro 
rata basis to qualified current retiree health liabilities. 
"(C) APPUCABLE HEALTH BENEFITS.—The term 'applicable 
health benefits' mean health benefits or coverage which are 
provided to— 
"(i) retired employees who, immediately before the 
qualified transfer, are entitled to receive such benefits 
upon retirement and who are entitled to pension bene-
fits under the plan, and 
"(ii) their spouses and dependents. 
"(D) KEY EMPLOYEES EXCLUDED.—If an employee is a key 
employee (within the meaning of section 416(i)(l)) with 
respect to any plan year ending in a taxable year, such 
employee shall not be taken into account in computing 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-571 
qualified current retiree health liabilities for such taxable 
year or in calculating applicable employer cost under 
subsection (c)(3XB). 
"(2) EXCESS PENSION ASSETS.—The term 'excess pension gissets' 
means the excess (if any) of— 
"(A) the amount determined under section 412(cX7XA)(ii), 
over 
"(B) the greater of— 
"(i) 
the 
amount 
determined 
under 
section 
412(cX7XAXi), or 
"(ii) 125 percent of current liability (as defined in 
section 412(cX7XB)). 
The determination under this paragraph shall be made as of the 
most recent valuation date of the plan preceding the qualified 
transfer. 
"(3) HEALTH BENEFITS ACCOUNT.—The term "health benefits 
account" means an account established and maintained under 
section 401(h). 
"(4) COORDINATION WITH SECTION 412.—In the case of a quali-
fied transfer to a health benefits account— 
"(A) any assets transferred in a plan year on or before the 
valuation date for such year (and any income allocable 
thereto) shall, for purposes of section 412, be treated as 
assets in the plan as of the valuation date for such year, and 
"(B) the plan shall be treated £is having a net experience 
loss under section 412(b)(2)(B)(iv) in an amount equal to the 
amount of such transfer (reduced by any amounts trans-
ferred back to the pension plan under subsection (c)(lXB)) 
and for which amortization charges begin for the first plan 
year after the plan year in which such transfer occurs, 
except that such section shall be applied to such amount by 
substituting '10 plan years' for '5 plan years'." 
Qoi) CONFORMING AMENDMENT.—Section 401(h) is amended by 26USC401. 
inserting ", and subject to the provisions of section 420" after 
"Secretary". 
(c) EFFECTIVE DATES.— 
26 USC 420 note. 
(1) IN GENERAL.—The amendments made by this section shall 
apply to transfers in taxable years beginning after December 31, 
1990. 
(2) WAIVER OF ESTIMATED TAX PENALTIES.—No addition to tax 
shall be made under section 6654 or section 6655 of the Internal 
Revenue Code of 1986 for the taxable year preceding the tax-
payer's 1st taxable year beginning after December 31, 1990, 
with respect to any underpayment to the extent such 
underpayment was created or increased by reason of section 
420(b)(4)(B) of such Code (as added by subsection (a)). 
SEC. 12012. APPLICATION OF ERISA TO TRANSFERS OF EXCESS PENSION 
ASSETS TO RETIREE HEALTH ACCOUNTS. 
(a) EXCLUSIVE BENEFIT REQUIREMENT.—Section 403(cXl) of the 
Employee Retirement Income Security Act of 1974 (29 U.S.C. 
1103(cXl)) is amended by inserting ", or under section 420 of the 
Internal Revenue Code of 1986 (as in effect on January 1, 1991)" 
after "insured plans)". 
(b) EXEMPTIONS FROM PROHIBITED TRANSACTIONS.—Section 4080?) 
of such Act (29 U.S.C. 11080?)) is amended by adding at the end 
thereof the following new paragraph: 
104 STAT. 1388-572 
PUBLIC LAW 101-508—NOV. 5, 1990 
"(13) Any transfer in a taxable year beginning before Janu-
ary 1, 1996, of excess pension assets from a defined benefit plan 
to a retiree health account in a qualified transfer permitted 
under section 420 of the Internal Revenue Code of 1986 (as in 
effect on January 1,1991)." 
(c) FUNDING LIMITATIONS.—Section 302 of such Act (29 U.S.C. 
1082) is amended by redesignating subsection (g) as subsection (h) 
and by adding at the end thereof the following new subsection: 
"(g) QuAUFiED TRANSFERS TO HEALTH BENEFIT ACCOUNTS.—For 
purposes of this section, in the case of a qualified transfer (as defined 
in section 420 of the Internal Revenue Code of 1986)— 
"(1) any assets transferred in a plan year on or before the 
valuation date for such year (and any income allocable thereto) 
shall, for purposes of subsection (c)(7), be treated as assets in the 
plan as of the valuation date for such year, and 
"(2) the plan shall be treated as having a net experience loss 
under subsection (b)(2)(B)(iv) in an amount equal to the amount 
of such transfer (reduced by any amounts transferred back to 
the plan under section 420(c)(1)(B) of such Code) and for which 
amortization charges begin for the first plan year after the plan 
year in which such transfer occurs, except that such subsection 
shall be applied to such amount by substituting *10 plan years' 
for '5 plan years'." 
(d) NOTICE REQUIREMENTS.— 
(1) IN GENERAL.—Section 101 of such Act (29 U.S.C. 1021) is 
amended by redesignating subsection (e) as subsection (f) and by 
inserting after subsection (d) the following new subsection: 
"(e) NOTICE OF TRANSFER OF EXCESS PENSION ASSETS TO HEALTH 
BENEFITS ACCOUNTS.— 
"(1) NOTICE TO PARTICIPANTS.—Not later than 60 days before 
the date of a qualified transfer by an employee pension benefit 
plan of excess pension assets to a health benefits account, the 
administrator of the plan shall notify (in such manner as the 
Secretary may prescribe) each participant and beneficiary 
under the plan of such transfer. Such notice shall include 
information with respect to the amount of excess pension assets, 
the portion to be transferred, the amount of health benefits 
liabilities expected to be provided with the assets transferred, 
and the amount of pension benefits of the participant which will 
be nonforfeitable immediately after the transfer. 
"(2) NOTICE TO SECRETARIES, ADMINISTRATOR, AND EMPLOYEE 
ORGANIZATIONS.— 
"(A) IN GENERAL.—Not later than 60 days before the date 
of any qualified transfer by an employee pension benefit 
plan of excess pension assets to a health benefits account, 
the employer maintaining the plan from which the transfer 
is made shall provide the Secretary, the Secretary of the 
Treasury, the administrator, and each employee organiza-
tion representing participants in the plan a written notice 
of such transfer. A copy of any such notice shall be avail-
able for inspection in the principal office of the adminis-
trator. 
"(B) INFORMATION RELATING TO TRANSFER.—Such notice 
shall identify the plan from which the transfer is made, the 
amount of the transfer, a detailed accounting of assets 
projected to be held by the plan immediately before and 
PUBLIC LAW 101-508—NOV. 5. 1990 
104 STAT. 1388-573 
immediately after the transfer, and the current liabilities 
under the plan at the time of the transfer. 
"(C) 
AUTHORITY FOR ADDITIONAL REPORTING REQUIRE-
MENTS.—The Secretary may prescribe such additional 
reporting requirements £is may be necessary to carry out 
the purposes of this section. 
"(3) DEFINITIONS.—For purposes of paragraph (1), any term 
used in such paragraph which is also used in section 420 of the 
Internal Revenue Code of 1986 (as in effect on January 1, 1991) 
shall have the same meaning as when used in such section." 
(2) PENALTIES.— 
(A) Section 502(cXl) of such Act (29 U.S.C. 1132(cXl)) is 
amended by inserting "or section lOl(eXl)" after "section 
606". 
(B) Section 502(cX3) of such Act (29 U.S.C. 1132(cX3)) is 
amended— 
(i) by inserting "or who fails to meet the require-
ments of section 101(eX2) with respect to any person" 
after "beneficiary" the first place it appears, and 
(ii) by inserting "or to such person" after "bene-
ficiary' the second place it appears, 
(e) EFFECTIVE DATE.—The amendments made by this section shall 29 use 1021 
apply to qualified transfers under section 420 of the Internal Reve- "°*®-
nue Code of 1986 made after the date of the enactment of this Act. 
Subtitle C—Premium Rates 
SEC. 12021. INCREASE IN PREMIUM RATES. 
(a) INCREASE IN BASIC PREMIUM.— 
(1) IN GENERAL.—Clause (i) of section 4006(aX3)(A) of the 
Employee Retirement Income Security Act of 1974 (29 U.S.C. 
1306(aX3XA)) is amended by striking '%r plan years beginning 
after December 31, 1987, an gimount equal to the sum of $16' 
and inserting "for plan years beginning after December 31, 
1990, an amount equal to the sum of $19". 
(2) CONFORMING AMENDMENT.—Section 4006(cXlXA) of such 
Act (29 U.S.C. 1306(cXlXA)) is amended by adding at the end the 
following new clause: 
"(iv) with respect to each plan year beginning after 
December 31, 1987, and before January 1, 1991, an amount 
equal to $16 for each individual who was a participant in 
such plan during the plan year, and". 
(b) INCREASE IN ADDITIONAL PREMIUM.—Section 4006(aX3)(E) of 
such Act (29 U.S.C. 1306(aX3XE)) is amended— 
(1) by striking "$6.00" in clause (ii) and inserting "$9.00", and 
(2) by striking "$34" in clause (ivXD and inserting "$53". 
(c) EFFECTIVE DATE.—The amendments made by this section shall 29 use 1306 
apply to plan years beginning after December 31,1990. 
^°^-
TITLE XIII—BUDGET ENFORCEMENT 
i^Sement 
Act of 1990. 
SEC. 13001. SHORT TITLE; TABLE OF CONTENTS. 
(a) SHORT TITLE.—This title may be cited as the "Budget Enforce- 2 USC 900 note, 
ment Act of 1990". 
(b) TABLE OF CONTENTS.— 
104 STAT. 1388-574 
PUBLIC LAW 101-508—NOV. 5, 1990 
TITLE XIII—BUDGET ENFORCEMENT 
Subtitle A—Amendments to the Balanced Budget and Emergency Deficit Control 
Act of 1985 and Related Amendments 
Sec. 13001. Short title; table of contents. 
PART I—AMENDMENTS TO THE BALANCED BUDGET AND EMERGENCY DEFICIT CONTROL 
ACT OF 1985 
Sec. 13101. Sequestration. 
PART II—RELATED AMENDMENTS 
Sec. 13111. Temporary amendments to the Congressional Budget Act of 1974. 
Sec. 13112. Conforming amendments. 
Subtitle B—Permanent Amendments to the Congressional Budget and 
Impoundment Control Act of 1974 
Sec. 13201. Credit accounting. 
Sec. 13202. Codification of provision regarding revenue estimates. 
Sec. 13203. Debt increase as measure of deficit; display of Federal Retirement Trust 
Fund balances. 
Sec. 13204. Pay-as-you-go procedures. 
Sec. 13205. Amendments to section 303. 
Sec. 13206. Amendments to section 308. 
Sec. 13207. Standardization of language regarding points of order. 
Sec. 13208. Standardization of additional deficit control provisions. 
Sec. 13209. Codification of precedent with regard to conference reports and amend-
ments between Houses. 
Sec. 13210. Superseded deadlines and conforming changes. 
Sec. 13211. Definitions. 
Sec. 13212. Savings transfers between fiscal years. 
Sec. 13213. Conforming change to title 31. 
Sec. 13214. The Byrd Rule on extrfuieous matter in reconciliation. 
Subtitle C—Social Security 
Sec. 13301. Off-budget status of OASDI trust funds. 
Sec. 13302. Protection of OASDI trust funds in the House of Representatives. 
Sec. 13303. Social Security firewall and point of order in the Senate. 
Sec. 13304. Report to the Congress by the Board of Trustees of the OASDI trust funds 
regarding the actuarial balance of the trust funds. 
Sec. 13305. Exercise of rulemaking power. 
Sec. 13306. Effective date. 
Subtitle D—Treatment of Fiscal Year 1991 Sequestration 
Sec. 13401. Restoration of funds sequestered. 
Subtitle E—Government-Sponsored Enterprises 
Sec. 13501. Financial safety and soundness of Government-sponsored enterprises. 
Subtitle A—Amendments to the Balanced 
Budget and Emergency Deficit Control Act 
of 1985 and Related Amendments 
PART 
I—AMENDMENTS 
TO 
THE 
BALANCED 
BUDGET AND EMERGENCY DEFICIT CONTROL 
ACT OF 1985 
SEC. 13101. SEQUESTRATION. 
(a) SECTIONS 250 THROUGH 254.—Sections 251 (except for subsec-
tion (aX6XI)) through 254 of part C of the Balanced Budget and 
Emergency Deficit Control Act of 1985 (2 U.S.C. 901 et seq.) are 
amended to read as follows: 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-575 
"SEC. 250. TABLE OF CONTENTS; STATEMENT OF BUDGET ENFORCEMENT 2 USC 900. 
THROUGH SEQUESTRATION; DEFINITIONS. 
"(a) TABLE OF CONTENTS.— 
"Sec. 250. Table of contents; budget enforcement statement; definitions. 
"Sec. 251. Enforcing discretionary spending limits. 
"Sec. 252. Enforcing pay-as-you-go. 
"Sec. 253. Enforcing deficit targets. 
"Sec. 254. Reports and orders. 
"Sec. 255. Exempt programs and activities. 
"Sec. 256. Special rules. 
"Sec. 257. The baseline. 
"Sec. 258. Suspension in the event of war or low growth. 
"Sec. 258A. Modification of presidential order. 
"Sec. 258B. Alternative defense sequestration. 
"Sec. 258C. Special reconciliation process. 
"(b) 
GENERAL STATEMENT OF BUDGET ENFORCEMENT THROUGH 
SEQUESTRATION.—This part provides for the enforcement of the 
deficit reduction assumed in House Concurrent Resolution 310 
(101st Congress, second session) and the applicable deficit targets for 
fiscal years 1991 through 1995. Enforcement, as necessary, is to be 
implemented through sequestration— 
"(1) to enforce discretionary spending levels assumed in that 
resolution (with adjustments as provided hereinafter); 
"(2) to enforce the requirement that any legislation increasing 
direct spending or decreasing revenues be on a pay-as-you-go 
basis; and 
"(3) to enforce the deficit targets specifically set forth in the 
Congressional Budget and Impoundment Control Act of 1974 
(with adjustments as provided hereinafter); 
applied in the order set forth above. 
"(c) DEFINITIONS.— 
"As used in this part: 
"(1) The terms 'budget authority', 'new budget authority', 
'outlays', and 'deficit' have the meanings given to such terms in 
section 3 of the Congressional Budget and Impoundment Con-
trol Act of 1974 (but including the treatment specified in section 
257(b)(3) of the Hospital Insurance Trust Fund) and the terms 
'maximum deficit amount' and 'discretionary spending limit' 
shall mean the amounts specified in section 601 of that Act as 
adjusted under sections 251 and 253 of this Act. 
'(2) The terms 'sequester' and 'sequestration' refer to or mean 
the cancellation of budgetary resources provided by discre-
tionary appropriations or direct spending law. 
"(3) The term 'breach' means, for any fiscal year, the amount 
(if any) by which new budget authority or outlays for that year 
(within a category of discretionary appropriations) is above that 
category's discretionary spending limit for new budget author-
ity or outlays for that year, as the case may be. 
"(4) The term 'category' means: 
"(A) For fiscal years 1991, 1992, and 1993, any of the 
following subsets of discretionary appropriations: defense, 
international, or domestic. Discretionary appropriations in 
each of the three categories shall be those so designated in 
the joint statement of managers accompanying the con-
ference report on the Omnibus Budget Reconciliation Act of 
1990. New accounts or activities shall be categorized in 
consultation with the Committees on Appropriations and 
the Budget of the House of Representatives and the Senate. 
104 STAT. 1388-576 
PUBLIC LAW 101-508—NOV. 5, 1990 
"(B) For fiscal years 1994 and 1995, all discretionary 
appropriations. 
Contributions to the United States to offset the cost of Oper-
ation Desert Shield shall not be counted within any category. 
"(5) The term 'baseline' means the projection (described in 
section 257) of current-year levels of new budget authority, 
outlays, receipts, and the surplus or deficit into the budget year 
and the outyears. 
"(6) The term 'budgetary resources' means— 
"(A) with respect to budget year 1991, new budget author-
ity; unobligated balances; new loan guarantee commit-
ments 
or 
limitations; 
new 
direct 
loan 
obligations, 
commitments, or limitations; direct spending authority; and 
obligation limitations; or 
"(B) with respect to budget year 1992, 1993, 1994, or 1995, 
new budget authority; unobligated balances; direct spend-
ing authority; and obligation limitations. 
"(7) The term 'discretionary appropriations' means budgetary 
resources (except to fund direct-spending programs) provided in 
appropriation Acts. 
"(8) The term 'direct spending' means— 
"(A) budget authority provided by law other than appro-
priation Acts; 
"(B) entitlement authority; and 
"(C) the food stamp program. 
"(9) The term 'current' means, with respect to 0MB estimates 
included with a budget submission under section 1105(a) of title 
31, United States Code, the estimates consistent with the eco-
nomic and technical assumptions underlying that budget and 
with respect to estimates made after submission of the fiscal 
year 1992 budget that are not included with a budget submis-
sion, estimates consistent with the economic and technical 
assumptions underlying the most recently submitted Presi-
dent's budget. 
"(10) The term 'real economic growth', with respect to any 
fiscal year, means the growth in the gross national product 
during such fiscal year, adjusted for inflation, consistent with 
Department of Commerce definitions. 
"(11) The term 'account' means an item for which appropria-
tions are made in any appropriation Act and, for items not 
provided for in appropriation Acts, such term means an item for 
which there is a designated budget account identification code 
number in the President's budget. 
"(12) The term 'budget year' means, with respect to a session 
of Congress, the fiscal year of the Government that starts on 
October 1 of the calendar year in which that session begins. 
"(13) The term 'current year' means, with respect to a budget 
year, the fiscal year that immediately precedes that budget 
year. 
"(14) The term 'outyear' means, with respect to a budget year, 
any of the fiscal years that follow the budget year through fiscal 
year 1995. 
"(15) The term '0MB' means the Director of the Office of 
Management and Budget. 
"(16) The term 'CBO' means the Director of the Congressional 
Budget Office. 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-577 
"(17) For purposes of sections 252 and 253, legislation enacted 
during the second session of the One Hundred First Congress 
shall be deemed to have been enacted before the enactment of 
this Act. 
"(18) As used in this part, all references to entitlement 
authority shall include the list of mandatory appropriations 
included in the joint explanatory statement of managers accom-
panying the conference report on the Omnibus Budget Rec-
onciliation Act of 1990. 
"(19) The term 'deposit insurance' refers to the expenses of 
the Federal Deposit Insurance Corporation and the funds it 
incorporates, the Resolution Trust Corporation, the National 
Credit Union Administration and the funds it incorporates, the 
Office of Thrift Supervision, the Comptroller of the Currency 
Assessment Fund, and the RTC Office of Inspector General. 
"(20) The term 'composite outlay rate' means the percent of 
new budget authority that is converted to outlays in the fiscal 
year for which the budget authority is provided and subsequent 
fiscal years, as follows: 
"(A) For the international category, 46 percent for the 
first year, 20 percent for the second year, 16 percent for the 
third year, and 8 percent for the fourth year. 
"(B) For the domestic category, 53 percent for the first 
year, 31 percent for the second year, 12 percent for the 
third year, and 2 percent for the fourth year. 
•SEC. 251. ENFORCING DISCRETIONARY SPENDING LIMITS. 
2 USC 901. 
"(a) FISCAL YEARS 1991-1995 ENFORCEMENT.— 
"(1) SEQUESTRATION.—Within 15 calendar days after Congress 
adjourns to end a session and on the same day as a sequestra-
tion (if any) under section 252 and section 253, there shall be a 
sequestration to eliminate a budget-year breach, if any, within 
any category. 
"(2) EUMINATING 
A BREACH.—Each non-exempt account 
within a category shall be reduced by a dollar amount cal-
culated by multiplying the baseline level of sequestrable budg-
etary resources in that account at that time by the uniform 
percentage necessary to eliminate a breach within that cat-
egory; except that the health programs set forth in section 
256(e) shall not be reduced by more than 2 percent and the 
uniform percent applicable to all other programs under this 
paragraph shall be increased (if necessary) to a level sufficient 
to eliminate that breach. If, within a category, the discretionary 
spending limits for both new budget authority and outlays are 
breached, the uniform percentage shall be calculated by— 
"(A) first, calculating the uniform percentage necessary 
to eliminate the breach in new budget authority, and 
"(B) second, if any breach in outlays remains, increasing 
the uniform percentage to a level sufficient to eliminate 
that breach. 
"(3) MILITARY PERSONNEL.—If the President uses the authority 
to exempt any military personnel from sequestration under 
section 255(h), each account within subfunctional category 051 
(other than those military personnel accounts for which the 
authority provided under section 255(h) has been exercised) 
shall be further reduced by a dollar amount calculated by 
multiplying the enacted level of non-exempt budgetary re-
39-194 O - 91 - 32 : QL 3 Part 2 
104 STAT. 1388-578 
PUBLIC LAW 101-508—NOV. 5, 1990 
sources in that account at that time by the uniform percentage 
necessary to offset the total dollar amount by which outlays are 
not reduced in military personnel accounts by reason of the use 
of such authority. 
"(4) PART-YEAR APPROPRIATIONS.—If, on the date specified in 
paragraph (1), there is in effect an Act making or continuing 
appropriations for part of a fiscal year for any budget account, 
then the dollar sequestration calculated for that account under 
paragraphs (2) and (3) shall be subtracted from— 
"(A) the annualized amount otherwise available by law in 
that account under that or a subsequent part-year appro-
priation; and 
"(B) when a full-year appropriation for that account is 
enacted, from the amount otherwise provided by the full-
year appropriation. 
"(5) LOOK-BACK.—If, after June 30, an appropriation for the 
fiscal year in progress is enacted that causes a breach within a 
category for that year (after taking into account any sequestra-
tion of amounts within that category), the discretionary spend-
ing limits for that category for the next fiscal year shall be 
reduced by the amount or amounts of that breach. 
"(6) WiTHiN-SESSiON SEQUESTRATION.—If an appropriation for 
a fiscal year in progress is enacted (after Congress adjourns to 
end the session for that budget year and before July 1 of that 
fiscal year) that causes a breach within a category for that year 
(after taking into account any prior sequestration of amounts 
within that category), 15 days later there shall be a sequestra-
tion to eliminate that breach within that category following the 
procedures set forth in paragraphs (2) through (4). 
"(7) 0MB ESTIMATES.—As soon as practicable after Congress 
completes action on any discretionary appropriation, CBO, after 
consultation with the Committees on the Budget of the House of 
Representatives and the Senate, shall provide OMB with an 
estimate of the amount of discretionary new budget authority 
and outlays for the current year (if any) and the budget year 
provided by that legislation. Within 5 calendar days after the 
enactment of any discretionary appropriation, OMB shall trans-
mit a report to the House of Representatives and to the Senate 
containing the CBO estimate of that legislation, an OMB esti-
mate of the amount of discretionary new budget authority and 
outlays for the current year (if any) and the budget year pro-
vided by that legislation, and an explanation of any difference 
between the two estimates. For purposes of this paragraph, 
amounts provided by annual appropriations shall include any 
new budget authority and outlays for those years in account^ 
for which funding is provided in that legislation that result 
from previously enacted legislation. Those OMB estimates shall 
be made using current economic and technical assumptions. 
OMB shall use the OMB estimates transmitted to the Congress 
under this paragraph for the purposes of this subsection. OMB 
and CBO shall prepare estimates under this paragraph in 
conformance with scorekeeping guidelines determined after 
consultation among the House and Senate Committees on the 
Budget, CBO, and OMB. 
"(b) ADJUSTMENTS TO DISCRETIONARY SPENDING LIMITS.—(1) When 
the President submits the budget under section 1105(a) of title 31, 
United States Code, for budget year 1992, 1993, 1994, or 1995 (except 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-579 
as otherwise indicated), OMB shall calculate (in the order set forth 
below), and the budget shall include, adjustments to discretionary 
spending limits (and those limits as cumulatively adjusted) for the 
budget year and each outyear through 1995 to reflect the following: 
"(A) CHANGES IN CONCEPTS AND DEFINITIONS.—The adjust-
ments produced by the amendments made by title XIII of the 
Omnibus Budget Reconciliation Act of 1990 or by any other 
changes in concepts and definitions shall equal the baseline 
levels of new budget authority and outlays using up-to-date 
concepts and definitions minus those levels using the concepts 
and definitions in effect before such changes. Such other 
changes in concepts and definitions may only be made in con-
sultation with the Committees on Appropriations, the Budget, 
Government Operations, and Governmental Affairs of the 
House of Representatives and Senate. 
"(B) CHANGES IN INFLATION.—(i) For a budget submitted for 
budget year 1992, 1993, 1994, or 1995, the adjustments produced 
by changes in inflation shall equal the levels of discretionary 
new budget authority and outlays in the baseline (calculated 
using current estimates) subtracted from those levels in that 
baseline recalculated with the baseline inflators for the budget 
year only, multiplied by the inflation adjustment factor com-
puted under clause (ii). 
"(ii) For a budget year the inflation adjustment factor shall 
equal the ratio between the level of year-over-year inflation 
measured for the fiscal year most recently completed and the 
applicable estimated level for that year set forth below: 
"For 1990,1.041 
"For 1991,1.052 
"For 1992,1.041 
"For 1993,1.033 
Inflation shall be measured by the average of the estimated 
gross national product implicit price deflator index for a fiscal 
year divided by the average index for the prior fiscal year. 
"(C) CREDIT REESTIMATES.—For a budget submitted for fiscal 
year 1993 or 1994, the adjustments produced by reestimates to 
costs of Federal credit programs shall be, for any such program, 
a current estimate of new budget authority and outlays £issoci-
ated with a baseline projection of the prior year's gross loan 
level for that program minus the baseline projection of the prior 
year's new budget authority and associated outlays for that 
program. 
"(2) When OMB submits a sequestration report under section 
254(g) or (h) for fiscal year 1991, 1992, 1993, 1994, or 1995 (except as 
otherwise indicated), OMB shall calculate (in the order set forth 
below), and the sequestration report, and subsequent budgets 
submitted by the President under section 1105(a) of title 31, United 
States Code, shall include, adjustments to discretionary spending 
limits (and those limits as adjusted) for the fiscgd year and each 
succeeding year through 1995, as follows: 
"(A) IRS FUNDING.—To the extent that appropriations are 
enacted that provide additional new budget authority or result 
in additional outlays (as compared with the CBO baseline con-
structed in June 1990) for the Internal Revenue Service compli-
ance initiative in any fiscal year, the adjustments for that year 
shall be those amounts, but shall not exceed the amounts set 
forth below— 
104 STAT. 1388-580 
PUBLIC LAW 101-508—NOV. 5, 1990 
"(i) for fiscal year 1991, $191,000,000 in new budget 
authority and $183,000,000 in outlays; 
"(ii) for fiscal year 1992, $172,000,000 in new budget 
authority and $169,000,000 in outlays; 
"(iii) for fiscal year 1993, $183,000,000 in new budget 
authority and $179,000,000 in outlays; 
"(iv) for fiscal year 1994, $187,000,000 in new budget 
authority and $183,000,000 in outlays; and 
"(v) for fiscal year 1995, $188,000,000 in new budget 
authority and $184,000,000 in outlays; and 
the prior-year outlays resulting from these appropriations of 
budget authority. 
"(B) DEBT FORGIVENESS.—If, in calendar year 1990 or 1991, an 
appropriation is enacted that forgives the Arab Republic of 
Egypt s foreign military sales indebtedness to the United States 
and any part of the Government of Poland's indebtedness to the 
United States, the adjustment shall be the estimated costs (in 
new budget authority and outlays, in all years) of that 
forgiveness. 
'XC) IMF FUNDING.—If, in fiscal year 1991,1992,1993,1994, or 
1995 an appropriation is enacted to provide to the International 
Monetary Fund the dollar equivalent, in terms of Special Draw-
ing Rights, of the increase in the United States quota as part of 
the International Monetary Fund Ninth General Review of 
Quotas, the adjustment shall be the amount provided by that 
appropriation. 
(D) EMERGENCY APPROPRIATIONS.—(i) If, for fiscal year 1991, 
1992, 1993, 1994, or 1995, appropriations for discretionary ac-
counts are enacted that the President designates as emergency 
requirements and that the Congress so designates in statute, the 
adjustment shall be the total of such appropriations in discre-
tionary accounts designated as emergency requirements and the 
outlays flowing in all years from such appropriations. 
"(ii) The costs for operation Desert Shield are to be treated as 
emergency funding requirements not subject to the defense 
spending limits. Funding for Desert Shield will be provided 
through the normal legislative process. Desert Shield costs 
should be accommodated through Allied burden-sharing, subse-
quent appropriation Acts, and if the President so chooses, 
through offsets within other defense accounts. Emergency 
Desert Shield costs mean those incremental costs associated 
with the increase in operations in the Middle East and do not 
include costs that would be experienced by the Department of 
Defense as part of its normal operations absent Operation 
Desert Shield. 
"(E) 
SPECIAL ALLOWANCE FOR DISCRETIONARY NEW BUDGET 
AUTHORITY.—(i) For each pf fiscal years 1992 and 1993, the 
adjustment for the domestic category in each year shall be an 
amount equal to 0.1 percent of the sum of the adjusted discre-
tionary spending limits on new budget authority for all cat-
egories for fiscal years 1991, 1992, and 1993 (cumulatively), 
together with outlays associated therewith (calculated at the 
composite outlay rate for the domestic category); 
"(ii) for each of fiscal years 1992 and 1993, the adjustment 
for the international category in each year shall be an amount 
equal to 0.079 percent of the sum of the adjusted discretionary 
spending limits on new budget authority for all categories for 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-581 
fiscal years 1991, 1992, and 1993 (cumulatively), together with 
outlays associated therewith (calculated at the composite outlay 
rate for the international category); and 
"(iii) if, for fiscal years 1992 and 1993, the amount of new 
budget authority provided in appropriation Acts exceeds the 
discretionary spending limit on new budget authority for any 
category due to technical estimates made by the Director of the 
Office of Management and Budget, the adjustment is the 
amount of the excess, but not to exceed an amount (for 1992 and 
1993 together) equal to 0.042 percent of the sum of the adjusted 
discretionary limits on new budget authority for all categories 
for fiscal years 1991,1992, and 1993 (cumulatively). 
"(F) SPECIAL OUTLAY ALLOWANCE.—If in any fiscal year out-
lays for a category exceed the discretionary spending limit for 
that category but new budget authority does not exceed its limit 
for that category (after application of the first step of a seques-
tration described in subsection (a)(2), if necessary), the adjust-
ment in outlays is the amount of the excess, but not to exceed 
$2,500,000,000 in the defense category, $1,500,000,000 in the 
international category, or $2,500,000,000 in the domestic cat-
egory (as applicable) in fiscal year 1991,1992, or 1993, and not to 
exceed $6,500,000,000 in fiscal year 1994 or 1995 less any of the 
outlay adjustments made under subparagraph (E) for a category 
for a fiscal year. 
"SEC. 252. ENFORCING PAY-AS-YOU-GO. 
2 USC 902. 
"(a) FISCAL YEARS 1992-1995 ENFORCEMENT.—The purpose of this 
section is to assure that any legislation (enacted after the date of 
enactment of this section) affecting direct spending or receipts that 
increases the deficit in any fiscal year covered by this Act will 
trigger an offsetting sequestration. 
(b) SEQUESTRATION; LOOK-BACK.—Within 15 calendar days after 
Congress adjourns to end a session (other than of the One Hundred 
First Congress) and on the same day as a sequestration (if any) 
under section 251 and section 253, there shall be a sequestration to 
offset the amount of any net deficit increase in that fiscal year and 
the prior fiscal year caused by all direct spending and receipts 
legislation enacted after the date of enactment of this section (after 
adjusting for any prior sequestration as provided by paragraph (2)). 
OMB shall calculate the amount of deficit increase, if any, in those 
fiscal years by adding— 
"(1) all applicable estimates of direct spending and receipts 
legislation transmitted under subsection (d) applicable to those 
fiscal years, other than any amounts included in such estimates 
resulting from— 
"(A) full funding of, and continuation of, the deposit 
insurance guarantee commitment in effect on the date of 
enactment of this section, and 
"(B) emergency provisions as designated under subsection 
(e); and 
"(2) the estimated amount of savings in direct spending pro-
grams applicable to those fiscal years resulting from the prior 
year's sequestration under this section or section 253, if any 
(except for any amounts sequestered as a result of a net deficit 
increase in the fiscal year immediately preceding the prior 
fiscal year), as published in OMB's end-of-session sequestration 
report for that prior year. 
104 STAT. 1388-582 
PUBLIC LAW 101-508—NOV. 5, 1990 
"(c) ELIMINATING A DEFICIT INCREASE.—(1) The amount required to 
be sequestered in a fiscal year under subsection (b) shall be obtained 
from non-exempt direct spending accounts from actions taken in the 
following order: 
"(A) FIRST.—All reductions in automatic spending increases 
specified in section 256(a) shall be made. 
"(B) SECOND.—If additional reductions in direct spending ac-
counts are required to be made, the maximum reductions 
permissible under sections 256(b) (guaranteed student loans) 
and 256(c) (foster care and adoption assistance) shall be made. 
"(C) THIRD.—(i) If additional reductions in direct spending 
accounts are required to be made, each remaining non-exempt 
direct spending account shall be reduced by the uniform 
percentage necessary to make the reductions in direct spending 
required by paragraph (1); except that the medicare programs 
specified in section 256(d) shall not be reduced by more than 4 
percent and the uniform percentage applicable to all other 
direct spending programs under this paragraph shall be in-
creased (if necessary) to a level sufficient to achieve the required 
reduction in direct spending. 
"(ii) For purposes of determining reductions under clause (i), 
outlay reductions (as a result of sequestration of Commodity 
Credit Corporation commodity price support contracts in the 
fiscal year of a sequestration) that would occur in the following 
fiscal year shall be credited as outlay reductions in the fiscal 
year of the sequestration. 
"(2) For purposes of this subsection, accounts shall be assumed to 
be at the level in the baseline. 
"(d) 0MB ESTIMATES.—As soon as practicable after Congress com-
pletes action on any direct spending or receipts legislation enacted 
after the date of enactment of this section, after consultation with 
the Committees on the Budget of the House of Representatives and 
the Senate, CBO shall provide 0MB with an estimate of the amount 
of change in outlays or receipts, as the case may be, in each fiscal 
year through fiscal year 1995 resulting from that legislation. Within 
5 calendar days after the enactment of any direct spending or 
receipts legislation enacted after the date of enactment of this 
section, 0MB shall transmit a report to the House of Representa-
tives and to the Senate containing such CBO estimate of that 
legislation, an 0MB estimate of the amount of change in outlays or 
receipts, as the case may be, in each fiscal year through fiscal year 
1995 resulting from that legislation, and an explanation of any 
difference between the two estimates. Those CMB estimates shall be 
made using current economic and technical assumptions. 0MB and 
CBO shall prepare estimates under this paragraph in conformance 
with scorekeeping guidelines determined after consultation among 
the House and Senate Committees on the Budget, CBO, and 0MB. 
"(e) EMERGENCY LEGISLATION.—If, for fiscal year 1991, 1992, 1993, 
1994, or 1995, a provision of direct spending or receipts legislation is 
enacted that the President designates as an emergency requirement 
and that the Congress so designates in statute, the amounts of new 
budget authority, outlays, and receipts in all fiscal years through 
1995 resulting from that provision shall be designated as an emer-
gency requirement in the reports required under subsection (d). 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-583 
"SEC. 253. ENFORCING DEFICIT TARGETS. 
2 USC 903. 
"(a) SEQUESTRATION.—Within 15 calendar days after Congress 
adjourns to end a session (other than of the One Hundred First 
Congress) and on the same day as a sequestration (if any) under 
section 251 and section 252, but after any sequestration required by 
section 251 (enforcing discretionary spending limits) or section 252 
(enforcing pay-as-you-go), there shall be a sequestration to eliminate 
the excess deficit (if any remains) if it exceeds the margin. 
"(b) EXCESS DEFICIT; MARGIN.—The excess deficit is, if greater 
than zero, the estimated deficit for the budget year, minus— 
"(1) the maximum deficit amount for that year; 
"(2) the amounts for that year designated as emergency direct 
spending or receipts legislation under section 252(e); £uid 
"(3) for any fiscal year in which there is not a full adjustment 
for technical and economic reestimates, the deposit insurance 
reestimate for that year, if any, calculated under subsection (h). 
The 'margin' for fiscal year 1992 or 1993 is zero and for fiscal year 
1994 or 1995 is $15,000,000,000. 
"(c) DIVIDING THE SEQUESTRATION.—To eliminate the excess deficit 
in a budget year, half of the required outlay reductions shall be 
obtained from non-exempt defense accounts (accounts designated as 
function 050 in the President's fiscal year 1991 budget submission) 
and half from non-exempt, non-defense accounts (all other non-
exempt accounts). 
"(d) DEFENSE.—Each non-exempt defense account shall be reduced 
by a dollar amount calculated by multipljdng the level of 
sequestrable budgetary resources in that account at that time by the 
uniform percentage necessary to carry out subsection (c), except 
that, if any military personnel are exempt, adjustments shall be 
made under the procedure set forth in section 251(a)(3). 
"(e) NON-DEFENSE.—Actions to reduce non-defense accounts shall 
be taken in the following order: 
"(1) FIRST.—All reductions in automatic spending increases 
under section 256(a) shall be made. 
"(2) SECOND.—If additional reductions in non-defense ac-
counts are required to be made, the maximum reduction 
permissible under sections 256(b) (guaranteed student loans) 
and 256(c) (foster care and adoption assistance) shall be made. 
"(3) THIRD.—(A) If additional reductions in non-defense ac-
counts are required to be made, each remaining non-exempt, 
non-defense account shall be reduced by the uniform percentage 
necessary to make the reductions in non-defense outlays re-
quired by subsection (c), except that— 
"(i) the medicare program specified in section 256(d) shall 
not be reduced by more than 2 percent in total including 
any reduction of less than 2 percent made under section 252 
or, if it has been reduced by 2 percent or more under section 
252, it may not be further reduced under this section; and 
"(ii) the health programs set forth in section 256(e) shall 
not be reduced by more than 2 percent in total (including 
any reduction made under section 251), 
and the uniform percent applicable to all other programs under 
this subsection shall be increased (if necessary) to a level suffi-
cient to achieve the required reduction in non-defense outlays. 
"(B) For purposes of determining reductions under subpara-
graph (A), outlay reduction (as a result of sequestration of 
104 STAT. 1388-584 
PUBLIC LAW 101-508—NOV. 5, 1990 
Commodity Credit Corporation commodity price support con-
tracts in the fiscal year of a sequestration) that would occur in 
the following fiscal year shall be credited as outlay reductions in 
the fiscal year of the sequestration. 
"(f) BASELINE ASSUMPTIONS; PART-YEAR APPROPRIATIONS.— 
"(1) BUDGET ASSUMPTIONS.—For purposes of subsections (b), 
(c), (d), and (e), accounts shall be assumed to be at the level in 
the baseline minus any reductions required to be made under 
sections 251 and 252. 
"(2) PART-YEAR APPROPRIATIONS.—If, on the date specified in 
subsection (a), there is in effect an Act making or continuing 
appropriations for part of a fiscal year for any non-exempt 
budget account, then the dollar sequestration calculated for 
that account under subsection (d) or (e), as applicable, shall be 
subtracted from— 
"(A) the annualized amount otherwise available by law in 
that account under that or a subsequent part-year appro-
priation; and 
"(B) when a full-year appropriation for that account is 
enacted, from the amount otherwise provided by the full-
year appropriation; except that the amount to be seques-
tered from that account shall be reduced (but not below 
zero) by the savings achieved by that appropriation when 
the enacted amount is less than the baseline for that 
account. 
"(g) ADJUSTMENTS TO MAXIMUM DEFICIT AMOUNTS.— 
"(1) ADJUSTMENTS.— 
"(A) When the President submits the budget for fiscal 
year 1992, the maximum deficit amounts for fiscal years 
1992, 1993, 1994, and 1995 shall be adjusted to reflect up-to-
date reestimates of economic and technical assumptions 
and any changes in concepts or definitions. When the Presi-
dent submits the budget for fiscal year 1993, the maximum 
deficit amounts for fiscal years 1993,1994, and 1995 shall be 
further adjusted to reflect up-to-date reestimates of eco-
nomic and technical assumptions and any changes in con-
cepts or definitions. 
(B) When submitting the budget for fiscal year 1994, the 
President may choose to adjust the maximum deficit 
amounts for fiscal years 1994 and 1995 to reflect up-to-date 
reestimates of economic and technical assumptions. If the 
President chooses to adjust the maximum deficit amount 
when submitting the fiscal year 1994 budget, the President 
may choose to invoke the same adjustment procedure when 
submitting the budget for fiscal year 1995. In each case, the 
President must choose between making no adjustment or 
the full adjustment described in paragraph (2). If the Presi-
dent chooses to make that full adjustment, then those 
procedures for adjusting discretionary spending limits de-
scribed in sections 251(b)(lXC) and 251(b)(2XE), otherwise 
applicable through fiscal year 1993 or 1994 (as the case may 
be), shall be deemed to apply for fiscal year 1994 (and 1995 
if applicable). 
"(C) When the budget for fiscal year 1994 or 1995 is 
submitted and the sequestration reports for those years 
under section 254 are made (as applicable), if the President 
does not choose to make the adjustments set forth in 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-585 
subparagraph (B), the maximum deficit amount for that 
fiscal year shall be adjusted by the amount of the adjust-
ment to discretionary spending limits first applicable for 
that year (if any) under section 251(b). 
"(D) For each fiscal year the adjustments required to be 
made with the submission of the President's budget for that 
year shall also be made when 0MB submits the sequestra-
tion update report and the final sequestration report for 
that year, but OMB shall continue to use the economic and 
technical assumptions in the President's budget for that 
year. 
Each adjustment shall be made by increasing or decreasing the 
maximum deficit amounts set forth in section 601 of the 
Congressional Budget Act of 1974. 
"(2) CALCULATIONS OF ADJUSTMENTS.—The required incresise 
or decrease shall be calculated as follows: 
"(A) The baseline deficit or surplus shall be calculated 
using up-to-date economic and technical assumptions, using 
up-to-date concepts and definitions, and, in lieu of the 
baseline levels of discretionary appropriations, using the 
discretionary spending limits set forth in section 601 of the 
Congressional Budget Act of 1974 as adjusted under section 
251. 
"(B) The net deficit increase or decrease caused by all 
direct spending and receipts legislation enacted after the 
date of enactment of this section (after adjusting for £iny 
sequestration of direct spending accounts) shall be cal-
culated for each fiscal year by adding— 
"(i) the estimates of direct spending and receipts 
legislation transmitted under section 252(d) applicable 
to each such fiscal year; and 
"(ii) the estimated amount of savings in direct spend-
ing programs applicable to each such fiscal year result-
ing from the prior year's sequestration under this 
section or section 252 of direct spending, if any, as 
contained in OMB's final sequestration report for that 
year. 
"(C) The amount calculated under subparagraph (B) shedl 
be subtracted from the amount calculated under subpara-
graph (A). 
"(D) The maximum deficit amount set forth in section 601 
of the Congressional Budget Act of 1974 shall be subtracted 
from the amount calculated under subparagraph (C). 
"(E) The amount calculated under subparagraph (D) shall 
be the amount of the adjustment required by paragraph (1). 
'(h) TREATMENT OF DEPOSIT INSURANCE.— 
"(1) INITIAL ESTIMATES.—The initial estimates of the net costs 
of federal deposit insurance for fiscal year 1994 and fiscal year 
1995 (assuming full funding of, and continuation of, the deposit 
insurance guarantee commitment in effect on the date of the 
submission of the budget for fiscal year 1993) shall be set forth 
in that budget. 
"(2) REESTIMATES.—For fiscal year 1994 and fiscal year 1995, 
the amount of the reestimate of deposit insurance costs shall be 
calculated by subtracting the amount set forth under paragraph 
(1) for that year from the current estimate of deposit insurance 
costs (but assuming full funding of, and continuation of, the 
104 STAT. 1388-586 
PUBLIC LAW 101-508—NOV. 5, 1990 
deposit insurance guarantee commitment in effect on the date 
of submission of the budget for fiscal year 1993). 
2 u s e 904. 
"SEC. 254. REPORTS AND ORDERS. 
"(a) TIMETABLE.—The timetable with respect to this part for any 
budget year is as follows: 
"Date: 
Action to be completed: 
January 21 
Notification regarding optional adjust-
ment of maximum deficit amount. 
5 days before the President's budget 
CBO sequestration preview report, 
submission. 
The President's budget submission.... 
0MB sequestration preview report. 
August 10 
Notification regarding military person-
nel. 
August 15 
CBO sequestration update report. 
August 20 
OMB sequestration update report. 
10 days after end of session 
CBO 
final 
sequestration report. 
15 days after end of session 
OMB final sequestration report; Presi-
dential order. 
30 days later 
GAO compliance report. 
"(b) SUBMISSION AND AVAILABILITY OF REPORTS.—Each report re-
quired by this section shall be submitted, in the case of CBO, to the 
House of Representatives, the Senate and OMB and, in the case of 
OMB, to the House of Representatives, the Senate, and the Presi-
dent on the day it is issued. On the following day a notice of the 
report shall be printed in the Federal Register. 
(c) OPTIONAL ADJUSTMENT OF MAXIMUM DEFICIT AMOUNTS.— 
With respect to budget year 1994 or 1995, on the date specified in 
subsection (a) the President shall notify the House of Representa-
tives and the Senate of his decision regarding the optional adjust-
ment of the maximum deficit amount (as allowed under section 
253(g)(1)(B)). 
"(d) SEQUESTRATION PREVIEW REPORTS.— 
"(1) REPORTING REQUIREMENT.—On the dates specified in 
subsection (a), OMB and CBO shall issue a preview report 
regarding discretionary, pay-as-you-go, and deficit sequestration 
based on laws enacted through those dates. 
"(2) DISCRETIONARY SEQUESTRATION REPORT.—The preview re-
ports shall set forth estimates for the current year and each 
subsequent year through 1995 of the applicable discretionary 
spending limits for each category and an explanation of any 
adjustments in such limits under section 251. 
(3) PAY-AS-YOU-GO SEQUESTRATION REPORTS.—The preview re-
ports shall set forth, for the current year and the budget year, 
estimates for each of the following: 
"(A) The amount of net deficit increase or decrease, if 
any, calculated under subsection 252(b). 
(B) A list identifying each law enacted and sequestration 
implemented after the date of enactment of this section 
included in the calculation of the amount of deficit increase 
or decrease and specifying the budgetary effect of each such 
law. 
"(C) The sequestration percentage or (if the required 
sequestration percentage is greater than the maximum 
allowable percentage for medicare) percentages necessary 
to eliminate a deficit increase under section 252(c). 
"(4) DEFICIT SEQUESTRATION REPORTS.—The preview reports 
shall set forth for the budget year estimates for each of the 
following: 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-587 
"(A) The maximum deficit amount, the estimated deficit 
calculated under section 253(b), the excess deficit, and the 
margin. 
"(B) The amount of reductions required under section 
252, the excess deficit remaining after those reductions 
have been made, and the amount of reductions required 
from defense accounts and the reductions required from 
non-defense accounts. 
"(C) The sequestration percentage necessary to achieve 
the required reduction in defense accounts under section 
253(d). 
"(D) The reductions required under sections 253(eXl) and 
253(e)(2). 
"(E) The sequestration percentage necessary to achieve 
the required reduction in non-defense accounts under sec-
tion 253(e)(3). 
The CBO report need not set forth the items other than the 
maximum deficit amount for fiscal year 1992, 1993, or any fiscal 
year for which the President notifies the House of Representa-
tives and the Senate that he will adjust the maximum deficit 
amount under the option under section 253(g)(1)(B). 
"(5) EXPLANATION OF DIFFERENCES.—The 0MB reports shall 
explain the differences between 0MB and CBO estimates for 
each item set forth in this subsection. 
"(e) 
NOTIFICATION REGARDING MIUTARY 
PERSONNEL.—On 
or 
before the date specified in subsection (a), the President shall notify 
the Congress of the manner in which he intends to exercise flexibil-
ity with respect to military personnel accounts under section 255(h). 
"(f) SEQUESTRATION UPDATE REPORTS.—On the dates specified in 
subsection (a), 0MB and CBO shall issue a sequestration update 
report, reflecting laws enacted through those dates, containing all of 
the information required in the sequestration preview reports. 
"(g) FINAL SEQUESTRATION REPORTS.— 
"(1) REPORTING REQUIREMENT.—On the dates specified in 
subsection (a), 0MB and CBO shall issue a final sequestration 
report, updated to reflect laws enacted through those dates. 
"(2) DISCRETIONARY SEQUESTRATION REPORTS.—The final re-
ports shall set forth estimates for each of the following: 
"(A) For the current year and each subsequent year 
through 1995 the applicable discretionary spending limits 
for each category and an explanation of any adjustments in 
such limits under section 251. 
"(B) For the current year and the budget year the esti-
mated new budget authority and outlays for each category 
and the breach, if any, in each category. 
"(C) For each category for which a sequestration is re-
quired, the sequestration percentages necessary to achieve 
the required reduction. 
* 
"(D) For the budget year, for each account to be seques-
tered, estimates of the baseline level of sequestrable budg-
etary resources and resulting outlays and the amount of 
budgetary resources to be sequestered and resulting outlay 
reductions. 
"(3) PAY-AS-YOU-GO AND DEFICIT SEQUESTRATION REPORTS.—The 
final reports shall contain all the information required in the 
pay-as-you-go and deficit sequestration preview reports. In addi-
tion, these reports shall contain, for the budget year, for each 
104 STAT. 1388-588 
PUBLIC LAW 101-508—NOV. 5, 1990 
account to be sequestered, estimates of the baseline level of 
sequestrable budgetary resources and resulting outlays and the 
amount of budgetary resources to be sequestered and resulting 
outlay reductions. The reports shall also contain estimates of 
the effects on outlays of the sequestration in each outyear 
through 1995 for direct spending programs. 
"(4) EXPLANATION OF DIFFERENCES.—The 0MB report shall 
explain any differences between OMB and CBO estimates of the 
amount of any net deficit change calculated under subsection 
252(b), any excess deficit, any breach, and any required seques-
tration percentage. The OMB report shall also explain dif-
ferences in the amount of sequesterable resources for any 
budget account to be reduced if such difference is greater than 
$5,000,000. 
"(5) PRESIDENTIAL ORDER.—On the date specified in subsection 
(a), if in its final sequestration report OMB estimates that any 
sequestration is required, the President shall issue an order 
fully implementing without change all sequestrations required 
by the OMB calculations set forth in that report. This order 
shall be effective on issuance. 
"(h) WITHIN-SESSION SEQUESTRATION REPORTS AND ORDER.—If an 
appropriation for a fiscal year in progress is enacted (after Congress 
adjourns to end the session for that budget year and before July 1 of 
that fiscal year) that causes a breach, 10 days later CBO shall issue a 
report containing the information required in paragraph (gX2). Fif-
teen days after enactment, OMB shall issue a report containing the 
information required in paragraphs (g)(2) and (gX4). On the same 
day as the OMB report, the President shall issue an order fully 
implementing without change all sequestrations required by the 
OMB calculations set forth in that report. This order shall be 
effective on issuance. 
"(i) GAO COMPUANCE REPORT.—On the date specified in subsec-
tion (a), the C!omptroller General shall submit to the Congress and 
the President a report on— 
"(1) the extent to which each order issued by the President 
under this section complies with all of the requirements con-
tained in this part, either certifying that the order fully and 
accurately complies with such requirements or indicating the 
respects in which it does not; and 
"(2) the extent to which each report issued by OMB or CBO 
under this section complies with all of the requirements con-
tained in this part, either certifying that the report fully and 
accurately complies with such requirements or indicating the 
respects in which it does not. 
"(j) LOW-GROWTH REPORT.—At any time, CBO shall notify the 
Congress if— 
"(1) during the period consisting of the quarter during which 
such notification is given, the quarter preceding such notifica-
tion, and the 4 quarters following such notification, CBO or 
OMB has determined that real economic growth is projected or 
estimated to be less than zero with respect to each of any 2 
consecutive quarters within such period; or 
"(2) the most recent of the Department of Commerce's ad-
vance preliminary or final reports of actual real economic 
growth indicate that the rate of real economic growth for each 
of the most recently reported quarter and the immediately 
preceding quarter is less than one percent. 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-589 
"(k) ECONOMIC AND TECHNICAL ASSUMPTIONS.—In all reports re-
quired by this section, 0MB shall use the same economic and 
technical assumptions as used in the most recent budget submitted 
by the President under section 1105(a) of title 31, United States 
Code.". 
O
b
) SECTION 250: DEFINITIONS.—Paragraph (12) of section 257 of 
such Act (as in effect immediately before the date of enactment of 2 USC 900,907. 
this Act) is redesignated as a new paragraph (21) of section 250(c). 
(c) SECTION 255: EXEMPT PROGRAMS AND ACTIVITIES.— 
(1) Section 255(a) of such Act is amended to read as follows: 2 USC 905. 
"(a) SOCIAL SECURITY BENEFITS AND TIER I RAILROAD RETIREMENT 
BENEFITS.—Benefits payable under the old-age, survivors, and 
disability insursince program established under title II of the Social 
Security Act, and benefits payable under section 3(a), 3(fX3), 4(a), or 
4(f) of the Railroad Retirement Act of 1974, shall be exempt from 
reduction under any order issued under this part.". 
(2) Section 255(e) of such Act is amended to read as follows: 
"(e) NON-DEFENSE UNOBLIGATED BALANCES.—Unobligated bal-
ances of budget authority carried over from prior fiscal years, except 
balances in the defense category, shall be exempt from reduction 
under any order issued under this part.". 
(3) Section 255(gXl)(B) of such Act is amended by inserting 
after the item relating to Railroad retirement tier II the 
following: 
"Railroad supplemental annuity pension fund (60-8012-0-7-
602);". 
(4) Section 255 of such Act is amended by inserting at the end 
the following: 
"(h) OPTIONAL EXEMPTION OF MILITARY PERSONNEL.— 
"(1) The President may, with respect to any military person-
nel account, exempt that account from sequestration or provide 
for a lower uniform percentage reduction than would otherwise 
apply. 
(2) The President may not use the authority provided by 
paragraph (1) unless he notifies the C!ongress of the manner in 
which such authority will be exercised on or before the initial 
snapshot date for the budget year.". 
(d) SECTION 256: EXCEPTIONS, LIMITATIONS, AND SPECIAL RULES.— 
(1) Section 256(a) of such Act is amended to read as follows: 2 USC 906. 
"(a) AUTOMATIC SPENDING INCREASES.—Automatic spending in-
creases are increases in outlays due to changes in indexes in the 
following programs: 
"(1) National Wool Act; 
"(2) Special milk program; and 
"(3) Vocational rehabilitation basic State grants. 
In those programs all amounts other than the automatic spending 
increases shall be exempt from reduction under any order issued 
under this part.". 
(2) Section 256 of such Act is amended by redesignating 
subsection (b) as subsection (h), subsection (c) as subsection (b), 
subsection (e) as subsection (f), subsection (f) as subsection (c), 
subsection (h) as subsection (i), and subsection (k) as subsection 
(e), by repealing subsections (i) and (1), and by inserting at the 
end the following: 
"(k) SPECIAL RULES FOR THE JOBS PORTION OF AFDC.— 
"(1) FULL AMOUNT OF SEQUESTRATION REQUIRED.—Any order 
issued by the President under section 254 shall accomplish the 
104 STAT. 1388-590 
PUBLIC LAW 101-508—NOV. 5, 1990 
full amount of any required sequestration of the job opportuni-
ties and basic skills training program under section 402(a)(19), 
and part F of title VI, of the Social Security Act, in the manner 
specified in this subsection. Such an order may not reduce any 
Federal matching rate pursuant to section 403(1) of the Social 
Security Act. 
"(2) N E W ALXOTMENT FORMULA.— 
"(A) GENERAL RULE.—Notwithstanding section 403(k) of 
the Social Security Act, each State's percentage share of the 
amount available after sequestration for direct spending 
pursuant to section 403(1) of such Act for the fiscal year to 
which the sequestration applies shall be equal to— 
"(i) the lesser of— 
"(I) that percentage of the total amount paid to 
the States pursuant to such section 403(1) for the 
prior fiscal year that is represented by the amount 
paid to such State pursuant to such section 403(1) 
for the prior fiscal year; or 
"(II) the amount that would have been allotted to 
such State pursuant to such section 403(k) had the 
sequestration not been in effect. 
"(B) REALLOTMENT OF AMOUNTS REMAINING UNALLOTTED 
AFTER APPUCATION OF GENERAL RULE.—Any amount made 
available after sequestration for direct spending pursuant 
to section 403(1) of the Social Security Aot for the fiscal year 
to which the sequestration applies that remains unallotted 
as a result of subparagraph (A) of this paragraph shall be 
allotted among the States in proportion to the absolute 
difference between the amount allotted, respectively, to 
each State as a result of such subparagraph and the amount 
that would have been allotted to such State pursuant to 
section 403(k) of such Act had the sequestration not been in 
effect, except that a State may not be allotted an amount 
under this subparagraph that results in a total allotment to 
the State under this paragraph of more than the amount 
that would have been allotted to such State pursuant to 
such section 403(k) had the sequestration not been in effect. 
"(1) EFFECTS OF SEQUESTRATION.—The effects of sequestration shall 
be as follows: 
"(1) Budgetary resources sequestered from any account other 
than a trust or special fund account shall be permanently 
cancelled. 
"(2) Except as otherwise provided, the same percentage 
sequestration shall apply to EQI programs, projects, and activi-
ties within a budget account (with programs, projects, and 
activities as delineated in the appropriation Act or accompany-
ing report for the relevant fiscal year covering that account, or 
for accounts not included in appropriation Acts, as delineated in 
the most recently submitted President's budget). 
"(3) Administrative regulations or similar actions implement-
ing a sequestration shall be made within 120 days of the seques-
tration order. To the extent that formula allocations differ at 
different levels of budgetary resources within an account, pro-
gram, project, or activity, the sequestration shall be interpreted 
as producing a lower total appropriation, with the remaining 
amount of the appropriation being obligated in a manner 
consistent with program allocation formulas in substantive law. 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-591 
"(4) Except as otherwise provided, obligations in sequestered 
accounts shall be reduced only in the fiscal year in which a 
sequester occurs. 
"(5) If an automatic spending increase is sequestered, the 
increase (in the applicable index) that was disregarded as a 
result of that sequestration shall not be taken into account in 
any subsequent fiscal year. 
"(6) Except as otherwise provided, sequestration in trust and 
special fund accounts for which obligations are indefinite shall 
be taken in a manner to ensure that obligations in the fiscal 
year of a sequestration are reduced, from the level that 
would actually have occurred, by the applicable sequestration 
percentage.". 
(3) Section 256 of such Act is amended by striking "section 2 USC 906. 
252" each place it appears and by inserting "section 254". 
(4) Section 256(c) (as redesignated) of such Act is amended by 
inserting after the first sentence the following: "No State's 
matching pajrments from the Federal Government for foster 
care maintenance payments or for adoption assistance mainte-
nance payments may be reduced by a percentage exceeding the 
applicable domestic sequestration percentage.". 
(5) Section 256(dXl) of such Act is amended to read as follows: 
"(1) 
CALCULATION OF REDUCTION IN INDIVIDUAL PAYMENT 
AMOUNTS.—To achieve the total percentage reduction in those 
programs required by sections 252 and 253, and notwithstanding 
section 710 of the Social Security Act, 0MB shall determine, 
and the applicable Presidential order under section 254 shall 
implement, the percentage reduction that shall apply to pay-
ments under the health insurance programs under title XVIII 
of the Social Security Act for services furnished after the order 
is issued, such that the reduction made in payments under that 
order shall achieve the required total percentage reduction in 
those payments for that fiscal year as determined on a 12-month 
bdsis 
(6) Section 256(d)(2)(C) of such Act is repealed. 
(e) THE BASELINE.—(1) Section 257 of such Act is amended to read 2 USC 907. 
as follows: 
"SEC. 257. THE BASELINE. 
"(a) IN GENERAL.—For any budget year, the baseline refers to a 
projection of current-year levels of new budget authority, outlays, 
revenues, and the surplus or deficit into the budget year and the 
outyears based on laws enacted through the applicable date. 
"(b) DIRECT SPENDING AND RECEIPTS.—For the budget year and 
each outyear, the baseline shall be calculated using the following 
assumptions: 
"(1) IN GENERAL.—Laws providing or creating direct spending 
/ 
and receipts are assumed to operate in the manner specified in 
/ 
those laws for each such year and funding for entitlement 
/ 
authority is assumed to be adequate to make all payments 
/ 
required by those laws. 
/ 
"(2) EXCEPTIONS.—(A) No program with estimated current- 
/ 
year outlays greater than $50 million shall be assumed to expire 
in the budget year or outyears. 
"(B) The increase for vetersuis' compensation for a fiscal year 
is assumed to be the same as that required by law for veterans' 
104 STAT. 1388-592 
PUBLIC LAW 101-508—NOV. 5, 1990 
pensions unless otherwise provided by law enacted in that 
session. 
"(C) Excise taxes dedicated to a trust fund, if expiring, are 
assumed to be extended at current rates. 
"(3) HOSPITAL INSURANCE TRUST FUND.—Notwithstanding any 
other provision of law, the receipts and disbursements of the 
Hospital Insurance Trust Fund shall be included in all calcula-
tions required by this Act. 
"(c) DISCRETIONARY APPROPRIATIONS.—For the budget year and 
each outyear, the baseline shall be calculated using the following 
assumptions regarding all amounts other than those covered by 
subsection (b): 
"(1) INFLATION OF CURRENT-YEAR APPROPRIATIONS.—Budgetary 
resources other than unobligated balances shall be at the level 
provided for the budget year in full-year appropriation Acts. If 
for any account a full-year appropriation has not yet been 
enacted, budgetary resources other than unobligated balances 
shall be at the level available in the current year, adjusted 
sequentially and cumulatively for expiring housing contracts as 
specified in paragraph (2), for social insurance administrative 
expenses as specified in paragraph (3), to offset pay absorption 
and for pay annualization as specified in paragraph (4), for 
inflation as specified in paragraph (5), and to account for 
changes required by law in the level of agency pa3anents for 
personnel benefits other than pay. 
"(2) EXPIRING HOUSING CONTRACTS.—New budget authority to 
renew expiring multiyear subsidized housing contracts shall be 
adjusted to reflect the difference in the number of such con-
tracts that are scheduled to expire in that fiscal year and the 
number expiring in the current year, with the per-contract 
renewal cost equal to the aversige current-year cost of renewal 
contracts. 
"(3) SOCIAL INSURANCE ADMINISTRATIVE EXPENSES.—Budgetary 
resources for the administrative expenses of the following trust 
funds shall be adjusted by the percentage change in the bene-
ficiary population from the current year to that fiscal year: the 
Federal Hospital Insurance Trust Fund, the Supplementary 
Medical Insurance Trust Fund, the Unemplojmient Trust Fund, 
and the railroad retirement account. 
"(4) PAY ANNUALIZATION; OFFSET TO PAY ABSORPTION.—Cur-
rent-year new budget authority for Federal employees shall be 
adjusted to reflect the full 12-month costs (without absorption) 
of any pay adjustment that occurred in that fiscal year. 
"(5) INFLATORS.—The inflator used in paragraph (1) to adjust 
budgetary resources relating to personnel shall be the percent 
by which the average of the Bureau of Labor Statistics Employ-
ment Cost Index (wages and salaries, private industry workers) 
for that fiscal year differs from such index for the current year. 
The inflator used in paragraph (1) to adjust all other budgetary 
resources shall be the percent by which the average of the 
estimated gross national product fixed-weight price index for 
that fiscal year differs from the average of such estimated index 
for the current year. 
"(6) CURRENT-YEAR APPROPRIATIONS.—If, for any account, a 
continuing appropriation is in effect for less than the entire 
current year, then the current-year amount shall be assumed to 
equal the amount that would be available if that continuing 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-593 
appropriation covered the entire fiscal year. If law permits the 
transfer of budget authority among budget accounts in the 
current year, the current-year level for an account shall reflect 
transfers accomplished by the submission of, or assumed for the 
current year in, the President's original budget for the budget 
year. 
"(d) UP-TODATE CONCEPTS.—In deriving the baseline for any 
budget year or outyear, current-year amounts shall be calculated 
using the concepts and definitions that are required for that budget 
year.". 
(2) Section 251(aX6)(I) of such Act (as in effect immediately before 2 USC 901,907. 
the date of enactment of this Act) is redesignated as section 257(e) of 
such Act. Section 257(e) is amended by striking "assuming, for 
purposes of this paragraph and subparagraph (A)(i) of paragraph (3), 
that the" and inserting 'The". 
(f) Such Act is amended by inserting after section 257 the 
following: 
"SEC. 258. SUSPENSION IN THE EVENT OF WAR OR LOW GROWTH. 
2 USC 907a. 
"(a) PROCEDURES IN THE EVENT OF A LOW GROWTH REPORT.— 
"(1) TRIGGER.—Whenever CBO issues a low-growth report 
under section 254(j), the Majority Leader of the House of Rep-
resentatives may, and the Majority Leader of the Senate shall, 
introduce a joint resolution (in the form set forth in paragraph 
(2)) declaring that the conditions specified in section 254(j) are 
met and suspending the relevant provisions of this title, titles 
III and VI of the Congressional Budget Act of 1974, and section 
1103 of title 31, United States Code. 
"(2) FORM OF JOINT RESOLUTION.— 
"(A) The matter after the resolving clause in any joint 
resolution introduced pursuant to paragraph (1) shall be as 
follows: 'That the Congress declares that the conditions 
specified in section 254(j) of the Balanced Budget and 
Emergency Deficit Control Act of 1985 are met, and the 
implementation of the Congressional Budget and Impound-
ment Control Act of 1974, chapter 11 of title 31, United 
States Code, and part C of the Balanced Budget and Emer-
gency Deficit Control Act of 1985 are modified as described 
in section 258(b) of the Balanced Budget and Emergency 
Deficit Control Act of 1985.'. 
"(B) The title of the joint resolution shall be 'Joint resolu-
tion suspending certain provisions of law pursuant to sec-
tion 258(aX2) of the Balanced Budget and Emergency 
Deficit Control Act of 1985.'; and the joint resolution shall 
not contain any preamble. 
"(3) COMMITTEE ACTION.—Each joint resolution introduced 
pursuant to paragraph (1) shall be referred to the appropriate 
committees of the House of Representatives or the Committee 
on the Budget of the Senate, as the case may be; and such 
Committee shall report the joint resolution to its House without 
amendment on or before the fifth day on which such House is in 
session after the date on which the joint resolution is intro-
duced. If the Committee fails to report the joint resolution 
within the five-day period referred to in the preceding sentence, 
it shall be automatically discharged from further consideration 
of the joint resolution, and the joint resolution shall be placed 
on the appropriate calendar. 
104 STAT. 1388-594 
PUBLIC LAW 101-508—NOV. 5, 1990 
"(4) CONSIDERATION OF JOINT RESOLUTION.— 
"(A) A vote on final passage of a joint resolution reported 
to the Senate or discharged pursuant to paragraph (3) shall 
be taken on or before the close of the fifth calendar day of 
session after the date on which the joint resolution is 
reported or after the Committee has been discharged from 
further consideration of the joint resolution. If prior to the 
passage by one House of a joint resolution of that House, 
that House receives the same joint resolution from the 
other House, then— 
"(i) the procedure in that House shall be the same as 
if no such joint resolution had been received from the 
other House, but 
"(ii) the vote on final passage shall be on the joint 
resolution of the other House. 
When the joint resolution is agreed to, the Clerk of the 
House of Representatives (in the case of a House joint 
resolution agreed to in the House of Representatives) or the 
Secretary of the Senate (in the case of a Senate joint 
resolution agreed to in the Senate) shall cause the joint 
resolution to be engrossed, certified, and transmitted to the 
other House of the Congress as soon as practicable. 
"(B)(i) In the Senate, a joint resolution under this para-
graph shall be privileged. It shall not be in order to move to 
reconsider the vote by which the motion is agreed to or 
disagreed to. 
"(ii) Debate in the Senate on a joint resolution under this 
paragraph, and all debatable motions and appeals in 
connection therewith, shall be limited to not more than five 
hours. The time shall be equally divided between, and 
controlled by, the majority leader and the minority leader 
or their designees. 
"(iii) Debate in the Senate on any debatable motion or 
appeal in connection with a joint resolution under this 
paragraph shall be limited to not more than one hour, to be 
equally divided between, and controlled by, the mover and 
the manager of the joint resolution, except that in the event 
the manager of the joint resolution is in favor of any such 
motion or appeal, the time in opposition thereto shall be 
controlled by the minority leader or his designee. 
"(iv) A motion in the Senate to further limit debate on a 
joint resolution under this paragraph is not debatable. A 
motion to table or to recommit a joint resolution under this 
paragraph is not in order. 
"(C) No amendment to a joint resolution considered 
under this paragraph shall be in order in the Senate. 
"(b) SUSPENSION OF SEQUESTRATION. PROCEDURES.—Upon the enact-
ment of a declaration of war or a joint resolution described in 
subsection (a)— 
"(1) the subsequent issuance of any sequestration report or 
any sequestration order is precluded; 
"(2) sections 302(f), 310(d), 311(a), and title VI of the Congres-
sional Budget Act of 1974 are suspended; and 
"(3) section 1103 of title 31, United States C!ode, is suspended. 
"(c) RESTORATION OF SEQUESTRATION PROCEDURES.— 
"(1) In the event of a suspension of sequestration procedures 
due to a declaration of war, then, effective with the first fiscal 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-595 
year that begins in the session after the state of war is con-
cluded by Senate ratification of the necessary treaties, the 
provisions of subsection (b) triggered by that declaration of war 
are no longer effective. 
"(2) In the event of a suspension of sequestration procedures 
due to the enactment of a joint resolution described in subsec-
tion (a), then, effective with regard to the first fiscal year 
beginning at least 12 months after the enactment of that resolu-
tion, the provisions of subsection (b) triggered by that resolution 
are no longer effective. 
"SEC. 258A. MODIFICATION OF PRESIDENTIAL ORDER 
2 USC 907b. 
"(a) INTRODUCTION OF JOINT RESOLUTION.—At any time after the 
Director of 0MB issues a final sequestration report under section 
254 for a fiscal year, but before the close of the twentieth calendar 
day of the session of C!ongress beginning after the date of issuance of 
such report, the majority leader of either House of Congress may 
introduce a joint resolution which contains provisions directing the 
President to modify the most recent order issued under section 254 
or provide an £ilternative to reduce the deficit for such fiscal year. 
After the introduction of the first such joint resolution in either 
House of Congress in any calendar year, then no other joint resolu-
tion introduced in such House in such calendar year shall be subject 
to the procedures set forth in this section. 
"(b) 
PROCEDURES FOR CONSIDERATION OF JOINT RESOLUTIONS.— 
"(1) REFERRAL TO COMMITTEE.—A joint resolution introduced 
in the Senate under subsection (a) shall not be referred to a 
committee of the Senate and shall be placed on the calendar 
pending disposition of such joint resolution in accordance with 
this subsection. 
"(2) CONSIDERATION IN THE SENATE.—On or after the third 
calendar day (excluding Saturdays, Sundays, and legal holidays) 
beginning after a joint resolution is introduced under subsection 
(a), notwithstanding any rule or precedent of the Senate, includ-
ing Rule XXII of the Standing Rules of the Senate, it is in order 
(even though a previous motion to the same effect has been 
disagreed to) for any Member of the Senate to move to proceed 
to the consideration of the joint resolution. The motion is not in 
order after the eighth calendar day (excluding Saturdays, Sun-
days, and legal holidays) beginning after a joint resolution (to 
which the motion applies) is introduced. The joint resolution is 
privileged in the Senate. A motion to reconsider the vote by 
which the motion is agreed to or disagreed to shall not be in 
order. If a motion to proceed to the consideration of the joint 
resolution is agreed to, the Senate shall immediately proceed to 
consideration of the joint resolution without intervening 
motion, order, or other business, apd the joint resolution shall 
remain the unfinished business of the Senate until disposed of. 
"(3) DEBATE IN THE SENATE.— 
"(A) In the Senate, debate on a joint resolution intro-
duced under subsection (a), amendments thereto, and all 
debatable motions and appeals in connection therewith 
shall be limited to not more than 10 hours, which shall be 
divided equally between the majority leader and the minor-
ity leader (or their designees). 
"(B) A motion to postpone, or a motion to proceed to the 
consideration of other business is not in order. A motion to 
104 STAT. 1388-596 
PUBLIC LAW 101-508—NOV. 5, 1990 
reconsider the vote by which the joint resolution is agreed 
to or disagreed to is not in order, and a motion to recommit 
the joint resolution is not in order. 
"(CXi) No amendment that is not germane to the provi-
sions of the joint resolution or to the order issued under 
section 254 shall be in order in the Senate. In the Senate, an 
amendment, any amendment to an amendment, or any 
debatable motion or appeal is debatable for not to exceed 30 
minutes to be equally divided between, and controlled by, 
the mover and the majority leader (or their designees), 
except that in the event that the majority leader favors the 
amendment, motion, or appeal, the minority leader (or the 
minority leader's designee) shall control the time in opposi-
tion to the amendment, motion, or appeal. 
"(ii) In the Senate, an amendment that is otherwise in 
order shall be in order notwithstanding the fact that it 
amends the joint resolution in more than one place or 
amends language previously amended. It shall not be in 
order in the Senate to vote on the question of agreeing to 
such a joint resolution or any amendment thereto unless 
the figures then contained in such joint resolution or 
amendment are mathematically consistent. 
"(4) VOTE ON FINAL PASSAGE.—Immediately following the 
conclusion of the debate on a joint resolution introduced under 
subsection (a), a single quorum call at the conclusion of the 
debate if requested in accordance with the rules of the Senate, 
and the disposition of any pending amendments under para-
graph (3), the vote on final passage of the joint resolution shall 
occur. 
"(5) APPEALS.—Appeals from the decisions of the Chair shall 
be decided without debate. 
"(6) CONFERENCE REPORTS.—In the Senate, points of order 
under titles III, IV, and VI of the Congressional Budget Act of 
1974 are applicable to a conference report on the joint resolu-
tion or any amendments in disagreement thereto. 
"(1) RESOLUTION FROM OTHER HOUSE.—If, before the passage by 
the Senate of a joint resolution of the Senate introduced under 
subsection (a), the Senate receives from the House of Represent-
atives a joint resolution introduced under subsection (a), then 
the following procedures shall apply: 
"(A) The joint resolution of the House of Representatives 
shall not be referred to a committee and shall be placed on 
the calendar. 
"(B) With respect to a joint resolution introduced under 
subsection (a) in the Senate— 
"(i) the procedure in the Senate shall be the same as 
if no joint resolution had been received from the House; 
but 
"(ii)(I) the vote on final passage shall be on the joint 
resolution of the House if it is identical to the joint 
resolution then pending for passage in the Senate; or 
"(II) if the joint resolution from the House is not 
identical to the joint resolution then pending for pas-
sage in the Senate and the Senate then passes the 
Senate joint resolution, the Senate shall be considered 
to have passed the House joint resolution as amended 
by the text of the Senate joint resolution. 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-597 
"(C) Upon disposition of the joint resolution received from 
the House, it shall no longer be in order to consider the 
resolution originated in the Senate. 
"(8) 
SENATE ACTION ON HOUSE RESOLUTION.—If the Senate 
receives from the House of Representatives a joint resolution 
introduced under subsection (a) after the Senate has disposed of 
a Senate originated resolution which is identical to the House 
passed joint resolution, the action of the Senate with regard to 
the disposition of the Senate originated joint resolution shall be 
deemed to be the action of the Senate with regard to the House 
originated joint resolution. If it is not identical to the House 
passed joint resolution, then the Senate shall be considered to 
have passed the joint resolution of the House as amended by the 
text of the Senate joint resolution.". 
(g) Such Act is amended by inserting after section 258A the 
following: 
"SEC. 258B. FLEXIBILITY AMONG DEFENSE PROGRAMS, PROJECTS, AND 2 USC 907c. 
ACTIVITIES. 
"(a) Subject to subsections (b), (c), and (d), new budget authority 
and unobligated balances for any programs, projects, or activities 
within major functional category 050 (other than a military person-
nel account) may be further reduced beyond the amount specified in 
an order issued by the President under section 254 for such fiscal 
year. To the extent such additional reductions are made and result 
in additional outlay reductions, the President may provide for lesser 
reductions in new budget authority and unobligated balances for 
other programs, projects, or activities within major functional cat-
egory 050 for such fiscal year, but only to the extent that the 
resulting outlay increases do not exceed the additional outlay reduc-
tions, and no such program, project, or activity may be increased 
above the level actually made available by law in appropriation Acts 
(before taking sequestration into account). In making calculations 
under this subsection, the President shall use account outlay rates 
that are identical to those used in the report by the Director of OMB 
under section 254. 
"(b) No actions taken by the President under subsection (a) for a 
fiscal year may result in a domestic base closure or realignment that 
would otherwise be subject to section 2687 of title 10, United States 
Code. 
"(c) The President may not exercise the authority provided by this 
paragraph for a fiscal year unless— 
"(1) the President submits a single report to Congress specify-
ing, for each account, the detailed changes proposed to be made 
for such fiscal year pursuant to this section; 
"(2) that report is submitted within 5 calendar days of the 
start of the next session of Congress; and 
"(3) a joint resolution affirming or modifying the changes 
proposed by the President pursuant to this paragraph becomes 
law. 
"(d) Within 5 calendar days of session after the President submits 
a report to Congress under subsection (cXD for a fiscal year, the 
majority leader of each House of Congress shall (by request) intro-
duce a joint resolution which contains provisions affirming the 
changes proposed by the President pursuant to this paragraph. 
"(eXD The matter after the resolving clause in any joint resolution 
introduced pursuant to subsection (d) shall be as follows: 'That the 
104 STAT. 1388-598 
PUBLIC LAW 101-508—NOV. 5, 1990 
report of the President as submitted on [Insert Date] under section 
258B is hereby approved.'. 
"(2) The title of the joint resolution shall be 'Joint resolution 
approving the report of the President submitted under section 258B 
of the Balanced Budget and Emergency Deficit Control Act of 1985.'. 
"(3) Such joint resolution shall not contain any preamble. 
"(f)(1) A joint resolution introduced in the Senate under subsec-
tion (d) shall be referred to the Committee on Appropriations, and if 
not reported within 5 calendar days (excluding Saturdays, Sundays, 
and legal holidays) from the date of introduction shall be considered 
as having been discharged therefrom and shall be placed on the 
appropriate calendar pending disposition of such joint resolution in 
accordance with this subsection. In the Senate, no amendment 
proposed in the Committee on Appropriations shall be in order other 
than an amendment (in the nature of a substitute) that is germane 
or relevant to the provisions of the joint resolution or to the order 
issued under section 254. For purposes of this paragraph, an amend-
ment shall be considered to be relevant if it relates to function 050 
(national defense). 
"(2) On or after the third calendar day (excluding Saturdays, 
Sundays, and legal holidays) beginning after a joint resolution is 
placed on the Senate calendar, notwithstanding any rule or prece-
dent of the Senate, including Rule XXII of the Standing Rules of the 
Senate, it is in order (even though a previous motion to the same 
effect has been disagreed to) for any Member of the Senate to move 
to proceed to the consideration of the joint resolution. The motion is 
not in order after the eighth calendar day (excluding Saturdays, 
Sundays, and legal holidays) beginning after such joint resolution is 
placed on the appropriate calendar. The motion is not debatable. 
The joint resolution is privileged in the Senate. A motion to re-
consider the vote by which the motion is agreed to or disagreed to 
shall not be in order. If a motion to proceed to the consideration of 
the joint resolution is agreed to, the Senate shall immediately 
proceed to consideration of the joint resolution without intervening 
motion, order, or other business, and the joint resolution shall 
remain the unfinished business of the Senate until disposed of. 
"(gXD In the Senate, debate on a joint resolution introduced under 
subsection (d), amendments thereto, and all debatable motions and 
appeals in connection therewith shall be limited to not more than 10 
hours, which shall be divided equally between the majority leader 
and the minority leader (or their designees). 
"(2) A motion to postpone, or a motion to proceed to the consider-
ation of other business is not in order. A motion to reconsider the 
vote by which the joint resolution is agreed to or disagreed to is not 
in order. In the Senate, a motion to recommit the joint resolution is 
not in order. 
"(hXD No amendment that is not germane or relevant to the 
provisions of the joint resolution or to the order issued under section 
254 shall be in order in the Senate. For purposes of this paragraph, 
an amendment shall be considered to be relevant if it relates to 
function 050 (national defense). In the Senate, an amendment, any 
amendment to an amendment, or any debatable motion or appeal is 
debatable for not to exceed 30 minutes to be equally divided be-
tween, and controlled by, the mover and the majority leader (or 
their designees), except that in the event that the majority leader 
favors the amendment, motion, or appeal, the minority leader (or 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-599 
the minority leader's designee) shall control the time in opposition 
to the amendment, motion, or appeal. 
"(2) In the Senate, an amendment that is otherwise in order shall 
be in order notwithstanding the fact that it amends the joint 
resolution in more than one place or amends language previously 
amended, so long as the amendment makes or maintains mathe-
matical consistency. It shall not be in order in the Senate to vote on 
the question of agreeing to such a joint resolution or any amend-
ment thereto unless the figures then contained in such joint 
resolution or amendment are mathematically consistent. 
"(3) It shall not be in order in the Senate to consider any amend-
ment to any joint resolution introduced under subsection (d) or any 
conference report thereon if such amendment or conference report 
would have the effect of decreasing any specific budget outlay 
reductions below the level of such outlay reductions provided in 
such joint resolution unless such amendment or conference report 
makes a reduction in other specific budget outlays at least equiva-
lent to any increase in outlays provided by such amendment or 
conference report. 
"(4) For purposes of the application of paragraph (3), the level of 
outlays and specific budget outlay reductions provided in an amend-
ment shall be determined on the basis of estimates made by the 
Committee on the Budget of the Senate. 
"(i) Immediately following the conclusion of the debate on a joint 
resolution introduced under subsection (d), a single quorum call at 
the conclusion of the debate if requested in accordance with the 
rules of the Senate, and the disposition of any pending amendments 
under subsection (h), the vote on final passage of the joint resolution 
shall occur. 
"0) Appeals from the decisions of the Chair relating to the applica-
tion of the rules of the Senate to the procedure relating to a joint 
resolution described in subsection (d) shall be decided without 
debate. 
"(k) In the Senate, points of order under titles III and IV of the 
Congressional Budget Act of 1974 (including points of order under 
sections 302(c), 303(a), 306, and 401(b)(1)) are applicable to a con-
ference report on the joint resolution or any amendments in dis-
agreement thereto. 
"(1) If, before the passage by the Senate of a joint resolution of the 
Senate introduced under subsection (d), the Senate receives from the 
House of Representatives a joint resolution introduced under subsec-
tion (d), then the following procedures shall apply: 
"(1) The joint resolution of the House of Representatives shall 
not be referred to a committee. 
"(2) With respect to a joint resolution introduced under 
subsection (d) in the Senate— 
"(A) the procedure in the Senate shall be the same as if 
no joint resolution had been received from the House; but 
"(BXi) the vote on final passage shall be on the joint 
resolution of the House if it is identical to the joint resolu-
tion then pending for passage in the Senate; or 
"(ii) if the joint resolution from the House is not identical 
to the joint resolution then pending for passage in the 
Senate and the Senate then passes the Senate joint resolu-
tion, the Senate shall be considered to have passed the 
House joint resolution as amended by the text of the Senate 
joint resolution. 
104 STAT. 1388-600 
PUBLIC LAW 101-508—NOV. 5, 1990 
"(3) Upon disposition of the joint resolution received from the 
House, it shall no longer be in order to consider the joint resolution 
originated in the Senate. 
"(m) If the Senate receives from the House of Representatives a 
joint resolution introduced under subsection (d) after the Senate has 
disposed of a Senate originated joint resolution which is identical to 
the House passed joint resolution, the action of the Senate with 
regard to the disposition of the Senate originated joint resolution 
shall be deemed to be the action of the Senate with regard to the 
House originated joint resolution. If it is not identical to the House 
passed joint resolution, then the Senate shall be considered to have 
passed the joint resolution of the House as amended by the text of 
the Senate joint resolution. 
2 use 907d. 
"SEC. 258C. SPECIAL RECONCILIATION PROCESS. 
"(a) REPORTING OF RESOLUTIONS AND RECONCIUATION BILLS AND 
RESOLUTIONS, IN THE SENATE.— 
"(1) COMMITTEE ALTERNATIVES TO PRESIDENTIAL ORDER.—After 
the submission of an 0MB sequestration update report under 
section 254 that envisions a sequestration under section 252 or 
253, each standing committee of the Senate may, not later than 
October 10, submit to the Committee on the Budget of the 
Senate information of the type described in section 301(d) of the 
Congressional Budget Act of 1974 with respect to alternatives to 
the order envisioned by such report insofar as such order affects 
laws within the jurisdiction of the committee. 
"(2) INITIAL BUDGET COMMITTEE ACTION.—After the submission 
of such a report, the Committee on the Budget of the Senate 
may, not later than October 15, report to the Senate a resolu-
tion. The resolution may affirm the impact of the order envi-
sioned by such report, in whole or in part. To the extent that 
any part is not affirmed, the resolution shall state which parts 
are not affirmed and shall contain instructions to committees of 
the Senate of the type referred to in section 310(a) of the 
Congressional Budget Act of 1974, sufficient to achieve at least 
the total level of deficit reduction contained in those sections 
which are not affirmed. 
"(3) RESPONSE OF COMMITTEES.—Committees instructed pursu-
ant to paragraph (2), or affected thereby, shall submit their 
responses to the Budget Committee no later than 10 days after 
the resolution referred to in parsigraph (2) is agreed to, except 
that if only one such Committee is so instructed such Commit-
tee shall, by the same date, report to the Senate a reconciliation 
bill or reconciliation resolution containing its recommendations 
in response to such instructions. A committee shall be consid-
ered to have complied with all instructions to it pursuant to a 
resolution adopted under paragraph (2) if it has made rec-
ommendations with respect to matters within its jurisdiction 
which would result in a reduction in the deficit at least equal to 
the total reduction directed by such instructions. 
"(4) BUDGET COMMITTEE ACTION.—Upon receipt of the rec-
ommendations received in response to a resolution referred to 
in paragraph (2), the Budget Committee shall report to the 
Senate a reconciliation bill or reconciliation resolution, or both, 
carrying out all such recommendations without any substantive 
revisions. In the event that a committee instructed in a resolu-
tion referred to in paragraph (2) feiils to submit any rec-
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-601 
ommendation (or, when only one committee is instructed, fails 
to report a reconciliation bill or resolution) in response to such 
instructions, the Budget Committee shall include in the rec-
onciliation bill or reconciliation resolution reported pursuant to 
this subparagraph legislative language within the jurisdiction of 
the noncomplying committee to achieve the amount of deficit 
reduction directed in such instructions. 
"(5) POINT OF ORDER.—It shall not be in order in the Senate to 
consider any reconciliation bill or reconciliation resolution re-
ported under paragraph (4) with respect to a fiscal year, any 
amendment thereto, or any conference report thereon i
f
— 
"(A) the enactment of such bill or resolution as reported; 
"(B) the adoption and enactment of such amendment; or 
"(C) the enactment of such bill or resolution in the form 
recommended in such conference report, 
would cause the amount of the deficit for such fiscal year to 
exceed the maximum deficit amount for such fiscal year, unless 
the low-growth report submitted under section 254 projects 
negative real economic growth for such fiscal year, or for each 
of any two consecutive quarters during such fiscal year. 
"(6) TREATMENT OF CERTAIN AMENDMENTS.—In the Senate, an 
amendment which adds to a resolution reported 
under 
paragraph (2) an instruction of the type referred to in such 
paragraph shall be in order during the consideration of such 
resolution if such amendment would be in order but for the fact 
that it would be held to be non-germane on the basis that the 
instruction constitutes new matter. 
"(7) DEFINITION.—For purposes of paragraphs (1), (2), and (3), 
the term "day" shall mean any calendar day on which the 
Senate is in session. 
'(b) PROCEDURES.— 
"(1) IN GENERAL.—Except as provided in paragraph (2), in the 
Senate the provisions of sections 305 and 310 of the Congres-
sional Budget Act of 1974 for the consideration of concurrent 
resolutions on the budget and conference reports thereon shall 
also apply to the consideration of resolutions, and reconciliation 
bills and reconciliation resolutions reported under this para-
graph and conference reports thereon. 
"(2) LIMIT ON DEBATE.—Debate in the Senate on any resolu-
tion reported pursuant to subsection (a)(2), and all amendments 
thereto and debatable motions and appeals in connection there-
with, shall be limited to 10 hours. 
"(3) LIMITATION ON AMENDMENTS.—Section 310(d)(2) of the 
Congressional Budget Act shall apply to reconciliation bills and 
reconciliation resolutions reported under this subsection. 
"(4) BILLS AND RESOLUTIONS RECEIVED FROM THE HOUSE.—Any 
bill or resolution received in the Senate from the House, which 
is a companion to a reconciliation bill or reconciliation resolu-
tion of the Senate for the purposes of this subsection, shall be 
considered in the Senate pursuant to the provisions of this 
subsection. 
"(5) DEFINITION.—For purposes of this subsection, the term 
'resolution' means a simple, joint, or concurrent resolution.". 
39-194 O - 91 - 33 : QL 3 Part 2 
104 STAT. 1388-602 
PUBLIC LAW 101-508—NOV. 5, 1990 
PART II—RELATED AMENDMENTS 
SEC. 13111. TEMPORARY AMENDMENTS TO THE CONGRESSIONAL BUDGET 
ACT OF 1974. 
Title VI of the C!ongressional Budget Act of 1974 is amended to 
read as follows: 
"TITLE VI—BUDGET AGREEMENT 
ENFORCEMENT PROVISIONS 
2 use 665. 
"SEC. 601. DEFINITIONS AND POINT OF ORDER. 
"(a) DEFINITIONS.—As used in this title and for purposes of the 
Balanced Budget and Emergency Deficit Control Act of 1985: 
"(1) MAXIMUM DEFICIT AMOUNT,—The term 'msiximum deficit 
amount' means— 
"(A) with respect to fiscal year 1991, $327,000,000,000; 
"(B) with respect to fiscal year 1992, $317,000,000,000; 
"(C) with respect to fiscal year 1993, $236,000,000,000; 
"(D) with respect to fiscal year 1994, $102,000,000,000; and 
"(E) with respect to fiscal year 1995, $83,000,000,000; 
as adjusted in strict conformance with sections 251, 252, and 253 
of the Balanced Budget and Emergency Deficit Control Act of 
1985. 
"(2) DISCRETIONARY SPENDING UMIT.—The term 'discretionary 
spending limit' means— 
"(A) with respect to fiscal year 1991— 
"(i) for the defense category: $288,918,000,000 in new 
budget authority and $297,660,000,000 in outlays; 
"(ii) for the international category: $20,100,000,000 in 
new budget authority and $18,600,000,000 in outlays; 
and 
"(iii) for the domestic category: $182,700,000,000 in 
new budget authority and $198,100,000,000 in outlays; 
"(B) with respect to fiscal year 1992— 
"(i) for the defense category: $291,643,000,000 in new 
budget authority and $295,744,000,000 in outlays; 
"(ii) for the international category: $20,500,000,000 in 
new budget authority and $19,100,000,000 in outlays; 
and 
"(iii) for the domestic category: $191,300,000,000 in 
new budget authority and $210,100,000,000 in outlays; 
"(C) with respect to fiscal year 1993— 
"(i) for the defense category: $291,785,000,000 in new 
budget authority and $292,686,000,000 in outlays; 
"(ii) for the international category: $21,400,000,000 in 
new budget authority and $19,600,000,000 in outlays; 
and 
"(iii) for the domestic category: $198,300,000,000 in 
new budget authority and $221,700,000,000 in outlays; 
"(D) with respect to fiscal year 1994, for the discretionary 
category: $510,800,000,000 in new budget authority and 
$534,800,000,000 in outlays; and 
"(E) with respect to fiscal year 1995, for the discretionary 
category: $517,700,000,000 in new budget authority and 
$540,800,000,000 in outlays; 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-603 
as adjusted in strict conformance with section 251 of the Bal-
anced Budget and Emergency Deficit Control Act of 1985. 
"(b) POINT OF ORDER IN THE SENATE ON AGGREGATE ALLOCATIONS 
FOR DEFENSE, INTERNATIONAL, AND DOMESTIC DISCRETIONARY SPEND-
ING.— 
"(1) Except as provided in paragraph (3), it shall not be in 
order in the Senate to consider any concurrent resolution on the 
budget for fiscal year 1992, 1993, 1994, or 1995 (or amendment, 
motion, or conference report on such a resolution), or any 
appropriations bill or resolution (or amendment, motion, or 
conference report on such an appropriations bill or resolution) 
for fiscal year 1992 or 1993 that would exceed the allocations in 
this section or the suballocations made under section 602(b) 
based on these allocations. 
"(3) For purposes of this subsection, the levels of new budget 
authority and outlays for a fiscal year shall be determined on 
the basis of estimates made by the Committee on the Budget of 
the Senate. 
"(4) This subsection shall not apply if a declaration of war by 
the Congress is in effect or if a joint resolution pursuant to 
section 258 of the Balanced Budget and Emergency Deficit 
Control Act of 1985 has been enacted. 
"SEC. 602. COMMITTEE ALLOCATIONS AND ENFORCEMENT. 
2 USC 665a. 
" (a) (COMMITTEE SPENDING ALLOCATIONS.— 
"(1) HOUSE OF REPRESENTATIVES.— 
"(A) ALLOCATION AMONG COMMITTEES.—The joint explana-
tory statement accompanying a conference report on a 
budget resolution shall include allocations, consistent with 
the resolution recommended in the conference report, of 
the appropriate levels (for each fiscal year covered by that 
resolution and a total for all such years) of— 
"(i) total new budget authority, 
"(ii) total entitlement authority, and 
"(iii) total outlays; 
among each committee of the House of Representatives 
that hEis jurisdiction over legislation providing or creating 
such amounts. 
"(B) No DOUBLE COUNTING.—Any item allocated to one 
committee of the House of Representatives may not be 
allocated to another such committee. 
"(C) FURTHER DIVISION OF AMOUNTS.—The amounts allo-
cated to each committee for each fiscal year, other than the 
Committee on Appropriations, shall be further divided be-
tween amounts provided or required by law on the date of 
filing of that conference report and amounts not so pro-
vided or required. The amounts allocated to the Committee 
on Appropriations for each fiscal year shall be further 
divided between discretionary and mandatory amounts or 
programs, as appropriate. 
"(2) SENATE ALLOCATION AMONG COMMITTEES.—The joint 
explanatory statement accompanying a conference report on a 
budget resolution shall include an allocation, consistent with 
the resolution recommended in the conference report, of the 
appropriate levels of— 
"(A) total new budget authority; 
"(B) total outlays; and 
104 STAT. 1388-604 
PUBLIC LAW 101-508—NOV. 5, 1990 
"(C) social security outlays; 
among each committee of the Senate that has jurisdiction over 
legislation providing or creating such amounts. 
"(3) AMOUNTS NOT ALLOCATED.—(A) In the House of Rep-
resentatives, if a committee receives no allocation of new budget 
authority, entitlement authority, or outlays, that committee 
shall be deemed to have received an allocation equal to zero for 
new budget authority, entitlement authority, or outlays. 
"(B) In the Senate, if a committee receives no allocation of 
new budget authority, outlays, or social security outlays, that 
committee shall be deemed to have received an sdlocation equal 
to zero for new budget authority, outlays, or social security 
outlays. 
"(b) SUBALLOCATIONS BY COMMITTEES.— 
"(1) SUBALLOCATIONS BY APPROPRIATIONS COMMITTEES.—As 
soon as practicable after a budget resolution is agreed to, the 
Committee on Appropriations of each House (after consulting 
with the Committee on Appropriations of the other House) shall 
suballocate each amount allocated to it for the budget year 
under subsection (a)(1)(A) or (a)(2) among its subcommittees. 
Each Committee on Appropriations shall promptly report to its 
House suballocations made or revised under this paragraph. 
"(2) SUBALLOCATIONS BY OTHER COMMITTEES OF THE SENATE.— 
Each other committee of the Senate to which an allocation 
under subsection (a)(2) is made in the joint explanatory state-
ment may subdivide each amount allocated to it under subsec-
tion (a) among its subcommittees or among programs over 
which it has jurisdiction and shall promptly report any such 
suballocations to the Senate. Section 302(c) shall not apply in 
the Senate to committees other than the Committee on Appro-
priations. 
"(c) APPLICATION OF SECTION 302(f) TO THIS SECTION.—In fiscal 
years through 1995, reference in section 302(f) to the appropriate 
allocation made pursuant to section 302(b) for a fiscal year shall, for 
purposes of this section, be deemed to be a reference to any alloca-
tion made under subsection (a) or any suballocation made under 
subsection (b), as applicable, for the fiscal year of the resolution or 
for the total of all fiscal years made by the joint explanatory 
statement accompanying the applicable concurrent resolution on 
the budget. In the House of Representatives, the preceding sentence 
shall not apply with respect to fiscal year 1991. 
"(d) APPLICATION OF SUBSECTIONS (a) AND (b) TO FISCAL YEARS 1992 
T
O 1995.—In the case of concurrent resolutions on the budget for 
fiscal years 1992 through 1995, allocations shall be made under 
subsection (a) instead of section 302(a) and shall be made under 
subsection (b) instead of section 302(b). For those fiscal years, all 
references in sections 302(c), (d), (e), (f), and (g) to section 302(a) shall 
be deemed to be to subsection (a) (including revisions made under 
section 604) and all such references to section 302(b) shall be deemed 
to be to subsection (b) (including revisions made under section 604).". 
"(e) PAY-AS-You-Go EXCEPTION IN THE HOUSE.—Section 302(fXl) 
and, after April 15 of any calendar year section 303(a), shall not 
apply to any bill, joint resolution, amendment thereto, or conference 
report thereon if, for each fiscal year covered by the most recently 
agreed to concurrent resolution on the budget— 
"(1) the enactment of such bill or resolution as reported; 
"(2) the adoption and enactment of such amendment; or 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-605 
"(3) the enactment of such bill or resolution in the form 
recommended in such conference report, 
would not increase the deficit for any such fiscal year, and, if the 
sum of any revenue increases provided in legislation already en-
acted during the current session (when added to revenue increases, 
if any, in excess of any outlay increase provided by the legislation 
proposed for consideration) is at least as great as the sum of the 
amount, if any, by which the aggregate level of Federal revenues 
should be increased as set forth in that concurrent resolution and 
the amount, if any, by which revenues are to be increased pursuant 
to pay-as-you-go procedures under section 301(b)(8) if included in 
that concurrent resolution. 
"(2) REVISED ALLOCATIONS.— 
"(A) As soon as practicable after Congress agrees to a bill 
* 
or joint resolution that would have been subject to a point 
of order under section 302(f)(1) but for the exception pro-
vided in paragraph (1), the chairman of the Committee on 
the Budget of the House of Representatives may file with 
the House appropriately revised allocations under section 
302(a) and revised functional levels and budget aggregates 
to reflect that bill. 
"(B) such revised allocations, functional levels, and 
budget aggregates shall be considered for the purposes of 
this Act as allocations, functional levels, and budget aggre-
gates contained in the most recently agreed to concurrent 
resolution on the budget. 
"SEC. 603. CONSIDERATION OF LEGISLATION BEFORE ADOPTION OF 2 USC 665b. 
BUDGET RESOLUTION FOR THAT FISCAL YEAR. 
"(a) ADJUSTING SECTION ALLOCATION OF DISCRETIONARY SPEND-
ING.—If a concurrent resolution on the budget is not adopted by 
April 15, the chairman of the Committee on the Budget of the House 
of Representatives shall submit to the House, as soon as practicable, 
a section 602(a) allocation to the Committee on Appropriations 
consistent with the discretionary spending limits contained in the 
most recent budget submitted by the President under section 1105(a) 
of title 31, United States Code. Such allocation shall include the full 
allowance specified under section 251(b)(2)(E)(i) of the Balanced 
Budget and Emergency Deficit Control Act of 1985. 
"(b) As soon as practicable after a section 602(a) allocation is 
, 
submitted under this section, the Committee on Appropriations 
shall make suballocations and promptly report those suballocations 
to the House of Representatives. 
"SEC. 604. RECONCILIATION DIRECTIVES REGARDING PAY-AS-YOU-GO 2 USC 665c. 
REQUIREMENTS. 
"(a) INSTRUCTIONS TO EFFECTUATE PAY-AS-YOU-GO IN THE HOUSE 
OF REPRESENTATIVES.—If legislation providing for a net reduction in 
revenues in any fiscal year (that, within the same measure, is not 
fully offset in that fiscal year by reductions in direct spending) is 
enacted, the Committee on the Budget of the House of Representa-
tives may report, within 15 legislative days during a Congress, a 
pay-as-you-go reconciliation directive in the form of a concurrent 
resolution— 
"(1) specifying the total amount by which revenues sufficient 
to eliminate the net deficit increase resulting from that legisla-
tion in each fiscal year are to be changed; and 
104 STAT. 1388-606 
PUBLIC LAW 101-508—NOV. 5, 1990 
"(2) directing that the committees having jurisdiction deter-
mine and recommend changes in the revenue law, bills, and 
resolutions to accomplish a change of such total amount. 
"(b) CONSIDERATION OF PAY-AS-YOU-GO RECONCILIATION LEGISLA-
TION IN THE HOUSE OF REPRESENTATIVES.—In the House of Rep 
resentatives, subsections (b) through (d) of section 310 shall apply in 
the same manner as if the reconciliation directive described in 
subsection (a) were a concurrent resolution on the budget. 
2 u s e 665d. 
"SEC. 605. APPLICATION OF SECTION 311; POINT OF ORDER. 
"(a) APPLICATION OF SECTION 311(a).—(1) In the House of Rep-
resentatives, in the application of section 311(a)(1) to any bill, resolu-
tion, amendment, or conference report, reference in section 311 to 
the appropriate level of total budget authority or total budget 
outlays or appropriate level of total revenues set forth in the most 
recently agreed to concurrent resolution on the budget for a fiscal 
year shall be deemed to be a reference to the appropriate level for 
that fiscal year and to the total of the appropriate level for that year 
and the 4 succeeding years. 
"(2) In the Senate, in the application of section 311(a)(2) to any bill, 
resolution, motion, or conference report, reference in section 311 to 
the appropriate level of total revenues set forth in the most recently 
agreed to concurrent resolution on the budget for a fiscal year shall 
be deemed to be a reference to the appropriate level for that fiscal 
year and to the total of the appropriate levels for that year and the 4 
succeeding years. 
"(b) MAXIMUM DEFICIT AMOUNT POINT OF ORDER IN THE SENATE.— 
After Congress has completed action on a concurrent resolution on 
the budget, it shall not be in order in the Senate to consider any bill, 
resolution, amendment, motion, or conference report that would 
result in a deficit for the first fiscal year covered by that resolution 
that exceeds the maximum deficit amount specified for such fiscal 
year in section 601(a). 
2 u s e 665e. 
"SEC. 606. 5-YEAR BUDGET RESOLUTIONS; BUDGET RESOLUTIONS MUST 
CONFORM TO BALANCED BUDGET AND EMERGENCY DEFICIT 
CONTROL ACT OF 1985. 
"(a) 5-YEAR BUDGET RESOLUTIONS.—In the case of any concurrent 
resolution on the budget for fiscal year 1992, 1993, 1994, or 1995, 
that resolution shall set forth appropriate levels for the fiscal year 
beginning on October 1 of the calendar year in which it is reported 
and for each of the 4 succeeding fiscal years for the matters de-
scribed in section 301(a). 
"(b) POINT OF ORDER IN THE HOUSE OF REPRESENTATIVES.—It shall 
not be in order in the House of Representatives to consider any 
concurrent resolution on the budget for a fiscal year or conference 
report thereon under section 301 or 304 that exceeds the maximum 
deficit amount for each fiscal year covered by the concurrent resolu-
tion or conference report as determined under section 601(a), includ-
ing possible revisions under part C of the Balanced Budget and 
Emergency Deficit Control Act of 1985. 
"(c) POINT OF ORDER IN THE SENATE.—It shall not be in order in 
the Senate to consider any concurrent resolution on the budget for a 
fiscal year under section 301, or to consider any amendment to such 
a concurrent resolution, or to consider a conference report on such a 
concurrent resolution, if the level of total budget outlays for the first 
fiscal year that is set forth in such concurrent resolution or con-
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-607 
ference report exceeds the recommended level of Federal revenues 
set forth for that year by an amount that is greater than the 
maximum deficit amount for such fiscal year as determined under 
section 601(a), or if the adoption of such amendment would result in 
a level of total budget outlays for that fiscal year which exceeds the 
recommended level of Federal revenues for that fiscal year, by an 
amount that is greater than the maximum deficit amount for such 
fiscal years as determined under section 601(a). 
"(d) ADJUSTMENTS.—(1) Notwithstanding any other provision of 
law, concurrent resolutions on the budget for fiscal years 1992,1993, 
1994, and 1995 under section 301 or 304 may set forth levels consist-
ent with allocations increased by— 
"(A) amounts not to exceed the budget authority amounts in 
section 251(b)(2)(E)(i) and (ii) of the Balanced Budget and Emer-
gency Deficit Control Act of 1985 and the composite outlays per 
category consistent with them; and 
"(B) the budget authority and outlay amounts in section 
251(b)(1) of that Act. 
"(2) For purposes of congressional consideration of provisions 
described 
in 
sections 
251(b)(2)(A), 
251(b)(2)(B), 
251(b)(2)(C), 
251(b)(2)(D), and 252(e), determinations under sections 302, 303, and 
311 shall not take into account any new budget authority, new 
entitlement authority, outlays, receipts, or deficit effects in any 
fiscal year of those provisions. 
"SEC. 607. EFFECTIVE DATE. 
2 USC 665 note. 
This title shall take effect upon its date of enactment and shall 
apply to fiscal years 1991 to 1995.". 
SEC. 13112. CONFORMING AMENDMENTS. 
(a) CONFORMING AMENDMENTS TO THE CONGRESSIONAL BUDGET AND 
IMPOUNDMENT CONTROL ACT OF 1974.— 
(1) TABLE OF CONTENTS.—Section 1(b) of the Congressional 
Budget and Impoundment Control Act of 1974 is amended to 
reflect the new section numbers and headings resulting from 
amendments made by this title. 
(2) SECTION 3.—Section 3 of such Act is amended— 
2 USC 622. 
(A) by striking paragraphs (6), (7), and (8) and inserting 
the following: 
"(6) The term deficit' means, with respect to a fiscal year, the 
amount by which outlays exceeds receipts during that year. 
"(7) The term 'surplus' means, with respect to a fiscal year, 
the amount by which receipts exceeds outlays during that year. 
"(8) The term 'government-sponsored enterprise' means a 
corporate entity created by a law of the United States that— 
"(A)(i) has a Federal charter authorized by law; 
"(ii) is privately owned, as evidenced by capital stock owned 
by private entities or individuals; 
"(iii) is under the direction of a board of directors, a majority 
of which is elected by private owners; 
"(iv) is a financial institution with power to— 
"(I) make loans or loan guarantees for limited purposes 
such as to provide credit for specific borrowers or one 
sector; and 
"(II) raise funds by borrowing (which does not carry the 
full faith and credit of the Federal Government) or to 
guarantee the debt of others in unlimited amounts; and 
104 STAT. 1388-608 
PUBLIC LAW 101-508—NOV. 5, 1990 
"(B)(i) does not exercise powers that are reserved to the 
Government as sovereign (such as the power to tax or to regu-
late interstate commerce); 
"(ii) does not have the power to commit the Government 
financially (but it may be a recipient of a loan guarantee 
commitment made by the Government); and 
"(iii) has employees whose salaries and expenses are paid by 
the enterprise and are not Federal employees subject to title 5 
of the United States Code.''. 
(3) SECTION 202.—Section 202(a)(1) and the second sentence of 
2 use 602. 
202(f)(1) of such Act are amended by striking "budget authority" 
and inserting "new budget authority" . 
2 use 631. 
(4) SECTION 300.—Section 300 of such Act is amended by 
striking "First Monday after January 3" and by inserting "First 
Monday in February". 
2 use 632. 
(5) SECTION 301(d).—Section 301(d) of such Act is amended by 
striking "On or before February 25 of each year" and inserting 
"Within 6 weeks after the President submits a budget under 
section 1105(a) of title 31, United States Code". 
2 use 633. 
(6) SECTION 302(a).—Section 302(a)(2) of such Act is amended 
by striking "the House of Representatives and". 
(7) SECTION 302(f).—Section 302(f)(2) of such Act is amended— 
(A) by inserting after "in excess o f the following: "(A)"; 
(B) by striking "under subsection (b)" and inserting 
"under subsection (a), or (B) the appropriate allocation (if 
any) of such outlays or authority reported under subsection 
(b)^and 
(C) by inserting at the end the following: 
"Subparagraph (A) shall not apply to any bill, resolution, 
amendment, motion, or conference report that is within the 
jurisdiction of the Committee on Appropriations.". 
2 use 635. 
(8) SECTION 304.—Section 304 of such Act is amended bv 
striking subsection O
t
>
) and by striking "(c)" and inserting "(h)' • 
2 use 641. 
(9) SECTION 310(g).—Section 310(g) of such Act is amended by 
striking "resolution pursuant" and inserting "joint resolution 
pursuant" and by striking "2540))" and inserting "258C". 
2 use 642. 
(10) SECTION 311(a).—Section 311(a) of such Act is amended by 
striking "or, in the Senate" and all that follows thereafter 
through "paragraph (2) of such subsection" and inserting 
"except in the case that a declaration of war by the Congress is 
in effect". 
2 use 621 note. 
(H) SECTION 904(a).—Section 904(a) of such Act is amended by 
striking "and" after "III", by inserting ", V, and VI (except 
section 601(a))" after "IV", and by striking "606,". 
(b) CONFORMING AMENDMENT TO THE BALANCED BUDGET AND 
EMERGENCY DEFICIT CONTROL ACT OF 1985.—Subsection O
t
)
) of section 
275 of the Balanced Budget and Emergency Deficit Control Act of 
2 use 900 note. 
1985 is amended to read as follows: 
"Ot)) EXPIRATION.—Part C of this title, section 27103) of this Act, 
and sections 1105(f) and 1106(c) of title 31, United States Code, shall 
expire September 30,1995.". 
(c) CONFORMING AMENDMENTS TO SECTION 1105 
OF TITLE 31, 
UNITED STATES CODE.— 
(1) SECTION 1105(a).—Section 1105(a) of title 31, United States 
Code, is amended by striking "On or before the first Monday 
after January 3 of each year (or on or before February 5 in 
1986)" and by inserting "On or after the first Monday in 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-609 
January but not later than the first Monday in February of 
each year" 
(2) SECTION 1105(f).—Section 1105(f) of title 31, United States 
Code, is amended to read as follows: 
"(f) The budget transmitted pursuant to subsection (a) for a fiscal 
year shall be prepared in a manner consistent with the require-
ments of the Balanced Budget and Emergency Deficit Control Act of 
1985 that apply to that and subsequent fiscal years.". 
(d) CONFORMING AMENDMENTS TO THE RULES OF THE HOUSE OF 
REPRESENTATIVES.— 
(1) CROSS-REFERENCE.—Clause l(eX2) of rule X of the Rules of 
the House of Representatives is amended by striking "(a)(4)". 
(2) CROSS-REFERENCE.—Clause 1(e)(2) of rule X of Rules of the 
House of Representatives is amended by striking "Act, and any 
resolution pursuant to section 254(b) of the Balanced Budget 
and Emergency Deficit Control Act of 1985" and inserting 
"Act". 
(3) JURISDICTION.—Clause 10') of rule X of the Rules of the 
House of Representatives is amended by inserting after para-
graph (6) the following new paragraph: 
"(7) Measures providing exemption from reduction under any 
order issued under part C of the Balanced Budget and Emer-
gency Deficit Control Act of 1985.". 
(4) ALLOCATIONS.—Clause 4(h) of rule X of the Rules of the 
House of Representatives is amended by inserting "or section 
602 (in the case of fiscal years 1991 through 1995)" after "section 
302". 
(5) MULTIYEAR REVENUE ESTIMATES.—Clause 7(a)(1) of rule XIII 
of the Rules of the House of Representatives is amended by 
striking ", except that, in the case of measures affecting the 
revenues, such reports shall require only an estimate of the gain 
or loss in revenues for a one-year period". 
(e) CONFORMING AMENDMENT TO THE FULL EMPLOYMENT AND 
BALANCED GROWTH ACT OF 1978.—Section 103(a) of the Full Employ-
ment and Balanced Growth Act of 1978 (15 U.S.C. 1022(a) is amend-
ed by striking "transmit to the Congress during the first twenty 
days of each regular session" and inserting "annually transmit to 
the Congress not later than 10 days after the submission of the 
budget under section 1105(a) of title 31, United States Code". 
(f) FILING REQUIREMENT.—After the convening of the One Hun-
dred Second Congress, the chairman of the C!ommittee on the 
Budget of the Senate shall file with the Senate revised and outyear 
budget aggregates and allocations under section 602(a) consistent 
with this Act. 
Subtitle B—Permanent Amendments to the 
Congressional Budget and Impoundment 
Control Act of 1974 
SEC. 13201. CREDIT ACCOUNTING. 
(a) CREDIT ACCOUNTING.—Title V of the Congressional Budget Act 
of 1974 is amended to read as follows: 
104 STAT. 1388-610 
PUBLIC LAW 101-508—NOV. 5, 1990 
"TITLE V—CREDIT REFORM 
Federal Credit 
Reform Act of 
1990. 
2 use 621 note. 
"SEC. 500. SHORT TITLE. 
"This title may be cited as the 'Federal Credit Reform Act of 
1990'. 
2 use 661. 
"SEC. 501. PURPOSES. 
'The purposes of this title are to— 
"(1) measure more accurately the costs of Federal credit 
programs; 
"(2) place the cost of credit programs on a budgetary basis 
equivalent to other Federal spending; 
"(3) encourage the delivery of benefits in the form most 
appropriate to the needs of beneficiaries; and 
"(4) improve the allocation of resources among credit pro-
grams and between credit and other spending programs. 
2 use 661a. 
"SEC. 502. DEFINITIONS. 
'For purposes of this title— 
"(1) The term 'direct loan' means a disbursement of funds by 
the Government to a non-Federal borrower under a contract 
that requires the repajmient of such funds with or without 
interest. The term includes the purchase of, or participation in, 
a loan made by another lender. The term does not include the 
acquisition of a federally guaranteed loan in satisfaction of 
default claims or the price support loans of the Commodity 
Credit Corporation, 
"(2) The term 'direct loan obligation' meems a binding agree-
ment by a Federal agency to make a direct loan when specified 
conditions are fulfilled by the borrower. 
"(3) The term 'loan guarantee' means any guarantee, insur-
ance, or other pledge with respect to the payment of all or a 
part of the principal or interest on any debt obligation of a non-
Federal borrower to a non-Federal lender, but does not include 
the insurance of deposits, shares, or other withdrawable ac-
counts in financial institutions. 
"(4) The term 'loan guarantee commitment' means a binding 
agreement by a Federal agency to make a loan guarantee when 
specified conditions are fulfilled by the borrower, the lender, or 
any other party to the guarantee agreement. 
"(5XA) 'The term 'cost' means the estimated long-term cost to 
the Government of a direct loan or loan guarantee, calculated 
on a net present value basis, excluding administrative costs and 
any incidental effects on governmental receipts or outlays. 
"(B) The cost of a direct loan shall be the net present value, at 
the time when the direct loan is disbursed, of the following cash 
flows: 
"(i) loan disbursements; 
"(ii) repayments of principal; and 
"(iii) payments of interest and other payments by or to 
the Government over the life of the loan after adjusting for 
estimated defaults, prepayments, fees, penalties and other 
recoveries. 
"(C) The cost of a loan guarantee shall be the net present 
value when a guaranteed loan is disbursed of the cash flow 
from— 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-611 
"(i) estimated payments by the Government to cover 
defaults and delinquencies, interest subsidies, or other pay-
ments, and 
"(ii) the estimated pa3mients to the Government includ-
ing origination and other fees, penalties and recoveries, 
"(D) Any Government action that alters the estimated net 
present value of an outstanding direct loan or loan guarantee 
(except modifications within the terms of existing contracts or 
through other existing authorities) shall be counted as a change 
in the cost of that direct loan or loan guarantee. The calculation 
of such changes shall be based on the estimated present value of 
the direct loan or loan guarantee at the time of modification. 
"(E) In estimating net present values, the discount rate shall 
be the average interest rate on marketable Treasury securities 
of similar maturity to the direct loan or loan guarantee for 
which the estimate is being made. 
"(6) The term 'credit program account' means the budget 
account into which an appropriation to cover the cost of a direct 
loan or loan guarantee program is made and from which such 
cost is disbursed to the financing account. 
"(7) The term 'financing account' means the non-budget ac-
count or accounts associated with each credit program account 
which holds balances, receives the cost pa3anent from the credit 
program account, and also includes all other cash flows to and 
from the Government resulting from direct loan obligations or 
loan guarantee commitments made on or after October 1, 1991. 
"(8) The term 'liquidating account' means the budget account 
that includes all cash flows to and from the Government result-
ing from direct loan obligations or loan guarantee commitments 
made prior to October 1,1991. 
These accounts shall be shown in the budget on a cash basis. 
"(9) The term 'Director' means the Director of the Office of 
Management and Budget. 
"SEC. 503. 0MB AND CBO ANALYSIS, COORDINATION, AND REVIEW. 
2 USC 661b. 
"(a) IN GENERAL.—For the executive branch, the Director shall be 
responsible for coordinating the estimates required by this title. The 
Director shall consult with the agencies that administer direct loan 
or loan guarantee programs. 
"(b) DELEGATION.—The Director may delegate to agencies author-
ity to make estimates of costs. The delegation of authority shall be 
based upon written guidelines, regulations, or criteria consistent 
with the definitions in this title. 
"(c) (DOORDINATION WiTH THE CONGRESSIONAL BuDGET OFFICE.—In 
developing estimation guidelines, regulations, or criteria to be used 
by Federal agencies, the Director shall consult with the Director of 
the (Congressional Budget Office. 
"(d) IMPROVING COST ESTIMATES.—The Director and the Director 
of the (Dongressional Budget Office shall coordinate the development 
of more accurate data on historical performance of direct loan and 
loan guarantee programs. They shall annually review the perform-
ance of outstanding direct loans and loan guarantees to improve 
estimates of costs. The Office of Management and Budget and the 
C!ongression£d Budget Office shall have access to all agency data 
that may facilitate the development and improvement of estimates 
of costs. 
104 STAT. 1388-612 
PUBLIC LAW 101-508—NOV. 5, 1990 
"(e) HISTORICAL CREDIT PROGRAM COSTS.—The Director shall 
review, to the extent possible, historical data and develop the best 
possible estimates of adjustments that would convert aggregate 
historical budget data to credit reform accounting. 
"(f) ADMINISTRATIVE COSTS.—The Director and the Director of the 
Congressional Budget Office shall each analyze and report to (Don-
gress on differences in long-term administrative costs for credit 
programs versus grant programs by January 31, 1992. Their reports 
shall recommend to Congress any changes, if necessary, in the 
treatment of administrative costs under credit reform accounting. 
2 u s e 661c. 
"SEC. 504. BUDGETARY TREATMENT. 
"(a) PRESIDENT'S BUDGET.—Beginning with fiscal year 1992, the 
President's budget shall reflect the costs of direct loan and loan 
guarantee programs. The budget shall also include the planned level 
of new direct loan obligations or loan guarantee commitments asso-
ciated with each appropriations request. 
"(b) 
APPROPRIATIONS REQUIRED.—Notwithstanding any other 
provision of law, new direct loan obligations may be incurred and 
new loan guarantee commitments may be made for fiscal year 1992 
and thereafter only to the extent that— 
"(1) appropriations of budget authority to cover their costs are 
made in advance; 
"(2) a limitation on the use of funds otherwise available for 
the cost of a direct loan or loan guarantee program is enacted; 
or 
"(3) authority is otherwise provided in appropriation Acts. 
"(c) EXEMPTION FOR MANDATORY PROGRAMS.—Subsection (b) shall 
not apply to a direct loan or loan guarantee program that— 
"(1) constitutes an entitlement (such as the guaranteed stu-
dent loan program or the veterans' home loan guaranty pro-
gram); or 
"(2) all existing credit programs of the Commodity Credit 
Corporation on the date of enactment of this title. 
"(d) BUDGET ACCOUNTING.— 
"(1) The authority to incur new direct loan obligations, make 
new loan guarantee commitments, or directly or indirectly alter 
the costs of outstanding direct loans and loan guarantees shall 
constitute new budget authority in an amount equal to the cost 
of the direct loan or loan guarantee in the fiscal year in which 
definite authority becomes available or indefinite authority is 
used. Such budget authority shall constitute an obligation of the 
credit program account to pay to the financing account. 
"(2) The outlays resulting from new budget authority for the 
cost of direct loans or loan guarantees described in paragraph 
(1) shall be paid from the credit program account into the 
financing account and recorded in the fiscal year in which the 
direct loan or the guaranteed loan is disbursed or its costs 
altered. 
"(3) All collections and payments of the financing accounts 
shall be a means of financing. 
"(e) MODIFICATIONS.—A direct loan obligation or loan guarantee 
commitment shall not be modified in a manner that increases its 
cost unless budget authority for the additional cost is appropriated, 
or is available out of existing appropriations or from other budg-
etary resources. 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-613 
"(f) REESTIMATES.—When the estimated cost for a group of direct 
loans or loan guarantees for a given credit program made in a single 
fiscal year is reestimated in a subsequent year, the difference 
between the reestimated cost and the previous cost estimate shall be 
displayed as a distinct and separately identified subaccount in the 
credit program account as a change in program costs and a change 
in net interest. There is hereby provided permanent indefinite 
authority for these reestimates. 
"(g) ADMINISTRATIVE EXPENSES.—All funding for an agency's 
administration of a direct loan or loan guarantee program shall be 
displayed as distinct and separately identified subaccounts within 
the same budget account as the program's cost. 
"SEC. 505. AUTHORIZATIONS. 
2 USC 661d. 
"(a) AUTHORIZATION OF APPROPRIATIONS FOR C!OSTS.—There are 
authorized to be appropriated to each Federal agency authorized to 
make direct loan obligations or loan guarantee commitments, such 
sums as may be necessary to pay the cost associated with such direct 
loan obligations or loan guarantee commitments. 
"(b) AUTHORIZATION FOR FINANCING ACCOUNTS.—In order to im-
plement the accounting required by this title, the President is 
authorized to establish such non-budgetary accounts £is may be 
appropriate. 
"(c) TREASURY TRANSACTIONS WITH THE FINANCING ACCOUNTS.— 
The Secretary of the Treasury shall borrow from, receive from, lend 
to, or pay to the financing accounts such amounts as may be 
appropriate. The Secretary of the Treasury may prescribe forms and 
denominations, maturities, and terms and conditions for the trans-
actions described above. The authorities described above shall not be 
construed to supercede or override the authority of the head of a 
Federal agency to administer and operate a direct loan or loan 
guarantee program. All of the transactions provided in this subsec-
tion shall be subject to the provisions of subchapter II of chapter 15 
of title 31, United States Code. Cash balances of the financing 
accounts in excess of current requirements shall be maintained in a 
form of uninvested funds and the Secretary of the Treasury shall 
pav interest on these funds. 
'(d) AUTHORIZATION FOR LIQUIDATING ACCOUNTS.—If funds in liq-
uidating accounts are insufficient to satisfy the obligations and 
commitments of said accounts, there is hereby provided permanent, 
indefinite authority to make any pajmients required to be made on 
such obligations and commitments. 
"(e) AUTHORIZATION OF APPROPRIATIONS FOR IMPLEMENTATION EX-
PENSES.—There are authorized to be appropriated to existing ac-
counts such sums as may be necessary for salaries and expenses to 
carry out the responsibilities under this title. 
"(f) REINSURANCE.—Nothing in this title shall be construed as 
authorizing or requiring the purchase of insurance or reinsurance 
on a direct loan or loan guarantee from private insurers. If any such 
reinsurance for a direct loan or loan guarantee is authorized, the 
cost of such insurance and any recoveries to the Government shall 
be included in the calculation of the cost. 
"(g) EUGIBILITY AND ASSISTANCE.—Nothing in this title shall be 
construed to change the authority or the responsibility of a Federal 
agency to determine the terms and conditions of eligibility for, or 
the amount of assistance provided by a direct loan or a loan 
guarantee. 
104 STAT. 1388-614 
PUBLIC LAW 101-508—NOV. 5, 1990 
2 use 661e. 
"SEC. 506. TREATMENT OF DEPOSIT INSURANCE AND AGENCIES AND 
OTHER INSURANCE PROGRAMS. 
"(a) IN GENERAL.— 
"(1) This title shall not apply to the credit or insurance 
activities of the Federal Deposit Insurance Corporation, Na-
tional Credit Union Administration, Resolution Trust Corpora-
tion, Pension Benefit Guaranty Corporation, National Flood 
Insurance, National Insurance Development Fund, Crop Insur-
ance, or Tennessee Valley Authority. 
"(2) The Director and the Director of the Congressional 
Budget Office shall each study whether the accounting for 
Federal deposit insurance programs should be on a cash basis 
on the same basis as loan guarantees, or on a different basis. 
Each Director shall report findings and recommendations to the 
President and the Congress on or before May 31,1991. 
"(3) For the purposes of paragraph (2), the Office of Manage-
ment and Budget and the Congressional Budget Office shall 
have access to all agency data that may facilitate these studies. 
2 use 661f. 
"SEC. 507. EFFECT ON OTHER LAWS. 
"(a) EFFECT ON OTHER LAWS.—This title shall supersede, modify, 
or repeal any provision of law enacted prior to the date of enactment 
of this title to the extent such provision is inconsistent with this 
title. Nothing in this title shall be construed to establish a credit 
limitation on any Federal loan or loan guarantee program. 
"(b) CREDITING OF COLLECTIONS.—Collections resulting from direct 
loans obligated or loan guarantees committed prior to October 1, 
1991, shall be credited to the liquidating accounts of Federal agen-
cies. Amounts so credited shall be available, to the same extent that 
they were available prior to the date of enactment of this title, to 
liquidate obligations arising from such direct loans obligated or loan 
guarantees committed prior to October 1,1991, including repayment 
of any obligations held by the Secretary of the Treasury or the 
Federal Financing Bank. The unobligated balances of such accounts 
that are in excess of current needs shall be transferred to the 
general fund of the Treasury. Such transfers shall be made from 
time to time but, at least once each year.". 
(b) CONFORMING AMENDMENTS.— 
(1) DEFINITION.—Section 3(2) of the Congressional Budget Act 
2 use 622. 
of 1974 is amended by adding at the end the following: "The 
term includes the cost for direct loan and loan guarantee pro-
grams, as those terms are defined by title V". 
(2) POINT OF ORDER FOR FISCAL YEAR 1991.—Effective January 
1, 1991, for fiscal year 1991 only, section 302(f)(2) of the Congres-
2 use 633. 
sional Budget Act of 1974 is amended by inserting after "new 
budget authority" the following: "or new credit authority". 
(3) SUNSET OF POINT OF ORDER IN FISCAL YEAR 1992.—Effective 
for fiscal years beginning after September 30, 1991, section 302 
of the Congressional Budget Act is amended— 
(A) in subsection (a)(1)— 
(i) by striking "total entitlement authority, and total 
credit authority" and inserting "and total entitlement 
authority"; 
(ii) by striking "such entitlement authority, or such 
credit authority" and inserting "or such entitlement 
authority"; and 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-615 
(iii) by striking "entitlement authority, and credit 
authority" and inserting "and entitlement authority"; 
(B) in subsection (a)(2), by striking "total budget outlays, 
total new budget authority and new credit authority" and 
inserting "total budget outlays and total new budget 
authority"; 
(C) in subsection (b)(lXA), by striking "budget outlays, 
new budget authority, and new credit authority" and 
inserting "budget outlays and new budget authority"; 
(D) in subsection (c)— 
(i) in paragraph (1), by inserting "or" at the end 
thereof; and 
(ii) by striking "or (3) new credit authority for a fiscal 
year;"; and 
(E) in subsection (f)(1)— 
(i) by striking "year, new entitlement authority effec-
tive during such fiscal year, or new credit authority for 
such fiscal year," and inserting "year or new entitle-
ment authority effective during such fiscal year,"; and 
(ii) by striking "authority, new entitlement author-
ity, or new credit authority" and inserting "authority 
or new entitlement authority". 
SEC. 13202. CODIFICATION OF PROVISION REGARDING REVENUE ESTI-
MATES. 
(a) REDESIGNATION.—Section 201 of the Congressional Budget Act 
of 1974 is amended by redesignating subsection (f) as subsection (g). 2 USC 601. 
(b) TRANSFER.—The text of section 273 of the Balanced Budget and 
Emergency Deficit Control Act of 1985 is transferred to section 201 2 USC 921, 60lc. 
of the Congressional Budget Act of 1974 and is designated as subsec-
tion (g). 
(c) CONFORMING CHANGES.—Section 201(g) of the Congressional 
Budget Act of 1974 (as redesignated by subsection (b)) is amended 
by— 
(1) striking "this title and the Congressional Budget and 
Impoundment Control Act of 1974" and inserting "this Act"; 
and 
(2) inserting "REVENUE ESTIMATES.—" before the first sen-
tence. 
SEC. 13203. DEBT INCREASE AS MEASURE OF DEFICIT; DISPLAY OF FED-
ERAL RETIREMENT TRUST FUND BALANCES. 
Section 301(b) of the Congressional Budget Act of 1974 is amended 2 USC 632. 
by striking "and" at the end of paragraph (3), by striking the period 
at the end of paragraph (4) and inserting a semicolon, and by adding 
at the end the following new paragraphs: 
"(5) include a heading entitled 'Debt Increase as Measure of 
Deficit' in which the concurrent resolution shall set forth the 
amounts by which the debt subject to limit (in section 3101 of 
title 31 of the United States Code) has increased or would 
increase in each of the relevant fiscal years; and 
"(6) include a heading entitled 'Display of Federal Retirement 
Trust Fund Balances' in which the concurrent resolution shall 
set forth the balances of the Federal retirement trust funds.". 
104 STAT. 1388-616 
PUBLIC LAW 101-508—NOV. 5, 1990 
SEC. 13204. PAY-AS-YOU-GO PROCEDURES. 
2 use 632. 
Section 301(b) of the Congressional Budget Act of 1974 (as amend-
ed by section 13203) is further amended by striking "and" at the end 
of paragraph (5), by striking the period at the end of paragraph (6) 
and inserting a semicolon, and by adding at the end the following 
new paragraphs: 
"(7) set forth pay-as-you-go procedures for the Senate 
whereby— 
(A) budget authority and outlays may be allocated to a 
committee for legislation that increases funding for entitle-
ment and mandatory spending programs within its jurisdic-
tion if that committee or the committee of conference on 
such legislation reports such legislation, if, to the extent 
that the costs of such legislation are not included in the 
concurrent resolution on the budget, the enactment of such 
legislation will not increase the deficit (by virtue of either 
deficit reduction in the bill or previously passed deficit 
reduction) in the resolution for the first fiscal year covered 
by the concurrent resolution on the budget, and will not 
increase the total deficit for the period of fiscal years 
covered by the concurrent resolution on the budget; 
"(B) upon the reporting of legislation pursuant to 
subparagraph (A), and again upon the submission of a 
conference report on such legislation (if a conference report 
is submitted), the chairman of the Committee on the Budget 
of the Senate may file with the Senate appropriately re-
vised allocations under section 302(a) and revised functional 
levels and aggregates to carry out this paragraph; 
"(C) such revised allocations, functional levels, and aggre-
gates shall be considered for the purposes of this Act as 
allocations, functional levels, and Eiggregates contained in 
the concurrent resolution on the budget; and 
"(D) the appropriate committee shall report appro-
priately revised allocations pursuant to section 302(b) to 
carry out this paragraph; and 
"(8) set forth procedures to effectuate pay-as-you-go in the 
House of Representatives.". 
SEC. 13205. AMENDMENTS TO SECTION 303. 
(a) IN GENERAL.—Section 303(a) of the Congressional Budget Act 
2 use 634. 
of 1974 is amended— 
(1) by repealing paragraph (5), 
(2) by striking "or" at the end of paragraph (4), 
(3) by inserting after paragraph (4) the following new para-
graphs: 
"(5) in the Senate only, new spending authority (as defined in 
section 401(c)(2)) for a fiscal year; or 
"(6) in the Senate only, outlays,"; and 
(4) by inserting after the concurrent resolution on the budget 
for such fiscal year" the following: "(or, in the Senate, a concur-
rent resolution on the budget covering such fiscal year)". 
(b) EXCEPTIONS.—Section 3030^) of such Act is amended— 
(1) by striking "Subsection (a)" and inserting "(1) In the House 
of Representatives, subsection (a)" and by redesignating para-
graphs (1) and (2) as subparagraphs (A) and (B), respectively; 
and 
(2) by inserting at the end the following new paragraph: 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-617 
"(2) In the Senate, subsection (a) does not apply to any bill or 
resolution making advance appropriations for the fiscal year to 
which the concurrent resolution applies and the two succeeding 
fiscal years.". 
SEC. 13206. AMENDMENTS TO SECTION 308. 
(a) REPORTS AND SUMMARIES OF CONGRESSIONAL BUDGET AC-
TIONS.—(1) Section 308(a)(1) of that Act is amended— 
2 USC 639. 
(1) in the matter preceding subparagraph (A) by inserting 
after "fiscal year" the following: "(or fiscal years)"; 
(2) in subparagraph (A) by inserting after "fiscal year" the 
following: "(or fiscal years)"; and 
(3) in subparagraph (C) by inserting after "such fiscal year" 
the following: "(or fiscal years)". 
(b) CONFORMING AMENDMENT.—Section 308(a)(2) of that Act is 
amended by inserting after "fiscal year" the following: "(or fiscal 
years)". 
(c) ADDITIONAL CONFORMING AMENDMENT.—Section 308(b)(1) of 
that Act is amended— 
(1) by striking "for a fiscal year" in the first sentence and 
inserting "for each fiscal year covered by a concurrent resolu-
tion on the budget"; and 
(2) by striking "such fiscal year" in the second sentence and 
inserting "the first fiscal year covered by the appropriate 
concurrent resolution". 
SEC. 13207. STANDARDIZATION OF LANGUAGE REGARDING POINTS OF 
ORDER. 
(a) IN GENERAL.—The Congressional Budget Act of 1974 is 
amended— 
(1)(A) in section 302(c), by striking "bill or resolution, or 2 USC 633. 
amendment thereto" and inserting "bill, joint resolution, 
amendment, motion, or conference report"; 
(B) in section 302(f)(1), by inserting "joint" before "resolution" 
the second and third places it appears and in section 302(f)(2), by 
striking "bill or resolution (including a conference report 
thereon), or any amendment to a bill or resolution" and insert-
ing "bill, joint resolution, amendment, motion, or conference 
report"; 
(C) in section 303(a), by striking "bill or resolution (or amend- 2 USC 634. 
ment thereto)" and inserting "bill, joint resolution, amendment, 
motion, or conference report"; 
(D) in section 306, by striking "bill or resolution, and no 2 USC 637. 
amendment to any bill or resolution" and inserting "bill, resolu-
tion, amendment, motion, or conference report"; 
(E) in section 311(a), by— 
2 USC 642. 
(i) striking "bill, resolution, or amendment" and inserting 
"bill, joint resolution, amendment, motion, or conference 
report"; and 
(ii) striking "or any conference report on any such bill or 
resolution"; 
(F) in section 401(a), by— 
2 USC 651. 
(i) striking "bill, resolution, or conference report" and 
inserting "bill, joint resolution, amendment, motion, or 
conference report"; and 
(ii) striking "(or any amendment which provides such 
new spending authority)"; 
104 STAT. 1388-618 
PUBLICijAW 101-508—NOV. 5, 1990 
/ 
2 use 651. 
(G) in 8601101^40106X1), by— 
(i) striking "bill or resolution" and inserting "bill, joint 
resolution, amendment, motion, or conference report, as 
reported to its House"; and 
(ii) striking "(or any amendment which provides such 
new spending authority)"; and 
2 use 652. 
(H) in section 402(a), by— 
(i) striking "bill, resolution, or conference report" and 
inserting "bill, joint resolution, amendment, motion, or 
conference report"; and 
(ii) striking "or any amendment"; and 
2 use 633. 
(2) in section 302(f)(2), by striking "outlays or new budget 
authority" and inserting "outlays, new budget authority, or new 
spending authority (as defined in section 401(c)(2))". 
(b) POINTS OF ORDER IN THE SENATE.— 
(1) Title III of the Congressional Budget Act of 1974 is 
amended by adding at the end the following new section: 
"EFFECTS OF POINTS OF ORDER 
2 use 643. 
"SEC. 312. POINTS OF ORDER IN THE SENATE AGAINST AMENDMENTS 
BETWEEN THE HOUSES.—Each provision of this Act that establishes a 
point of order against an amendment also establishes a point of 
order in the Senate against an amendment between the Houses. If a 
point of order under this Act is raised in the Senate against an 
amendment between the Houses, and the Presiding Officer sustains 
the point of order, the effect shall be the same as if the Senate had 
disagreed to the amendment. 
"(b) EFFECT OF A POINT OF ORDER ON A BILL IN THE SENATE.—In 
the Senate, if the Chair sustains a point of order under this Act 
against a bill, the Chair shall then send the bill to the committee of 
appropriate jurisdiction for further consideration.". 
(2) The table of contents for the Congressional Budget and 
Impoundment Control Act of 1974 is amended by adding after 
the item relating to section 311 the following new item: 
"Sec. 312. Effect of points of order.". 
(c) ADJUSTMENT IN THE SENATE OF ALLOCATIONS AND AGGREGATES 
To REFLECT CHANGES PURSUANT TO SECTION 310(C).—Section 310(c) 
2 use 641. 
of the Congressional Budget Act of 1974 is amended by— 
(1) inserting "(1)" before "Any committee"; 
(2) redesignating subparagraphs (A) and (B) of paragraph (1) 
as clauses (i) and (ii), respectively; 
(3) redesignating paragraphs (1) and (2) as subparagraphs (A) 
and (B), respectively; and 
(4) inserting at the end the following new paragraph: 
"(2)(A) Upon the reporting to the Committee on the Budget of 
the Senate of a recommendation that shall be deemed to have 
complied with such directions solely by virtue of this subsection, 
the chairman of that committee may file with the Senate 
appropriately revised allocations under section 302(a) and 
revised functional levels and aggregates to carry out this 
subsection. 
"(B) Upon the submission to the Senate of a conference report 
recommending a reconciliation bill or resolution in which a 
committee shall be deemed to have complied with such direc-
tions solely by virtue of this subsection, the chairman of the 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-619 
Committee on the Budget of the Senate may file with the 
Senate appropriately revised allocations under section 302(a) 
and revised functional levels and aggregates to carry out this 
subsection. 
"(C) Allocations, functional levels, and aggregates revised 
pursuant to this paragraph shall be considered to be allocations, 
functional levels, and aggregates contained in the concurrent 
resolution on the budget pursuant to section 301. 
"(D) Upon the filing of revised allocations pursuant to this 
paragraph, the reporting committee shall report revised alloca-
tions pursuant to section 302(b) to carry out this subsection.", 
(d) 
RECONCIUATION 
INSTRUCTIONS.—Section 
310(a)(4) of 
the 
Congressional Budget Act of 1974 is amended by inserting after "(3)" 2 USC 641. 
the following: "(including a direction to achieve deficit reduction)". 
SEC. 13208. STANDARDIZATION OF 
ADDITIONAL 
DEFICIT CONTROL 
PROVISIONS. 
(a) Section 904 of the Congressional Budget Act of 1974 is 2 USC 621 note, 
amended— 
(1) by amending subsection (c) to read as follows: 
"(c) WAIVER.—Sections 305(b)(2), 305(c)(4), 306, 904(c), and 904(d) 
may be waived or suspended in the Senate only by the affirmative 
vote of three-fifths of the Members, duly chosen and sworn. Sections 
301(i), 302(c), 302(f), 310(d)(2), 310(f), 311(a), 313, 601(b), and 606(c) of 
this Act 
and 
sections 
258(a)(4)(C), 258A(b)(3XC)(i), 
258B(f)(l), 
258B(h)(l), 258B(h)(3), 258C(a)(5), and 258C(b)(l) of the Balanced 
Budget and Emergency Deficit Control Act of 1985 may be waived or 
suspended in the Senate only by the affirmative vote of three-fifths 
of the Members, duly chosen and sworn. "; and 
(2) in subsection (d) by inserting at the end the following: "An 
affirmative vote of three-fifths of the Members of the Senate, 
duly chosen and sworn, shall be required in the Senate to 
sustain an appeal of the ruling of the Chair on a point of order 
raised under sections 305(b)(2), 305(c)(4), 306, 904(c), and 904(d). 
An affirmative vote of three-fifths of the Members of the 
Senate, duly chosen and sworn, shall be required in the Senate 
to sustain an appeal of the ruling of the Chair on a point of 
order raised under sections 301(i), 302(c), 302(f), 310(d)(2), 310(f), 
311(a), 313, 601(b), and 606(c) of this Act and sections 258(a)(4)(C), 
258A(b)(3)(C)(i), 258B(f)(l), 258B(h)(l), 258B(h)(3), 258C(a)(5), and 
258C(bXl) of the Balanced Budget and Emergency Deficit Con-
trol Act of 1985". 
(b) Section 275(b)(2) of the Balanced Budget and Emergency Deficit 
Control Act of 1985 is amended— 
2 USC 900 note. 
(1) in subparagraph (C), by striking the final word "and"; 
(2) in subparagraph (D), by striking the final period and 
inserting "; and"; and 
(3) by inserting at the end the following new subparagraph: 
'(E) the second sentence of section 904(c) of the Congres-
sional Budget and Impoundment Control Act of 1974 and 
the final sentence of section 904(d) of that Act." 
SEC. 13209. CODIFICATION OF PRECEDENT WITH REGARD TO CON-
FERENCE REPORTS AND AMENDMENTS BETWEEN HOUSES. 
Section 305(c) of the (Dongressional Budget Act 1974 is amended— 
2 USC 636. 
(1) in paragraph (1)— 
(A) by striking the first sentence; and 
104 STAT. 1388-620 
PUBLIC LAW 101-508—NOV. 5, 1990 
(B) by inserting after "consideration of the conference 
report" the following: "on any concurrent resolution on the 
budget (or a reconciliation bill or resolution)"; and 
(2) in paragraph (2), by inserting "(or a message between 
Houses)" after "conference report" each place it appears. 
SEC. 13210. SUPERSEDED DEADLINES AND CONFORMING CHANGES. 
The Congressional Budget Act of 1974 is amended— 
2 use 636. 
(1) in section 305, by striking subsection (d) and redesignating 
subsection (e) as subsection (d); and 
2 use 641. 
(2) in section 310(f), by striking paragraph (1) and by striking 
"(2) POINT OF ORDER IN THE HOUSE OF REPRESENTATIVES.—". 
SEC. 13211. DEFINITIONS. 
(a) BUDGET AUTHORITY,—Section 3(2) of the Congressional Budget 
2 use 622. 
and Impoundment Control Act of 1974 is amended to read as follows: 
"(2) BUDGET AUTHORITY AND NEW BUDGET AUTHORITY.— 
"(A) IN GENERAL.—The term 'budget authority' means 
the authority provided by Federal law to incur financial 
obligations, as follows: 
"(i) provisions of law that make funds available for 
obligation and expenditure (other than borrowing 
authority), including the authority to obligate and 
expend the proceeds of offsetting receipts and collec-
tions; 
"(ii) borrowing authority, which means authority 
granted to a Federal entity to borrow and obligate and 
expend the borrowed funds, including through the issu-
ance of promissory notes or other monetary credits; 
"(iii) contract authority, which means the making of 
funds available for obligation but not for expenditure; 
and 
"(iv) offsetting receipts and collections as negative 
budget authority, and the reduction thereof as positive 
budget authority. 
"(B) LIMITATIONS ON BUDGET AUTHORITY.—With respect to 
the Federal Hospital Insurance Trust Fund, the Supple-
mentary Medical Insurance Trust Fund, the Unemploy-
ment Trust Fund, and the railroad retirement account, any 
amount that is precluded from obligation in a fiscal year by 
a provision of law (such as a limitation or a benefit formula) 
shall not be budget authority in that year. 
"(C) NEW BUDGET AUTHORITY.—The term 'new budget 
authority' means, with respect to a fiscal year— 
"(i) budget authority that first becomes available for 
obligation in that year, including budget authority that 
becomes available in that year s ^^ a result of a 
reappropriation; or 
"(ii) a change in any account in the availability of 
unobligated balances of budget authority carried over 
from a prior year, resulting from a provision of law 
first effective in that year; 
and includes a change in the estimated level of new budget 
authority provided in indefinite amounts by existing law.". 
2 use 622 note. 
(b) EFFECTIVE DATE.—The amendment made by subsection (a) 
shall be effective for fiscal year 1992 and subsequent fiscal years. 
** So in original. Probably should be "as". 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-621 
SEC. 13212. SAVINGS TRANSFERS BETWEEN FISCAL YEARS. 
Section 202 of Public Law 100-119 is repealed. 
2USC909. 
SEC. 13213. CONFORMING CHANGE TO TITLE 31. 
(a) 
LIMITATIONS ON EXPENDING 
AND OBUGATING.—Section 
1341(aXl) of title 31, United States Code, is amended— 
(1) in subparagraph (A), by striking the final word "or"; 
(2) in subparagraph (B), by striking the final period and 
inserting a semicolon; and 
(3) bv adding at the end the following new subparagraphs: 
(C) make or authorize an expenditure or obligation of 
funds required to be sequestered under section 252 of the 
Balanced Budget and Emergency Deficit Control Act of 
1985; or 
"(D) involve either government in a contract or obligation 
for the payment of money required to be sequestered under 
section 252 of the Balanced Budget and Emergency Deficit 
Control Act of 1985.". 
(b) LIMITATION ON VOLUNTARY SERVICES.—Section 1342 of title 31, 
United States Code, is amended by inserting at the end the follow-
ing: "As used in this section, the term 'emergencies involving the 
safety of human life or the protection of property' does not include 
ongoing, regular functions of government the suspension of which 
would not imminently threaten the safety of human life or the 
protection of property.". 
SEC. 13214. THE BYRD RULE ON EXTRANEOUS MATTER IN RECONCILI-
ATION. 
(a) THE BYRD RULE ON EXTRANEOUS MATTER IN RECONCILIATION.— 
Section 20001 of the Consolidated Omnibus Budget Reconciliation 
Act of 1985 is amended— 
2 USC 644. 
(1) in subsection (a)— 
(A) by inserting after "(a)" the following: "IN GEN-
ERAL.—"; 
(B) by inserting after "1974" the following: "(whether 
that bill or resolution originated in the Senate or the 
House) or section 258C of the Balanced Budget and Emer-
gency Deficit Control Act of 1985"; 
(2) in subsection (d) by inserting after "(d)" the following: 
"EXTRANEOUS PROVISIONS.—"; 
(3) in subsection (d)(1)(A) by inserting before the semicolon 
"(but a provision in which outlay decreases or revenue incresises 
exactly offset outlay increases or revenue decreases shall not be 
considered extraneous by virtue of this subparagraph)"; 
(4) in subsection (dXl)(D) by striking "and" after the semi-
colon; 
(5) in subsection (d)(1)(E), by striking the period at the end and 
inserting "; and"; 
(6) in subsection (dXl) by adding at the end the following new 
subparagraph: 
"(F) a provision shall be considered extraneous if it vio-
lates section 310(g)."; 
(7) in subsection (dX2), by inserting after "A" the first place it 
appears the following: "Senate-originated"; and 
(8) by adding at the end the following new subsections: 
"(e) EXTRANEOUS MATERIALS.—Upon the reporting or discharge of 
a reconciliation bill or resolution pursuant to section 310 in the 
104 STAT. 1388-622 
PUBLIC LAW 101-508—NOV. 5, 1990 
Senate, and again upon the submission of a conference report on 
such a reconciUation bill or resolution, the Committee on the Budget 
of the Senate shall submit for the record a list of material consid-
ered to be extraneous under subsections (bXlXA), (bXlXB), and 
(bXlXE) of this section to the instructions of a committee as provided 
in this section. The inclusion or exclusion of a provision shall not 
constitute a determination of extraneousness by the Presiding Offi-
cer of the Senate. 
"(f) GENERAL POINT OF ORDER.—Notwithstanding any other law or 
rule of the Senate, it shall be in order for a Senator to raise a single 
point of order that several provisions of a bill, resolution, amend-
ment, motion, or conference report violate this section. The Presid-
ing Officer may sustain the point of order as to some or all of the 
provisions against which the Senator raised the point of order. If the 
Presiding Officer so sustains the point of order as to some of the 
provisions (including provisions of an amendment, motion, or con-
ference report) against which the Senator raised the point of order, 
then only those provisions (including provisions of an amendment, 
motion, or conference report) against which the Presiding Officer 
sustains the point of order shall be deemed stricken pursuant to this 
section. Before the Presiding Officer rules on such a point of order, 
any Senator may move to waive such a point of order as it applies to 
some or all of the provisions against which the point of order was 
raised. Such a motion to waive is amendable in accordance with the 
rules and precedents of the Senate. After the Presiding Officer rules 
on such a point of order, any Senator may appeal the ruling of the 
Presiding Officer on such a point of order as it applies to some or all 
of the provisions on which the Presiding Officer ruled. 
"(g) DETERMINATION OF LEVELS.—For purposes of this section, the 
levels of new budget authority, budget outlays, new entitlement 
authority, and revenues for a fiscal year shall be determined on the 
basis of estimates made by the Committee on the Budget of the 
Senate.". 
(b) TRANSFER OF BYRD RULE.—(1) Section 20001 of the Consolidated 
2 use 644. 
Omnibus Budget Reconciliation Act of 1985, as amended by subsec-
tion (a), is transferred to the end of title III of the Congressional 
Budget Act of 1974, and designated as section 313 of that Act. 
2 use 644. 
(2) Section 313 of the Congressional Budget Act of 1974 is amended 
by— 
(A) adding at the beginning the following center heading: 
"EXTRANEOUS MATTER IN RECONCILIATION LEGISLATION"; 
(B) striking subsection (b), subsection (c), and the last sentence 
of subsection (a); and 
(C) redesignating subsections (d) ^^ (e), (f), and (g) as subsec-
tions (b), (c), (d) and (e), respectively. 
(3) Subsection (a) of the first section of Senate Resolution 286 (99th 
2 use 644. 
Congress, 1st Session), as amended by Senate Resolution 509 (99th 
Congress, 2d Session) is enacted as subsection (c) of section 313 of the 
Congressional Budget Act of 1974. 
(4) Section 313 of the Congressional Budget Act of 1974 is 
amended— 
(A) in subsections (a), (bXlXA), and (c), by striking "of the 
Congressional Budget Act of 1974"; 
(B) in subsection (a), by striking "(d)" and inserting "(b)"; 
(C) in subsection (bX2)(C), by adding "or" at the end thereof; 
*• So in original. Probably should be "(d),". 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-623 
(D) in subsection (c), by striking "when" and inserting 
"When"; 
(E) in subsection (cXD, by striking "(dXlXA) or (dXlXD) of 
section 20001 of the Consolidated Omnibus Budget ReconciU-
ation Act of 1985" and inserting "(bXlXA), (bXlXB), (bXlXD), 
(bXlXE),or(bXlXF)";and 
(F) in subsection (cX2), by striking "this resolution" and 
inserting "this subsection". 
(5) The table of contents for the Congressional Budget and 
Impoundment Control Act of 1974 is amended by adding after the 
item for section 312 the following new item: 
"Sec. 313. Extraneous matter in reconciliation legislation.". 
Subtitle C—Social Security 
SEC. 13301. OFF-BUDGET STATUS OF OASDI TRUST FUNDS. 
(a) EXCLUSION OF SOCIAL SECURITY FROM ALL BUDGETS.—Notwith- 2 use 632 note, 
standing any other provision of law, the receipts and disbursements 
of the Federal Old-Age and Survivors Insurance Trust Fund £ind the 
Federal Disability Insurance Trust Fund shall not be counted as 
new budget authority, outlays, receipts, or deficit or surplus for 
purposes of— 
(1) the budget of the United States Government as submitted 
by the President, 
(2) the congressional budget, or 
(3) the Balanced Budget and Emergency Deficit Control Act of 
1985. 
0)) 
EXCLUSION 
OF 
SOCIAL 
SECURITY 
FROM 
CONGRESSIONAL 
BUDGET.—Section 301(a) of the Congressional Budget Act of 1974 is 2 USC 632. 
amended by adding at the end the following: "The concurrent 
resolution shall not include the outlays and revenue totals of the old 
age, survivors, and disability insurance program established under 
title II of the Social Security Act or the related provisions of the 
Internal Revenue Code of 1986 in the surplus or deficit totals 
required by this subsection or in any other surplus or deficit totals 
required by this title.". 
SEC. 13302. PROTECTION OF OASDI TRUST FUNDS IN THE HOUSE OF 2 USC 632 note. 
REPRESENTATIVES. 
(a) IN GENERAL.—It shall not be in order in the House of Rep-
resentatives to consider any bill or joint resolution, as reported, or 
any Eimendment thereto or conference report thereon, if, upon 
enactment— 
(IXA) such legislation under consideration would provide for a 
net increase in OASDI benefits of at least 0.02 percent of the 
present value of future taxable payroll for the 75-year period 
utilized in the most recent annual report of the Board of 
Trustees provided pursuant to section 201(cX2) of the Social 
Security Act, and (B) such legislation under consideration does 
not provide at least a net increase, for such f 5-year period, in 
OASDI taxes of the amount by which the net increase in such 
benefits exceeds 0.02 percent of the present value of future 
taxable pajn-oU for such 75-year period, 
(2XA) such legislation under consideration would provide for a 
net increase in OASDI benefits (for the 5-year estimating period 
for such legislation under consideration), (B) such net increase. 
104 STAT. 1388-624 
PUBLIC LAW 101-508—NOV. 5, 1990 
together with the net increases in OASDI benefits resulting 
from previous legislation enacted during that fiscal year or any 
of the previous 4 fiscal years (as estimated at the time of 
enactment) which are attributable to those portions of the 5-
year estimating periods for such previous legislation that fall 
within the 5-year estimating period for such legislation under 
consideration, exceeds $250,000,000, and (C) such legislation 
under consideration does not provide at least a net increase, for 
the 5-year estimating period for such legislation under consider-
ation, in OASDI taxes which, together with net increases in 
OASDI taxes resulting from such previous legislation which are 
attributable to those portions of the 5-year estimating periods 
for such previous legislation that fall within the 5-year estimat-
ing period for such legislation under consideration, equals the 
amount by which the net increase derived under subparagraph 
(B) exceeds $250,000,000; 
(3)(A) such legislation under consideration would provide for a 
net decrease in OASDI taxes of at least 0.02 percent of the 
present value of future taxable payroll for the 75-year period 
utilized in the most recent annual report of the Board of 
Trustees provided pursuant to section 201(c)(2) of the Social 
Security Act, and (B) such legislation under consideration does 
not provide at least a net decrease, for such 75-year period, in 
OASDI benefits of the amount by which the net decrease in 
such taxes exceeds 0.02 percent of the present value of future 
taxable payroll for such 75-year period, or 
(4)(A) such legislation under consideration would provide for a 
net decrease in OASDI taxes (for the 5-year estimating period 
for such legislation under consideration), (B) such net decrease, 
together with the net decreases in OASDI taxes resulting from 
previous legislation enacted during that fiscal year or any of the 
previous 4 fiscal years (as estimated at the time of enactment) 
which are attributable to those portions of the 5-year estimating 
periods for such previous legislation that fall within the 5-year 
estimating period for such legislation under consideration, ex-
ceeds $250,000,000, and (C) such legislation under consideration 
does not provide at least a net decrease, for the 5-year estimat-
ing period for such legislation under consideration, in OASDI 
benefits which, together with net decreases in OASDI benefits 
resulting from such previous legislation which are attributable 
to those portions of the 5-year estimating periods for such 
previous legislation that fall within the 5-year estimating period 
for such legislation under consideration, equals the amount by 
which the net decrease derived under subparagraph (B) exceeds 
$250,000,000. 
(b) APPUCATION.—In applying paragraph (3) or (4) of subsection 
(a), any provision of any bill or joint resolution, as reported, or any 
amendment thereto, or conference report thereon, the effect of 
which is to provide for a net decrease for any period in taxes 
described in subsection (c)(2)(A) shall be disregarded if such bill, joint 
resolution, amendment, or conference report also includes a provi-
sion the effect of which is to provide for a net increase of at least an 
equivalent amount for such period in medicare taxes. 
(c) DEFINITIONS.—For purposes of this subsection: 
(1) The term "OASDI benefits" means the benefits under the 
old-age, survivors, and disability insurance programs under title 
II of the Social Security Act. 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-625 
(2) The term "OASDI taxes" means— 
(A) the taxes imposed under sections 1401(a), 3101(a), and 
3111(a) of the Internal Revenue Code of 1986, and 
(B) the taxes imposed under chapter 1 of such Code (to the 
extent attributable to section 86 of such Code). 
(3) The term "medicare taxes" means the taxes imposed 
under sections 1401(b), 3101(b), and 3111(b) of the Internal Reve-
nue Code of 1986. 
(4) The term "previous legislation" shall not include legisla-
tion enacted before fiscal year 1991, 
(5) The term "5-year estimating period" means, with respect 
to any legislation, the fiscal year in which such legislation 
becomes or would become effective and the next 4 fiscal years. 
(6) No provision of any bill or resolution, or any amendment 
thereto or conference report thereon, involving a change in 
chapter 1 of the Internal Revenue Code of 1986 shall be treated 
as affecting the amount of OASDI taxes referred to in para-
graph (2)(B) unless such provision changes the income tax treat-
ment of OASDI benefits. 
SEC. 13303. SOCIAL SECURITY FIREWALL AND POINT OF ORDER IN THE 
SENATE. 
(a) CONCURRENT RESOLUTION ON THE BUDGET.—Section 301(a) of 
the Congressional Budget Act of 1974 is amended by striking "and" 2 USC 632. 
at the end of paragraph (4), by striking the period at the end of 
paragraph (5) and inserting a semicolon; and by adding after para-
graph (5) the following new paragraphs: 
"(6) For purposes of Senate enforcement under this title, 
outlays of the old-age, survivors, and disability insurance pro-
gram established under title II of the Social Security Act for the 
fiscal year of the resolution and for each of the 4 succeeding 
fiscal years; and 
"(7) For purposes of Senate enforcement under this title, 
revenues of the old-age, survivors, and disability insurance 
program established under title II of the Social Security Act 
(and the related provisions of the Internal Revenue Code of 
1986) for the fiscal year of the resolution and for each of the 4 
succeeding fiscal years.". 
(b) POINT OF ORDER.—Section 301(i) of the Congressional Budget 
Act of 1974 is amended to read as follows: 
"(i) It shall not be in order in the Senate to consider any concur-
rent resolution on the budget as reported to the Senate that would 
decrease the excess of social security revenues over social security 
outlays in any of the fiscal years covered by the concurrent resolu-
tion. No change in chapter 1 of the Internal Revenue Code of 1986 
shall be treated as affecting the amount of social security revenues 
unless such provision changes the income tax treatment of social 
security benefits.". 
(c) COMMITTEE ALLOCATIONS.— 
(1) Section 302(a)(2) of the Congressional Budget Act of 1974 is 2 USC 633. 
amended by inserting after "appropriate levels o f the follow-
ing: "social security outlays for the fiscal year of the resolution 
and for each of the 4 succeeding fiscal years,". 
(2) Section 302(f)(2) of the Congressional Budget Act of 1974 is 
amended by inserting before the period the following: "or pro-
vides for social security outlays in excess of the appropriate 
allocation of social security outlays under subsection (a) for the 
104 STAT. 1388-626 
PUBLIC LAW 101-508—NOV. 5, 1990 
fiscal year of the resolution or for the total of that year and the 
4 succeeding fiscal years". 
2 use 633. 
(3) Section 302(f)(2) of such Act is further amended by adding 
at the end the following: "In applying this paragraph— 
"(A) estimated social security outlays shall be deemed to 
be reduced by the excess of estimated social security reve-
nues (including social security revenues provided for in the 
bill, resolution, amendment, or conference report with re-
spect to which this paragraph is applied) over the appro-
priate level of social security revenues specified in the most 
recently adopted concurrent resolution on the budget; 
"(B) estimated social security outlays shall be deemed 
increased by the shortfall of estimated social security reve-
nues (including social security revenues provided for in the 
bill, resolution, amendment, or conference report with re-
spect to which this paragraph is applied) below the appro-
priate level of social security revenues specified in the most 
recently adopted concurrent resolution on the budget; and 
"(C) no provision of any bill or resolution, or any amend-
ment thereto or conference report thereon, involving a 
change in chapter 1 of the Internal Revenue Code of 1986 
shall be treated as affecting the amount of social security 
revenues unless such provision changes the income tax 
treatment of social security benefits. 
The Chairmsm of the Committee on the Budget of the Senate 
may file with the Senate appropriately revised allocations 
under subsection (a) and revised functional levels and aggre-
gates to reflect the application of the preceding sentence. Such 
revised allocations, functional levels, and aggregates shall be 
considered as allocations, functional levels, and aggregates con-
tained in the most recently agreed to concurrent resolution on 
the budget, and the appropriate committees shall report revised 
allocations pursuant to subsection (b).". 
(d) POINT OF ORDER UNDER SECTION 311.—(1) Subsection (a) of 
2 use 642. 
section 311(a) of the Congressional Budget Act of 1974 is redesig-
nated as subsection (aXl) and paragraphs (1), (2), and (3) are redesig-
nated as subparagraphs (A), (B), and (C). 
(2) Section 311(a) of such Act is amended by inserting at the end 
the following new paragraph: 
"(2XA) After the Congress has completed action on a concurrent 
resolution on the budget, it shall not be in order in the Senate to 
consider any bill, resolution, amendment, motion, or conference 
report that would cause the appropriate level of total new budget 
authority or total budget outlays or social security outlays set forth 
for the first fiscal year in the most recently agreed to concurrent 
resolution on the budget covering such fiscal year to be exceeded, or 
would cause revenues to be less than the appropriate level of total 
revenues (or social security revenues to be less than the appropriate 
level of social security revenues) set forth for the first fiscal year 
covered by the resolution and for the period including the first fiscal 
year plus the following 4 fiscal years in such concurrent resolution. 
"(B) In appljdng this paragraph— 
"(iXD estimated social security outlays shall be deemed to be 
reduced by the excess of estimated social security revenues 
(including those provided for in the bill, resolution, amendment, 
or conference report with respect to which this subsection is 
applied) over the appropriate level of Social Security revenues 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-627 
specified in the most recently agreed to concurrent resolution 
on the budget; 
"(II) estimated social security revenues shall be deemed to be 
increased to the extent that estimated social security outlays 
are less (taking into account the effect of the bill, resolution, 
amendment, or conference report to which this subsection is 
being applied) than the appropriate level of social security 
outlays in the most recently agreed to concurrent resolution on 
the budget; and 
"(ii)(I) estimated Social Security outlays shall be deemed to be 
increased by the shortfall of estimated social security revenues 
(including Social Security revenues provided for in the bill, 
resolution, amendment, or conference report with respect to 
which this subsection is applied) below the appropriate level of 
social security revenues specified in the most recently adopted 
concurrent resolution on the budget; and 
"(II) estimated social security revenues shall be deemed to be 
reduced by the excess of estimated social security outlays 
(including social security outlays provided for in the bill, resolu-
tion, amendment, or conference report with respect to which 
this subsection is applied) above the appropriate level of social 
security outlays specified in the most recently adopted concur-
rent resolution on the budget; and 
"(iii) no provision of any bill or resolution, or any amendment 
thereto or conference report thereon, involving a change in 
chapter 1 of the Internal Revenue Code of 1986 shall be treated 
as affecting the amount of social security revenues unless such 
provision changes the income tax treatment of social security 
benefits. 
The chairman of the Committee on the Budget of the Senate may 
file with the Senate appropriately revised allocations under section 
302(a) and revised functional levels and aggregates to reflect the 
application of the preceding sentence. Such revised allocations, 
functional levels, and aggregates shall be considered as allocations, 
functional levels, and aggregates contained in the most recently 
agreed to concurrent resolution on the budget, and the appropriate 
committees shall report revised allocations pursuant to section 
302(b)." 
SEC. 1
3
3
0
4
. 
REPORT 
TO 
THE 
CONGRESS 
BY 
THE 
BOARD 
OF 
TRUSTEES 
OF 
THE 
OASDI 
TRUST 
FUNDS 
REGARDING 
THE 
ACTUARIAL 
BAL-
ANCE 
OF 
THE 
TRUST 
FUNDS. 
Section 201(c) of the Social Security Act (42 U.S.C. 401(c)) is 
amended by inserting after the first sentence following clause (5) the 
following new sentence: "Such statement shall include a finding by 
the Board of Trustees as to whether the Federal Old-Age and 
Survivors Insurance Trust Fund and the Federal Disability Insur-
ance Trust Fund, individually and collectively, are in close actuarial 
balance (as defined by the Board of Trustees). . 
SEC. 13305. EXERCISE OF RULEMAKING POWER. 
2 USC 900 note. 
This title and the amendments made by it are enacted by the 
Congress— 
(1) as an exercise of the rulemaking power of the House of 
Representatives and the Senate, respectively, and sis such they 
shall be considered as a part of the rules of each House, 
respectively, or of that House to which they specifically apply. 
104 STAT. 1388-628 
PUBLIC LAW 101-508—NOV. 5, 1990 
and such rules shall supersede other rules only to the extent 
that they are inconsistent therewith; and 
(2) with full recognition of the constitutional right of either 
House to change such rules (so far as relating to such House) at 
any time, in the same manner, and to the same extent £is in the 
case of any other rule of such House. 
2 use 632 note. 
SEC. 13306. EFFECTIVE DATE. 
Sections 13301, 13302, and 13303 and any amendments made by 
such sections shall apply with respect to fiscal years beginning on or 
after October 1, 1990. Section 13304 shall be effective for annual 
reports of the Board of Trustees issued in or after calendar year 
1991. 
Subtitle D—Treatment of Fiscal Year 1991 
Sequestration 
2 use 902 note. 
SEC. 13401. RESTORATION OF FUNDS SEQUESTERED. 
(a) ORDER RESCINDED.—Upon the enactment of this Act, the orders 
issued by the President on August 25, 1990, and October 15, 1990, 
pursuant to section 252 of the Balanced Budget and Emergency 
Deficit Control Act of 1985 are hereby rescinded. 
(b) AMOUNTS RESTORED.—Any action taken to implement the 
orders referred to in subsection (a) shall be reversed, and any 
sequestrable resource that has been reduced or sequestered by such 
orders is hereby restored, revived, or released and shall be available 
to the same extent and for the same purpose as if the orders had not 
been issued. 
(c) FuRLOUGHED EMPLOYEES,—(1) Federal employees furloughed as 
a result of the lapse in appropriations from midnight October 5, 
1990, until the enactment of House Joint Resolution 666 shall be 
compensated at their standard rate of compensation for the period 
during which there was a lapse in appropriations. 
(2) AH obligations incurred in anticipation of the appropriations 
made and authority granted by House Joint Resolution 666 for the 
purposes of maintaining the essential level of activity to protect life 
and property and bringing about orderly termination of government 
functions are hereby ratified and approved if otherwise in accord 
with the provisions of that Act. 
Subtitle E—Government-sponsored Enterprises 
2 use 621 note. 
SEC. 13501. FINANCIAL SAFETY AND SOUNDNESS OF GOVERNMENT-SPON-
SORED ENTERPRISES. 
(a) DEFINITION.—For purposes of this section, the terms "Govern-
ment-sponsored enterprise" and "GSE" mean the Farm Credit 
System (including the Farm Credit Banks, Banks for Cooperatives, 
and Federal Agricultural Mortgage Corporation), the Federal Home 
Loan Bank System, the Federal Home Loan Mortgage Corporation, 
the Federal National Mortgage Association, and the Student Loan 
Marketing Association. 
0)) TREASURY DEPARTMENT STUDY AND PROPOSED LEGISLATION.— 
PUBLIC LAW 101-508—NOV. 5, 1990 
104 STAT. 1388-629 
(1) The Department of the Treasury shall prepare and submit 
to Congress no later than April 30, 1991, a study of GSEs and 
recommended legislation. 
(2) The study shall include an objective assessment of the 
financial soundness of GSEs, the adequacy of the existing regu-
latory structure for GSEs, the financial exposure of the Federal 
Government posed by GSEs, and the effects of GSE activities on 
Treasury borrowing. 
(c) CONGRESSIONAL BUDGET OFFICE STUDY.— 
(1) The Congressional Budget Office shall prepare and submit 
to Congress no later than April 30, 1991, a study of GSEs. 
(2) The study shall include an analysis of the financial risks 
each GSE assumes, how Congress may improve its understand-
ing of those risks, the supervision and regulation of GSEs' risk 
management, the financial exposure of the Federal Government 
posed by GSEs, and the effects of GSE activities on Treasury 
borrowing. The study shall also include an analysis of alter-
native models for oversight of GSEs and of the costs and bene-
fits of each alternative model to the Government and to the 
markets and beneficiaries served by GSEs. 
(d) ACCESS TO RELEVANT INFORMATION.— 
(1) For the studies required by this section, each GSE shall 
provide full and prompt access to the Secretary of the Treasury 
and the Director of the Congressional Budget Office to its bool^ 
and records and other information requested by the Secretary of 
the Treasury or the Director of the Congressional Budget Office. 
(2) In preparing the studies required by this section, the 
Secretary of the Treasury and the Director of the Congressional 
Budget Office may request information from, or the assistance 
of, any Federal department or agency authorized by law to 
supervise the activities of a GSE. 
(e) CONFIDENTIALITY OF RELEVANT INFORMATION.— 
(1) The Secretary of the Tresisury and the Director of the 
Congressional Budget Office shall determine and maintain the 
confidentiality of any book, record, or information made avail-
able by a GSE under this section in a manner consistent with 
the level of confidentiality established for the material by the 
GSE involved. 
(2) The Department of the Treasury shall be exempt from 
section 552 of title 5, United States Code, for any book, record, 
or information made available under subsection (d) and deter-
mined by the Secretary of the Treasury to be confidential under 
this subsection. 
(3) Any officer or employee of the Department of the Treasury 
shall be subject to the penalties set forth in section 1906 of title 
18, United States Code, if— 
(A) by virtue of his or her employment or official position, 
he or she has possession of or access to any book, record, or 
information made available under and determined to be 
confidential under this section; and 
(B) he or she discloses the material in any manner other 
than— 
(i) to an officer or employee of the Department of the 
Treasury; or 
(ii) pursuant to the exception set forth in such section 
1906. 
104 STAT. 1388-630 
PUBLIC LAW 101-508—NOV. 5, 1990 
(4) The Congressional Budget Office shall be exempt from 
section 203 of the Congressional Budget Act of 1974 with respect 
to any book, record, or information made available under this 
subsection and determined by the Director to be confidential 
under paragraph (1). 
(f) REQUIREMENT TO REPORT LEGISLATION.—(1) The committees of 
jurisdiction in the House shall prepare and report to the House no 
later than September 15, 1991, legislation to ensure the financial 
soundness of GSEs and to minimize the possibility that a GSE might 
require future assistance from the Government. 
(2) It is the sense of the Senate that the committees of jurisdiction 
in the Senate shall prepare and report to the Senate no later than 
September 15, 1991, legislation to ensure the financial safety and 
soundness of GSEs and to minimize the possibility that a GSE might 
require future assistance from the Government. 
(f) PRESIDENT'S BUDGET,—The President's annual budget submis-
sion shall include an analysis of the financial condition of the GSEs 
and the financial exposure of the Government, if any, posed by 
GSEs. 
Approved November 5, 1990. 
Certified February 22, 1991. 
Editorial note: This printed version of the original hand enrollment is published 
pursuant to section 2(c) of Public Law 101-466. The following memorandum for the 
Archivist of the United States was signed by the President on January 10, 1991, and 
was printed in the Federal Register on January 14, 1991: 
By the authority vested in me as President by the Constitution and laws of the 
United States, including Section 301 of Title 3 of the United States Code, I hereby 
authorize you to ascertmn whether the printed enrollment of H.R. 5835, the Omnibus 
Budget Reconciliation Act of 1990 (Public Law 101-508), approved on November 5, 
1990, is a correct printing of the hand enrollment and if so to make on my behalf the 
certification specified in Section 2(c) of H.J. Res. 682 (Public Law 101-466). 
Attached is the printed enrollment that was received at the White House on 
January 7, 1991. 
This memorandum shall be published in the Federal Register. 
The Archivist on February 22, 1991, certified this to be a correct printing of the hand 
enrollment of Public Law 101-508. 
LEGISLATIVE HISTORY—H.R. 5835 (S. 3209): 
HOUSE REPORTS: No. 101-881 (Comm. on the Budget) and No. 101-964 (Comm. of 
OonfGrGncG) 
CONGRESSIONAL RECORD, Vol. 136 (1990): 
Oct. 16, considered and passed House. 
Oct. 17, S. 3209 considered in Senate. 
Oct. 18, H.R. 5835 considered and passed Senate, amended, in lieu of S. 3209. 
Oct. 26, House agreed to conference report. 
Oct. 27, Senate agreed to conference report. 
WEEKLY COMPILATION OF PRESIDENTIAL DOCUMENTS, Vol. 26 (1990): 
Nov. 5, Presidential stetement.