Omnibus Budget Reconciliation Act of 1981
PL 97-35 (H.R.3982), enacted 08/13/1981

PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 357 
Public Law 97-35 
97th Congress 
An Act 
To provide for reconciliation pursuant to section 301 of the first concurrent resolution 
Aug. 13, 1981 
on the budget for the fiscal year 1982. 
[H.R. 3982] 
SHORT TITLE 
SECTION 1. This Act may be cited as the "Omnibus Budget Recon- Omnibus Budget 
ciliation Act of 1981". 
AS on98i'°" 
TABLE OF CONTENTS 
Title I. Agriculture, forestry, and related programs. 
Title II. Armed services and defense-related programs. 
Title III. Banking, housing, and related programs. 
Title IV. District of Columbia. 
Title V. Education programs. 
Title VI. Human services programs. 
Title VII. Employment programs. 
Title VIII. School lunch and child nutrition programs. 
Title IX. Health services and facilities. 
Title X. Energy and energy-related programs. 
Title XI. Transportation and related programs. 
Title XII. Consumer product safety and communications. 
Title XIII. International affairs. 
Title XIV. Department of Interior and related programs. 
Title XV. Department of Justice and related provisions. 
Title XVI. Maritime and related programs. 
Title XVII. Civil service and postal service programs; governmental 
affairs 
generally. 
Title XVIII. Water resource development and economic development programs. 
Title XIX. Small business. 
Title XX. Veterans' programs. 
Title XXI. Medicare, medicaid, and maternal and child health. 
Title XXII. Federal Old-Age, Survivors, and Disability Insurance program. 
Title XXIII. Public assistance programs. 
Title XXIV. Unemployment compensation. 
Title XXV. Trade adjustment assistance. 
Title XXVI. Low-income home energy assistance. 
Title XXVII. Health professions. 
PURPOSE 
SEC. 2. It is the purpose of this Act to implement the recommenda-
tions which were made by specified committees of the House of 
Representatives and the Senate pursuant to directions contained in 
part A of title III of the first concurrent resolution on the budget for 
the fiscal year 1982 (H. Con. Res. 115,97th Congress), and pursuant to 
the reconciliation requirements which were imposed by such concur-
rent resolution as provided in section 310 of the Congressional Budget 
Act of 1974. 
31 use 1331. 
95 STAT. 358 
PUBLIC LAW 97-35—AUG. 13, 1981 
TITLE I—AGRICULTURE, FORESTRY, AND 
RELATED PROGRAMS 
Subtitle A—Food Stamp Prog^ram Reductions and 
Other Reductions in Authorization for Appropriations 
PART 1—FOOD STAMP PROGRAM REDUCTIONS 
FAMILY UNIT REQUIREMENT 
7 use 2012. 
SEC. 101. Section 3(i) of 
the Food Stamp Act of 1977 is amended b y -
C
D inserting before the period at tne end of the first sentence "; 
except that parents and children who live together shall be 
treated as a group of individuals who customari^ purchase and 
prepare meals together for home consumption even if they do not 
do so, unless one of 
the parents is sixty years of 
age or older"; and 
(2) striking out "neither" in the second sentence and inserting 
"no" in lieu thereof. 
BOARDERS 
SEC. 102. Section 8(i) of 
the Food Stamp Act of 1977 is amended b y -
C
D striking out in clause (1) of the first sentence "or else pays 
compensation to the others for such meals,"; 
(2) striking out in clause (2) of the first sentence "or else live 
with others and pay compensation to the others for such meals"; 
and 
(3) adding before the period at the end of the second sentence ", 
or else live with others and pay compensation to the others for 
meals". 
ADJUSTMENT OF THE THRIFTY FOOD PLAN 
SEC. 103. Section 3(o) of the Food Stamp Act of 1977 is amended by 
striking out "and" before clause (6) and all that follows down through 
the end of clause (6), and inserting in lieu thereof the following: "(6) 
on April 1, 1982, ai^just the cost of such diet to the nearest dollar 
increment to reflect changes in the cost of 
the thrifty food plan for the 
fifteen months ending the preceding December 31, (7) on July 1,1983, 
adjust the cost of such diet to the nearest dollar increment to reflect 
changes in the cost of the thriffy food plan for the fifteen months 
ending the preceding March 31, (8) on October 1,1984, adjust the cost 
of such diet to the nearest dollar increment to reflect changes in the 
cost of the thrifty food plan for the fifteen months ending the 
preceding June 30, and (9) on October 1, 1985, and each October 1, 
thereafter, adjust the cost of such diet to the nearest dollar increment 
to reflect changes in the cost of the thrifty food plan for the twelve 
months ending the preceding June 30". 
GROSS INCOME ELIGIBILITY STANDARD 
7 use 2014. 
SEC. 104. (a) Section 5 of the Food Stamp Act of 1977 is amended 
b y -
C
D striking out everything before "adjusted annually" in the 
first sentence of subsection (c) and inserting the following: 
"(c) The income standards of eligibility shall be— 
"(1) for households contaimng a member who is sixty years of 
age or over or a member who receives suptplemental security 
42 use 1381. 
income benefits under title XVI of the Social Security Act or 
PUBLIC LAW 97-35—AUG. 13,1981 
96 STAT. 359 
disability and blindness payments under titles I, II, X, XIV, and 
XVI of 
the Social Security Act, 100 per centum, and 
42 U
S
C 30i, 40i, 
"(2) for all other households, 130 per centum, 
^^^i' ^^^^' ^^si 
of the nonfarm income poverty guidelines prescribed by the Office of 
Management and Budget"; and 
(2) inserting "for purposes of determining eligibility and bene-
fit levels for households described in subsection (cXD and deter-
mining benefit levels only for all other households'' after "house-
hold income'' in the first sentence of 
subsection (e). 
(b) Section 8(a) of the Food Stamp Act of 1977 is amended by ? use 2017. 
inserting "(d) and (e)" after "section 5" in the first sentence. 
ADJUSTMENTS OF DEDUCTIONS 
SEC. 105. Section 5(e) of the Food Stamp Act of 1977 is amended 7 use 2014. 
b y -
(1) striking out in the first sentence everything that follows 
"the Secretary shall allow a standard deduction of and inserting 
in lieu thereof the following: "$85 a month for each household, 
except that households in Alaska, Hawaii, Guam, Puerto Rico, 
and the Virgin Islands of the United States shall be allowed a 
standard deduction of $145, $120, $170, $50, and $75, respec-
tively."; 
(2) striking out the second sentence and inserting in lieu 
thereof the following: "Such standard deductions shall be ad-
justed (1) on July 1,1983, to the nearest $5 increment to reflect 
changes in the Consumer Price Index for all urban consumers 
published by the Bureau of Labor Statistics, for items other than 
food and the homeownership component of shelter costs, as 
appropriately adjusted by the Bureau of Labor Statistics after 
consultation with the Secretary, for the fifteen months ending 
the preceding March 31, (2) on October 1,1984, to the nearest $5 
increment to reflect such changes for the fifteen months ending 
the preceding June 30, and (3) on October 1, 1985, and each 
October 1 thereafter, to the nearest $5 increment to reflect such 
changes for the twelve months ending the preceding June 30."; 
and 
(3) striking out the proviso in clause (2) of the fourth sentence 
and inserting in lieu thereof the following: "Provided, That the 
amount of such excess shelter expense deduction shall not exceed 
$115 a month in the forty-eight contiguous States and the 
District of Columbia, and shall not exceed, in Alaska, Hawaii, 
Guam, Puerto Rico, and the Virgin Islands of the United States, 
$200, $165, $140, $40, and $85, respectively, ac^justed (i) on July 1, 
1983, to the nearest $5 increment to reflect changes in the shelter 
(exclusive of homeownership costs), fuel, and utilities compo-
nents of housing costs in the Consumer Price Index for all urban 
consumers published by the Bureau of Labor Statistics, as 
appropriately adjusted by the Bureau of Labor Statistics s^er 
consultation with the Secretary, for the fifteen months ending 
the preceding March 31, (ii) on October 1,1984, to the nearest $5 
increment to reflect such changes for the fifteen months ending 
the preceding June 30, and (iii) on October 1, 1985, and each 
October 1 thereafter, to the nearest $5 increment to reflect such 
changes for the twelve months ending the preceding June 30,". 
-194 0—82 
25:QL3 
95 STAT. 360 
PUBLIC LAW 97-35—AUG. 13, 1981 
EARNED INCOME DEDUCTION 
7 use 2014. 
SEC. 106. Section 5(e) of the Food Stamp Act of 1977 is amended by 
striking out "20 per centum" in the thini sentence and inserting in 
lieu thereof "18 per centum". 
RETROSPECTIVE ACCOUNTING 
SEC. 107. (a) Section 5(f) of the Food Stamp Act of 1977 is amended 
to read as follows: 
"(fKlXA) Household income for those households that, by contract 
for other than an hourly or piecework basis or by self-employment, 
derive their annual income in a period of time shorter than one year 
shall be calculated by averaging such income over a twelve-month 
period. 
"(B) Household income for those households that receive nonex-
cluded income of the type described in subsection (dX3) of this section 
shsQl be calculated by averaging such income over the period for 
which it is received. 
"(2XA) Household income for migrant farmworker households shall 
be c^culated on a propsective basis, as provided in paragraph (3XA). 
"(B) Household income for all other households shall be calculated 
either on a prospective basis as provided in paragraph (3XA) or on a 
retrospective basis as provided in paragraph (3XB), as elected by the 
State agency under regulations prescribed by the Secretary. 
"(3XA) Calculation of household income on a prospective basis is 
the calculation of income on the basis of the income reasonably 
anticipated to be received by the household during the period for 
which eligibility or benefits are being determined. Such calculation 
shall be made in accordance with regulations prescribed by the 
Secretary which shall provide for taking into account both the 
income reasonably anticipated to be received by the household during 
the period for which eligibility or benefits are being determined and 
the income received by the household during the preceding thirty 
days. 
"(B) Calculation of household income on a retrospective basis is the 
ceilculation of income for the period for which eligibility or benefits 
are being determined on the basis of income received in a previous 
period. Such calculation shall be made in accordance with regula-
tions prescribed by the Secretary which may provide for the determi-
nation of eligibility on a prospective basis in some or all cases in 
which benefits are calculated under this paragraph. Such regulations 
shall provide for supplementing the initisd sdlotments of newly 
applying households in those cases in which the determination of 
income under this paragraph causes serious hardship. 
"(4) In promulgating regulations under this subsection, the Secre-
tary shall consult with the Secretary of Health and Human Services 
in order to assure that, to the extent feasible and consistent with the 
42 use 1305. 
purposes of this Act and the Social Security Act, the income of 
households receiving benefits under this Act and title IV-A of the 
42 use 601. 
Social Security Act is calculated on a comparable basis under the two 
Acts. The Secretary is authorized, upon the request of a State agency, 
to waive any of the provisions of this subsection to the extent 
necessary to permit the State agency to calculate income for purposes 
of this Act on the same basis that income is calculated under title 
IV-A of 
the Social Security Act in that State.". 
PUBLIC LAW 97-35—AUG. 13,1981 
95 STAT. 361 
(b) Effective October 1,1983, paragraph (2XB) of section 5(f) of the 
Food Stamp Act of 1977, as amended by subsection (a), is amended to 7 use 2014. 
read as follows: 
"(B) Household income for all other households shall be calculated 
on a retrospective basis as provided in paragraph (3XB).". 
(c) Section 5(d) of the Food Stamp Act of 1977 is amended by 
striking out "5(fX2)" and inserting "5(f)" in lieu thereof. 
PERIODIC REPORTING 
SEC. 108. (a) Section 3(c) of the Food Stamp Act of 1977 is amended ? use 2012. 
by inserting before the period at the end of the second sentence 
"except that the limit of twelve months may be waived by the 
Secretary to improve the administration of the program". 
(b) Section 6(c) of the Food Stamp Act of 1977 is amended by— ^ use 2015. 
(1) inserting after "households" in the first sentence of para-
graph (1)", including all households with earned income, except 
migrant farmworker households, all households with potential 
earners, including individuals receiving unemployment compen-
sation benefits and individuals required by section 6(d) of this Act 
to register for work, and all households required to file a similar 
report under title IV-A of the Social Security Act, but not 42use60i. 
including households that have no earned income and in which 
all members are sixty years of age or over or receive supplemen-
tal security income benefits under title XVI of the Social Secu- 42 use 1381. 
rity Act or disability and blindness payments under titles I, II, X, 
XIV, and XVI of the Social Security Act,"; 
42 use 30i, 40i, 
(2) strildng out "5(fX2)" in paragraph (1) and inserting "5(f)" in 1201,135i, I38i. 
lieu thereof; and 
(3) inserting after paragraph (3) the following new paragraph: 
"(4) Any household that fails to submit periodic reports required by 
paragraph (1) shall not receive an allotment for the pajmient period 
to which the unsubmitted report applies until such report is submit-
ted.". 
(c) Effective October 1,1983, section 6(cXl) of the Food Stamp Act of 
1977 is further amended by— 
7 use 20i5. 
(1) striking out in the first sentence "that elect to use a system 
of retrospective accounting in accordance with section 5(f) of this 
Act"; and 
(2) striking out the second sentence. 
ELIGIBILITY OF STRIKERS 
SEC. 109. (a) Section 6(dX4) of the Food Stamp Act of 1977 is 
amended by— 
(1) inserting before the colon at the end of the first proviso the 
following: ", however, such household shall not receive an 
increased allotment as the result of a decrease in the income of 
the striking member or members of 
the household"; 
(2) inserting a period in lieu of the colon at the end of the 
second proviso; and 
(3) striking out the third proviso. 
(b) Section 6(i) of the Food Stamp Act of 1977 is repealed. 
PRORATING FIRST MONTH BENEFITS 
SBC. 110. Section 8 of the Food Stamp Act of 1977 is amended by 7 use 2017. 
adding at the end thereof the following new subsection: 
95 STAT. 362 
PUBLIC LAW 97-35—AUG. 13, 1981 
"(c) The value of the allotment issued to any eligible household for 
the initial month or other initial period for which an allotment is 
issued shall have a value which bears the same ratio to the value of 
the allotment for a full month or other initial period for which the 
allotment is issued as the number of days (from the date of appUca-
tion) remaining in the month or other initial period for which the 
allotment is issued bears to the total number of days in the month or 
"Initial month." other initio period for which the allotment is issued. As used in this 
subsection, the term 'initial month* means (1) the first month for 
wMch an allotment is issued to a household, and (2) the first month 
for which an allotment is issued to a household following any period 
of more than thirty days which such household was not participating 
in the food stamp program under this Act after previous participation 
in such program. . 
OUTREACH 
7 use 2020. 
SEC. 111. (a) Section IKeXD of the Food Stamp Act of 1977 is 
amended by striking out clauses (A) and (B) and redesignating 
existing clause (C) as (B) and inserting the following new clause (A): 
(A) not conduct food stamp outreach activities with funds 
provided under this Act;". 
7 use 2025. 
(b) Section 16(a) of 
that Act is amended by— 
(1) striking out clause (1); and 
(2) redesignating clauses (2), (3), (4), and (5) as clauses (1), (2), (3), 
and (4), respectively. 
DISQUALIFICATION PENALTIES FOR FRAUD AND MISREPRESENTATION 
7 use 2015. 
SEC. 112. Section 6(b) of the Food Stamp Act of 1977 is amended to 
read as follows: 
"(bXD Anjr person who has been found by any State or Federal 
court or administrative agency to have intentionally (A) made a false 
or misleading statement, or misrepresented, concealed or withheld 
facts, or (B) committed any act that constitutes a violation of this Act, 
the regulations issued thereunder, or any State statute, for the 
purpose of using, presenting, transferring, acquiring, receiving, or 
possessing coupons or authorization cards shall, immediately upon 
the rendering of such determination, become ineligible for mrther 
participation in the program— 
(i) for a period of six months upon the first occasion of any 
such determination; 
"(ii) for a period of one year upon the second occasion of any 
such determination; and 
"(iii) permanently upon the third occasion of 
any such determi-
nation. 
During the period of such ineligibility, no household shall receive 
increased benefits under this Act as the result of a member of such 
household having been disqualified under this subsection. 
"(2) Each State agency shall proceed against an individual alleged 
to have engaged in such activity eitiier by way of administrative 
hearings, a£ter notice and an opportunity for a hearing at the State 
level, or by referring such matters to appropriate authorities for civil 
or criminal action in a court of 
law. 
"(3) Such periods of 
ineligibili^ as are provided for in par^raph (1) 
of this subsection shall remain in enect, without possibility of 
administrative stay, unless and until the finding upon which the 
ineligibility is based is subsequently reversed by a court of appropri-
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 363 
ate jurisdiction, but in no event shall the period of ineligibility be 
subject to review. 
"(4) The Secretary shall prescribe such regulations as the Secretary Regulations. 
may deem appropriate to ensure that information concerning any 
such determination with respect to a specific individual is forwarded 
to the Office of the Secretary by any appropriate State or Federal 
entity for the use of the Secreta^ in administering the provisions of 
this section. No State shall withhold such information from the 
Secretsury or the Secretary's designee for any reason whatsoever.". 
WAIVING AND OFFSETTING CLAIMS; IMPROVED RECOVERY OF 
OVERPAYMENTS 
SEC. 113. (a) Section 13 of the Food Stamp Act of 1977 is amended 7 use 2022. 
b y -
C
D inserting "(a)" immediately after the section designation; 
(2) inserting before the period at the end of the first sentence ", 
including the power to waive claims if the Secretary determines 
that to do so would serve the purposes of 
this Act"; 
(3) adding the following new sentence at the end thereof: "The 
Secretary shall have the power to reduce amounts otherwise due 
to a State agency under section 16 of this Act to collect unpaid 7 use 2025. 
claims assessed against the State agency if the State agency has 
declined or exhausted its appeal rights under section 14 of this 
Act."; and 
7 use 2023. 
(4) adding the following new subsection at the end thereof: 
"(b)(1) In the case of any ineligibility determination under section 
6(b) of this Act, the household of which such inelmble individual is a 
member is required to agree to a reduction in the allotment of the 
household of which such individual is a member, or payment in cash, 
in accordance with a schedule determined by the Secretary, that will 
be sufficient to reimburse the Federal Government for the value of 
any overissuance of coupons resulting from the activity that was the 
basis of the ineligibility determination. If a household refuses to 
make an election, or elects to make a payment in cash under the 
provisions of the preceding sentence and fsSls to do so, the household 
shall be subject to an allotment reduction. 
"(2) State agencies shall collect any claim against a household 
arising from the overissuance of coupons, other than claims the 
collection of which is provided for in paragraph (1) of this subsection 
and claims arising from an error of the State agency, by reducing the 
monthly allotments of the household. These collections shall be 
limited to 10 per centum of the monthly allotment (or $10 per month, 
whenever that would result in a faster collection rate).". 
(b) The heading of section 13 of the Food Stamp Act of 1977 is 7 use 2022. 
amended to read COLLECTION AND DISPOSITION OF CLAIMS". 
STATES' SHARE OF COLLECTED CLAIMS 
SEC. 114. Section 16(a) of the Food Stamp Act of 1977 is amended ? use 2025. 
b y -
(1) striking out in the first sentence "through prosecutions" 
and all that follows down through the end of the sentence and 
inserting in lieu thereof "pursuant to section 13(bXl) of this Act Supra. 
and 25 per centum of the value of all funds or allotments 
recovered or collected pursuant to section 13(bX2) of this Act."; Supra. 
and 
95 STAT. 364 
PUBLIC LAW 97-35—AUG. 13, 1981 
(2) striking out in the second sentence "fraud" and inserting in 
lieu thereof ineligibility". 
REPEAL OF INCREASES IN DEPENDENT CARE DEDUCTIONS FOR WORKING 
ADULTS AND MEDICAL DEDUCTIONS FOR THE ELDERLY AND DISABLED 
Repeals. 
SEC. 115. Sections 104 and 105 of the Food Stamp Act Amendments 
7 if^ySand 
^^ ^^^^ (Public Law 96-249) are repealed. 
PUERTO RICO BLOCK GRANT 
note. 
SEC. 116. (a) Effective July 1,1982, the Food Stamp Act of 1977 is 
amended b y ^ 
(1) striking out "Puerto Rico/' in section 3(m), clause (3) of 
5 use 2012, 
section 3(o), section 5(b), wherever it appears in section 5(c), and 
1 i i r. Q
C
Q 
wherever it appears in section 5(e); and striking out "$50," and 
Ante, p. 359. 
« ^ Q „ ^ ^ ^ . ^ ^ g^^^. ^ ^ 
(2) adding at the end thereof tiie following new section: 
"BLOCK GRANT 
7 use 2028. 
"SEC. 19. (aXlXA) From the sums appropriated under this Act the 
Secretary shall, subject to the provisions of this subsection and 
subsection (b), pay to the Commonwealth of Puerto Rico not to exceed 
$825,000,000 for each fiscal year to finance 100 per centum of the 
expenditures for food assistance provided to needy persons, and 50 
per centum of the administrative expenses related to the provision of 
such assistance. 
"(B) The payments to the Commonwealth for any fiscal year shall 
not exceed the expenditures by that jurisdiction during that year for 
the provision of me assistance the provision of which is included in 
the plan of the Commonwealth approved under subsection (b) and 50 
per centum of the related administrative expenses. 
"(2) The Secretary shall, subject to the provisions of subsection O
i
>
)
, 
pay to the Commonwealth for me applicable fiscal year, at such times 
and in such manner as the Secretary may determine, the amount 
estimated bjr the Commonwealth pursuant to subsection (bXlXAXiv), 
reduced or increased to the extent of any prior overpayment or 
current under^yment which the Secretary determines has been 
made under tms section and with respect to which acijustment has 
not already been made under this subsection. 
"(bXlXA) In order to receive payments under this Act for any fiscal 
year, the Commonwealth shall have a plan for that fiscal year 
approved by the Secretary under tins section. By July 1 of each year, 
if the Commonwealth wishes to receive payments, it shall submit a 
plan for the provision of the assistance described in subsection 
(aXlXA) for the following fiscal year which— 
"(i) desi^ates a single agen(^ which shall be responsible for 
the administration, or supervision of the administration, of the 
program for the provision of such assistance; 
"(ii) assesses the food and nutrition needs of needy persons 
residing in the Commonwealth; 
"(iii) describes the program for the provision of such assistance, 
including the assistance to be provided and the persons to whom 
such assistance will be provided, and any agencies designated to 
provide such assistance, which program must meet such require-
ments as the Secretary may hy r^^ulation prescribe for the 
PUBLIC LAW 97-35—AUG. 13,1981 
95 STAT. 366 
purpose of assuring that assistance is provided to the most needy 
persons in the 
jurisdiction; 
"(iv) estimates the amoimt of expenditures necessary for the 
provision of the assistance described in the program and related 
administrative expenses, up to the amount provided for payment 
by subsection (aXlXA); and 
"(v) includes such other information as the Secretary may 
require. 
"(BXi) The Secretary shall approve or disapprove any plan sub-
mitted pursuant to subparagr^h (A) no later than August 1 of the 
year in which it is submitted. Ine Secretary shall approve any plan 
which complies with the requirements of subparagraph (A). If a plan 
is disapproved because it does not comply with any of the require-
ments of that paragraph the Secretary shall, except as provided in 
subparagraph (BXii), notify the appropriate agency in the C!ommon-
wealth that payments will not be made to it under subsection (a) for 
the fiscal year to which the plan applies until the Secretary is 
satisfied that there is no longer amr such failure to comply, and until 
the Secretary is so satisfied, the Secretary will make no pa3nnents. 
"(ii) The Secretary may suspend the denial of payments under 
subparagraph (BXi) for such period as the Secretary determines 
appropriate and instead withhold payments provided for under 
subsection (a), in whole or in part, for the fiscal vear to which the plan 
applies, until the Secretary is satisfied that tnere is no longer any 
failure to comply with the requirements of subparagraph (A), at 
which time such withheld payments shall be paid. 
"(2XA) The Commonwealth shall provide for a biennial audit of 
expenditures under its program for the provision of the assistance 
described in subsection (aXlXA), and within 120 days of the end of 
each fiscal year in which the audit is made, shall report to the 
Secretary the findings of such audit. 
"(B) Within 120 days of the end of the fiscal year, the Common-
wealth shall provide the Secretary with a statement as to whether 
the pa5mients received under subsection (a) for that fiscal year 
exceeded the expenditures by it during that year for which payment 
is authorized under this section, and if so, by how much, and such 
other information as the Secretary may require. 
"(CXi) If the Secretary finds that there is a substantial failure by 
the Commonwealth to comply with any of the requirements of 
subparagraphs (A) and (B), or to comply with the requirements of 
subsection (bXlXA) in the administration of a plan approved under 
subsection (bXlXB), the Secretary shall, except as provided in subpar-
agraph (CXii), notify the appropriate agency in the Commonwealth 
that further payments will not be made to it under subsection (a) 
until the Secretary is satisfied that there will no longer be any such 
failure to comply, and until the Secretary is so satisfied, the Secretary 
shall make no further payments. 
"(ii) The Secretary may suspend the termination of payments 
under subparagraph (CXi) for such period as the Secretary deter-
mines appropriate, and instead withhold pa3m[ients provided for 
under subsection (a), in whole or in part, until the Secretary is 
satisfied that there will no longer be any failure to comply with the 
requirements of subparagraphs (A) and (B) and subsection (bXlXA), at 
which time such withheld pajnnents shall be paid, 
"(iii) Upon a finding under subparagraph (CXi) of a substantial 
failure to comply with any of the requirements of subparagraphs (A) 
and (B) and subsection (bXlXA), the Secretary may, in addition to or 
in lieu of any action taken under subparagraphs (C)(i) and (CXii), refer 
95 STAT. 366 
PUBLIC LAW 97-35—AUG. 13, 1981 
Violation; 
penalty. 
7 u s e 2028 
note. 
Plan, sub-
mittal to 
Secretary. 
7 u s e 2012 
note. 
the matter to the Attorney General with a request that injunctive 
relief be sought to require compliance by the Commonwealth of 
Puerto Rico, and upon suit Iw the Attorney General in an appropriate 
district court of the United States and a snowing that noncompliance 
has occurred, appropriate injunctive relief shall issue. 
"(cXD The Secretary shall provide for the review of the programs 
for the provision of the assistance described in subsection (aXlXA) for 
which payments £ire made under this Act. 
"(2) The Secretary is authorized as the Secretary deems practicable 
to provide technics! assistance with respect to the programs for the 
provision of 
the assistance described in subsection (aXlXA). 
"(d) Whoever knowingly and willfully embezzles, misapplies, steals, 
or obtains by fraud, false statement, or forgery, any fimds, assets, or 
property provided or financed under this section shall be fined not 
more than $10,000 or imprisoned for not more than five years, or 
both, but if the value of the funds, assets or property involved is not 
over $200, the penalty shall be a fine of not more than $1,000 or 
imprisonment for not more than one year, or both.". 
(b) Notwithstanding the provisions of section 19 of the Food Stamp 
Act of 1977, as added by this section— 
(1) the amount payable to the Commonwealth of Puerto Rico 
under section 19 for fiscal year 1982 shall be $206,500,000, and 
the Secretary of Agriculture is authorized to ^ant such waivers 
of the requirements imposed by that section with respect to that 
fiscal year as the Secretary determines appropriate to carry out 
the purposes of that section; and 
(2) in order to receive the amounts payable under this subsec-
tion or section 19 for fiscal years 1982 and 1983, the Common-
wealth shall submit, for the Secretary's approval, the plan 
required by the provisions of subsection Qji) of section 19 by April 
1,1982. 
EFFECTIVE DATES 
SEC. 117. Except as otherwise specifically provided, the eimend-
ments made by sections 101 through 116 of this Act shall be effective 
and implemented upon such dates as the Secretary of Agriculture 
may prescribe, taking into account the need for orderly implementa-
tion. 
PART 2—OTHER REDUCTIONS IN AUTHORIZATIONS FOR 
APPROPRIATIONS 
AGRICULTURAL AND RELATED PROGRAMS 
SEC. 120. Notwithstanding any other provision of law, there are 
hereby authorized to be appropriated for the programs designated 
below not to exceed the sums shown for each of the fiscal years 1982, 
1983, and 1984. 
AGRICULTURAL STABILIZATION AND CONSERVATION SERVICE 
7 u s e 450j 
note. 
DAIRY AND BEEKEEPER INDEMNITY PROGRAMS 
For necessary expenses involved in making indemnity payments to 
dairy farmers under the Act of August 13, 1968 (7 U.S.C. 450j): 
$200,000 for fiscal year 1982, $200,000 for fiscal year 1983, and 
$200,000 for 
fiscal 
year 1984. 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 367 
AGRICULTURAL MARKETING SERVICE 
PAYMENTS TO STATES AND POSSESSIONS 
For pavments to departments of agriculture, bureaus and deijart- 7 use 1623 note. 
ments of markets, and similar agencies for marketing activities 
under section 204(b) of the Agricultural Marketing Act of 1946 (7 
U.S.C. 1623(b)): $1,571,000 for fiscal year 1982, $1,651,000 for fiscal 
year 1983, and $1,723,000 for fiscal year 1984. 
FARMERS HOME ADMINISTRATION 
RURAL COMMUNITY FIRE PROTECTION GRANTS 
For grants pursuant to section 7 of the Cooperative Forestry 16USC2106 
Assistance Act of 1978 (Public Law 95-313): $3,565,000 for fiscal year "ff-^^ ^
^ ^^ 
1982, $3,821,000 for fiscal year 1983, and $4,038,000 for fiscal year ^^ "SC 2106. 
1984. 
RURAL DEVELOPMENT PLANNING GRANTS 
For rural development planning grants pursuant to section 7 use 1926 note. 
306(aXll) of the Consolidated Farm and Rural Development Act (7 
U.S.C. 1926(aXll)): $4,767,000 for fiscal year 1982, $4,959,000 for fiscal 94 stat. 1174. 
year 1983, and $5,155,000 for fiscal year 1984. 
RURAL DEVELOPMENT GRANTS 
For grants pursuant to section 310B(c) of the Consolidated Farm 7 use 1932 note. 
and Rural Development Act (7 U.S.C. 1932): $5,007,000 for fiscal year 
1982, $5,280,000 for fiscal year 1983, and $5,553,000 for fiscal year 
1984. 
SOIL CONSERVATION SERVICE 
For necessary expenses for carrying out the programs adminis- 16 use 590f 
tered by the Soil Conservation Service: $588,875,000 for fiscal year "
^
^
^
^ 
1982, $596,767,000 for fiscal year 1983, and $602,865,000 for fiscal year 
1984. 
AGRICULTURAL STABILIZATION AND CONSERVATION SERVICE 
AGRICULTURAL CONSERVATION PROGRAM 
For necessary expenses to carrv into effect the program authorized I6 use 1510 
in sections 7 to 15,16(a), and 17 of the Soil Conservation and Elomestic °°^® 
Allotment Act (16 U.S.C. 590g-590o, 590p(a), and 590q), and sections 
1001-1008, and 1010 of the Agricultural Act of 1970, as added by the 
Agriculture and Consumer Protection Act of 1973 (16 U.S.C. 
1501-1508, and 1510): $201,325,000 for fiscal year 1982, $209,647,000 
for fiscal year 1983, and $218,216,000 for fiscal year 1984. 
FORESTRY INCENTIVES PROGRAM 
For necessary expenses, not otherwise provided for, to carry out the 16 use 2103 
program of forestry incentives, as authorized in the Cooperative "°*® 
Forestry Assistance Act of 1978 (16 U.S.C. 2101): $15,090,000 for fiscal 
year 1982, $16,913,000 for fiscal year 1983, and $18,314,000 for fiscal 
year 1984. 
95 STAT. 368 
PUBLIC LAW 97-35—AUG. 13, 1981 
WATER BANK PROGRAM 
16 use 1310 
For necessary expenses to carry into effect the provisions of the 
"°*^ 
Water Bank Act (16 U.S.C. 1301-1311): $10,876,000 for fiscal year 
1982, $10,854,000 for fiscal year 1983, and $10,813,000 for fiscal year 
1984. 
EMERGENCY CONSERVATION PROGRAM 
16 use 2204 
For necessary expenses to carry into effect the program authorized 
^°^- 
in sections 401,402, and 404 of title IV of the Agricultural Credit Act 
of 1978 (16 U.S.C. 2201-2205): $10,069,000 for fiscal year 1982, 
$10,507,000 for fiscal year 1983, and $10,958,000 for fiscal year 1984. 
WATER AND WASTE GRANTS 
SEC. 121. Section 306(aX2) of the Consolidated Farm and Rural 
Development Act (7 U.S.C. 1926 (aX2)) is amended by striking out the 
period at the end of the first sentence and inserting in lieu thereof a 
colon and the following: "Provided, That for fiscal years commencing 
after September 30,1981, such grants may not exceed $154,900,000 in 
any fiscal year.". 
FOREST SERVICE 
16 use 580o. 
SEC. 122. Notwithstanding any other provision of law, there are 
hereby authorized to be appropriated for the necessary expenses of 
the Forest Service for carrying out the programs for Forest Research, 
State and Private Forestry, and National Forest System under the 
appropriations account for Forest Management, Protection, and 
Utilization, and the programs under the appropriations account for 
Construction and Land Acquisition: $1,575,552,000 for fiscal year 
1981; $1,498,000,000 for fiscal year 1982; $1,560,000,000 for fiscal year 
1983; and $1,620,000,000 for fiscal year 1984: Provided, That none of 
the funds authorized to be appropriated hereby may be used for 
carrying out the Bald Moimtsdn road in the Siskiyou National Forest. 
ASSISTANCE TO LAND-GRANT COLLEGES 
7 use 322 note. 
SEC. 123. There are authorized to be appropriated for the purpose of 
providing assistance to land-grant colleges under the Act of August 
30,1890 (commonly referred to as the "Second Morrill Act") and the 
Act of March 4,1907 (7 U.S.C. 322), not to exceed $2,800,000 for the 
fiscal year 1981; not to exceed $2,800,000 for the fiscal year 1982; not 
to exceed $2,8()0,000 for the fiscal year 1983; and not to exceed 
$2,800,000 for the fiscal year 1984. 
PUBUC LAW 480 APPROPRIATION UMITS 
7 use 1733 note. 
SEC. 124. Notwithstanding any other provision of law, programs 
shall not be undertaken under title I (including title III) and title II of 
'
7 use 1701, 
the Agricultural Trade Development and Assistance Act of 1954 
1721,1427. 
during any calendar year which call for an appropriation of more 
than $1,304,836,000 for the fiscal year 1982; $1,320,292,000 for the 
fiscal year 1983; and $1,402,278,000 for the fiscal year 1984. 
PUBLIC LAW 97-35—AUG. 13, 1981 
PART 3—DEPARTMENT OF AGRICULTURE PERSONNEL 
95 STAT. 369 
ESTABLISHMENT OF PERSONNEL CEILING 
SEC. 125. Notwithstanding any other provision of law, the total full-
time equivalent staff year personnel ceiling for the United States 
Department of Agriculture shall not exceed one hundred and seven-
teen thousand staff years (including overtime) for each of the fiscal 
years ending September 30,1982, September 30,1983, and September 
30,1984. 
Subtitle B—Reduction in Direct Spending 
PART 1—COMMODITY CREDIT CORPORATION PROGRAMS 
7 use 2201 note. 
7 use 1446. 
Net Government 
purchases, 
estimate. 
MILK PRICE SUPPORT 
SEC. 150. Effective October 1,1981, section 201 of the Agricultural 
Act of 1949 is amended by— 
(1) striking out the second sentence of subsection (c) and 
inserting in lieu thereof the following: "Notwithstanding the 
foregoing, effective for the period beginning October 1,1981, and 
ending September 30, 1985, the price of milk for the marketing 
year beginning on October 1 of each year shall be supported at a 
level determined according to the following procedure: The 
Secretary shall estimate Government price support purchases 
net of sales for unrestricted use for the marketing year using the 
amount of such purchases made during the most recent six-
month period adjusted to an annual level on the basis of the most 
recent ten year experience. The Secretary shall adjust this Adjustment 
estimate of net Government purchases to reflect the effect of 
current and expected availability of feed, feed prices, milk-feed 
price ratio, utility cow prices, dairy cow numbers and dairy 
heifer replacement stocks on milk production during the market-
ing year. After making this final estimate, the Secretary shall 
support the price of milk at not less than the level indicated by 
the following schedule, nor more than 90 per centum of the 
parity price therefor: 
The higher of anticipated annual rate of net Government 
purchases 
"Price as percent of parity 
Nonfat dry milk (million 
pounds) 
Milk equivalent (butterfat 
basis) of butter and cheese 
(billion pounds) 
75, 
76 
77, 
78, 
79, 
80 
81 
82, 
83 
84 
85, 
more than 500 
5.5 or more. 
450-499.9 
5.0-5.499. 
400-449.9 
4.5-4.999. 
350-399.9 
4.0-4.499. 
300-349.9 
3.5-3.999. 
250-299.9 
3.0-3.499. 
200-249.9 
2.5-2.999. 
150-199.9 
2.0-2.499. 
100-149.9 
1.5-1.999. 
50-99.9 
1.0-1.499. 
less than 50 
less than 1.0. 
95 STAT. 370 
PUBLIC LAW 97-35—AUG. 13, 1981 
Notification 
to congres-
sional com-
mittees. 
7 u s e 624. 
Effective 
date. 
Notification 
to congressional 
committees. 
In no event shall the support price be less than the dollar amount 
of the support price then currently in effect for milk: Provided, 
That if the Secretary determines that the inventory of dairy 
products, at the end of the marketing year, exceeds five hundred 
million pounds of nonfat dry milk or five and one-half billion 
pounds milk equivalent of butter and cheese, the support price 
for the next marketing year shall be established at the minimum 
level indicated by this schedule based upon estimated Govern-
ment price support purchases net of sales for unrestricted use for 
suchvear. The Secretary shall notify, in writing, the chairman of 
the Innate Committee on Agriculture, Nutrition, and Forestry 
and the chairman of the House Committee on Agriculture of the 
Secretary's decision and reasons therefor thirty days prior to the 
effective date of the new support level. Notwithstanding the 
foregoing, if during any marketing year dairy product imports 
into the United States are incrased as the result of an expansion 
of imports or termination of import restraints established pursu-
ant to section 22 of the Agricultural Adjustment Act, the support 
price shall be redetermined by reducing the final estimate of net 
Government purchases by the milk equivalent (butterfat bsisis) of 
dairv products or nonfat dry milk or its equivalent of other 
products derived from such increased imports. The increased 
support price so determined shall become effective simultaneous-
ly with the announcement of the expansion of dairy product 
imports. A similar reduction in the net Government purchases 
for the marketing year in which the imports are entered into the 
United States shall be made when determining the support price 
level for subsequent years."; and 
(2) inserting a new subsection (d) as follows: 
"(d) Effective for the period beginning October 1,1982, and ending 
on September 30,1985, the support price of milk shall be adjusted by 
the Secretary at the beginning of each semiannual period to reflect 
any estimated change in the parity index during said semiannual 
period. If a review of net Government purchases as provided for in 
subsection (c) indicates that purchases during the most recent six-
month period are being made at an annual rate exceeding five and 
one-half billion poun(& milk equivalent Ot)utterfat basis), or five 
hundred million pounds of nonfat dry milk, the support price of milk 
need not be adjusted unless such adjustment is necessaiy to prevent a 
support price at less than 75 per centum of parity as determined at 
the beginning of the semiannual period. The Secretary shall notify, in 
writing, the chairman of the Senate Committee on Agriculture, 
Nutrition, and Forestry and the chairman of the House Committee 
on Agriculture of the Secretary's decision and the reasons therefor 
thirty days prior to the effective date of such semiannual ac^ust-
ment.". 
FARM STORAGE FACILITY LOANS 
SEC. 151. Section 4(h) of the Commodity Credit Corporation Charter 
Act (15 U.S.C. 714b(h)) is amended by striking out from the fourth 
proviso of the second sentence "shall make loans" and inserting in 
lieu thereof "may make loans". 
REDUCTION IN CCC ADMINISTRATIVE EXPENSE LIMITATION 
15 use 7i3a-io. 
SEC. 152. Not to excoed $52,000,000 shall be available for the fiscal 
year ending September 30,1982, for administrative expenses of the 
Commodity Credit Corporation, within the limits of funds and bor-
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 371 
rowing authority available to the CJorporation as may be necessary in 
carrying out the programs set forth in the budget for the CJorporation. 
PART 2-COMMODITY INSPECTION FEES 
GRAIN INSPECTION AND WEIGHING 
SEC. 155. Effective for the period October 1,1981, through Septem-
ber 30, 1984, inclusive, the United States Grain Standards Act is 
amended by— 
(1) amending section 7(j) (7 U.S.C. 79(j)) to read as follows: 
"(jXl) The Administrator shall, under such regulations as the 
Administrator may prescribe, charge and collect reasonable inspec-
tion fees to cover the estimated cost to the Service incident to the 
performance of official inspection except when the official inspection 
is performed by a designated official agency or by a State under a 
delegation of authority. The fees authorized by this subsection shall, 
as nearly as practicable and after taking into consideration any 
proceeds from the sale of samples, cover the costs of the Service 
incident to its performance of official inspection services in the 
United States and on United States grain in Canadian ports, includ-
ing administrative and supervisory costs related to such official 
inspection of grain. Such fees, and the proceeds from the sale of 
samples obtained for purposes of official inspection which become the 
property of the United States, shall be deposited into a fund which 
shall be available without fiscal year limitation for the expenses of 
the Service incident to providing services under this Act. 
"(2) Each designated official agency and each State agency to which 
authority has been delegated under subsection (e) of this section shall 
pay to the Administrator fees in such amount as the Administrator 
determines fair and reasonable and as will cover the estimated costs 
incurred by the Service relating to supervision of official agency 
personnel and supervision by Service personnel of its field office 
personnel, except costs incurred under paragraph (3) of subsection (g) 
of this section and sections 9,10, and 14 of this Act. The fees shall be 
payable after the services are performed at such times as specified by 
the Administrator and shall be deposited in the fund created in 
paragraph (1) of this subsection. Failure to pay the fee within thirty 
days after it is due shall result in automatic termination of the 
delegation or designation, which sheill be reinstated upon payment, 
within such period as specified by the Administrator, of the fee 
currently due plus interest and any further expenses incurred by the 
Service because of such termination. The interest rate on overdue 
fees shall be as prescribed by the Secretary, but not less than the 
current average market yield on outstanding marketable obligations 
of the United States of comparable maturity, plus an additional 
charge of not to exceed 1 per centum per annum as determined by the 
Secretary and adjusted to the nearest one-eighth of 1 per centum."; 
(2) amending section 7A(1) (7 U.S.C. 79a(l)) to read as follows: 
"(IXD The Administrator shall, under such regulations as the 
Administrator may prescribe, charge and collect reasonable fees to 
cover the estimated costs to the Service incident to the performance 
of the functions provided for under this section except as otherwise 
provided in paragraph (2) of this subsection. The fees authorized by 
this paragraph shall, as nearly as practicable, cover the costs of the 
service incident to performance of its functions related to weighing, 
including administrative and supervisory costs directly related 
7 u s e 79 note. 
7 use 71. 
7 u s e 85, 86, 
87c. 
Overdue 
fee. 
Interest 
rate. 
95 STAT. 372 
PUBLIC LAW 97-35—AUG. 13, 1981 
7 u s e 79, 85, 86 
87c. 
Overdue 
fees. 
Interest 
rate. 
thereto. Such fees shall be deposited into the fund created in section 
7(j) of this Act. 
"(2) Each agency to which authority has been delegated under this 
section and each agency or other person which has been designated to 
perform functions related to weighing under this section shall pay to 
the Administrator fees in such amount as the Administrator deter-
mines fair and reasonable and as will cover the costs incurred by the 
Service relating to supervision of the agency personnel and supervi-
sion by Service personnel of its field office personnel incurred as a 
result of the functions performed by such agencies, except costs 
incurred under sections 7(gX3), 9,10, and 14 of this Act. The fees shall 
be payable after the services are performed at such times as specified 
by the Administrator and shall be deposited in the fund created in 
section 7(j) of this Act. Failure to pay the fee within thirty dajrs after 
it is due shall result in automatic termination of the delegation or 
designation, which shall be reinstated upon pa3mient, within such 
period as specified by the Administrator, of the fee currently due plus 
interest and any further expenses incurred by the Service because of 
such termination. The interest rate on overdue fees shall be as 
prescribed by the Secretary, but not less than the current average 
market jdeld on outstanding marketable obligations of the United 
States of comparable maturity, plus an additional charge of not to 
exceed 1 per centum per annum as determined by the Secretary, and 
adjusted to the nearest one-eighth of 1 per centum."; 
(3) adding a new section 7C as follows: 
LIMITATION ON ADMINISTRATIVE AND SURPERVISORY COSTS 
7 use 79c. 
"SEC. 7C. The total administrative and supervisory costs which 
may be incurred under this Act for inspection and weighing (exclud-
ing standardization, compliance, and foreign monitoring activities) 
for each of the fiscal years 1982 through 1984 shall not exceed 35 per 
centum of the total costs for such activities carried out by the Service 
for such year."; 
(4) amending section 19 (7 U.S.C. 87h) to read as follows: 
7 u s e 79, 79a, 
87f-l. 
APPROPRIATIONS 
"SEC. 19. There are hereby authorized to be appropriated such 
sums as are necessary for standardization and compliance activities, 
monitoring in foreign ports grain officially in^)ected and weighed 
under this Act, and any other expenses necessary to carry out the 
provisions of this Act for each of the fiscal years during the period 
beginning October 1, 1981, and ending September 30, 1984, to the 
extent that financing is not obtained from fees and sales of samples as 
provided for in sections 7,7A, and 17A of 
this Act."; and 
(5) adding a new section 20 as follows: 
Establishment. 
7 use 87i. 
7 u s e 71 note. 
ADVISORY COMMITTEE 
"SEC. 20. (a) In order to assure the normal movement of grain in an 
orderly and timely manner, the Secretary shall establish an advisory 
committee to provide advice to the Administrator with respect to the 
efficient and economical implementation of the United States Grain 
Standards Act of 1976. The advisory committee shall consist of not 
more than twelve members, appointed bj^ the Secretary, representing 
the interests of all segments of the grain industry, including grain 
inspection and weighing agencies. Members of the advisory commit-
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 373 
tee shall be appointed not later than thirty days after the date of 
enactment of this section. 
"0)) The advisory committee shall be governed by the provisions of 
the Federal Advisory Committee Act. 
5 use app. 
"(c) The Administrator shall provide the advisory committee with 
necessary clerical assistance and staff personnel. 
"(d) Members of the advisory committee shall serve without com-
pensation, if not otherwise officers or employees of the United States, 
except that members shall, while away from their homes or regular 
places of business in the performance of services under this Act, be 
allowed travel expenses, including per diem in lieu of subsistence, as 
authorized under section 5703 of title 5, United States Code.". 
COTTON 
CLASSING 
AND 
RELATED 
SERVICES 
SEC. 156. (a) Section 5 of the United States Cotton Standards Act (7 
U.S.C. 55) is amended to read as follows: 
"SEC. 5. (a) The Secretary of Agriculture shall cause to be collected Fees and 
such fees and charges for licenses issued to classifiers of cotton under charges. 
section 3 of this Act, for determinations made under section 4 of this ^ use 53, 54. 
Act, and for the establishment of standards and sale of copies of 
standards under section 6 of this Act, as will cover, as nearly as 7 use 56, 57, 
practicable, and after taking into consideration net proceeds from ^^^ 
any sale of samples, the costs incident to providing services and 
standards under such sections, including administrative and supervi-
sory costs. Such fees and charges shall be credited to the current 
appropriation account that incurs the cost and shall remain available 
until expended to pay the expenses of the Secretary incident to 
providing services and standards under this Act and the United 
States Cotton Futures Act (7 U.S.C. 15b). The Secretary may provide 
by regulation conditions under which cotton samples submitted or 
used in the performance of services authorized by this Act shall 
become the property of the United States and may be sold with the 
proceeds credited to the foregoing account: Provided, That such 
cotton samples shall not be subject to the provisions of the Federal 
Property and Administrative Services Act of 1949 (40 U.S.C. 471 et 
seq.). 
(b) The price established by the Secretary of 
Agriculture under the 
foregoing provisions of this section for practical forms representing 
the official cotton standards of the United States shall cover, as 
nearly as practicable, the estimated actual cost to the Department of 
Agriculture for developing and preparing such practical forms.". 
(b) Effective only for the fiscal years ending September 30, 1982, 
September 30,1983, and September 30,1984, section 3a of the Cotton 
Statistics and Estimates Act (7 U.S.C. 473a) is amended to read as 
follows: 
"SEC. 3a. Effective for the fiscal years ending September 30,1982, 
September 30,1983, and September 30,1984, the Secretary of Agricul-
ture shall make cotton classification services available to producers 
of cotton. The Secretary shall further provide for appropriate agen-
cies of the Department of Agriculture to collect directly from partici-
pating producers reasonable fees which, together with the proceeds of 
sales of samples submitted under this section, shall cover as nearly as 
practicable the cost of the services provided under this section, 
including administrative and supervisory costs: Provided, That the 
Secretary's net cost estimate (after taking into account the proceeds 
from the sale of samples) used to calculate the uniform per-bale fee to 
be collected from producers for such classification services shall not 
95 STAT. 374 
PUBLIC LAW 97-35—AUG. 13, 1981 
Appropriation 
authorization. 
Ante, p. 373. 
Meetings. 
7 u s e 61a. 
7 use 51, 
471 note. 
7 u s e 241. 
Effective 
date. 
7 u s e 61a note. 
Fees and 
charges. 
exceed $12,000,000 in the fiscal year ending September 30, 1982, 
$12,400,000 in the fiscal year ending September 30, 1983, and 
$13,000,000 in the fiscal year ending September 30,1984. All samples 
of cotton submitted for classification under this section shall become 
the property of the United States, and shall be sold: Provided, That 
such cotton samples shall not be suWect to the provisions of the 
Federal Property and Administrative Services Act of 1949 (40 U.S.C. 
471 et seq.). Fees collected under this section and under section 3d of 
this Act and proceeds from sales of samples shall be credited to the 
current appropriation account that incurs the cost and shall remain 
available without fiscal year limitation to pay the expenses of the 
Secretary incident to providing classification services under this 
section. The Secretary may deposit such funds in an interest bearing 
account with a financial institution. If any interest is earned on this 
account, such interest so earned shall be credited to the account for 
use by the Secretary in providing such services. There are authorized 
to be appropriated such sums as may be necessary to carry out the 
provisions of this section to the extent that financing is not available 
from fees and the proceeds from the sale of samples.". 
(c) Subsection (f)(1)(G) of the United States Cotton Futures Act (7 
U.S.C. 15b(f)(l)(G)) is amended by striking out "in such regulations." 
and inserting in lieu thereof "in such regulations and shall be 
credited to the account referred to in section 5 of the United States 
Cotton Standards Act (7 U.S.C. 55). The Secretary may provide by 
regulation conditions under which cotton samples submitted or used 
in the performance of services authorized by this act shall become the 
property of the United States and may be sold and the proceeds 
credited to the foregoing account: Provided, That such cotton samples 
shall not be subject to the provisions of the Federal Property and 
Administrative Services Act of 1949 (40 U.S.C. 471 et seq.).". 
(d) The Secretary of Agriculture shall hold annual meetings with 
representatives of the cotton industry to review (1) activities and 
operations under the Cotton Standards Act, and the Cotton Statistics 
and Estimates Act, (2) activities and operations relating to cotton 
under the United States Warehouse Act, and (3) the effect of such 
activities and operations on prices received by producers and sales to 
domestic and foreign users, for the purpose of improving procedures 
for financing and administering such activities and operations for the 
benefit of the industry and the Government. Notwithstanding any 
other provision of law, the Secretary shall take such action as may be 
necessary to insure that the universal cotton standards system and 
the licensing and inspection procedures for cotton warehouses are 
preserved and that the Government cotton classification system 
continues to operate so that the United States cotton crop is provided 
an official quality description. 
(e) The provisions of this section shall become effective October 1, 
1981. 
TOBACCO 
INSPECTION 
AND 
RELATED 
SERVICES 
SEC. 157. (a) The Tobacco Inspection Act is amended by— 
(1) in section 5 (7 U.S.C. 51 Id), striking out the last two 
sentences and inserting in lieu thereof the following: "The 
Secretary shall by regulation fix and collect fees and charges for 
inspection and certification, the establishment of standards, and 
other services under this section at designated auction markets. 
The fees and charges authorized by this section shall, as nearly 
as practicable, cover the costs of the services, including the 
administrative and supervisory costs customarily included by the 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 375 
Secretary in user fee calculations. The fees and charges, when 
collected, shall be credited to the current appropriation account 
that incurs the cost and shall be available without fiscal year 
limitation to pay the expenses of the Secretary incident to 
providing services under this Act, Such fees and charges shall be 
assessed against the warehouse operator, irrespective of owner-
ship or interest in the tobacco, and shall be collected by the 
warehouse operator from the sellers of the tobacco. The inspec-
tion and related services under this section shall be suspended or 
denied if the warehouse operator fails to collect or otherwise pay 
the fees and charges imposed under this section. Tobacco inspec-
tion or certification services provided to designated auction 
markets shall take precedence over such services, other than 
reinspection, requested under the authority contained in section 
6 of this Act or any other provision of law. In accordance with the 
Federal Advisory Committee Act, the Secretary shall establish a 5 use app 
national advisory committee of tobacco producers, and advisory 
subcommittees for each major kind of tobacco, to advise the 
Secretary with regard to the level of inspection and related 
services and the fees and charges therefor. The advisory commit-
tee and subcommittees established under this section shall be of 
permanent duration. The committees shall meet at the call of the 
Secretary."; and 
(2) in section 6 (7 U.S.C. 51 le), amending the first sentence of 
the second paragraph as follows: "The Secretary shall fix and 
collect such fees or charges in the administration of this section 
as will cover, as nearly as practicable, the costs of the services 
provided, including administrative and supervisory costs. Such 
fees and charges shall be credited to the account referred to in 
section 5 of 
this Act.". 
G
D
) The provisions of this section shall become effective October 1, 
1981. 
WAREHOUSE EXAMINATION, INSPECTION, AND UCENSING 
5 use Slid. 
Effective 
date. 
7 u s e 51 Id note. 
SEC. 158. (a) The United States Warehouse Act is amended by— 
(1) amending section 10 (7 U.S.C. 251) to read as follows: 
"SEC. 10. The Secretary of Agriculture, or the Secretary's designat- Fees, collection. 
ed representative, shall charge, assess, and cause to be collected a 
reasonable fee for (1) each examination or inspection of a warehouse 
(including the physical facilities and records thereof and the agricul-
tural products therein) under this Act; (2) each license issued to any 
person to classify, inspect, grade, sample, or weigh agricultural 
products stored or to be stored under provisions of this Act; (3) each 
annual warehouse license issued to a warehouseman to conduct a 
warehouse under this Act; and (4) each warehouse license amended, 
modified, extended, or reinstated under this Act. Such fees shall 
cover, as nearly as practicable, the costs of providing such services 
and licenses, including administrative and supervisory costs: Pro-
vided, That the amount of such fees collected for cotton warehouse 
inspections shall not exceed $400,000 in the fiscal year ending 
September 30,1982, $415,000 in the fiscal year ending September 30, 
1983, and $430,000 in the fiscal year ending September 30, 1984. All 
fees collected shall be credited to the current appropriation account 
that incurs the costs and shall be available without fiscal year 
limitation to pay the expenses of the Secretary incident to providing 
services under this Act. The Secretary may deposit such funds in an 
interest bearing account with a financial institution. If any interest is 
9-194 0-82 
26:QL3 
95 STAT. 376 
PUBLIC LAW 97-35—AUG. 13, 1981 
Appropriation 
authorization. 
Effective date. 
7 u s e 251 note. 
Fees and 
charges. 
7 use 93. 
Appropriation 
authorization. 
Effective date. 
7 u s e 94 note. 
earned on this account such interest shall be credited to the account 
for use by the Secretary in providing such services."; and 
(2) amending section 31 (7 U.S.C. 271) to read as follows: 
"SEC. 31. There are hereby authorized to be appropriated such 
sums as are necessary to carry out the provisions of this Act other 
than those services for which fees are authorized pursuant to section 
10. Such appropriated funds may be used by the Secretary to employ 
qualified persons not regularly in the service of the United States for 
temporary assistance in carrying out the provisions of this Act.". 
(b) The provisions of this section shall become effective October 1, 
1981. 
NAVAL STORES INSPECTION AND RELATED SERVICES 
SEC. 159. (a) The Naval Stores Act is amended by— 
(1) in the second sentence of section 4 (7 U.S.C. 94) striking out 
"on tender of the cost thereof as required by him,"; and 
(2) amending section 8 (7 U.S.C. 98) to read as follows: 
"SEC. 8. (a) The Secretary of Agriculture shall fix and cause to be 
collected fees and charges for the establishment of standards under 
section 3 of this Act and for examinations, analyses, classifications, 
and other services under section 4 of this Act which shall cover, as 
nearly as practicable, the costs of providing such services and 
standards as the Secretary shall deem necessary, including adminis-
trative and supervisory costs. Such fees and charges, when collected, 
shall be credited to the current appropriation account that incurs 
such costs and shall be available without fiscal year limitation to pay 
the expenses of the Secretary incident to providing such services and 
standards under this Act. Fees and charges shall be assessed and 
collected from processors and warehousers of naval stores, and 
inspection and related services shall be suspended or denied to any 
such processor or warehouser upon failure to timely pay the fees and 
charges assessed. 
"(b) There are hereby authorized to be appropriated such sums as 
may be necessary for the enforcement and administration of this 
Act.". 
(b) The provisions of this section shall become effective October 1, 
1981. 
PART 3—FARMERS HOME ADMINISTRATION PROGRAMS 
INTEREST RATES ON FARMERS HOME ADMINISTRATION WATER AND 
WASTE DISPOSAL AND COMMUNITY FACIUTY LOANS, LOANS TO LOW-
INCOME UMITED RESOURCE BORROWERS, AND LOANS FOR NONFARM 
FACIUTIES ON PRIME FARMLANDS 
SEC 160. (a) Section 307(a) of the Consolidated Farm and Rural 
Development Act (7 U.S.C. 1927(a)) is amended bv— 
(1) in paragraph (2), striking out "and (5) and inserting in lieu 
thereof ^'(5), and (6)"; 
(2) in paragraph (4), striking out "The" and inserting in lieu 
thereof Except as provided in paragraph (6), the"; 
(3) amending paragraph (3) to read as follows: 
"(3)(A) Except as provided in paragraph (6), the interest rates on 
loans (other than guranteed loans), to public bodies or nonprofit 
associations (inclu(Cng Indian tribes on Federal and State reserva-
tions and other federally recognized Indian tribal groups) for water 
and waste disposal facilities and essential community facilities shall 
be set by the Secretary at rates not to exceed the current market 3rield 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 377 
for outstdnding municipal obligations with remaining periods to 
maturity comparable to the average maturity for such loans, and 
adjusted to the nearest one-eighth of 1 per centum; and not in excess 
of 5 per centum per annum for any such loans which are for the 
upgrading of existing facilities or construction of new facilities as 
required to meet applicable health or sanitary standards in areas 
where the median family income of the persons to be served by such 
facility is below the poverty line prescribed by the Office of Manage-
ment and Budget as adjusted under section 624 of the Economic 
Opportunity Act of 1964 (42 U.S.C 2971d) and in other areas as the 
Secretary may designate where a significant percentage of the 
persons to be served by such facilities are of low income, as deter-
mined by the Secretary. 
"(B) Except as provided in paragraph (6), the interest rates on loans 
(other than guaranteed loans) under section 310D of this title shall be '
7 U
S
C 1934. 
as determined by the Secretary, but not in excess of one-half of the 
current average market yield on outstanding marketable obligations 
of the United States with remaining periods to maturity comparable 
to the average maturities of such loans, nor less than 5 per centum 
per annum."; and 
(4) adding at the end thereof a new paragraph (6) as follows: 
"(6XA) Notwithstanding any other provision of this section, in the 
case of loans (other than guaranteed loans) made or insured under 
the authorities of this Act specified in subparagraph (B) for activities 
that involve the use of prime farmland as defined in subparagraph 
(C), the interest rates shall be the interest rates otherwise applicable 
under this section increased by 2 per centum per annum. Wherever 
practicable, construction by a State, municipality, or other political 
subdivision of local government that is supported by loans described 
in the preceding sentence shall be placed on land that is not prime 
farmland, in order to preserve the maximum practicable amount of 
prime farmlands for production of food and fiber. Where other 
options exist for the siting of such construction and where the 
governmental authority still desires to carry out such construction on 
prime farmland, the 2 per centum interest rate incregise provided by 
this clause shall apply, but such increased interest rate shall not 
apply where such other options do not exist. 
"(B) The authorities referred to in subparagraph (A) are— 
"(i) clauses (2) and (3) of 
section 303(a), 
7 use 1923. 
"(ii) the provisions of section 304(a) relating to the financing of '
^ use 1924. 
outdoor recreational enterprises or the conversion of farming or 
rsmching operations to recreational uses, 
"(iii) section 304(b), 
"(iv) the provisions of section 306(aXl) relating to loans for '
^ use 1926. 
recreational developments and essential community facilities, 
"(v) section 306(aX15), 
"(vi) clause (1) of section 310B(a), 
7 use 1932. 
"(vii) subsections (d) and (e) of section 310B, and 
"(viii) section 310D(a) as it relates to the making or insuring of 7 use 1934. 
loans under clauses (2) and (3) of 
section 303(a). 
"(C) For purposes of this paragraph, the term 'prime farmland' "Prime 
means prime farmlands and unique farmland as those terms are farmland." 
defined in sections 657.5 (a) and (b) of title 7, Code of Federal 
Regulations (1980).". 
(b) Section 316(a) of the Consolidated Farm and Rural Development 
Act (7 U.S.C. 1946(a)) is amended by— 
(1) inserting "(1)" after "(a)"; 
95 STAT. 378 
PUBLIC LAW 97-35—AUG. 13, 1981 
7 u s e 1942. 
Ante, p. 376. 
Effective date. 
7USC 1927 note. 
(2) inserting in the second sentence "and loans as provided in 
paragraphs (2) and (3)" after "except for guaranteed loans"; and 
(3) adding at the end thereof new paragraphs (2) and (3) as 
follows: 
"(2) The interest rate on any loan (other than a guaranteed loan) to 
a low-income, limited resource borrower under this subtitle shall be 
the interest rate otherwise applicable under this section reduced by 3 
per centum per annum. 
"(3) The interest rate on any loan (other than a guaranteed loan) 
made or insured under clause (5) of section 312(a) for activities that 
involve the use of prime farmland as defined in section 307(aX6XC) 
shall be the interest rate otherwise applicable under this section 
increased by 2 per centum per annum.". 
(c) The amendments made by this section shall apply to loans 
approved after September 30,1981. 
EMERGENCY LOAN AMOUNTS 
SEC. 161. Section 321(a) of the Consolidated Farm and Rural 
Development Act (7 U.S.C. 1961(a)) is amended by inserting "only to 
the extent and in such amounts as provided in advance in appropri-
ation Acts" after "The Secretary shall make and insure loans under 
this subtitle". 
Effective date. 
7 u s e 1964 note. 
INTEREST RATES ON EMERGENCY LOANS FOR ACTUAL LOSS 
SEC. 162. (a) Section 324(b)(1) of the Consolidated Farm and Rural 
Development Act (7 U.S.C. 1964(bXl)) is amended to read as follows: 
"(1) For loans or portions of loans up to the amount of the 
applicant's actual loss caused by the disaster, as limited under 
subsection (aXD of this section, the interest shall be at rates pre-
scribed by the Secretary, but (A) if the applicant is not able to obtain 
sufficient credit elsewhere, not in excess of 8 per centum per annum, 
and (B) if the applicant is able to obtain sufficient credit elsewhere, 
not in excess of the rate prevailing in the private market for similar 
loans, as determined by the Secretary; and". 
(b) The amendments made by this section shall apply to loans made 
with respect to disasters occurring after September 30,1981. 
ELIGIBILITY FOR ASSISTANCE BASED ON PRODUCTION LOSS 
SEC. 163. Section 329 of the Consolidated Farm and Rural Develop-
7 use 1970. 
ment Act is amended to read as follows: 
"SEC. 329. The Secretary shall make financial assistance under this 
subtitle available to any applicant seeking assistance based on 
production losses if the applicant shows that a single enterprise 
which constitutes a basic part of the applicant's farming, ranching, or 
aquaculture operation has sustained at least a 30 per centum loss of 
normal per acre or per animal production, or such lesser per centum 
of loss as the Secretary may determine, as a result of the disaster 
based upon the average monthly price in effect for the previous year 
and the applicant otherwise meets the conditions of eligibility pre-
scribed under this subtitle. Such loans shall be made available based 
upon 80 per centum, or such greater per centum as the Secretary may 
determine, of the total calculated actual production loss sustained by 
the applicant.". 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 379 
INSURED LOAN UMITS 
SEC. 164. Section 346 of the Consolidated Farm and Rural Develop-
ment Act (7 U.S.C. 1994) is amended by adding at the end thereof a 
new subsection (d) as follows: 
"(d) Notwithstanding any contrary provisions of subsection (b) of 
this section, for fiscal year 1982, loans are authorized to be insured, or 
made to be sold and insured, as follows: 
"(1) From the Agricultural Credit Insurance Fund— 
"(A) insured real estate loans for farm ownership pur-
poses, $700,000,000, and 
"(B) insured operatmg loans, $1,325,000,000. 
Not less than 20 per centum of the insured loans authorized for 
farm ownership purposes and not less that 20 per centum of the 
insured loans authorized for farm operating purposes shall be for 
low-income, limited-resource applicants. 
"(2) From the Rural Development Insurance Fund— 
"(A) insured water and waste disposal loans, $300,000,000, 
and 
"(B) insured community facility loans, $130,000,000.". 
PART 4—RURAL ELECTRIFICATION ADMINISTRATION 
PROGRAMS 
RURAL ELECTRIFICATION ACT AMENDMENTS 
SEC. 165. (a) Section 305(b) of the Rural Electrification Act of 1936 (7 
U.S.C. 935(b)) is amended to read as follows: 
"(b) Insured loans made under this title shall bear interest at 5 per insured loans, 
centum per annum, except that the Administrator may make insured interest rates. 
loans to electric or telephone borrowers at a lesser interest rate, but 
not less than 2 per centum per annum, if, in the Administrator's sole 
discretion, the Administrator finds that the borrower— 
"(1) has experienced extreme financial hardship; or 
"(2) cannot, in accordance with generally accepted manage-
ment and accounting principles and without charging rates to its 
customers or subscribers so high as to create a substantial 
disparity between such rates and the rates charged for similar 
service in the same or nearby areas by other suppliers, provide 
service consistent with the objectives of this Act.". 
(b) Section 306 of the Rural Electrification Act of 1936 (7 U.S.C. 936) 
is amended by— 
(1) inserting immediately after the second sentence the follow-
ing: "With respect to guarantees issued by the Administrator 
under this section, on the request of the borrower of any such 
loan so guaranteed, the loan shall be made by the Federal 
FiuEuicing Bank and at a rate of interest that is not more than 
the rate of interest applicable to other similar loans then being 
made or purchsised by the Bank."; and 
(2) striking our "a loan insured at the standard rate" in the 
fourth sentence and inserting in lieu thereof "an insured loan". 
(c) Section 307 of the Rural Electrification Act of 1936 (7 U.S.C. 937) 
is amended by striking out "a loan insured at the standard rate" and 
inserting in lieu thereof "an insured loan". 
(d) The amendments made by subsection (a) of this section shall 7 use 935 note 
apply to loans the applications for which are received by the Rural 
Electrification Administration after July 24,1981. 
95 STAT. 380 
PUBLIC LAW 97-35—AUG. 13, 1981 
Effective date. 
7 u s e 98d note. 
Effective date. 
Effective date. 
Expiration. 
TITLE II—ARMED SERVICES AND 
DEFENSE-RELATED PROGRAMS 
Subtitle A—Strategic and Critical Materials 
AUTHORIZATION OF DISPOSALS 
SEC. 201. (a) Effective on October 1,1981, the President is author-
ized to dispose of the following quantities of materials currently held 
in the National Defense Stockpile established by section 3 of the 
Strategic and Critical Materials Stock Piling Act (50 U.S.C. 98b), such 
quantities having been determined to be excess to the current 
requirements of the stockpile: 
(1) 1,000,000 pounds of 
iodine. 
(2) 1,500,000 carats of diamonds, industrial crushing bort. 
(3) 710,253 pounds of 
mercuric oxide. 
(4) 50,000 flasks of mercury. 
(5) 6,000,000 pounds of 
mica, muscovite splittings. 
(6) 25,000 pounds of 
mica, phlogopite splittings. 
(7) 46,537,000 troy ounces of silver. 
(8) 1,000 short tons of antimony. 
(9) 2,000 short tons of 
asbestos chrysotile. 
(10) 50,000 pounds of mica muscovite film, first and second 
qualities. 
(11) 50,000 pounds of mica muscovite block, stained and lower. 
(12) 700 long tons of 
vegetable tannin extract, wattle. 
(b) Effective on October 1, 1982, the President is authorized to 
dispose of the foUowii^ quantities of materials currently held in the 
National Defense Stockpile, such quantities having been determined 
to be excess to the current requirements of the stockpile: 
(1) 44,682,000 troy ounces of silver. 
(2) 1,()00 short tons of antimony. 
(3) 2,000 short tons of 
asbestos chrysotile. 
(4) 1,500,000 carats of 
diamond stones. 
(5) 1,000,000 pounds of 
iodine. 
(6) 50,000 pounds of mica muscovite film, first and second 
qualities. 
(7) 50,000 pounds of mica muscovite block, stained and lower. 
(8) 697 long tons of 
vegetable teinnin extract, wattle. 
(c) Effective on October 1, 1983, the President is authorized to 
dispose of the following quantities of materials currently held in the 
National Defense Stockpile, such quantities having been determined 
to be excess to the current requirements of 
the stockpile: 
(1) 13,900,000 troy ounces of silver. 
(2) 1,000 short tons of antimony. 
(3) 6,000 short tons of 
asbestos amosite. 
(4) 2,000 short tons of asbestos chrysotile. 
(5) 1,500,000 carats of 
diamond stones. 
(6) 197,465 carats of 
diamonds, industrial crushing bort. 
(7) 213,000 pounds of iodine. 
(8) 50,000 poimds of mica muscovite film, first and second 
qualities. 
(9) 50,000 pounds of mica muscovite block, stained and lower. 
(dXD The authority to enter into contracts for the disposal of 
materials in the stockpile under the disposal authorizations con-
tained in paragraphs (7) through (12) of subsection (a) eiq;>ires on 
September 30,1982. 
PUBLIC LAW 97-35-AUG. 13,1981 
95 STAT. 381 
(2) The. authority to enter into contracts for the disposal of materi- Expiration. 
als in the stockpue under the disposal authorizations contained in 
subsection (b) expires on September 30,1983. 
(3) The authori^ to enter into contracts for the disposal of materi- Expiration. 
als in the stockpue under the disposal authorizations contained in 
subsection (c) expires on September 30,1984. 
(e) Any disposal under the authority of 
subsection (a), (b), or (c) shall' 
be carried out in accordance with the provisions of the Strat^c and 
Critical Materials Stock Piling Act (50 U.S.C. 98 et seq.). 
(fKD The authority contained in subsections (bXD and (cXD shall 
not become effective unless the President, not later than September 
1, 1982, determines that the silver authorized for disposal oy such 
subsections is excess to the requirements of the stockpile as of that 
date. 
(2) A determination by the President under paragraph (1) shall be 
based upon consideration of such factors as the President considers 
relevant, including the following factors: 
(A) The demand for silver in each of the next ten years for the 
industrial, military, and naval needs of the United States for 
national defense. 
(B) The domestic supply of silver for each of the next ten years, 
as a function of price, that would be available to meet the 
demand identified under subparagraph (A). 
(C) The potential dependency of the United States on foreign 
supplies of silver in each of the next ten years to meet the 
demand identified under subparagraph (A). 
(D) The effect of 
disposal under subsections (bXD and (cXD on (i) 
the world silver market (in terms of price and supply), (ii) the 
domestic and international silver mining industry (in terms of 
exploration and production), (iii) international currency and 
monetary policy, and (iv) long range military preparedness. 
(3) If the President makes a determination described in paragraph 
(1), he shall promptly report to the Committees on Armed Services of 
the Senate and House of Representatives that he has made such 
determination and shall include a detailed discussion and analysis of 
the factors set forth in paragraph (2) and other relevant factors. 
Report to 
congressional 
committees. 
AUTHORIZATION OP APPROPRIATIONS 
SEC. 202. (a) Effective on October 1,1981, there is authorized to be so use 98d note. 
appropriated the sum of $535,000,000 for the acquisition of strategic 
and critical materials under section 6(a) of the Strategic and Critical 
Materials Stock Piling Act (50 U.S.C. 98e(a)). 
(b) Any acquisition using funds appropriated under the authoriza-
tion of subsection (a) shall be carried out in accordance with the 
provisions of the Strategic and Critical Materials Stock Piling Act (50 
lJ.S.C.98etseq.). 
IMPROVEMENTS IN STOCKPILE MANAGEMENT 
SEC. 203. (a) Section 5(a) of the Strategic and Critical Materials 
Stock Piling Act (50 U.S.C. 98d(a)) is amended— 
(1) by inserting "(1)" after "(a)"; 
(2) by inserting "and other incidental expenses" after "trans-
portation"; 
(3) by striking out "for a period of five fiscal years, if so 
provided in appropriation Acts" and inserting in lieu thereof 
95 STAT. 382 
PUBLIC LAW 97-35—AUG. 13, 1981 
50 u s e 98h-2. 
Report to 
congressional 
committees. 
Effective date. 
50 use 98d note. 
"until expended, unless otherwise provided in appropriation 
Acts"; and 
(4) by adding at the end thereof the following new paragraph: 
"(2) If for any fiscal year the President proposes certain stockpile 
transactions in the annual materials plan submitted to Congress for 
that year under section 11(b) and after that plan is submitted the 
President proposes (or Congress requires) a significant change in any 
such transaction, or a significant transaction not included in such 
plan, no amount may be obligated or expended for such transaction 
during such year until the President has submitted a full statement 
of the proposed transaction to the appropriate committees of Con-
gress and a period of 30 days has passed from the date of the receipt of 
such statement by such committees or until each such committee, 
before the expiration of such period, notifies the President that it has 
no objection to the proposed transaction. In computing any 30-day 
period for the purpose of the preceding sentence, there shall be 
excluded any day on which either House of Congress is not in session 
because of 
an adjournment of 
more than three days to a day certain.". 
(b) Section 5(b) of such Act (50 U.S.C. 98d(b)) is amended— 
(1) by inserting "(1)" after "from the stockpile"; and 
(2) by striking out the period at the end and inserting in lieu 
thereof ", or (2) if the disposal would result in there being a 
balance in the National Defense Stockpile Transaction Fund in 
excess of $1,000,000,000 or, in the case of a disposal to be made 
after September 30, 1983, if the disposal would result in there 
being a balance in the fund in excess of $500,000,000.". 
(c) Section 6(a)(6) of such Act (50 U.S.C. 98e(a)(6)) is amended by 
inserting "subject to the provisions of section 5(b)," after "(6)". 
(dXD Section 9(bXl) of such Act (50 U.S.C. 98h(bXl)) is amended by 
striking out "or until" and all that follows in such section and 
inserting in lieu thereof a period. 
(2) Section 9(bX3) of such Act (50 U.S.C. 98h(bX3)) is amended to 
read as follows: 
"(3) Moneys in the fund, when appropriated, shall remain available 
until expended, unless otherwise provided in appropriation Acts.". 
(e) Section 11 of such Act (50 U.S.C. 98h-2) is amended— 
(1) by inserting "(a)" after "SEC. 11."; and 
(2) by adding at the end thereof the following new subsection: 
"(b) The President shall submit to the appropriate committees of 
the Congress each year with the Budget submitted to Congress 
pursuant to section 201(a) of the Budget and Accounting Act, 1921 (31 
U.S.C. 11(a)), for the next fiscal year a report containing an annual 
materials plan for the operation of the stockpile during such fiscal 
year and the succeeding four fiscal years. Each such report shall 
include details of planned expenditures for acquisition of strategic 
and critical materials during such period (including expenditures to 
be made from appropriations from the general fund of the Treasury) 
and of anticipated receipts from proposed disposals of stockpile 
materials during such period.". 
(f) The amendments made by subsection (a) shall apply with respect 
to funds appropriated for fiscal years beginning after September 30, 
1981. 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 383 
Subtitle B—Military Compensation 
ONCE ANNUAL COST-OF-LIVING INCREASES IN MILITARY RETIRED PAY 
SEC. 211. (a) For cost savings achieved through elimination of one of 
the present semiannual increases in military retired and retainer 
pay, contingent upon a similar change in law being made with respect 
to the ci^dl service retirement system, see section 812(b) of the 
Department of Defense Authorization Act, 1981 (Public Law 96-342; 
94 Stat. 1098). 
(b) Section 812(bXl) of the Department of Defense Authorization 
Act, 1981, is amended by striking out "subject to paragraph (3)" and 
inserting in lieu thereof "subject to paragraph (2)". 
10 u s e 1401a 
note. 
OPEN ENROLLMENT PERIOD FOR SURVIVOR BENEFIT PLAN 
SEC. 212. (aXD Any eligible member who on the date of the 
enactment of this Act is not a participant in the Survivor Benefit 
Plan may elect to participate in the Plan during the open enrollment 
period specified in subsection (b). 
(2) Any eligible member who on the date of the enactment of this 
Act is a participant in the Plan but elected not to participate in the 
Plan at the maximum level or (in the case of an eligible member who 
is married) elected to provide an annuity under the Plan for a 
dependent child and not for the member's spouse may during the 
open enrollment period elect to participate in the Plan at a higher 
level or to provide an annuity under the Plan for the eligible 
member's spouse at a level not less than the level provided for the 
dependent child. 
(3) Any such election shall be made in the same manner as an 
election under section 1448 of such title and shall be effective when 
received by the Secretary concerned. Notwithstanding the last sen-
tence of section 1452(a) of such title, the reduction in retired or 
retainer pay prescribed by the first sentence of such section shall, in 
the case of an individual making an election under paragraph (1), 
begin on the first day of the first month beginning after such election 
is effective. 
(b) The open enrollment period is the period beginning on October 
1,1981, and ending on September 30,1982. 
(c) If an individual making an election under subsection (a) dies 
before the end of the two-year period beginning on the date of that 
election, the election is void and the amount of any reduction in the 
retired or retainer pay of such individual that is attributable to the 
election shall be paid in a lump sum to that individual's beneficiary 
under the Plan (as designated under that election). 
(d) Sections 1449,1453, and 1454 of title 10, United States Code, are 
applicable to individuals making elections and to elections under this 
section. 
(e) For the purposes of this section: 
(1) The term "eligible member" means a member or former 
member of the uniformed services who on the date of the 
enactment of this Act is entitled to retired or retainer pay. 
(2) The term "Survivor Benefit Plan" or "Plan" means the 
program established under subchapter II of chapter 73 of title 10, 
United States Code. 
(3) The term "Secretary concerned" has the meaning given 
such term in section 101(5) of title 37, United States Code. 
10 u s e 1448 
note. 
Definitions. 
10 u s e 1447. 
95 STAT. 384 
PUBLIC LAW 97-35—AUG. 13, 1981 
Housing and 
Community 
Development 
Amendments of 
1981. 
42 u s e 5301 
note. 
TITLE III—BANKING, HOUSING, AND 
RELATED PROGRAMS 
Subtitle A—Housing and Community Development 
SHORT TITLE 
SEC. 300. This subtitle may be cited as the "Housing and Communi-
ty Development Amendments of 1981". 
PART 1—COMMUNITY AND ECONOMIC DEVELOPMENT 
42 u s e 5303. 
AUTHORIZATIONS 
SEC. 301. Section 103 of the Housing and Community Development 
Act of 1974 is amended to read as follows: 
Grants. 
Appropriation. 
42 u s e 5304. 
42 u s e 5306; 
Post p. 389. 
AUTHORIZATIONS 
"SEC. 103. The Secretary is authorized to make grants to States, 
units of general local government, and Indian tribes to carry out 
activities in accordance with the provisions of this title. There are 
authorized to be appropriated for these purposes not to exceed 
$4,166,000,000 for each of the fiscal years 1982 and 1983. Sums 
appropriated pursuant to this section shall remain available until 
expended.". 
STATEMENT OP ACTIVITIES AND REVIEW 
SEC. 302. (a) The caption of section 104 of the Housing and 
Community Development Act of 1974 is amended to read as follows: 
"STATEMENT OF ACTIVITIES AND REVIEW". 
(b) Subsections (a), (b), and (c) of section 104 of such Act are 
amended to read as follows: 
"(aXl) Prior to the receipt in any fiscal year of 
a grant under section 
10603) by any metropolitan city or urban county, under section 106(d) 
by any State, or under section 106(dX2XB) by any unit of 
general local 
government, the grantee shall have prepared a final statement of 
community development objectives and projected use of funds and 
shall have provided the Secretary with the certifications required in 
subsection 0)) and, where appropriate, subsection (c). In the case of 
metropolitan cities and urban counties receiving grants pursuant to 
section 1060t)) and in the case of units of general local government 
receiving grants pursuant to section 106(dX2XB), the statement of 
projected use of funds shall consist of proposed community develop-
ment activities. In the case of States receiving grants pursuant to 
section 106(d), the statement of projected use of funds shall consist of 
the method by which the States will distribute funds to units of 
general local government. 
"(2) In order to permit public examination and appraisal of such 
statements, to enhance the public accountability of grantees, and to 
facilitate coordination of activities with different levels of govern-
ment, the grantee shall— 
"(A) furnish citizens information concerning the amount of 
funds available for proposed community development and hous-
ing activities and the range of activities that may be undertaken; 
"(B) publish a proposed statement in such manner to afford 
affected citizens or, as appropriate, units of general local govern-
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 385 
42 u s e 2000a 
note; 82 Stat. 73. 
Projected use of 
funds. 
ment an opportunity to examine its content and to submit 
comments on the proposed statement and on the community 
development performance of the grantee; and 
"(C) hold one or more public hearings to obtain the views of 
citizens on community development and housing needs. 
In preparing the final statement, the grantee shall consider any such, 
comments and views and may, if deemed appropriate by the grantee, 
modify the proposed statement. The final statement shall be made 
available to the public, and a copy shall be furnished to the Secretary 
together with the certifications required under subsection (b) and, 
where appropriate, subsection (c). 
"(b) Any grant under section 106 shall be made only if the grantee 42 use 5306 
certifies to the satisfaction of the Secretary that— 
"(1) the grantee is in full compliance with the requirements of 
subsection (aX2) (A), (B), and (C) and has made the final statement 
available to the public; 
"(2) the grant will be conducted and administered in conform-
ity with Public Law 88-352 and Public Law 90-284; 
"(3) the projected use of funds has been developed so as to give 
maximum feasible priority to activities which will benefit low-
and moderate-income families or aid in the prevention or elimi-
nation of slums or blight; the projected use of funds may also 
include activities which the grantee certifies are designed to 
meet other community development needs having a particular 
urgency because existing conditions pose a serious and immedi-
ate threat to the health or welfare of the community where other 
financigd resources are not available to meet such needs; and 
"(4) the grantee will comply with the other provisions of this 
title and with other applicable laws. 
"(cXD Any grant made under section 1060i)) shall be made only if Grants. 
the unit of general local government certifies that it is following a 
current housing assistance plan which has been approved by the 
Secretary and which— 
"(A) accurately surveys the condition of the housing stock in 
the community and assesses the housing assistance needs of 
lower income persons (including elderly and handicapped per-
sons, large families, owners of homes requiring rehabilitation 
assistance, and persons displaced or to be displaced) residing in 
or expected to reside in the community as a result of existing or 
projected changes in employment opportunities and population 
in the community (and those elderly persons residing in or 
expected to reside in the community), or as estimated in a 
community accepted State or regional housing opportunity plan 
approved by the Secretary, and identifies housing stock which is 
in a deteriorated condition, including the impact of conversion of 
rental housing to condominium or cooperative ownership on 
such needs; 
"(B) specifies a realistic annual goal for the number of dwelling 
units or lower income persons to be assisted, including (i) the 
relative proportion of new, rehabilitated, and existing dwelling 
units, including existing rental and owner occupied dwelling 
units to be upgraded and thereby preserved, (ii) the sizes and 
types of housing projects and assistance best suited to the needs 
of lower income persons in the community, and (iii) in the case of 
subsidized rehabilitation, adequate provisions to assure that a 
preponderance of persons assisted should be of low and moderate 
income; and 
95 STAT. 386 
PUBLIC LAW 97-35—AUG. 13, 1981 
42 use 5304. 
Report. 
Post. p. 389. 
Post, p. 389. 
Effective 
date. 
42 use 5304 
note. 
42 use 5304. 
"(C) indicates the general locations of proposed housing for 
lower income persons, with the objective of (i) furthering the 
revitalization of the community, including the restoration and 
rehabilitation of stable neighborhoods to the maximum extent 
possible, and the reclamation of the housing stock where feasible 
through the use of a broad range of techniques for housing 
restoration by local government, the private sector, or commu-
nity organizations, including provision of a reasonable opportu-
nity for tenants displaced as a result of such activities to relocate 
in their immediate neighborhood, (ii) promoting greater choice 
of housing opportunities and avoiding undue concentrations of 
assisted persons in areas containing a high proportion of low-
income persons, and (iii) assuring the availability of public 
facilities and services adequate to serve proposed housing 
projects. 
"(2) The Secretary shall establish such dates and manner for the 
submission of housing assistance plans described in paragraph (1) as 
the Secretary may prescribe.". 
(c)(1) Section 104(d) of such Act is amended to read as follows: 
"(d) Each grantee shall submit to the Secretary, at a time deter-
mined by the Secretary, a performance report concerning the use of 
funds made available under section 106, together with an assessment 
by the grantee of the relationship of such use to the objectives 
identified in the grantee's statement under subsection (a). The 
Secretary shall, at least on an annual basis, make such reviews and 
audits as may be necessary or appropriate to determine— 
"(1) in the case of grants made under section 106(b) or section 
106(d)(2)(B), whether the grantee has carried out its activities 
and, where applicable, its housing assistance plan in a timely 
manner, whether the grantee has carried out those activities and 
its certifications in accordance with the requirements and the 
primary objectives of this title and with other applicable laws, 
and whether the grantee has a continuing capacity to carry out 
those activities in a timely manner; and 
"(2) in the case of grants to States made under section 106(d), 
whether the State has distributed funds to units of general local 
government in a timely manner and in conformance to the 
method of distribution described in its statement, whether the 
State has carried out its certifications in compliance with the 
requirements of this title and other applicable laws, and whether 
the State has made such reviews and audits of the units of 
general local government as may be necessary or appropriate to 
determine whether they have satisfied the applicable perform-
ance criteria described in paragraph (1) of this subsection. 
The Secretary may make appropriate adjustments in the amount of 
the annual grants in accordance with the Secretary's findings under 
this subsection. With respect to assistance made available to units of 
general local government under section 106(d), the Secretary may 
adjust, reduce, or withdraw such assistance, or take other action as 
appropriate in accordance with the Secretary's reviews and audits 
under this subsection, except that funds already expended on eligible 
activities under this title shall not be recaptured or deducted from 
future assistance to such units of general local government.". 
(2) The amendment made by paragraph (1) shall take effect on 
October 1,1982. 
(d) Section 104 of such Act is amended by striking out subsections 
(e) and (f) and redesignating subsections (g), (h), (i), and (j) as 
subsections (e), (f), (g), and (h). 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 387 
(e) Section 104(f) of such Act, as redesignated by subsection (d) of ^"*«' P- ^86. 
this section, is amended— 
(1) by striking out "applicants" in paragraph (1) and inserting 
in lieu thereof 'Tecipiente of assistance under this title"; 
(2) by striking out "applicant" wherever it appears and insert-
ing in lieu thereof "recipient of assistance under this title"; 
(3) by striking out "applications and" in the last sentence of 
paragraph (2); and 
(4) by adding the following new paragraph at the end thereof: 
"(4) In the case of grants made to States pursuant to section 106(d), f^ost, p. 389. 
the State shall perform those actions of the Secretary described in 
paragraph (2) and the performance of such actions shall be deemed to 
satisfy the Secretary s responsibilities referred to in the second 
sentence of 
such paragraph. . 
(f) Section 104(g) of such Act, as redesignated by subsection (d) of Ante, p. 386. 
this section, is amended— 
(1) by striking out paragraph (1) and inserting in lieu thereof 
the following: 
"(1) Units of general local government receiving assistance under 
this title may receive funds, in one payment, in an amount not to 
exceed the total amount designated in the grant (or, in the case of a 
unit of 
general local government receiving a distribution from a State 
pursuant to section 106(d), not to exceed the total amount of such 
distribution) for use in establishing a revolving loan fund which is to 
be established in a private financial institution and which is to be 
used to finance rehabilitation activities assisted under this title. 
Rehabilitation activities authorized under this section shall begin 
within 45 days after receipt of 
such payment."; and 
(2) by striking out the last two sentences of paragraph (2). 
EUGIBLE ACTIVITIES 
SEC. 303. (a) Section 105(a) of the Housing and Community Develop-
ment Act of 1974 is amended— 
42 use 5305. 
(1) by striking out paragraph (8) and inserting in lieu thereof 
the following: 
"(8) provision of public services, including but not limited to 
those concerned with employment, crime prevention, child care, 
health, drug abuse, education, energy conservation, welfare or 
recreation needs, if such services have not been provided by the 
unit of general local government (through funds raised by such 
unit, or received by such unit from the State in which it is 
located) during any part of the twelve-month period immediately 
preceding the date of submission of the statement with respect to 
which funds are to be made available under this title, and which 
are to be used for such services, unless the Secretary finds that 
the discontinuation of such services was the result of events not 
within the control of 
the unit of 
general local government, except 
that not more than 10 per centum of the amount of any 
assistance to a unit of general local government under this title 
may be used for activities under this paragraph;"; 
(2) by inserting the following before the semicolon at the end of 
paragraph (13) , and including the carrying out of activities as 
described in section 701(e) of the Housing Act of 1954 on the date 94 Stat. 1662. 
prior to the date of enactment of the Housing and Community 
Development Amendments of 1981"; 
Ante, p. 384. 
(3) by striking out "and" at the end of 
peiragraph (15); 
95 STAT. 388 
PUBLIC LAW 97-35—AUG. 13, 1981 
Waiver. 
42 u s e 5305 
note. 
Ante, p. 387. 
42 u s e 5301. 
42 u s e 5306. 
Ante, p. 384. 
Post, pp. 391, 
392. 
42 u s e 5306. 
Reallocated 
funds. 
Ante, p. 384. 
Ante, p. 386. 
42 u s e 5311. 
(4) by striking out the period at the end of paragraph (16) and 
inserting in lieu thereof'; and"; and 
(5) by adding at the end thereof the following new paragraph: 
"(17) provision of assistance to private, for-profit entities, when 
the assistance is necessary or appropriate to carry out an 
economic development project.", 
(b) In fiscal years 1982,1983, and 1984, the Secretary may waive the 
limitation on the amount of funds which may be used for public 
services activities under section 105(a)(8) of the Housing and Com-
munity Development Act of 1974, as amended by this Act, in the case 
of a unit of general local government which, during fiscal year 1981, 
allocated more than 10 per centum of funds received under title I of 
the Housing and Community Development Act of 1974 for such 
activities. 
ALLOCATION AND DISTRIBUTION OF FUNDS 
SEC. 304. (a) Section 106(a) of the Housing and Community Develop-
ment Act of 1974 is amended to read as follows: 
"(a) Of the amount approved in an appropriation Act under section 
103 for grants in any year (excluding the amounts provided for use in 
accordance with section 107 and section 119), 70 per centum shall be 
allocated by the Secretary to metropolitan cities and urban counties. 
Except as otherwise specifically authorized, each metropolitan city 
and urban county shall be entitled to an annual grant from such 
allocation in an amount not exceeding its basic amount computed 
pursuant to paragraph (1) or (2) of subsection (b).". 
(b) Section 106 of such Act is amended by striking out subsection (c) 
and redesignating subsections (d), (e), (f), and (g) as subsections (c), (d), 
(e), and (f), respectively. 
(c) Section 106(c), as redesignated by subsection (b) of this section, is 
amended to read as follows: 
"(c)(1) Except as provided in paragraph (2), any amounts allocated 
to a metropolitan city or an urban county pursuant to the preceding 
provisions of this section which are not received by the city or county 
for a fiscal year because of failure to meet the requirements of section 
104(a), (b), or (c), or which become available as a result of actions 
under section 104(d) or 111, shall be reallocated in the succeeding 
fiscal year to the other metropolitan cities and urban counties in the 
same metropolitan area which certify to the satisfaction of the 
Secretary that they would be adversely affected by the loss of such 
amounts from the metropolitan area. The amount of the share of 
funds reallocated under this paragraph for any metropolitan city or 
urban county shall bear the same ratio to the total of such reallocated 
funds in the metropolitan area as the amount of funds awarded to the 
city or county for the fiscal year in which the reallocated funds 
become available bears to the total amount of funds awarded to all 
metropolitan cities and urban counties in the same metropolitan area 
for that fiscal year, except that— 
"(A) in determining the amounts awarded to cities or counties 
for purposes of calculating shares pursuant to this sentence, 
there shall be excluded from the award of any city or county any 
amounts which become available as a result of actions against 
such city or county under section 111; 
"(B) in reallocating amounts resulting from an action under 
section 104(d) or section 111, the city or county against whom any 
such action was taken shall be excluded from the calculation of 
shares for purposes of reallocating the amounts becoming avail-
able as a result of such action; and 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 389 
"(C) in no event may the share of reallocated funds for any 
metropolitan city or urban county exceed 25 per centum of the 
amount awarded to the city or county under section 106(b) for the 4
2 use 5306. 
fiscal year in which the reallocated funds under this paragraph 
become available. 
Any amounts allocated under section 106(b) which become available 
for reallocation and for which no metropolitan city or urban county 
qualifies under this paragraph shall be added to amounts available 
for allocation under such section 106(b) in the succeeding fiscal year. 
"(2) Notwithstanding any other provision of this title, the Secretary 
shall make grants from amounts authorized for use under section 
106(b) by the Department of Housing and Urban Development— 
Independent Agencies Appropriation Act, 1981, in accordance with 94 Stat. 3044. 
the provisions of this title which governed grants with respect to such 
amounts, as such provisions existed prior to the effective date of the 
Housing and Community Development Amendments of 1981, except Ante, p. 384. 
that any such amounts which are not obligated before January 1, 
1982, shall be reallocated in accordance with paragraph (1).". 
(d) Section 106(d)(1) of such Act, as redesignated by subsection (b) of 
this section, is amended— 
Ante, p. 388. 
(1) by striking out "section 108(a)" and all that follows through 
"nonmetropolitan areas of each State" in the first sentence and 
inserting in lieu thereof the following: "section 103 for grants in 
any year (excluding the amounts provided for use in accordance 
with section 107 and section 119), 30 per centum shall be Post, pp. 391,392. 
allocated among the States for use in nonentitlement areas. The 
allocation for each State shall be"; and 
(2) by striking out "nonmetropolitan" wherever it appears and 
inserting in lieu thereof "nonentitlement". 
(e) Section 106(d) of such Act, as redesignated by subsection (b) of 
this section, is amended by striking out paragraphs (2) and (3) and 
inserting in lieu thereof the following: 
"(2)(A) Amounts allocated under paragraph (1) shall be distributed 
to units of general local government located in nonentitlement areas 
of the State to carry out activities in accordance with the provisions of 
this title— 
"(i) by the State, consistent with the statement submitted 
under section 104(a); or 
Ante, p. 384. 
"(ii) by the Secretary, in any case described in subparagraph 
(B), for use by units of general local government in accordance 
with paragraph (3)(B). 
Notwithstanding any provision of this title, the Secretary shall make 
grants from amounts authorized for use in nonentitlement areas by 
the Department of Housing and Urban Development—Independent 
Agencies Appropriation Act, 1981, in accordance with the provisions 94 Stat. 3044. 
of this title which governed grants with respect to such amounts, as 
such provisions existed prior to the effective date of the Housing and 
Community Development Amendments of 1981. Any amounts under Ante, p. 384. 
the preceding sentence (except amounts for which preapplications 
have been approved by the Secretary prior to October 1, 1981, and 
which have been obligated by January 1,1982) which are or become 
available for obligation after fiscal year 1981 shall be available for 
distribution in the State in which the grants from such amounts were 
made, by the State or by the Secretary, whichever is distributing the 
State allocation in the fiscal year in which such amounts are or 
become available, 
"(B) The Secretary shall distribute amounts allocated under para-
graph (1) where— 
95 STAT. 390 
PUBLIC LAW 97-35—AUG. 13, 1981 
"(i) the State has elected, in such manner and before such time 
as the Secretary may prescribe, not to distribute such amounts; 
or 
"(ii) the State has failed to submit the certifications described 
in subparagraph (C). 
"(C) To receive and distribute amounts allocated under paragraph 
(1), the Governor must certify that the State, with respect to units of 
general local government in nonentitlement areas— 
"(i) engages or will engage in planning for community develop-
ment activities; 
"(ii) provides or will provide technical assistance to units of 
general local government in connection with community devel-
opment programs; 
"(iii) will provide, out of State resources, funds for community 
development activities in an amount which is at least 10 per 
centum of the amounts allocated for use in the State pursuant to 
paragraph (1); and 
"(iv) has consulted with local elected officials from among 
units of general local government located in nonentitlement 
areas of that State in determining the method of distribution of 
funds required by subparagraph (A). 
"(8)(A) If the State receives and distributes such amounts, it shall 
be responsible for the administration of funds so distributed. The 
State shall pay from its own resources all administrative expenses 
incurred by the State in carrying out its responsibilities under this 
title, except that from the amounts received for distribution in 
nonentitlement areas, the State may deduct an amount not to exceed 
50 per centum of the costs incurred by the State in carrying out such 
responsibilities. Amounts so deducted shall not exceed 2 per centum 
of the amount so received. 
"(B) If the Secretary distributes such amounts, the distribution 
shall be made in accordance with determinations of the Secretary 
pursuant to statements submitted and the other requirements of 
Ante, p. 384. 
section 104 (other than subsection (c)) and in accordance with regula-
tions and procedures prescribed by the Secretary. 
"(C) Any amounts allocated for use in a State under this subsection 
Ante, p. 386. 
which become available as a result of actions under section 104(d) or 
4
2 use 5311. 
Ill shall— 
"(i) in the case of actions against units of general local 
government in nonentitlement areas, be added to amounts avail-
able for distribution in the State in the fiscal year in which the 
amounts become so available; or 
"(ii) in the case of actions against the State, be added to 
amounts available for distribution in the State in the succeeding 
fiscal year. 
Amounts reallocated under this subparagraph shall be available for 
distribution by the State or by the Secretary, whichever is distribut-
ing the State allocation in the fiscal year in which such reallocated 
amounts are added. 
"(4) In computing amounts under paragraph (1), Indian tribes shall 
be excluded.". 
Ante, p. 388. 
(f) Section 106(f), as redesignated by subsection (b) of this section, is 
amended by striking out "(1)" and all that follows through "106(e)" 
and inserting in lieu thereof "all basic grant entitlement amounts". 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 391 
DISCRETIONARY FUND 
SEC. 305. Section 107 of the Housing and Community Development 
Act of 1974 is amended to read as follows: 
42 u s e 5307. 
DISCRETIONARY FUND 
"SEC. 107. (a) Of the total amount approved in appropriation Acts 
under section 103 for each of the fiscal years 1982 and 1983, not more 
than $60,000,000 for each of the fiscal years 1982 and 1983 may be set 
aside in a special discretionary fund for grants under subsection (b). 
Grants under this section are in addition to any other grants which 
may be made under this title to the same entities for the same 
purposes. 
"(b) From amounts set aside under subsection (a), the Secretary is 
authorized to make grants— 
"(1) in behalf of new communities assisted under title VII of 
the Housing and Urban Development Act of 1970 or title IV of 
the Housing and Urban Development Act of 1968 or in behalf of 
new community projects assisted under title X of the National 
Housing Act which meet the eligibility stemdards set forth in 
title Vn of the Housing and Urban Development Act of 1970 and 
which were the subject of an application or preapplication under 
such title prior to January 14,1975; 
"(2) in Guam, the Virgin Islands, American Samoa, the North-
ern Mariana Islands, and the Trust Territory of the Pacific 
Islands; 
"(3) to Indian tribes; and 
"(4) to States, units of general local government, Indian tribes, 
or areawide planning organizations for the purpose of providing 
technical assistance in planning, developing, and administering 
assistance under this title, and to States and units of general 
local government for implementing special projects otherwise 
authorized under this title. The Secretary may also provide, 
directly or through contracts, technical assistaiice under this 
paragraph to such governmental units, or to a group designated 
by such a governmental unit for the purpose of assisting that 
governmental unit to carry out assistance under this title. 
"(c) Amounts set aside for use under subsection (b) in any fiscal 
year but not used in that year shall remain available for use in 
subsequent fiscal years in accordance with the provisions of that 
subsection. 
"(dXD Except as provided in paragraph (2), no grant may be made 
under this section or section 119 unless the applicant provides 
satisfactory assurances that its program will be conducted and 
administered in conformity with Public Law 88-352 and Public Law 
90-284. 
"(2) No grant may be made to an Indian tribe under this section or 
section 119 unless the applicant provides satisfactory assurances that 
its program will be conducted and administered in conformity with 
title II of Public Law 90-284. The Secretary may waive, in connection 
with grants to Indian tribes, the provisions of section 109 and section 
110. 
"(3) The Secretary may accept a certification from the applicant 
that it has complied with the requirements of paragraph (1) or (2), as 
appropriate.". 
Ante, p. 384. 
42 u s e 4501. 
42 use 3901. 
12 u s e 1749aa. 
Technical 
Eissistance. 
Post, p. 392. 
42 use 2000a 
note; 
82 Stat. 73. 
Waiver. 
25 use 1301. 
42 use 5309, 
5310. 
89-194 O—82 
27 : QL3 
95 STAT. 392 
PUBLIC LAW 97-35—AUG. 13, 1981 
42 use 5309. 
42 use 6101 
note. 
29 use 794. 
42 use 5306 
note. 
42 use 5306. 
Ante, p. 388. 
42 use 5307. 
Ante, p. 391. 
Ante, p. 389. 
NONDISCRIMINATION 
SEC. 306. Section 109(a) of the Housing and Community Develop-
ment Act of 1974 is amended by adding the following new sentence at 
the end thereof: "Any prohibition against discrimination on the basis 
of age under the Age Discrimination Act of 1975 or with respect to an 
otherwise qualified handicapped individual as provided in section 504 
of the Rehabilitation Act of 1973 shall also apply to any such program 
or activity.". 
TRANSITIONAL PROVISIONS 
SEC. 307. (a) Any amounts appropriated for any fiscal year before 
fiscal year 1982 in a Department of Housing and Urban Develop-
ment—Independent Agencies Appropriation Act or a Supplemental 
Appropriation Act under the head "COMMUNITY DEVELOPMENT 
GRANTS" which are or become available for obligation on or after 
October 1,1981, shall remain available as provided by law, and shall 
be used in accordance with the following: 
(1) funds authorized for use under section 106(b) of the Housing 
and Community Development Act of 1974 ("such Act") before 
October 1, 1981, shall be available for use as provided by section 
106(c) of such Act as amended by this Act; 
(2) funds authorized for use under section 107 of such Act 
before October 1, 1981, shall be available for use as provided by 
section 107(a) of 
such Act as amended by this Act; and 
(3) funds authorized for use under section 106(c) or (e) of such 
Act before October 1,1981, shall be available for use as provided 
by section 106(d)(2)(A) of such Act as amended by this Act. 
(b) Any grant or loan which, prior to the effective date of any 
provision of this part, was obligated and governed by any authority 
amended by any provision of this part shall continue to be governed 
by the provisions of such authority as they existed immediately 
before such effective date. 
42 u s e 5318. 
URBAN DEVELOPMENT ACTION GRANTS 
SEC. 308. (a) Section 119 of the Housing and Community Develop-
ment Act of 1974 is amended to read as follows: 
URBAN DEVELOPMENT ACTION GRANTS 
"SEC. 119. (a) The Secretary is authorized to make urban develop-
ment action grants to cities and urban counties which are experienc-
ing severe economic distress to help stimulate economic development 
activity needed to aid in economic recovery. Of the total amount 
42 use 5303. 
approved in appropriation Acts under section 103 for each of the 
fiscal years 1982 and 1983, not more than $500,000,000 shall be 
available for each of the fiscal years 1982 and 1983 for grants under 
this section. 
"Ol5)(l) Urban development action grants shall be made only to 
cities and urban counties which have, in the determination of the 
Secretary, demonstrated results in providing housing for low- and 
moderate-income persons and in providing equal opportunity in 
housing and employment for low- and moderate-income persons and 
Regulations. 
members of minority groups. The Secretary shall issue regulations 
establishing criteria in accordance with the preceding sentence and 
setting forth minimum standards for determining the level of eco-
nomic distress of cities and urban counties for eligibility for such 
grants. These standards shall take into account factors such as the 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 393 
age of housing; the extent of poverty; the extent of population lag; 
growth of per capita income; and, where data are available, the 
extent of unemployment and job lag. 
"(2) A city or urban county which fails to meet the minimum 
standards established pursuant to paragraph (1) shall be eligible for 
assistance under this section if it meets the requirements of the first 
sentence of such paragraph and— 
"(A) in the case of a city with a population of fifty thousand 
persons or more or an urban county, contEiins an area (i) 
comi)Osed of one or more contiguous census tracts, enumeration 
districts, or block groups, as defined by the United States Bureau 
of the Census, having at least a population of ten thousand 
persons or 10 per centum of the population of the city or urban 
county; (ii) in which at lesist 70 per centum of the residents have 
incomes below 80 per centum of the median income of the city or 
urban county; and (iii) in which at least 30 per centum of the 
residents have incomes below the national poverty level; or 
"(B) in the case of a city with a population of less than fifty 
thousand persons, contains an area (i) composed of one or more 
contiguous census tracts, enumeration districts, or block groups 
or other areas defined by the United States Bureau of the Census 
or for which data certified by the United States Bureau of the 
Census are available having at least a population of two thou-
sand five hundred persons or 10 per centum of the population of 
the city, whichever is greater; (ii) in which at least 70 per centum 
of the residents have incomes below 80 per centum of the median 
income of the city; and (iii) in which at least 30 per centum of the 
residents have incomes below the national poverty level. 
The Secretary shall use up to, but not more than, 20 per centum of the 
funds appropriated for use in any fiscal year under this section for 
the purpose of making grants to cities and urban counties eligible 
under this paragraph. 
"(c) Applications for eissistance under this section shall— 
Contents. 
"(1) in the case of an application for a grant under subsection 
(bX2), include documentation of grant eligibility in accordance 
with the standards described in that subsection; 
"(2) set forth the activities for which assistance is sought, 
including (A) an estimate of the costs and general location of the 
activities; (B) a summary of the public and private resources 
which are expected to be made available in connection with the 
activities, including how the activities will take advantage of 
unique opportunities to attract private investment; and (C) an 
analysis of the economic benefits which the activities are 
expected to produce; 
'(3) contain a certification satisfactory to the Secretary that 
the applicant, prior to submission of its application, (A) has held 
public hearings to obteiin the views of citizens, particularly 
residents of the area in which the proposed activities are to be 
carried out, and (B) has analyzed the impact of these proposed 
activities on the residents, particularly those of low and moder-
ate income, of the residential neighborhood, and on the neighbor-
hood in which they are to be carried out; and 
"(4) contain a certification satisfactory to the Secretary that 
the applicant, prior to submission of its application, (A) has 
identified all properties, if any, which are included on the 
National Register of Historic Places and which, as determined by 
the applicant, will be affected by the project for which the 
application is made; (B) ha-s identified all other properties, if any, 
95 STAT. 394 
PUBLIC LAW 97-35—AUG. 13, 1981 
94 Stat. 1620. 
42 u s e 5320. 
Selection 
criteria, 
establish-
ment. 
City or urban 
county, eli-
gibility. 
which will be affected by such project and which, as determined 
by the applicant, may meet the criteria established by the 
Secretary of the Interior for inclusion on such Register, together 
with documentation relating to the inclusion of such properties 
on the Register; (C) has determined the effect, as determined by 
the applicant, of 
the project on the properties identified pursuant 
to clauses (A) and (B); and (D) will comply with the requirements 
of 
section 121. 
"(dXD Except in the case of a city or urban county eligible under 
subsection (b)(2), the Secretary shall establish selection criteria for 
grants under this section which must include (A) as the primary 
criterion, the comparative degree of economic distress among appli-
cants, as measured (in the case of a metropolitan city or urban 
county) by the differences in the extent of growth lag, the extent of 
poverty, and the adjusted age of housing in the metropolitan city or 
urban county; (B) other factors determined to be relevant by the 
Secretary in assessing the comparative degree of economic deteriora-
tion in cities and urban counties; and (C) at least the following other 
criteria: demonstrated performance of the city or urban county in 
housing and community development programs; the extent to which 
the grant will stimulate economic recovery by leveraging private 
investment; the number of permanent jobs to be created and their 
relation to the amount of grant funds requested; the proportion of 
permanent jobs accessible to lower income persons and minorities, 
including persons who are unemployed; the impact of the proposed 
activities on the fiscal base of the city or urban county and its relation 
to the amount of grant funds requested; the extent to which State or 
local government funding or special economic incentives have been 
committed; and the feasibility of accomplishing the proposed activi-
ties in a timely fashion within the grant amount available. 
"(2) For the purpose of making grants with respect to areas 
described in subsection (bX2), the Secretary shall establish selection 
criteria, which must include (A) factors determined to be relevant by 
the Secretary in assessing the comparative degree of economic 
deterioration among eligible areas, and (B) such other criteria as the 
Secretary may determine, including at a minimum the criteria listed 
in paragraph (IXC) of this subsection. 
"(e) The Secretary may not approve any grant to a city or urban 
county eligible under subsection (bX2) unless— 
"(1) the grant will be used in connection with a project located 
in an area described in subsection (bX2), except that the Secre-
tary may waive this requirement where the Secretary deter-
mines (A) that there is no suitable site for the project within that 
area, (B) the project will be located directly adjacent to that area, 
and (C) the project will contribute substantially to the economic 
development of 
that area; 
"(2) the city or urban county has demonstrated to the satisfac-
tion of the Secretary that basic services supplied by the city or 
urban county to the area described in subsection (bX2) are at least 
equivalent, as measured by per capita expenditures, to those 
supplied to other areas within the city or urban county which are 
similar in population size and physical characteristics and which 
have median incomes above the median income for the city or 
urban county; 
"(8) the grant will be used in connection with a project which 
will directly benefit the low- and moderate-income families and 
individuals residing in the area described in subsection (bX2); and 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 395 
"(4) the city or urban county makes available, from its own 
funds or from funds received from the State or under any Federal 
program which permits the use of financial assistance to meet 
the non-Federal share requirements of Federal grant-in-aid pro-
grams, an amount equal to 20 per centum of the grant to be 
available under this section to be used in carrying out the 
activities described in the application. 
"(f) Activities assisted under this section may include such activi-
ties, in addition to those authorized under section 105(a), as the 
Secretary determines to be consistent with the purposes of this 
section. 
"(g) The Secretary shall, at least on an annual basis, make reviews 
and audits of recipients of grants under this section as necessary to 
determine the progress made in carrying out activities substantially 
in accordance with approved plans and timetables. The Secretary 
may adjust, reduce, or withdraw grant funds, or take other action as 
appropriate in accordance with the findings of these reviews and 
audits, except that funds edready expended on eligible activities 
under this title shall not be recaptured or deducted from future 
grants made to the recipient. 
"(h) No assistance may be provided under this section for projects 
intended to facilitate the relocation of industrial or commercial 
plants or facilities from one area to another, unless the Secretary 
finds that the relocation does not significantly and adversely affect 
the unemployment or economic base of the area from which the 
industrial or commercial plant or facility is to be relocated. 
"(i) Not less than 25 per centum of the funds made available for 
grants under this section shall be used for cities with populations of 
less than fifty thousand persons which are not central cities of a 
metropolitan statistical area. 
"(j) A grant may be made under this section only where the 
Secretary determines that there is a strong probability that (1) the 
non-Federal investment in the project would not be made without the 
grant, and (2) the grant would not substitute for non-Federal funds 
which are otherwise available to the project. 
"(k) In making grants under this section, the Secretary shall take 
such steps as the Secretary deems appropriate to assure that the 
amount of the grant provided is the least necessary to make the 
project feasible. 
* (1) For purposes of this section, the Secretary may reduce or waive 
the requirement in section 102(a)(5)(BXii) that a town or township be 
closely settled. 
"(m) In the case of any application which identifies any property in 
accordance with subsection (c)(4)(B), the Secretary may not commit 
funds with respect to an approved application unless the applicant 
has certified to the Secretary that the appropriate State historic 
preservation officer and the Secretary of the Interior have been 
provided an opportunity to take action in accordance with the 
provisions of 
section 121(b). 
"(nXD For the purposes of this section, the term 'city' includes 
Guam, the Virgin Islands, and Indian tribes. 
"(2) The Secretary may not approve a grant to an Indian tribe 
under this section unless the tribe (A) is located on a reservation or in 
an Alaskan Native Village, and (B) is an eligible recipient under the 
State and Local Fiscal Assistance Act of 1972. 
"(o) If no amounts are set aside under, or amounts are precluded 
from being appropriated for this section for fiscal years after fiscal 
year 1983, any amount which is or becomes available for use under 
42 u s e 5305. 
Reviews and 
audits. 
Industrial 
or commercial 
plants or facili-
ties, £issistance. 
42 use 5302. 
94 Stat. 1620. 
42 use 5320. 
"City.'^ 
31 use 1221 
note. 
95 STAT. 396 
PUBLIC LAW 97-35—AUG. 13, 1981 
42 use 5303. 
94 Stat. 1620. 
42 use 5320. 
Effective date. 
42USC5318 
note. 
Rules and 
regulations. 
this section after fiscal year 1983 shall be added to amounts appropn-
ated under section 103. % _ 
* 
(b) Section 121 of such Act is amended by striking out "subsecGbn 
(cX7XB)" in subsection (b) and inserting in lieu thereof "subsection 
(c)(4XB)". 
(c) The amendments made by subsections (a) and (b) shall become 
effective on the effective date of regulations implementing such 
subsections. As soon as practicable, but not later than January 1, 
1982, the Secretary shall issue such final rules and regulations as the 
Secretary determines are necessary to carry out such subsections. 
42 use 5302. 
"Npnentitlement 
area." 
94 Stat. 1614. 
42 use 5302. 
94 Stat. 1615. 
42 use 5304. 
42 use 5305. 
94 Stat. 1618. 
94 Stat. 1615. 
42 use 5306. 
COMMUNITY DEVELOPMENT TECHNICAL AMENDMENTS 
SEC. 309. (a) Section 102(a) of the Housing and Community Develop-
ment Act of 1974 is amended— 
(1) by striking out paragraphs (18) and (19); 
(2) by inserting immediately after paragraph (6) the following: 
"(7) The term 'nonentitlement area' means an area which is 
not a metropolitan city or part of an urban county."; and 
(3) by redesignating the remaining paragraphs accordingly. 
(b) Section 102(c) of such Act is amended by striking out 
a 
(Community Development Program in whole or in part" and inserting 
in lieu thereof "activities assisted under this title". 
(c) The first sentence of section 102(d) of such Act is amended— 
(1) by striking out "103(aXl)" and inserting in lieu thereof 
"103"; and 
(2) by striking out "unless the application by the urban county 
is disapproved or withdrawn prior to or during such three-year 
period' and inserting in lieu thereof "unless the urban county 
does not receive a grant for any year during such three-year 
period". 
(d) Section 104(j) of such Act is amended by striking out "planning a 
joint community development program, meeting the application 
requirements of this section, and implementing such program" and 
inserting in lieu thereof "submitting a statement under section 104(a) 
and carrying out activities under this title". 
(e) The caption of section 105 of such Act is amended to read as 
follows: "EUGIBLE ACTIVITIES". 
(f) Section 105(a) of such Act is amended— 
(1) by striking out the first sentence and "These activities" in 
the second sentence and inserting in lieu thereof "Activities 
assisted under this title"; 
(2) by striking out "program" in paragraph (6); 
(3) by striking out the Community Development Program" in 
paragraph (9) and inserting in lieu thereof "activities assisted 
under this title"; 
(4) by striking out "to the community development program" 
in paragraph (11); 
(5) by striking out "(as specifically" and all that follows 
through "104(aXl)" in paragraph (14) and inserting in lieu 
thereof "which are carried out by public or private nonprofit 
entities"; and 
(6) by striking out "(as specifically described in the application 
submitted pursuant to section 104)" in paragraph (15). 
(g) Section 105(b) of such Act is amended by striking out "a grant" 
and inserting in lieu thereof "assistance". 
(h) The second sentence of section 106(bX4) of such Act is amended 
by striking out "for a grant under subsection (c) or (e)" and inserting 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 397 
in lieu thereof the following: "to receive assistance under subsection 
(d)". 
(i) Section 108(d)(2) of such Act is amended by striking out 42 use 5308. 
"approved or". 
0) The first sentence of section 110 of such Act is amended by 42 use 53io. 
striking out "grants" and inserting in lieu thereof "assistance . 
(k) The first sentence of section 112(a) of such Act is amended by 42 use 5312. 
striking out "103(a)" and inserting in lieu thereof "103". 
(1) Section 113(a)(2) of such Act is amended by striking out "as 42 use 5813. 
approved by the Secretary". 
(m) Section 116(b) of such Act is amended to read as follows: 94 Stet. 1622. 
"(b) In the case of funds available for any fiscal year, the Secretary 
^ ^ 
shall not consider any statement under section 104(a), unless such 
statement is submitted on or prior to such date (in that fiscal year) as 
the Secretary shall establish as the final date for submission of 
statements in that year.". 
COMMUNITY DEVELOPMENT MISCELLANEOUS AMENDMENTS 
SEC. 310. (a) Section 102(aK4) of the Housing and Community 
Development Act of 1974 is amended by inserting the following before 42 use 5302. 
the period at the end thereof: "or until September 30,1982, whichever 
is later". 
(b) Section 102(a)(6) of such Act is amended by inserting at the end 
thereof the following: "Any urban county (A) which qualified as an 
urban county in fiscal year 1981, (B) the population of which includes 
all of the population of the county (other than the population of 
metropolitan cities therein), and (C) the population of which for fiscal 
year 1982 falls below the amount required by clause (B) of the 
preceding sentence by reason of the 1980 decennial census shall be 
considered as meeting the population requirements of such clause for 
fiscal year 1982 and shall not be subject to the provisions of section 
102(d) in that fiscal year.". 
REHABIUTATION LOANS 
SEC. 311. (a) Subsection (a)(1)(D) of section 312 of the Housing Act of 
1964 is amended by striking out "an approved community develop- 42 use I452b. 
ment program" and inserting in lieu thereof "community develop-
ment activities". 
(b) Subsection (d) of such section is amended— 
94 Stat. 1622. 
(1) by inserting "and" after "October 1, 1979," in the first 
sentence 
* 
(2) by striking out "and not to exceed $129,000,000 for the fiscal 
year beginning on October 1, 1981," in the first sentence; and 
(3) by striking out the last sentence. 
(c) Subsection (h) of such section is amended by striking out "1982" 
each place it appears and inserting in lieu thereof "1983". 
(d) Subsection (j)(l) of such section is amended by striking out the 
second sentence. 
URBAN HOMESTEADING 
SEC. 312. The first sentence of section 810(h) of the Housing and 
Community Development Act of 1974 is amended by striking out 1
2 use I706e. 
"and not to exceed $26,000,000 for the fiscal year 1979"^ and inserting 
in lieu thereof "not to exceed $26,000,000 for the fiscal year 1979, and 
not to exceed $13,467,000 for the fiscal year 1983". 
95 STAT. 398 
PUBLIC LAW 97-35—AUG. 13, 1981 
42 use 8121 
note. 
94 Stat. 1662. 
40 use 461. 
94 Stat. 1645. 
42 use 8107. 
REPEALERS 
SEC. 313. (a) Title Vn of 
the Housing and Ck)mmunity Development 
Amendments of 1978 is hereby repealeid. 
(b) Section 701 of the Housing Act of 1954 is hereby repealed. 
NEIGHBORHOOD REINVESTMENT CORPORATION 
SEC. 314. Section 608(a) of the Neighborhood Reinvestment Corpo-
ration Act is amended— 
(1) by striking out "and" after "1980,"; and 
(2) by inserting the following before the period at the end 
thereof: ", and not to exceed $14,950,000 for fiscal year 1982". 
REPORT ON BLOCK GRANT PROGRAM 
Report to 
SEC. 315. Not later than 270 days after the date of enactment of this 
eongress. 
^Q^^ ^jjg Secretary of 
Housing and Urban Development shall report to 
the Congress on administrative and legislative steps that can be 
taken to-— 
(1) require all grantees to concentrate their block grant funds 
in distressed geographic areas small enough so that visible 
improvements can be achieved in a reasonable time period and to 
ensure that claimed benefits to low- and moderate-income per-
sons are, in actuality, occurring; 
(2) reduce the broad list of activities currently eligible so that 
funds can be focused on those activities which meet the cities' 
most urgent revitalization needs; 
(3) develop overall income eligibility requirements for recipi-
ents of 
block grant supported rehabilitation; and 
(4) limit eligible rehabilitation work to that which is essential 
to restore the housing unit to a decent, safe, and sanitary or 
energy efficient condition, specifically prohibiting nonessential 
and luxury items, so that more homes needing basic repairs C
£
m 
be rehabilitated. 
PART 2—HOUSING ASSISTANCE PROGRAMS 
Contracts. 
94 Stat. 1624. 
42 use 1437c. 
94 Stat. 1625. 
42 use 1437/. 
HOUSING AUTHORIZATIONS 
SEC. 321. (a) The first sentence of 
section 5(c)(1) of the United States 
Housing Act of 1937 is amended by inserting immediately after 
"1980" the following: ", and by $906,985,000 on October 1, 1981". 
(b) The second sentence of section 5(cXl) of such Act is amended by 
striking out "Acts;" and all that follows through the period and 
inserting in lieu thereof the following: "Acts. In addition, the aggre-
gate amount which may be obligated over the duration of the 
contracts may not exceed $31,200,000,000 with respect to the addition-
al authority provided on October 1, 1980, and $18,087,370,000 with 
respect to the additional authority provided on October 1, 1981.". 
(c) Section 5(c) of 
such Act is amended by— 
(1) redesignating paragraphs (3), (4), and (5) as paragraphs (4), 
(5), and (6), respectively; and 
(2) inserting immediately after paragraph (2) the following: 
"(3)(A) Of the additional authority approved in appropriation Acts 
and made available on October 1, 1981, the Secretary shall make 
available at least $75,000,000 for assistance to projects under section 
14. 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 399 
"(B) Of the balance of the additional authority referred to in the 
preceding subparagraph which remains after deducting the amount 
to be provided for assistance to projects under section 14, the 
Secretary shall allocate such authority for use in different areas and 
communities in accordance with section 213(d) of the Housing and 
Community Development Act of 1974, except that on a national basis 
the Secretary may not enter into contracts aggregating— 
"(i) more than 45 per centum of such baleuice for existing units 
assisted under this Act; and 
"(ii) more than 55 per centum of such balance for newly 
constructed and substantially rehabilitated units assisted under 
this Act. 
"(C) After making allocations referred to in subparagraph (B), the 
Secretary shsM, to the extent allowable within the percentage limita-
tions conteiined in such subparagraph and within the available 
contract and budget authority, accommodate the preferences of units 
of general local government, which preferences shall be established 
after consultation with the appropriate public housing agencies, 
regarding (i) the mix among newly constructed, substantially reha-
bilitated, existing, or moderately rehabilitated units; (ii) the pro-
grams under which assistance is to be provided; and (iii) the extent to 
which such allocation should be used for comprehensive improve-
ment assistance under section 14.". 
(d) Section 9(c) of such Act is amended— 
(1) by striking out "and" after "on or after October 1,1979,"; 
and 
(2) by inserting before the period at the end thereof the 
following: ", and not to exceed $1,500,000,000 on or after October 
1,1981". 
(e) Section 213(d) of the Housing and Community Development Act 
of 1974 is amended by adding at the end thereof a new paragraph to 
read as follows: 
"(4) Notwithstanding any other provision of law, with respect to 
fiscal years beginning after September 30, 1981, the Secretary of 
Housing and Urban Development may not reteiin more than 15 per 
centum of the financial assistance which becomes available under 
programs described in subsection (aXD during any fiscal year. Any 
such financial assistance which is retciined shall be available for 
subsequent allocation to specific areas and communities, and may 
only be used for— 
"(A) unforeseeable housing needs, especially those brought on 
by natural disasters or special relocation requirements; 
"(B) support for the needs of the handicapped or for minority 
enterprise; 
"(C) providing for assisted housing as a result of the settlement 
of litigation; 
"(D) small research and demonstration projects; 
"(E) lower-income housing needs described in housing assist-
ance plans, including activities carried out under areawide 
housing opportunity plans; and 
"(F) innovative housing programs or alternative methods for 
meeting lower-income housing needs approved by the Secretary, 
including assistance for infrastructure in connection with the 
Indisui Housing Program.". 
(fKD The first sentence of section 201(h) of the Housing and 
Community Development Amendments of 1978 is amended— 
(A) by striking out "and" after "the fiscal year 1980,"; 
94 Stat. 1625. 
42 u s e 1437Z. 
42 use 1439. 
General local 
government 
preferences, 
accommodation. 
42 use 1437g. 
Financial 
assistance, 
retention. 
42 use 1439. 
Allocation 
use. 
1
2 use 
1715z-la. 
95 STAT. 400 
PUBLIC LAW 97-35—AUG. 13, 1981 
12 u s e 1715Z-1 
and note, 
1715z-la. 
1
2 use 
1715z-la. 
12 u s e 1701s, 
42 u s e 1451. 
Post, p. 403. 
(B) by inserting before the period at the end thereof the 
following: ", and not to exceed $4,000,000 for the fiscal year 
1982"; and 
(C) by striking out the comma immediately following "Act" 
and inserting in lieu thereof a closed parenthesis. 
(2) Section 201 of the Housing and Community Development 
Amendments of 1978 is amended— 
(A) by redesignating subsections (h) and (i) as subsections (j) 
and (k), respectively; and 
(B) by inserting the following new subsection after subsection 
(g): 
"(h) The Secretary may not use any of the assistance available 
under this section during any fiscal year beginning on or after 
October 1, 1981, to supplement any contract to make rental assist-
ance pajrments which was made pursuant to section 101 of the 
Housing and Urban Development Act of 1965.". 
(3) The third sentence of section 236(f)(3) of the National Housing 
Act, as redesignated by section 322(f)(7) of this part, is amended by 
striking out "September 30, 1981" and inserting in lieu thereof 
"September 30,1982". 
TENANT RENTAL PAYMENTS 
42 use 1437a. 
SEC. 322. (a) Section 3 of the United States Housing Act of 1937 is 
amended to read as follows: 
RENTAL PAYMENTS; DEFINITIONS 
"SEC. 3. (a) Dwelling units assisted under this Act shall be rented 
only to families who are lower income families at the time of their 
initial occupancy of such units. A family shall pay as rent for a 
dwelling unit assisted under this Act the highest of the following 
amounts, rounded to the nearest dollar: 
"(1) 30 per centum of the family's monthly adjusted income; 
"(2) 10 per centum of 
the family's monthly income; or 
"(3) if the family is receiving payments for welfare assistance 
from a public agency and a part of such payments, adjusted in 
accordance with the family's actual housing costs, is specifically 
designated by such agency to meet the family's housing costs, the 
portion of such payments which is so designated. 
"(b) When used in this Act: 
"(1) The term 'lower income housing' means decent, safe, and 
sanitary dwellings assisted under this Act. The term 'public housing' 
means lower income housing, and all necessary appurtenances 
thereto, assisted under this Act other than under section 8. When 
used in reference to public housing, the term 'lower income housing 
project' or 'project' means (A) housing developed, acquired, or assist-
ed by a public housing agency under this Act, and (B) the improve-
ment of any such housing. 
"(2) The term 'lower income families' means those families whose 
incomes do not exceed 80 per centum of the median income for the 
area, as determined by the Secretary with adjustments for smaller 
and larger families, except that the Secretary may establish income 
ceilings higher or lower than 80 per centum of the median for the 
area on the basis of the Secretary's findings that such variations are 
necessary because of prevailing levels of construction costs or unusu-
ally high or low family incomes. The term 'very low-income families' 
means lower income families whose incomes do not exceed 50 per 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 401 
centum of the median family income for the area, as determined by 
the Secretary with adjustments for smaller and larger families. 
"(3) The term 'families' includes families consisting of a single 
person in the case of (A) a person who is at least sixty-two years of age 
or is under a disability as defined in section 223 of the Social Security 
Act or in section 102 of the Developmental Disabilities Services and 42 use 423. 
Facilities Construction Amendments of 1970, or is handicapped, (B) a 42 use 6001. 
displaced person, (C) the remaining member of a tenant family, and 
(D) other single persons in circumstances described in regulations of 
the Secretary. In no event shall more than 15 per centum of the units 
under the jurisdiction of any public housing agency be occupied by 
single persons under clause (D). In determining priority for admission 
to housing under this Act, the Secretary shall give preference to those 
single persons who are elderly, handicapped, or displaced before 
those eligible under clause (D). The term 'elderly families' means 
families whose heads (or their spouses), or whose sole members, are 
persons described in clause (A). A person shall be considered handi-
capped if such person is determined, pursuant to regulations issued 
by the Secretary, to have an impairment which is expected to be of 
long-continued and indefinite duration, substantially impedes such 
person's ability to live independently, and is of such a nature that 
such ability could be improved by more suitable housing conditions. 
The term 'displaced person' means a person displaced by governmen-
tal action, or a person whose dwelling has been extensively damaged 
or destroyed as a result of a disaster declared or otherwise formally 
recognized pursuant to Federal disaster relief laws. Notwithstanding 
the preceding provisions of this subsection, the term 'elderly families' 
includes two or more elderly, disabled, or handicapped individuals 
living together, or one or more such individuals living with one or 
more persons determined under regulations of the Secretary to be 
essential to their care or well being. 
"(4) The term 'income' means income from all sources of each 
member of the household, as determined in accordance with criteria 
prescribed by the Secretary. 
"(5) The term 'adjusted income' means the income which remains 
after excluding such amounts or types of income as the Secretary 
may prescribe. In determining amounts to be excluded from income, 
the Secretary may, in the Secretary's discretion, take into account 
the number of minor children in the household and such other factors 
as the Secretary may determine are appropriate. 
"(6) The term 'public housing agency' means any State, county, 
municipality, or other governmental entity or public body (or agency 
or instrumentality thereof) which is authorized to engage in or assist 
in the development or operation of lower income housing. 
"(7) The term 'State includes the several States, the District of 
Columbia, the Commonwealth of Puerto Rico, the territories and 
possessions of the United States, the Trust Territory of the Pacific 
Islands, and Indian tribes, bands, groups, and Nations, including 
Alaska Indians, Aleuts, and Eskimos, of the United States. 
"(8) The term 'Secretary' means the Secretary of Housing and 
Urban Development. 
"(c) When used in reference to public housing: 
"(1) The term 'development' means any or all undertakings neces-
sary for planning, land acquisition, demolition, construction, or 
equipment, in connection with a lower income housing project. The 
term 'development cost' comprises the costs incurred by a public 
housing agency in such undertakings and their necessary financing 
(including the payment of carrying charges), and in otherwise carry-
95 STAT. 402 
PUBLIC LAW 97-35—AUG. 13, 1981 
42 
use 1437b, 
1437c, 1437g, 
14371. 
42 use 1437, 
1437b-1437d, 
1437g, 14371, 
1437J; 
94 Stat. 1625, 
42 use 1437/. 
42 use 1437d. 
42 use 1437f. 
Ante, p. 400. 
ing out the development of such project. Construction activity in 
connection with a lower income housing project may be confined to 
the reconstruction, remodeling, or repair of existing buildings. 
"(2) The term 'operation' means any or all undertakings appropri-
ate for management, operation, services, maintenance, security (in-
cluding the cost of security personnel), or financing in connection 
with a lower income housing project. The term also means the 
financing of tenant programs and services for families residing in 
lower income housing projects, particularly where there is maximum 
feasible participation of the tenants in the development and oper-
ation of such tenant programs and services. As used in this para-
graph, the term 'tenant programs and services' includes the develop-
ment and maintenance of tenant organizations which participate in 
the management of lower income housing projects; the training of 
tenants to manage and operate such projects and the utilization of 
their services in project management and operation; counseling on 
household management, housekeeping, budgeting, money manage-
ment, child care, and similar matters; advice as to resources for job 
training and placement, education, welfare, health, and other com-
munity services; services which are directly related to meeting tenant 
needs and providing a wholesome living environment; and referral to 
appropriate agencies in the community when necessary for the 
provision of such services. To the maximum extent available and 
appropriate, existing public and private agencies in the community 
shall be used for the provision of such services. 
"(3) The term 'acquisition cost' means the amount prudently 
required to be expended by a public housing agency in acquiring 
property for a lower income housing project.". 
(b) Sections 4, 5, 9, and 11 of such Act are amended by striking out 
"LOW-INCOME" where it appears in the caption accompanying each 
such section and by inserting in lieu thereof "LOWER INCOME". 
(c) Sections 2, 4, 5, 6, 9, 11, 12, and 14 of such Act are amended by 
striking out "low income" and "low-income" wherever they appear 
and inserting in lieu thereof "lower income". 
(d) Section 6(c)(2) of such Act is amended by striking out the phrase 
"at intervals of two years (or at shorter intervals where the Secretary 
deems it desirable)" and inserting in lieu thereof "no less frequently 
than annually". 
(e) Section 8 of such Act is amended— 
(1) by striking out paragraph (3) of subsection (c) and inserting 
in lieu thereof the following: 
"(3) The amount of the monthly assistance payment with respect to 
any dwelling unit shall be the difference between the maximum 
monthly rent which the contract provides that the owner is to receive 
for the unit and the rent the family is required to pay under section 
3(a) of this Act. Reviews of family income shall be made no less 
frequently than annually."; 
(2) by striking out paragraph (7) of subsection (c) and redesig-
nating paragraph (8) of such subsection as paragraph (7); 
(3) by striking out paragraphs (1), (2), and (3) of subsection (f) 
and redesignating paragraphs (4), (5), and (6) of such subsection 
as paragraphs (1), (2), and (3), respectively; 
(4) by striking out "The provisions of section 3(1), 5(e), and 6" in 
subsection (h) and inserting in lieu thereof "Sections 5(e) and 6"; 
(5) by striking out the comma after the word "Act" in subsec-
tion (h); and 
(6) by striking out "25 per centum of one-twelfth of the annual 
income of such family" in paragraph (3) of subsection (j) and 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 403 
inserting in lieu thereof "the rent the family is required to pay 
under section 3(a) of this Act". 
Ante, p. 400. 
(f) Section 236 of the National Housing Act is amended— 
12 use I7i5z-l. 
(1) by striking out "two years" in subsection (e) and inserting in 
lieu thereof "one year"; 
(2) by striking out "25 per centum of the tenant's income" in 
the second sentence of subsection (fKD and inserting in lieu 
thereof "30 per centum of the tenant's adjusted income"; 
(3) by striking out clause (ii) in the third sentence of subsection 
(f)(1) and inserting in lieu thereof the following: 
"(ii) to permit the charging of a rental for such dwelling 
units at such an amount less than 30 per centum of a 
tenant's adjusted income as the Secretary determines repre-
sents a proportionate decrease for the utility charges to be 
paid by such tenant, but in no case sheill such rental be lower 
than 25 per centum of a tenant's adjusted income.": 
(4) by striking out "25 per centum of their income' in para-
graph (2) of subsection (f) and inserting in lieu thereof "30 per 
centum of their adjusted income"; 
(5) by striking out "25 per centum of the tenant's income" in 
paragraph (2) of subsection (f) and inserting in lieu thereof "the 
highest of the following amounts, rounded to the nearest dollar: 
"(A) 30 per centum of the tenant's monthly adjusted 
income; 
"(B) 10 per centum of the tenant's monthly income; or 
"(C) if the family is receiving pajmients for welfare assist-
ance from a public agency and a part of such payments, 
adjusted in accordance with the family's actusd housing 
costs, is specifically designated by such agency to meet the 
family's housing costs, the portion of such pajrments which is 
so designated"; 
(6) by striking out the third sentence in paragraph (2) of 
sulDsection (f); 
(7) by striking out subparagraph (A) of subsection (f)(3) and 
redesignating subsection (f)(3XB) as subsection (f)(3); and 
(8) by striking out subsection (m) and inserting in lieu thereof 
the following: 
"(m) For the purpose of this section the term 'income' means 
income from all sources of each member of the household, as 
determined in accordance with criteria prescribed by the Secretary. 
In determining amounts to be excluded from income, the Secretary 
may, in the Secretary's discretion, take into account the number of 
minor children in the household and such other factors as the 
Secretary may determine are appropriate.". 
(g) Section 101 of the Housing and Urban Development Act of 1965 12 use I70is, 
is amended- 
42 use 1451. 
(1) by striking out paragraph (2) in subsection (c) and inserting 
in lieu thereof the following: 
"(2) 'income' means income from all sources of each member of 
the household, as determined in accordance with criteria pre-
scribed by the Secretary. In determining amounts to be excluded 
from income, the Secretary may, in the Secretary's discretion, 
take into account the number of minor children in the household 
and such other factors as the Secretary may determine are 
appropriate."; 
(2) by striking out the first sentence of subsection (d) and 
inserting in lieu thereof the following: "The amount of the 
annual payment with respect to any dwelling unit shall be the 
95 STAT. 404 
PUBLIC LAW 97-35—AUG. 13, 1981 
42 u s e 1437a 
note. 
12 u s e 1701s 
note. 
Rent payments, 
determination. 
42 u s e 1437a 
note. 
lesser of (1) 70 per centum of the fair market rent, or (2) the 
amount by which the fair market rental for such unit exceeds 30 
per centum of 
the tenant's adjusted income."; and 
(3) by striking out ", except the elderly, at intervals of two 
years (or at shorter intervals in cases where the Secretary may 
deem it desirable)" in paragraph (2) of subsection (e), and bv 
inserting in lieu thereof "no less frequently than annually*. 
(h) Title If of the Housing and C!onununity Development Amend-
ments of 1979 is amended— 
(1) by striking out subsection (c) in section 202; and 
(2) by striking out subsection (c) in section 203. 
(iXD In determining the rent to be paid by tenants who are 
occupying housing assisted under the authorities amended by this 
section on the effective date of this Act, the Secretary, notwithstand-
ing any other provision of this section, may provide for delayed 
applicability, or for staged implementation, of the procedures for 
determining rent required by the provisions of subsections (a) 
through (h) of 
this section if the Secretary determines that immediate 
application of such procedures would be impracticable, would violate 
the terms of existing leases, or would result in extraordinary hard-
ship for any class of tenants. The Secretary shall provide that the 
amount of rent paid by any family shall not increase, as a result of 
the amendments made by this section and as a result of any other 
provision of Federal law redefining which governmental benefits are 
required to or may be considered as income, by more than 10 per 
centum during any 12-month period unless the increase above such 
10 per centum is attributed solely to increases in income which are 
not caused by such amendments or by such redefinitions. The 
limitation contained in the preceding sentence shall remain in effect 
and may not be changed or superceded except by another provision of 
law which amends tms subsection. Notwithstanding any other provi-
sion of this section, application of the procedures for determining 
rent contained in this section shall not result in a reduction in the 
amount of rent paid by any tenant below the amount paid by such 
tenant immediately precedmg the effective date of 
this Act. 
(2) Tenants of housing assisted under the provisions of law amend-
ed by this section whose occupancy begins after the effective date of 
this Act shall be subject to immediate rent payment determinations 
in accordance with the amendments contained in subsections (a) 
through (h), except that the Secretary may provide for delayed 
applicability, or for staged implementation, of these requirements for 
such tenants if the Secretary determines that immediate application 
of the requirements of this section would be impracticable, or that 
uniform procedures for assessing rents would significantly decrease 
administrative costs and burdens. 
(3) The Secretary's actions and determinations and the procedures 
for making determinations pursuant to this subsection shall not be 
reviewable in any court. The provisions of subsections (a) through (h) 
shall be implemented and fully applicable to all affected tenants no 
later than five years following the date of enactment of this Act, 
except that the Secretary may extend the time for implementation if 
the Secretary determines that full implementation would result in 
extraordinary hardship for any class of tenants. 
42 u s e 1437 
note. 
INCOME EUGIBIUTY 
SEC. 323. The United States Housing Act of 1937 is amended by 
adding at the end thereof the following: 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 405 
Contract rents, 
increases, 
limitation. 
"INCOME EUGIBIUTY FOR ASSISTED HOUSING 
"SEC. 16. (a) Not more than 10 per centum of the dwelling units 42 use I437n. 
which were available for occupancy under public housing annual 
contributions contracts and section 8 housing assistance payments 
contracts under this Act before the effective date of the Housing and 
Community Development Amendments of 1981, and which will be Ante. p. 384. 
leased on or after such effective date shall be available for leasing by 
lower income families other than very low-income families. 
"Ot)) Not more than 5 per centimi of the dwelling units which 
become available for occupancy under public housing annual contri-
butions contracts and section 8 housing assistance payments con-
tracts under this Act on or after the effective date of the Housing and 
Community Development Amendments of 1981 shall be available for 
leasing by lower income families other than very low-income fami-
lies.". 
COST REDUCTION IN ASSISTED HOUSING 
SEC. 324. Section 8 of the United States Housing Act of 1937 is 42 use I437f. 
amended— 
(1) by inserting after the first sentence of subsection (bX2) the 
following: "To increase housing opportunities for very low-
income families, the Secretary shall assure that newly con-
structed housing to be assisted under this section is modest in 
design."; 
(2) by adding at the end of subsection (cX2) the following: 
"(D) Notmthstanding the foregoing, the Secretary shall limit 
increases in contract rents for newly constructed or substantially 
rehabilitated projects assisted under this section to the amount of 
operating cost increases incurred with respect to comparable rent«d 
dwelling units of various sizes and tjrpes in the S£ime market area 
which are suitable for occupancy by families assisted under this 
section. Where no comparable dwelling units exist in the same 
market area, the Secretary shall have authority to approve such 
increases in accordance with the best available data regarding 
operating cost increases in rental dwelling units."; and 
(3) by adding at the end thereof the following: 
"(1) After selection of a proposal involving newly constructed or 
substantially rehabilitated units for assistance under this section, the 
Secretary shall limit cost and rent increases, except for adjustments 
in rent pursuant to section 8(c)(2), to those approved by the Secretary. 
The Secretary may approve those increases only for unforeseen 
factors beyond the owner's control, design chsmges required by the 
Secretary or the local government, or changes in financing approved 
by the Secretary. 
"(m) For the purpose of achieving the lowest cost in providing units 
in newly constructed projects assisted under this section, the Secre-
tary shall give a preference in entering ihto contracts under this 
section for projects which are to be located on specific tracts of land 
provided by States or units of local government if the Secretary 
determines that the tract of land is suitable for such housing, and 
that affording such preference will be cost effective. 
"(n) In msJdng assistance available under subsection (e)(5) and 
subsection (i), the Secretary may provide assistance with respect to 
residential properties in which some or all of the dwelling units do 
not contain bathroom or kitchen facilities, i
f
— 
95 STAT. 406 
PUBLIC LAW 97-35—AUG. 13, 1981 
"(1) the property is located in an area in which there is a 
significant demand for such units, as determined by the Secre-
tary; and 
(2) the unit of 
general local government in which the property 
is located and the local public housing agency approve of such 
units being utilized for such purpose. 
Waiver 
The Secretary may waive, in appropriate cases, the limitation and 
preference described in the second and third sentences of section 
Ante, p. 400. 
3(b)(3) with respect to the assistance made available under this 
subsection.". 
AID FOR EUGIBLE FAMILIES 
42 use I437f. 
SEC. 325. Section 8 of the United States Housing Act of 1937 is 
amended— 
(1) by adding at the end of subsection (b)(2) the following: "Each 
contract to make assistance payments for newly constructed or 
substantially rehabilitated housing assisted under this section 
entered into after the date of enactment of the Housing and 
Ante, p. 384. 
Community Development Amendments of 1981 shall provide 
that during the term of the contract the owner shall make 
available for occupancy by families which are eligible for assist-
ance under this section, at the time of their initial occupancy, the 
number of units for which assistance is committed under the 
contract."; and 
(2) by inserting after "nonhandicapped persons" in the second 
sentence of subsection (c)(5) the following: "which are not subject 
to mortgages purchased under section 305 of the National Hous-
1
2 use 1720. 
ingAct". 
42 u s e 1437f. 
Survey. 
42 u s e 1437f 
note. 
Report to 
eongress. 
Regulations. 
42 u s e 1437f 
note. 
MISCELLANEOUS HOUSING ASSISTANCE PROVISIONS 
SEC. 326. (a) Section 8(c) of the United States Housing Act of 1937 is 
amended by adding at the end thereof the following: 
"(8) Each contract under this section shall provide that the owner 
will notify tenants at least 90 days prior to the expiration of the 
contract of any rent increase which may occur as a result of the 
expiration of such contract.". 
(b)(1) Within one year after the date of enactment of this Act, the 
Secretary of Housing and Urban Development shall conduct a survey 
to determine the number of projects which are assisted under section 
8 of the United States Housing Act of 1937 and are owned by 
developers or sponsors with five-year annual contributions contracts 
who plan to withdraw from the section 8 program when their 
contracts expire and who will increase rents in those projects to levels 
that the current residents of those projects will not be able to afford. 
Where such survey indicates that an owner intends to withdraw from 
the program, the Secretary shall notify affected residents of possible 
rent increases. 
(2) Not later than one year after the date of the enactment of this 
Act, the Secretary shall transmit to the Congress a report indicating 
alternative methods which may be utilized for recapturing the cost to 
the Federal Government of front-end investment in those units which 
are removed from the section 8 program. 
(c) The Secretary of Housing and Urban Development, after consul-
tation with the Attorney General, shall develop regulations to pre-
vent possible conflicts of interest on the part of Federal, State, and 
local government officials with regard to participation in projects 
assisted under section 8 of the United States Housing Act of 1937, and 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 407 
shall make such r^ulations effective not later than 180 days after 
the date of 
enactment of 
this Act. 
(dXD The Secretary of Housing and Urban Development shall 
permit public housing agencies to retain, out of judgments obtained 
by them in recovering amounts wrongfully paid as a result of fraud 
and abuse in the housing assistance program under section 8 of the 
United States Housing Act of 1937, an amoimt equal to the greater of 
(A) the legal expenses incurred in obtaining such judgments, or (B) 50 
per centum of the amount actually collected on the judgments. 
(2) The Secretary of Housing and Urban Development shall include 
in the annual report under section 8 of the Department of Housing 
and Urban Development Act a summary of cases brought to ite 
attention by public housing authorities for prosecution or civil action, 
and shall describe the handling of such cases by such authorities and 
by the Department of Housing and Urban Development and the 
resolution of 
such cases in the court system. 
(e)(1) Section 8(dXlXB) of the United States Housing Act of 1937 is 
amended to read as follows: 
"(BXi) the lease between the tenant and the owner shall be for 
at least one year or the term of such contract, whichever is 
shorter, and shall contain other terms and conditions specified 
by the Secretary; and 
"(ii) the owner shall not terminate the tenancy except for 
serious or repeated violation of the terms and conditions of the 
lease, for violation of applicable Federal, State, or local law, or 
for other good cause;". 
(2) The amendment made by paragraph (1) shall apply with respect 
to leases entered into on or after October 1,1981. 
42 u s e 1437f 
note. 
42 use 1437f. 
42 u s e 1437f 
note. 
RENT SUPPLEMENTS 
SEC. 327. (a) Section 101(1) of the Housing and Urban Development 
Act of 1965 is amended to read as follows: 
"(1) Notwithstanding the provisions of subsection (a) and any other 
provision of law, the Secretary may utilize additional authority under 
section 5(c) of the United States Housing Act of 1937 made available 
by appropriation Acts on or after October 1, 1979, to supplement 
assistance authority available imder this section.". 
(b) The second sentence of section 101(d) of such Act is repealed. 
12 use 1701s. 
94 Stat. 1624. 
42 use 1437c. 
SECTION 235 AMENDMENTS 
94 Stat. 1630. 
12 u s e 1715z. 
SEC. 328. (a) Section 235(cX2XA) of the National Housing Act is 
amended by striking out "ceases for a period of 90 continuous days or 
more makmg payments required under the mortgage, loan, or ad-
vance of 
credit secured by such a property, or". 
(b) Section 235(hXl) of such Act is amended by adding the following 
new sentences at the end thereof: "The Secretary shall not enter into 
new contracts for assistance payments under this section after March 
31,1982, except pursuant to a firm commitment issued on or before 
March 31, 1982, or pursuant to other commitments issued by the 
Secretary prior to June 30, 1981, reserving funds for housing to be 
assisted imder this section where such housing is included in a project 
pursuant to section 119 of the Housing and Community Development 
Act of 1974. In no event may the Secretary enter into any new 42 use 5318 
contract for assistance payments under this section after September 
30,1983.". 
89-194 O—82 
28:QL3 
95 STAT. 408 
PUBLIC LAW 97-35—AUG. 13, 1981 
94 
Stat. 1631. 
12 
use 
1715z. 
(c) Section 235(q)(14) of such Act is amended by striking out "ceases 
for a period of 90 continuous days or more making payments on the 
mortgage, loan, or advance of credit secured by the property, or". 
94 Stat. 1637. 
42 u s e 1436a. 
Resident aliens. 
94 Stat. 103. 
94 Stat. 105. 
94 Stat. 107. 
94 Stat. 107. 
"Financial 
assistance." 
42 u s e 1437 
note. 
12 u s e 1715z, 
1715Z-1. 
12 u s e 1701s, 
42 u s e 1451. 
42 u s e 1436a 
note. 
94 Stat. 107. 
Supra. 
RESTRICTION ON USE OF ASSISTED HOUSING 
SEC. 329. (a) Section 214 of the Housing and Community Develop-
ment Act of 1980 is amended to read as follows: 
"RESTRICTION O N U S E OP ASSISTED HOUSING 
"SEC. 214. (a) Notwithstanding any other provision of law, the 
Secretary of Housing and Urban Development may not make finan-
cial assistance available for the benefit of any alien unless that alien 
is a resident of the United States and is— 
"(1) an alien lawfully admitted for permanent residence as an 
immigrant as defined by sections 101(a)(15) and 101(aX20) of the 
Immigration and Nationality Act (8 U.S.C. 1101(a)(15) and 8 
U.S.C. 1101(a)(20)), excluding, among others, alien visitors, tour-
ists, diplomats, and students who enter the United States tempo-
rarily with no intention of abandoning their residence in a 
foreign country; 
"(2) an alien who entered the United States prior to June 30, 
1948, or such subsequent date as is enacted by law, has continu-
ously maintained his or her residence in the United States since 
then, and is not ineligible for citizenship, but who is deemed to be 
lawfully admitted for permanent residence as a result of an 
exercise of discretion by the Attorney General pursuant to 
section 249 of the Immigration and Nationality Act (8 U.S.C. 
1259); 
"(3) an alien who is lawfully present in the United States 
pursuant to an admission under section 207 of the Immigration 
and Nationality Act (8 U.S.C. 1157) or pursuant to the granting of 
asylum (which has not been terminated) under section 208 of 
such Act (8 U.S.C. 1158); 
"(4) an alien who is lawfully present in the United States as a 
result of an exercise of discretion by the Attorney General for 
emergent reasons or reasons deemed strictly in the public inter-
est pursuant to section 212(d)(5) of the Immigration and Nation-
ality Act (8 U.S.C. 1182(d)(5)); or 
"(5) an alien who is lawfully present in the United States as a 
result of the Attorney General's withholding deportation pursu-
ant to section 243(h) of the Immigration and Nationality Act (8 
U.S.C. 1253(h)). 
"(b) For purposes of this section the term 'financial assistance' 
means financial assistance made available pursuant to the United 
States Housing Act of 1937, section 235 or 236 of the National 
Housing Act, or section 101 of the Housing and Urban Development 
Act of 1965.". 
(b) An alien who is lawfully present in the United States as a result 
of being granted conditional entry pursuant to section 203(a)(7) of the 
Immigration and Nationalilty Act (8 U.S.C. 1153(a)(7)) before April 1, 
1980, because of persecution or fear of persecution on account of race, 
religion, or political opinion or because of being uprooted by cata-
strophic natural calamity shall be deemed, for purposes of section 214 
of the Housing and Community Development Act of 1980, to be an 
alien described in section 214(a)(3) of such Act. 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 409 
PAYMENT FOR DEVELOPMENT MANAGERS 
SEC. 329A. The Secretary of Housing and Urban Development shall 42 use I437j-i. 
develop and implement a revised fee schedule for development 
managers of lower income housing projects assisted under the United 
States Housing Act of 1987 so that the percentage limitation applica-
ble to fees chargeable in connection with smaller projects is increased 
to a minimum level which is practicable. 
42 u s e 1437 
note. 
REVIEW OF OPERATING SUBSIDY FORMULA 
SEC. 329B. The Secretary of Housing and Urban Development shall 
review the administration of the operating subsidy program under 
section 9 of the United States Housing Act of 1937, including an 42 use I437g. 
examination of alternative methods for distributing operating subsi-
dies which provide incentives for efficient management, full rent 
collection, and improved maintenance of projects developed under 
the United States Housing Act of 1937. Not later than March 1,1982, 
the Secretary of Housing and Urban Development shall transmit a 
report to the Congress on the results of such review. 
Report to 
eongress. 
ENERGY EFFICIENCY EFFORTS 
SEC. 329C. Section 201 of the Housing and Community Develop-
ment Amendments of 1978 is amended— 
(1) in subsection (fXD, by striking out "and" at the end of 
subparagraph (B), by striking out the period at the end of 
subparagraph (C) and inserting in lieu thereof "; and", and by 
adding at the end thereof the following: 
"(D) an amount determined by the Secretary to be neces-
sary to carry out a plan to upgrade the project to meet cost-
effective energy efficiency standards prescribed by the Sec-
retary."; and 
(2) by inserting after subsection (h) the following: 
"(i) Notwithstanding any other provision of law, in exercising any 
authority relating to the approval or disapproval of rentals charged 
tenants residing in projects which are eligible for assistance under 
this section, the Secretary— 
"(1) shall consider whether the mortgagor could control in-
creases in utility costs by securing more favorable utility rates, 
by undertaking energy conservation measures which are finan-
cially feasible and cost effective, or by taking other financially 
feasible and cost-effective actions to increase energy efficiency or 
to reduce energy consumption; and 
"(2) may, in his discretion, adjust the amount of a proposed 
rental increase where he finds the mortgagor could exercise such 
control.". 
1
2 use 
1715z-la. 
RECOGNITION OF KANSAS DEPARTMENT OP ECONOMIC DEVELOPMENT 
SEC. 329D. The Secretary of Housing and Urban Development shall 
permit the Kansas Department of Economic Development to partici-
pate as a public housing agency for the purposes of programs carried 
out under the United States Housing Act of 1937 and as a State 
agency for the purpose of section 883.203 of title 24 of the Code of 
Federal Regulations as in effect June 1,1981. 
42 u s e 1437 
note. 
95 STAT. 410 
PUBLIC LAW 97-35—AUG. 13, 1981 
12 u s e 2294a. 
12 u s e 2294. 
94 Stat. 1624. 
42 u s e 1437c. 
PURCHASE OF PHA OBLIGATIONS 
SEC. 329E. In addition to any authority provided before October 1, 
1981, the Secretary of Housing and Urban Development may, on and 
after October 1, 1981, enter into contracts for periodic payments to 
the Federal Financing Bank to offset the costs to the Bank of 
purchasing obligations (as described in the first sentence of section 
16(b) of the Federal Financing Bank Act of 1973) issued by local public 
housing agencies for purposes of financing public housing projects 
authorized by section 5(c) of the United States Housing Act of 1937. 
Notwithstanding any other provision of law, such contracts may be 
entered into only to the extent approved in appropriation Acts, and 
the aggregate amount which may be obligated over the duration of 
such contracts may not exceed $400,000,000. There are hereby au-
thorized to be appropriated any amounts necessary to provide for 
such payments. The authority to enter into contracts under this 
subsection shall be in lieu of any authority (except for authority 
provided specifically to the Secretary before October 1, 1981) of the 
Secretary to enter into contracts for such purposes under section 
16(b) of the Federal Financing Bank Act of 1973. 
1
2 use 
1715z-lb. 
94 Stat. 1625. 
42 u s e 1437/. 
TENANT PARTICIPATION 
SEC. 329F. Section 202(b)(1) of the Housing and Communitv Devel-
opment Amendments of 1978 is amended by striking out owner's 
action" and inserting in lieu thereof "owner's request for rent 
increase, conversion of residential rental units to any other use 
(including commercial use or use as a unit in any condominium or 
cooperative project), partial release of security, or major physiced 
alterations". 
FIRE SAFETY 
SEC. 329G. Section 14(i)(l) of the United States Housing Act of 1937 
is amended by inserting the following before the period at the end of 
the first sentence thereof: ", especially emergency and special pur-
pose needs which relate to fire safety standards". 
Contracts. 
42 u s e 1437f. 
Maximum 
monthly 
rent. 
SECTION 8 ASSISTANCE FOR MANUFACTURED HOMES 
SEC. 329H. (a) Section 8(j) of the United States Housing Act of 1937 
is amended to read as follows: 
"(j)(l) The Secretary may enter into contracts to make assistance 
payments under this subsection to assist lower income families by 
making rental assistance payments on behalf of any such family 
which utilizes a manufactured home as its principal place of resi-
dence. Such payments may be made with respect to the rental of the 
real property on which there is located a manufactured home which 
is owned by any such family or with respect to the rental by such 
family of a manufactured home and the real property on which it is 
located. In carrying out this subsection, the Secretary may— 
"(A) enter into annual contributions contracts with public 
housing agencies pursuant to which such agencies may enter into 
contracts to make such assistance pa3rments to the owners of 
such real property, or 
"(B) enter into such contracts directly with the owners of such 
real property. 
"(2)(A) A contract entered into pursuant to this paragraph shall 
establish the maximum monthly rent (including maintenance and 
management charges) which the owner is entitled to receive for the 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 411 
Maximum 
monthly 
rent. 
space on which a manufactured home is located and with respect to 
which assistance payments are to be made. The maximum monthly 
rent shall not exceed by more than 10 per centum the fair market 
rental established by the Secretary periodically (but not less than 
annually) with respect to the market area for the rental of real 
property suitable for occupancy by families assisted under this 
paragraph. 
"(B) The amount of any monthly assistance payment with respect 
to any family which rents real property which is assisted under this 
paragraph, and on which is located a manufactured home which is 
owned by such family shall be the difference between the rent the 
family is required to pay under section 3(a) of this Act and the sum 42 U
S
C I437a. 
o
f
— 
"(i) the monthly payment made by such family to amortize the 
cost of purchasing the manufactured home; 
"(ii) the monthly utility payments made by such family, 
subject to reasonable limitations prescribed by the Secretary; 
and 
"(iii) the maximum monthly rent permitted with respect to the 
real property which is rented by such family for the purpose of 
locating its manufactured home; 
except that in no case may such assistance exceed the total amount of 
such maximum monthly rent. 
"(3)(A) Contracts entered into pursuant to this paragraph shall 
establish the maximum monthly rent permitted with respect to the 
manufactured home and the real property on which it is located and 
with respect to which assistance payments are to be made. The 
maximum monthly, rent shall not exceed by more than 10 per centum 
the fair market rental established by the Secretary periodically (but 
not less than annually) with respect to the market area for the rental 
of a manufactured home and the real property on which it is located 
suitable for occupancy by families assisted under this paragraph, 
except that the maximum monthly rent may exceed the fair market 
rental by more than 10 but not more than 20 per centum where the 
Secretary determines that special circumstances warrant such 
higher maximum rent. 
"(B) The amount of any monthly assistance payment with respect 
to any family which rents a manufactured home and the real 
property on which it is located and which is assisted under this 
paragraph shall be the difference between the rent the family is 
required to pay under section 3(a) of this Act and the sum of^ 
"(i) the monthly utility payments made by such family, subject 
to reeisonable limitations prescribed by the Secretary; and 
"(ii) the maximum monthly rent permitted with respect to the 
manufactured home and the real property on which it is located. 
"(4) The provisions of subsection (cX2) of this section shall apply to 
the adjustments of maximum monthly rents under this subsection. 
"(5) Each contract entered into under this subsection shall be for a Contract terms. 
term of not less than one month and not more than 180 months, 
except that in any case in which the manufactured home park is 
substantially rehabilitated or newly constructed, such term may not 
be less than 240 months, nor more than the maximum term for a 
manufactured home loan permitted under section 2(b) of the National 
Housing Act. 
"(6) The Secretary may carry out this subsection without regard to 
whether the manufactured home park is existing, substantially 
rehabilitated, or newly constructed. 
Post, p. 414. 
95 STAT. 412 
PUBLIC LAW 97-35—AUG. 13, 1981 
"(7) In the case of any substantially rehabilitated or newly con-
structed manufactured home park containing spaces with respect to 
which assistance is made under this subsection, the principal amount 
of 
the mortgage attributable to the rental spaces within the park may 
not exceed an amount established by the Secretary which is equal to 
or less than the limitation for manufactured home parks descrioed in 
Post, p. 416. 
section 207(cX3) of the National Housing Act, and the Secretanr may 
increase such limitation in high cost areas in the manner described in 
such section. 
"(8) The Secretary may prescribe other terms and conditions which 
are necessary for tne purpose of carrying out the provisions of this 
subsection and which are consistent with the purposes of this 
subsection.". 
HOMEOWNERSHIP AND FIRE SAFETY STUDIES 
SEC. 3291. (aXD The Secretary of Housing and Urban Development 
shall conduct a study o
f
—
-
(A) the extent, if any, to which section 8(cX7) of the United 
42 use i437f. 
States Housing Act of 1937 has been utilized; 
(B) the results of 
any such utilization; 
(C) if such section has not been utilized or utilized only on a 
very restricted basis, the reasons why it has not been utilized 
more extensively; and 
(D) different methods by which such section could be utilized 
for increasing homeownership opportunities for lower income 
families. 
(2) As a result of such study, the Secretary shall, not later than 
January 1,1982, transmit to the Congress recommendations regard-
ing the establishment of a demonstration project in which the 
Secretary would use section 8(cX7) of such Act for the purpose of 
increasing homeownership opportunities for lower income families. 
Such proposal shall include, but not be limited to, provisions for— 
(A) targeting such project so that existing housing may be 
preserved to the maximum extent practicable; and 
(B) recovering assistance in the case of resale of 
the property or 
in other appropriate cases. 
Report to 
(b) The Secretary shall conduct a study to the extent to which lower 
Congress. 
income housing projects do not meet applicable fire safety standards 
and report to the Congress with respect to such study not later than 
one year after the date of 
the enactment of this Act. 
PART 3—PROGRAM AMENDMENTS AND EXTENSIONS 
Recommenda-
tions, 
transmittal to 
Congress. 
94 Stat. 1638. 
12 use 1703. 
12 u s e 1715h. 
12 u s e 1715i. 
12 0 ^ ltl54. 
FEDERAL HOUSING ADMINISTRATION EXTENSIONS 
SEC. 331. (a) Section 2(a) of the National Housing Act is amended by 
striking out "October 1, 1981" in the first sentence and inserting in 
lieu thereof "October 1,1982". 
O
t
>
) Section 217 of such Act is amended by striking out "September 
30,1981" and inserting in lieu thereof "September 30,1982". 
(c) Section 221(f) of such Act is amended by striking out "September 
30,1981" in the fifth sentence and inserting in lieu thereof Septem-
ber 30,1982". 
(dXD Section 235(m) of such Act is amended by striking out 
"September 30, 1981" and inserting in lieu thereof "September 30, 
1982". 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 413 
(2) Section 235(q)(l) of such Act is amended by striking out "June 1, 
1981," in the fourth sentence thereof and inserting in lieu thereof 
"September 30,1982,". 
(e) Section 236(n) of such Act is amended by striking out "Septem-
ber 30, 1981" and inserting in Heu thereof "September 30, 1982". 
(f) Section 244(d) of 
such Act is amended— 
(1) by striking out "September 30,1981" in the first sentence 
and inserting in lieu thereof "September 30,1982"; and 
(2) by striking out "October 1,1981" in the second sentence and 
inserting in lieu thereof "October 1,1982". 
(g) Section 245(a) of such Act is amended by striking out "Septem-
ber 30, 1981" and inserting in lieu thereof "September 30, 1982". 
(h)(1) Section 809(f) of such Act is amended by striking out "Septem-
ber 30, 1981" in the second sentence and inserting in lieu thereof 
"September 30,1982". 
(2) Section 810(k) of such Act is amended by striking out "Septem-
ber 30, 1981" in the second sentence and inserting in lieu thereof 
"September 30,1982". 
(i) Section 1002(a) of such Act is amended by striking out "Septem-
ber 30, 1981" in the second sentence and inserting in lieu thereof 
"September 30,1982". 
(j) Section 1101(a) of such Act is amended by striking out "Septem-
ber 30, 1981" in the second sentence and inserting in lieu thereof 
"September 30,1982". 
94 Stat. 1631. 
12 u s e 1715z. 
94 Stat. 1638. 
12 u s e 1715Z-1. 
12 u s e 1715Z-9. 
1
2 use 
1715Z-10. 
12 u s e 1748h-l. 
94 Stat. 1639. 
12 u s e 1748h-2. 
12 u s e 1749bb. 
12 u s e 1749aaa. 
FLEXIBLE INTEREST RATES 
SEC. 332. Section 3(a)(1) of Public Law 90-301 is amended by striking 
out "October 1,1981" and inserting in lieu thereof "October 1,1982'" 
94 Stat. 1639. 
12 u s e 1709-1. 
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION 
SEC. 333. (a)(1) Section 305(c) of the Federal National Mortgage 
Association Charter Act is amended— 
(A) by striking out "and" after "1978,"; and 
(B) by inserting the following before the period at the end 
thereof:", and by $1,100,000,000 on October 1,1981". 
(2) Section 305 of such Act is amended by adding the following new 
subsection at the end thereof: 
"(k) During fiscal year 1982, the Association may not enter into 
commitments to purchase under this section mortg£^es with an 
aggregate principal amount in excess of $1,973,000,000, except that 
the Association may not enter into commitments to purchase mort-
gages secured by projects which do not contain units assisted under 
section 8 of the United States Housing Act of 1937 with an aggregate 
principal amount in excess of $580,000,000.". 
(3) Section 306(g) of 
such Act is amended— 
(A) by inserting "(1)" after "(g)"; 
(B) by striking out "(1)" and "(2)" in the first sentence and 
inserting in lieu thereof "(i)" and "(ii)", respectively; and 
(C) by adding the following new paragraph at the end thereof: 
"(2) During fiscal year 1982, the Association may not enter into 
commitments to issue guarantees under this subsection in an aggre-
gate amount in excess of $69,542,000,000.". 
(bXD In entering into commitments to purchase below-market, 
tandem plan mortgages during the period beginning on the date of 
the enactment of this Act and ending October 1,1982, under section 
305 of the Federal National Mortgage Association Charter Act, the 
12 u s e 1720. 
Mortgage 
purchases. 
42 u s e 1437f. 
12 u s e 1721. 
12 u s e 1720 
note. 
95 STAT. 414 
PUBLIC LAW 97-35—AUG. 13, 1981 
Government National Mortgage Association may enter into such 
commitments only with respect to multifamily projects for which 
firm commitments for mortgage insurance under title II of the 
1
2 use 1707. 
National Housing Act have been issued. 
(2) The Secretary of Housing and Urban Development shall con-
tinue to process applications for mortgage insurance for multifamily 
projects under title II of the National Housing Act for a period of at 
least 90 days beginning on October 1,1981. 
94 Stat. 1639. 
12 u s e 1735c. 
GENERAL INSURANCE FUND 
SEC. 334. Section 519(f) of the National Housing Act is amended by 
inserting the following before the period at the end thereof: ", which 
amount shall be increased by $126,673,000 on October 1, 1981". 
UMITATION ON INSURANCE AUTHORITY 
SEC. 335. Title V of the National Housing Act is amended by adding 
the following new section at the end thereof: 
"UMITATION ON INSURANCE AUTHORITY 
12 use i735f-9. 
"SEC. 531. During fiscal year 1982, the Secretary may not enter into 
commitments to insure under this Act loans and mortgages with an 
aggregate principal amount in excess of $41,000,000,000.". 
HOUSING FOR THE ELDERLY 
1
2 use l70iq. 
SEC. 336. Section 202(a)(4XC) of the Housing Act of 1959 is amended 
by inserting the following before the period at the end of the second 
sentence: , and not more than $850,848,000 may be approved in 
appropriation Acts for such loans with respect to fiscal year 1982". 
94 Stat. 1639. 
1
2 use 
1701Z-1. 
RESEARCH AUTHORIZATIONS 
SEC. 337. The second sentence of section 501 of the Housing and 
Urban Development Act of 1970 is amended bv striking out "and not 
to exceed $51,000,000 for the fiscal year 1981 and inserting in lieu 
thereof "not to exceed $51,000,000 for the fiscal year 1981, and not to 
exceed $35,000,000 for the fiscal year 1982". 
Insurance to 
financial institu-
tions. 
12 u s e 1703. 
PROPERTY IMPROVEMENT AND MANUFACTURED HOME LOANS 
SEC. 338. (a) Section 2(b) of the National Housing Act is amended to 
read as follows: 
"(b)(1) No insurance shall be granted under this section to any such 
financial institution with respect to any obligation representing any 
such loan, advance of credit, or purchase by it if the amoimt of such 
loan, advance of credit, or purchase exceeds— 
"(A) $17,500 ($20,000 where financing the installation of a solar 
energy system is involved) if made for the purpose of financing 
alterations, repairs and improvements upon or in connection 
with existing single-family structures or manufactured homes; 
"(B) $43,750 or an average amount of $8,750 per family unit 
($50,000 and $10,000, respectively, where financing the installa-
tion of a solar energy system is involved) if made for the purpose 
of financing the alteration, repair, improvement, or conversion of 
an existing structure used or to be used as an apartment house or 
a dwelling for two or more families; 
PUBLIC LAW 97-35—AUG. 13,1981 
95 STAT. 415 
"(C) $22,500 ($35,000 in the case of a manufactured home 
composed of two or more modules) if made for the purpose of 
financing the purchase of a manufactured home; 
"(D) $35,000 ($47,500 in the case of a manufactured home 
composed of two or more modules) if made for the purpose of 
financing the purchase of a manufactured home and a suitably 
developed lot on which to place the home; 
"(E) such an amount as may be necessary, but not exceeding 
$12,500, if made for the purpose of financing the purchase, by an 
owner of a manufactured home which is the principal residence 
of that owner, of a suitably developed lot on which to place that 
manufactured home, and if the owner certifies that he or she will 
place the manufactured home on the lot acquired with such loan 
within six months after the date of such loan; 
"(F) $15,000 per family unit if made for the purpose of financ-
ing the preservation of an historic structure; and 
(G) such principal amount as the Secretary may prescribe if 
made for the purpose of financing fire safety equipment for a 
nursing home, extended health care facility, intermediate health 
care facility, or other comparable health care facility. 
"(2) Because of prevailing higher costs, the Secretary may, by 
regulation, in Alaska, Guam, or Hawaii, increase any dollar amount 
limitation on manufactured homes or manufactured, home lot loans 
contained in this subsection by not to exceed 40 per centum. In other 
areas where needed to meet higher costs of land acquisition, site 
development, and construction of a permanent foundation in connec-
tion with the purchase of a manufactured home or lot, the Secretary 
may, by regulation, increase any dollar amount limitation otherwise 
applicable by an additional $7,500. 
(3) No insurance shall be granted under this section to any such 
financial institution with respect to any obligation representing any 
such loan, advance of credit, or purchase by it if the term to maturity 
of such loan, advance of credit or purchase exceeds— 
"(A) fifteen years and thirty-two days if made for the purpose 
of financing alterations, repairs, and improvements upon or in 
connection with an existing single-family structure or manufac-
tured home; 
"(B) fifteen years and thirty-two days if made for the purpose of 
financing the alteration, repair, improvement or conversion of 
an existing structure used or to be used as an apartment house or 
a dwelling for two or more families; 
"(C) twenty years and thirty-two days (twenty-three years and 
thirty-two days in the case of a manufactured home composed of 
two or more modules) if made for the purpose of financing the 
purchase of a manufactured home; 
"(D) twenty years and thirty-two days (twenty-five years and 
thirty-two days in the case of a manufactured home composed of 
two or more modules) if made for the purpose of financing the 
purchase of a manufactured home and a suitably developed lot 
on which to place the home; 
"(E) fifteen years and thirty-two days if made for the purpose of 
financing the purchase, by the owner of a manufactured home 
which is the principal residence of that owner, of a suitably 
developed lot on which to place that manufactured home; 
"(F) fifteen years and thirty-two days if made for the purpose of 
financing the preservation of an historic structure; 
"(G) such term to maturity as the Secretary may prescribe if 
made for the purpose of financing the construction of a new 
95 STAT. 416 
PUBLIC LAW 97-35—AUG. 13, 1981 
structure for use in whole or in part for agricultural purposes; 
and 
"(H) such term to maturity as the Secretary may prescribe if 
made for the purpose of financing fire safety equipment for a 
nursing home, extended health care facility, intermediate health 
care facility, or other comparable health care facility. 
"(4) For the purpose of this subsection— 
"(A) the term 'developed lot' includes an interest in a condo-
minium project (including any interest in the common areas) or a 
share in a cooperative association; 
"(B) a loan to finance the purchase of a manufactured home or 
a manufactured home and lot may also finance the purchase of a 
garage, patio, carport, or other comparable appurtenance; and 
"(C) a loan to finance the purchase of a manufactured home or 
a manufactured home and lot shall be secured by a first lien upon 
such home or home and lot, its furnishings, equipment, accesso-
ries, and appurtenances. 
"(5) No insurance shall be granted under this section to any such 
financial institution with respect to any obligation representing any 
such loan, advance of credit, or purchase by it unless the obligation 
bears such interest, has such maturity, and contains such other 
terms, conditions, and restrictions as the Secretary shall prescribe, in 
order to make credit available for the purpose of this title. Any such 
obligation with respect to which insurance is granted under this 
section shall bear interest and insurance premium charges not 
exceeding (A) an amount, with respect to so much of the net proceeds 
thereof as does not exceed $2,500, equivalent to $5.50 discount per 
$100 of original face amount of a one-year note payable in equal 
monthly installments, plus (B) an amount, with respect to any 
portion of the net proceeds thereof in excess of $2,500, equivalent to 
$4.50 discount per $100 of original face amount of such note. The 
amounts referred to in clauses (A) and (B) of the preceding sentence, 
when correctly based on tables of calculations issued by the Secretary 
or adjusted to eliminate minor errors in computation in accordance 
with requirements of the Secretary, shall be deemed to comply with 
such sentence. 
Refinancing. 
"(6)(A) Any obligation with respect to which insurance is granted 
under this section may be refinanced and extended in accordance 
with such terms and conditions as the Secretary may prescribe, but in 
no event for an additional amount or term in excess of any applicable 
maximum provided for in this subsection. 
"(B) The owner of a manufactured home lot purchased without 
assistance under this section but otherwise meeting the requirements 
of this section may refinance such lot under this section in connection 
with the purchase of a manufactured home if the borrower certifies 
that the home and lot is or will be his or her principal residence 
within six months after the date of the loan.". 
94 Stat. 1641. 
(b) Section 207(c)(8) of the National Housing Act is amended by 
1
2 use 1713. 
striking out "$8,000" and inserting in lieu thereof "$9,000". 
MORTGAGE INSURANCE FOR CONDOMINIUMS 
SEC. 339. (a) The first sentence of section 2340t)) of the National 
1
2 use I7l5y. 
Housing Act is amended by inserting ", including a project in which 
the dwelling units are attached, semi-attached, or detached," after 
"multifamily project". 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 417 
HOUSING COUNSELING 
SEC. 339 A. Section 106(a)(3) of the Housing and Urban Development 
Act of 1968 is amended by inserting the following before the period at 12 USC I701x. 
the end of the first sentence: "; except that for the fiscal year 1982, 
there are authorized to be appropriated not to exceed $4,000,000 for 
such purposes". 
TECHNICAL AMENDMENTS 
SEC. 339B. (a) The last sentence of section 207(c)(3), section 213(p), 
the last proviso in section 220(d)(3)(B)(iii), section 221(k), the proviso 
in section 231(c)(2), and section 234(j) of the National Housing Act are 
amended— 
(1) by inserting "therein" immediately after "installation" 
wherever it appears; and 
(2) by striking out "therein" before the punctuation at the end 
thereof. 
(b) Section 223(f) of such Act is amended— 
(1) by inserting "and" immediately after the semicolon at the 
end of paragraph (2)(A); and 
(2) by redesignating paragraph (5) as paragraph (4). 
(c) For purposes of paragraphs (1) and (4) of section 308(c) of the 
Housing and Community Development Act of 1980, the term "mobile 
home" and the term "manufactured home" shall be deemed to 
include the term "mobile homes" and the term "manufactured 
homes", respectively. 
(d)(1) The material preceding the proviso in clause (2) of the first 
sentence of section 234(c) of the National Housing Act is amended to 
read as follows: "(2) the project is or has been covered by a mortgage 
insured under any section (except section 213(a) (1) and (2)) of this Act 
or the project was approved for a guarantee, insurance, or a direct 
loan under chapter 37 of title 38, United States Code, notwith-
standing any requirements in any such section that the project be 
constructed or rehabilitated for the purpose of providing rental 
housing:". 
(2) Section 318 of the Housing and Community Development Act of 
1980 is repealed. 
LOWER COST TECHNOLOGY 
SEC. 339C. The Secretary of Housing and Urban Development is 
authorized to develop and implement a demonstration program 
utilizing lower cost building technology for projects located on inner-
city vacant land. 
REDUCTION OF 1981 AUTHORITY 
SEC. 339D. (a) Notwithstanding any other provision of law, the 
authorizations for appropriations for programs and activities admin-
istered by the Secretary for Housing and Urban Development in 
fiscal year 1981 are reduced by $5,359,000,000. 
(b) This section takes effect upon the date of enactment of this Act. Effective date. 
12 USC 1713, 
1715e, 1715k, 
1715/, 1715v, 
1715y. 
94 Stat. 1650. 
12 USC 1715n. 
Definitions. 
94 Stat. 1640. 
12 USC 1701 
et seq., 5401 et 
seq. 
12 USC 1715y. 
12 USC 1715e. 
38 USC 1801 et 
seq. 
Repeal. 
94 Stat. 1646. 
12 USC 
1701Z-14. 
NATIONAL INSTITUTE OF BUILDING SCIENCES 
SEC. 339E. (a) Section 809(h) of the Housing and Community 
Development Act of 1974 is amended by striking out "through 1982 12 USC i70lj-2. 
(with" and inserting in lieu thereof "through 1984 (with not more 
than $500,000 to be appropriated for each of the fiscal years 1982, 
1983, and 1984 and with^'. 
95 STAT. 418 
PUBLIC LAW 97-35—AUG. 13, 1981 
12 use 1701J-2. 
(b) Section 809(cX4) of such Act is amended by inserting the 
following before the period at the end thereof: "; except that, 
notwithstanding any such rules and procedures as may be adopted by 
the Institute, the President of the United States, by and with the 
advice and consent of the Senate, shall appoint, as representative of 
the public interest, two of the members of the Board of Directors 
selected each year for terms commencing in that year". 
42 use 4518. 
NEW COMMUNITIES 
SEC. 389F. Section 717(b) of the National Urban Policy and New 
Community Development Act of 1970 is amended by adding the 
following new sentence at the end thereof: "With respect to fiscal 
year 1982, the Secretary may not issue obligations under this section 
in an aggregate amount in excess of $33,250,000.". 
PURCHASER-BROKER ARRANGEMENT 
SEC. 339G. Title V of the National Housing Act is amended by 
adding the following new section at the end thereof: 
12 use 1735f-10. 
12 use 1707. 
12 use 1715Z-7. 
PURCHASER-BROKER ARRANGEMENT 
"SEC. 532. In carrying out the provisions of title II of this Act with 
respect to insuring mortgages secured by a one- to four-family 
residence, the Secretary may not exclude from the principal amount 
which may be insured under such title any sum solely on the basis 
that such sum is to be paid by the purchaser to a broker who has been 
the purchaser's agent in the purchase of the residence, but the 
principal amount of the mortgage, when such sum is added, shall not 
exceed the limitation as to maximum mortgage amount provided in 
title II.". 
MORTGAGE INSURANCE FOR HOSPITALS 
SEC. 339H. Section 242(dX5) of the National Housing Act is 
amended by adding at the end thereof the following: "This paragraph 
shall not limit the authoritj^ of the Secretary to approve a mortgage 
increase on any mortgage eligible for insurance under this paragraph 
at any time prior to final endorsement of the loan for insurance; 
except that such mortgage increase may not be approved for the cost 
of constructing any improvements not included in the original plans 
and specifications approved by the Department of Health and 
Human Services unless approved by the Secretary of Housing and 
Urban Development and by the Secretary of Health and Human 
Services.". 
PART 4-FLOOD, CRIME, AND RIOT INSURANCE 
94 Stat. 1639. 
42 use 4127. 
42 u s e 4026. 
FLOOD INSURANCE 
SEC. 341. (a) Section 1376(c) of the National Flood Insurance Act of 
1968 is amended— 
(1) by Striking out "and" after "1980,"; and 
(2) by inserting the following before the period at the end 
thereof ", and not to exceed $42,600,000 for the fiscal year 1982". 
03)(1) Section 1319 of the National Flood Insurance Act of 1968 is 
amended by striking out "September 30,1981" and inserting in lieu 
thereof "September 30,1982". 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 419 
42 use 4017. 
(2) Section 1336(a) of such Act is amended by striking out "Septem- 42 use 4056. 
ber 30, 1981" and inserting in lieu thereof "September 30, 1982". 
(cXD Section 1310(a) of such Act is amended by inserting "as 
described in subsection (f)" after "which shall be available". 
(2) Section 1310 of such Act is amended by adding the following new 
subsection at the end thereof 
: 
if) The fund shall be available, with respect to any fiscal year 
beginning on or after October 1,1981, only to the extent approved in 
appropriation Acts; except that the fund shall be available for the 
purnose described in subsection (dXD without such approval.". 
(cD(l) Chapter I of such Act is amended by adding the following new 
section at the end thereof: 
UNDEVELOPED COASTAL BARRIERS 
"SEC. 1321. (a) No new flood insurance coverage shall be provided 
under this title on or aiter October 1,1983, for any new construction 
or substeuitial improvements of structures located on undeveloped 
coastal barriers which shall be designated by the Secretary of the 
Interior. 
"(b) For purposes of 
this section— 
"(1) the term 'coastal barrier* means— 
"(A) a depositional geolc^c feature (such as a bay barrier, 
tombolo, barrier spit, or beurier islemd) which— 
"(i) consists of unconsolidated sedimentary materials, 
"(ii) is subject to wave, tidal, and wind energies, and 
"(iii) protects landward aquatic habitats from direct 
wave attack; and 
"(B) all associated aquatic habitats including the adjacent 
wetlands, marshes, estuaries, inlets, and nearshore waters; 
"(2) a coastal barrier or any portion thereof shall be treated as 
an undeveloped coastal barrier for purposes of subsection (a) only 
if there are few manmade structures on the barrier or portion 
thereof and these structures and man's activities on the barrier 
do not significemtly impede geomorphic and ecological processes; 
and 
"(3) a coastal barrier which is included within the boundaries 
of an area established under Federal, State, or local law, or held 
by a qualified organization as defined in section 170(h)(3) of the 
Internal Revenue Code of 1954, primarily for wildlife refuge, 
sanctuary, recreational, or natural resource conservation pur-
poses shall not be designated as an undeveloped coastal barrier 
for purposes of subsection (a). 
"(c) A federally insured financial institution may make loans 
secured by structures which are not eligible for 
flood 
insurance under 
this title by reason of 
subsection (a).". 
(2) The Secretary of the Interior shall conduct a study for the 
purpose of 
designating the undeveloped coastal barriers which will be 
affected by the amendment made by paragraph (1). Not later than 
one year after the date of enactment of this Act, the Secretary shall 
transmit to the Congress a report of the findings and conclusions of 
such study together with a proposed designation of the undeveloped 
coastal barriers and any recommendation regarding the definition of 
the term "coastal barrier" as enacted by such amendment. 
(e) Section 1345 of such Act is amended by adding at the end thereof 
the following: 
"(c) The Director of the Federal Emergency Management Agency 
shall hold any agent or broker selling or undert^ing to sell flood 
42 use 4028. 
"eoastal 
barrier." 
26 use 170. 
Study. 
42 u s e 4028 
note. 
Report to 
eongress. 
42 use 4081. 
95 STAT. 420 
PUBLIC LAW 97-35—AUG. 13, 1981 
insurance under this title harmless from any judgment for damages 
against such agent or broker as a result of any court action by a 
policyholder or applicant arising out of an error or omission on the 
part of the Federal Emergency Management Agency, and shall 
provide any such agent or broker with indemnification, including 
court costs and reasonable attorney fees, arising out of and caused by 
an error or omission on the part of the Federal Emergency Manage-
ment Agency and its contractors. The Director of the Federal Emer-
gency Management Agency may not hold harmless or indemnify an 
agent or broker for his or her error or omission.". 
CRIME AND RIOT INSURANCE 
1
2 use I749bbb. 
SEC. 342. (a) Section 1201(b) of the National Housing Act is 
amended— 
(1) by striking out "September 30,1981" in paragraph (1) and 
inserting in lieu thereof September 30,1982"; and 
(2) by striking out "September 30, 1984" in paragraph (IXA) 
and inserting in lieu thereof "September 30,1985". 
1
2 use 
(b) Section 1211(b) of the National Housing Act is amended— 
i749bbb-3. 
(1) by inserting "and" at the end of paragraph (9); 
(2) by striking out "; and" at the end of paragraph (10) and 
inserting in lieu thereof a period; and 
(3) by striking out paragraph (11). 
PART 5-RURAL HOUSING 
AUTHORIZATIONS 
94 Stat. 1667. 
SEC. 351. (a) Section 513 of the Housing Act of 1949 is amended— 
42 use 1483. 
(1) by striking out "not to exceed $3,797,600,000 with respect to 
the fiscal year ending September 30,1981" in subsection (a) and 
inserting in lieu thereof "not to exceed $3,700,600,000 with 
• respect to the fiscal year ending September 30,1982"; 
(2) by striking out "not less than $3,120,000,000" in subsection 
(aXD and inserting in lieu thereof "not less than $3,170,000,000"; 
(3) by striking out "not more than $100,000,000" in subsection 
(a)(4) and inserting in lieu thereof "none"; 
(4) by striking out subsection (bX2) and inserting in lieu thereof 
the following: 
"(2) not to exceed $50,000,000 for loans and grants pursuant to 
42 use 1474. 
section 504 for the fiscal year ending September 30, 1982, of 
which not more than $25,000,000 shall be available for grants;"; 
(5) by striking out subsection (bX3) and inserting in lieu thereof 
the following: 
"(3) not to exceed $25,000,000 for financial assistance pursuant 
42 use I486. 
to section 516 for the fiscal year ending September 30, 1982;"; 
(6) by striking out "September 30,1981" in subsection (bX4) and 
inserting in lieu thereof "September 30,1982"; and 
(7) by striking out "and" at the end of subsection 0)X4), by 
striking out the period at the end of subsection (bX5) and 
inserting in lieu thereof "; and", and by adding at the end thereof 
the following: 
42 use 1479. 
"(6) not to exceed $2,000,000 for the purposes of section 509(c) 
for the fiscal year ending September 30,1982.". 
?o f^h }^r' 
O
t
)
) Section 515(bX5) of such Act is amended by striking out "Sep-
42 use 1485. 
tember 30,1981" and mserting in lieu thereof "(September 30,1982*'. 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 421 
(c) Section 517(aXl) of such Act is amended by striking out "Septem-
ber 80, 1981" and inserting in lieu thereof "September 30, 1982". 
(d) Section 521(aX2XD) of such Act is amended— 
(1) by striking "$493,000,000" and inserting in lieu thereof 
"$398,000,000"; and 
(2) by striking out "1981, except that" and all that follows 
through the period at the end thereof and inserting in lieu 
thereof "1982.". 
(e) Section 523 of 
such Act is amended— 
(1) by striking out "September 30,1981" each place it appears 
in subsection (f) and inserting in lieu thereof "September 30, 
1982"; 
(2) by striking out "not to exceed $2,500,000 for fiscal year 
1981" in the first sentence of subsection (g) and inserting in lieu 
thereof "not to exceed $3,000,000 for fiscal year 1982"; 
(3) by inserting the following after "shall be available" in the 
second sentence of subsection (g): ", to the extent approved in 
appropriation Acts,"; and 
(4) by inserting the following before the period at the end of the 
second sentence of subsection (g): "; except that not more than 
$5,000,000 may be made available during fiscal year 1982". 
94 Stat. 1668. 
42 u s e 1487. 
94 Stat. 1668. 
42 u s e 1490a. 
94 Stat. 1668. 
42 u s e 1490c. 
INTEREST SUBSIDY PROGRAM 
SEC. 352. Section 521(aXlXB) of the Housing Act of 1949 is amended 
by striking out "shall" and iaserting in lieu thereof "may". 
94 Stat. 1669. 
42 u s e 1490a. 
REPORTS 
SEC. 353. The Secretary of Agriculture shall transmit a report to 
the Congress not later than March 1,1982, setting forth— 
(1) various options for presenting the budget of the Farmers 
Home Administration and alternatives to the use of Federal 
Financing Bank financing for rural housing programs; 
(2) workable definitions of "low income" which will target 
Farmers Home Administration housing assistance programs to a 
population substantially equivalent to the population served by 
the Department of Housing and Urban Development's assisted 
housing programs; 
(3) the effect of a requirement that 30 per centum of assistance 
provided by the Farmers Home Administration be provided to 
families with incomes at 50 per centum of area median income 
and recommendations for contribution requirements which will 
achieve equity with the contribution requirements of the Depart-
ment of Housing and Urban Development's assisted housing 
programs; 
(4) recommendations for ensuring that subsidy levels for as-
sisted families are minimized and that assisted families with 
similar circumstances in different regions of the country are 
treated equally; and 
(5) the Farmers Home Administration's efforts to minimize 
the cost of housing subsidized under its programs and the 
Farmers Home Administration's use of existing lower cost hous-
ing technology. 
Transmittal to 
eongress. 
95 STAT. 422 
PUBLIC LAW 97-35—AUG. 13, 1981 
Multifamiiy 
PART 6—MULTIFAMILY MORTGAGE FORECLOSURE 
Mortgage 
Foreclosure Act 
of 1981. 
SHORT TITLE 
1
2 use 3701 
SEC. 361. This part may be cited as the "Multifamiiy Mortgage 
note. 
Foreclosure Act of 1981". 
FINDINGS AND PURPOSE 
1
2 use 3701. 
SEC. 362. (a) The Congress finds that— 
(1) disparate State laws under which the Secretary of Housing 
and Urban Development forecloses real estate mor^ages which 
the Secretary holds pursuant to title II of the National Housing 
1
2 use 1707 
Act or section 312 of the Housing Act of 1964 covering multiunit 
42 use 1452b. 
residential and nonresidential properties burden the programs 
administered by the Secretary pursuant to these authorities, and 
cause detriment to the residents of the afTected projects and the 
community generally; 
(2) long periods to complete the foreclosure of these mortgages 
under certain State laws lead to deterioration in the condition of 
the properties involved; necessitate substantial Federal manage-
ment and holding expenditures; increase the risk of vandalism, 
fire loss, depreciation, damsige, and waste with respect to the 
properties; and adversely affect the residents of the projects and 
the neighborhoods in which the properties are located; 
(3) these conditions seriously impair the Secretary's ability to 
protect the Federal financial interest in the affected properties 
and frustrate attainment of the objectives of the underljdng 
Federal program authorities, as well as the national housing go^ 
of "a decent home and a suitable living environment for every 
American family"; 
(4) application of State redemption periods to these mortgages 
following their foreclosure would impair the salability of the 
properties involved and discourage their rehabilitation and im-
provement, thereby compounding the problems referred to in 
clause (3); 
(5) the availability of a uniform and more expeditious proce-
dure for the foreclosure of these mortgages by the Secretary and 
continuation of the practice of not appl)dng postsale redemption 
periods to such mortgages will tend to ameliorate these condi-
tions; and 
(6) providing the Secretary with a nonjudicial foreclosure 
procedure will reduce unnecessary litigation by removing many 
foreclosures from the courts where they contribute to over-
crowded calendars. 
(b) The purpose of this part is to create a uniform Federal 
foreclosure remedy for multiunit residential and nonresidentisil 
mortgages held by the Secretary of Housing and Urban Development 
pursuant to title II of the National Housing Act or section 312 of the 
Housing Act of 1964. 
DEFINITIONS 
1
2 use 3702. 
SEC. 363. As used in this part— 
(1) "mortgage" means a deed of trust, mortgage, deed to secure 
debt, security agreement, or any other form of instrument under 
which any interest in property, real, personal or mixed, or any 
interest in property including leaseholds, life estates, reversion-
ary interests, and any other estates under applicable State law, is 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 423 
conveyed in trust, mortgaged, encumbered, pledged, or otherwise 
rendered subject to a lien, for the purpose of securing the 
pa3niient of money or the performance of an obligation; 
(2) "multifamily mortgage" means a mortgage held by the 
Secretary pursuant to title 11 of the National Housing Act or 
section 312 of the Housing Act of 1964 covering any property, 1
2 use 1707. 
except a property on which there is located a one- to four-family ^^ use I452b. 
residence; 
(3) "mortgage agreement" meeins the note or debt instrument 
and the mortgage instrument, deed of trust instrument, trust 
deed, or instrument or instruments creating the mortgage, 
including any instrument incorporated by reference therein 
(including any applicable regulatory agreement), and any instru-
ment or agreement amending or modifying any of the foregoing; 
(4) "mortgagor" means the obligor, grantor, or trustor named 
in the mortgage agreement and, unless the context otherwise 
indicates, includes the current owner of record of the security 
property whether or not personally liable on the mortgage debt; 
(5) "person" includes any individual, group of individuals, 
association, partnership, corporation, or organization; 
(6) "record" and "recorded" include "register" and "regis-
tered" in the instance of registered land; 
(7) "security property" means the property, real, personal or 
mixed, or an interest in property, including leaseholds, life 
estates, reversionary interests, and any other estates under 
applicable State law, together with fixtures and other interests 
subject to the lien of the mortgage under applicable State law; 
(8) "State" means the several States, the District of Columbia, 
the Commonwealth of Puerto Rico, the territories and posses-
sions of the United States, and the Trust Territory of the Pacific 
Islands, and Indian tribes as defined by the Secretary; 
(9) "county" means county as defined in section 2 of title I, 
United States Code; and 
i use 2. 
(10) "Secretary" means the Secretary of Housing and Urban 
Development. 
APPLICABIUTY 
SEC. 364. Multifamily mortgages held by the Secretary encumber- 1
2 use 3703. 
ing real estate located in any State may be foreclosed by the 
Secretary in accordance with this part, or pursuant to other foreclo-
sure procedures available, at the option of the Secretary. 
DESIGNATION OF FORECLOSURE COMMISSIONER 
SEC. 365. A foreclosure commissioner or commissioners designated 1
2 use 3704. 
pursuant to this part shall have a nonjudicial power of sale as 
provided in this part. Where the Secretary is the holder of a 
multifamily mortgage, the Secretary may designate a foreclosure 
commissioner and, with or without cause, may designate a substitute 
foreclosure commissioner to replace a previously designated foreclo-
sure commissioner, by executing a duly acknowledged, written desig-
nation stating the name and business or residential address of the 
commissioner or substitute commissioner. The designation shall be 
effective upon execution. Except as provided in section 368(b), a copy 
of the designation shall be mailed with each copy of the notice of 
default and foreclosure sale served by mail in accordance with section 
369(1). The foreclosure commissioner, if a natural person, shall be a 
resident of the State in which the security property is located and, if 
-194 0—82 
29 : QL3 
95 STAT. 424 
PUBLIC LAW 97-35—AUG. 13, 1981 
not a natural person, the foreclosure commissioner must be duly 
authorized to transact business under the laws of the State in which 
the security property is located. The foreclosure commissioner shall 
be a person who is responsible, financially sound and competent to 
conduct the foreclosure. More than one foreclosure commissioner 
may be designated. If a natural person is designated as foreclosure 
commissioner or substitute foreclosure commissioner, such person 
shall be designated by name, except that where such person is 
designated in his or her capacity as an official or employee of the 
government of the State or subdivision thereof in which the security 
property is located, such person may be designated by his or her 
unique title or position instead of by name. The Secretary shall be a 
guarantor of payment of any judgment against the foreclosure 
commissioner for damages based upon the commissioner's failure 
properly to perform the commissioner's duties. As between the 
Secretary and the mortgagor, the Secretary shall bear the risk of any 
financial default by the foreclosure commissioner. In the event that 
the Secretary makes any payment pursuant to the preceding two 
sentences, the Secretary shall be fully subrogated to the rights 
satisfied by such payment. 
PREREQUISITES TO FORECLOSURE 
1
2 use 3705. 
SEC. 866. Foreclosure by the Secretary under this part of a multi-
family mortgage may be commenced, as provided in section 368, upon 
the breach of a covenant or condition in the mortgage agreement for 
which foreclosure is authorized under the mortgage, except that no 
such foreclosure may be commenced unless any previously pending 
proceeding, judicial or nonjudicial, separately instituted by the Secre-
tary to foreclose the mortgage other than under this part has been 
withdrawn, dismissed, or otherwise terminated. No such separately 
instituted foreclosure proceeding on the mortgage shall be instituted 
by the Secretary during the pendency of foreclosure pursuant to this 
part. Nothing in this part shall preclude the Secretary from enforcing 
any right, other than foreclosure, under applicable State law, includ-
ing any right to obtain a monetary judgment. Nothing in this part 
shall preclude the Secretary from foreclosing under this part where 
the Secretary has obtained or is seeking any other remedy available 
pursuant to Federal or State law or under the mortgage agreement, 
including, but not limited to, the appointment of a receiver, mort-
gagee-in-possession status or relief under an assignment of rents. 
NOTICE OF DEFAULT AND FORECLOSURE SALE 
1
2 use 3706. 
SEC. 367. (a) The notice of default and foreclosure sale to be served 
in accordance with this part shall be subscribed with the name and 
address of the foreclosure commissioner and the date on which 
subscribed, and shall set forth the following information: 
(1) the names of the Secretary, the original mortgagee and the 
original mortgagor; 
(2) the street address or a description of the location of the 
security property, and a description of the security property, or 
so much thereof as is to be offered for sale, sufficient to identify 
the property to be sold; 
(3) the date of the mortgage, the office in which the mortgage is 
recorded, and the liber and folio or other description of the 
location of recordation of the mortgage; 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 425 
(4) the failure to make payment, including the due date of the 
earliest installment pa3mient remaining wholly unpaid as of the 
date the notice is subscribed, or the description of other default 
or defaults upon which foreclosure is based, and the acceleration 
of the secured indebtedness; 
(5) the date, time, and place of 
the foreclosure sale; 
(6) a statement that the foreclosure is being conducted pursu-
ant to this part; 
(7) the types of costs, if any, to be paid by the purchaser upon 
transfer of title; and 
(8) the amount and method of deposit to be required at the 
foreclosure sale (except that no deposit shall be required of the 
Secretary), the time and method of payment of the balance of the 
foreclosure purchase price and other appropriate terms of sale. 
(b)(1) Except as provided in paragraph (2)(A), the Secretary may 
require, as a condition and term of sale, that the purchaser at a 
foreclosure sale under this part agree to continue to operate the 
security property in accordance with the terms, as appropriate, of the 
loan program under section 312 of the Housing Act of 1964, the 42 use I452b. 
program under which insurance under title II of the National 
Housing Act was originally provided with respect to such property, or 1
2 use 1707. 
any applicable regulatory or other agreement in effect with respect to 
such property immediately prior to the time of foreclosure sale. 
(2)(A) In any case where the majority of the residential units in a 
property subject to such a sale are occupied by residential tenants at 
the time of the sale, the Secretary shall require, as a condition and 
term of sale, any purchaser (other than the Secretary) to operate the 
property in accordance with such terms, as appropriate, of the 
programs referred to in paragraph (1). 
(B) In any case where the Secretary is the purchaser of a multi-
family project, the Secretary shall manage and dispose of such project 
in accordance with the provisions of section 203 of the Housing and 
Community Development Amendments of 1978. 
1
2 use I7i5z-ii. 
COMMENCEMENT OF FORECLOSURE 
SEC. 368. (a) If the Secretary as holder of a multifamily mortgage 1
2 use 3707. 
determines that the prerequisites to foreclosure set forth in section 
366 are satisfied, the Secretary may request the foreclosure commis-
sioner to commence foreclosure of the mortgage. Upon such request, 
the foreclosure commissioner shall commence foreclosure of the 
mortgage, by commencing service of a notice of default and foreclo-
sure sale in accordance with section 369. 
(b) Subsequent to commencement of a foreclosure under this part, 
the Secretary may designate a substitute foreclosure commissioner at 
any time up to forty-eight hours prior to the time of foreclosure sale, 
and the foreclosure shall continue without prejudice, unless the 
substitute commissioner, in his or her sole discretion, finds that 
continuation of the foreclosure sale will unfairly affect the interests 
of the mortgagor. In the event that the substitute commissioner 
makes such a finding, the substitute commissioner shall cancel the 
foreclosure sale, or adjourn such sale in the manner provided in 
section 369B(c). Upon designation of a substitute foreclosure commis-
sioner, a copy of the written notice of such designation referred to in 
section 365 shall be served upon the persons set forth in section 369(1) 
of this part (1) by mail as provided in such section 369 (except that the 
minimum time periods between mailing and the date of foreclosure 
sale prescribed in such section shall not apply to notice by mail 
95 STAT. 426 
PUBLIC LAW 97-35—AUG. 13, 1981 
pursuant to this subsection), or (2) in any other manner, which in the 
substitute commissioner's sole discretion, is conducive to achieving 
timely notice of such substitution. In the event a substitute foreclo-
sure commissioner is designated less than forty-eight hours prior to 
the time of the foreclosure sale, the pending foreclosure shall be 
terminated and a new foreclosure shall be commenced by commenc-
ing service of a new notice of default and foreclosure sale. 
SERVICE OF NOTICE OF DEFAULT AND FORECLOSURE SALE 
1
2 use 3708. 
SEC. 369. The foreclosure commissioner shall serve the notice of 
default and foreclosure sale provided for in section 367 upon the 
following persons and in the following manner, and no additional 
notice shall be required to be served notwithstanding any notice 
requirements of 
any State or local law— 
(1) NOTICE BY MAIL.—The notice of default and foreclosure sale, 
together with the designation required by section 365, shall be 
sent by certified or registered mail, postage prepaid and return 
receipt requested, to the following persons: 
(A) the current security property owner of record, as the 
record exists forty-five days prior to the date originally set 
for foreclosure sale, whether or not the notice describes a 
sale adjourned as provided in this part; 
(B) the original mortgagor and all subsequent mortgagors 
of record or other persons who appear of record or in the 
mortgage agreement to be liable for part or all of the 
mortgage debt, as the record exists forty-five days prior to 
the date originally set for foreclosure sale, whether or not 
the notice describes a sale adjourned as provided in this part, 
except any such mortgagors or persons who have been 
released; and 
(C) all persons holding liens of record upon the security 
property, as the record exists forty-five days prior to the date 
originally set for foreclosure sale, whether or not the notice 
describes a sale adjourned as provided in this part. 
Notice under clauses (A) and (B) of this paragraph shall be 
mailed at least twenty-one days prior to the date of foreclosure 
sale, and shall be mailed to the owner or mortgagor at the 
address stated in the mortgage agreement, or, if none, to the 
address of the security property, or, at the discretion of the 
foreclosure commissioner, to any other address believed to be 
that of such owner or mortgagor. Notice under clause (C) of this 
paragraph shall be mailed at least ten days prior to the date of 
foreclosure sale, and shall be mailed to each such lienholder's 
address as stated of record or, at the discretion of the foreclosure 
commissioner, to any other address believed to be that of such 
lienholder. Notice by mail pursuant to this subsection or section 
368(b) of this part shall be deemed duly given upon mailing, 
whether or not received by the addressee and whether or not a 
return receipt is received or the letter is returned. 
(2) PuBUCATiON.—A copy of the notice of default and foreclo-
sure sale shall be published, as provided herein, once a week 
during three successive calendar weeks, and the date of last 
publication shall be not less than four nor more than twelve days 
prior to the sale date. The information included in the notice of 
default and foreclosure sale pursuant to section 367(a)(4) may be 
omitted, in the foreclosure commissioner's discretion, from the 
Newspaper 
published notice. Such publication shall be in a newspaper or 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 427 
newspapers having general circulation in the county or counties 
in which the security property being sold is located. To the extent 
practicable, the newspaper or newspapers chosen shall be a 
newspaper or newspapers, if any is available, having circulation 
conducive to achieving notice of foreclosure by publication. 
Should there be no newspaper published at least weekly which 
has a general circulation in one of the counties in which the 
security property being sold is located, copies of the notice of 
default and foreclosure sale shall be posted in at least three 
public places in each such county at least twenty-one days prior 
to the date of sale. 
(8) POSTING.—A copy of the notice of default and foreclosure 
sale shall be posted in a prominent place at or on the real 
property to be sold at least seven days prior to the foreclosure 
sale, and entry upon the premises for this purpose shall be 
privileged as against all persons. If the property consists of two or 
more noncontiguous parcels of land, a copy of the notice of 
default and foreclosure sale shall be posted in a prominent place 
on each such parcel. If the security property consists of two or 
more separate buildings, a copy of the notice of default and 
foreclosure sale shall be posted in a prominent place on each such 
building. Posting at or on the premises shall not be required 
where the foreclosure commissioner, in the commissioner s sole 
discretion, finds that the act of posting will likely cause a breach 
of the peace or that posting may result in an increased risk of 
vandalism or damage to the property. 
PRESALE REINSTATEMENT 
SEC. 869A. (a) Except as provided in sections 368(b) and 369B(c), the 
foreclosure commissioner shall withdraw the security property from 
foreclosure and cancel the foreclosure sale only i
f
— 
(1) the Secretary so directs the commissioner prior to or at the 
time of sale; 
(2) the commissioner finds, upon application of the mortgagor 
at least three days prior to the date of sale, that the default or 
defaults upon which the foreclosure is based did not exist at the 
time of service of the notice of default and foreclosure sale; or 
(3)(A) in the case of a foreclosure involving a monetary default, 
there is tendered to the foreclosure commissioner before public 
auction is completed the entire amount of principal and interest 
which would be due if payments under the mortgage had not 
been accelerated; (B) in the case of a foreclosure involving a 
nonmonetary default, the foreclosure commissioner, upon appli-
cation of the mortgagor before the date of foreclosure sale, finds 
that such default is cured; and (C) there is tendered to the 
foreclosure commissioner before public auction is completed all 
amounts due under the mortgage agreement (excluding addi-
tional amounts which would have been due if mortgage pay-
ments had been accelerated), all amounts of expenditures 
secured by the mortgage and all costs of foreclosure incurred for 
which payment from the proceeds of foreclosure is provided in 
section 369C, except that the Secretary shall have discretion to 
refuse to cancel a foreclosure pursuant to this paragraph (3) if the 
current mortgagor or owner of record has on one or more 
previous occasions caused a foreclosure of the mortgage, com-
menced pursuant to this part or otherwise, to be canceled by 
curing a default. 
Posting in 
public place. 
Sale cancellation 
conditions. 
12 use 3709. 
95 STAT. 428 
PUBLIC LAW 97-35—AUG. 13, 1981 
(b) Prior to withdrawing the security property from foreclosure in 
the circumstances described in subsection (aX2) or (aX3), the foreclo-
sure commissioner shall afford the Secretary a reasonable opportu-
nity to demonstrate why the security property should not be so 
withdrawn. 
(c) In any case in which a foreclosure commenced under this part is 
canceled, the mortgage shall continue in effect as though acceleration 
had not occurred. 
(d) If the foreclosure commissioner cancels a foreclosure sale under 
this part a new foreclosure may be subsequently commenced as 
provided in this part. 
12 use 3710. 
Public auction. 
Written one-
price 
sealed bids. 
CONDUCT OF SALE; ADJOURNMENT 
SEC. 369B. (a) The date of foreclosure sale set forth in the notice of 
default and foreclosure sale shall not be prior to thirty days after the 
due date of the earliest installment wholly unpaid or the earliest 
occurrence of any uncured nonmonetary default upon which foreclo-
sure is based. Foreclosure sale pursuant to this part shall be at public 
auction, and shall be scheduled to begin between the hours of 9 
o'clock ante meridian and 4 o'clock post meridian local time on a day 
other than Sunday or a public holiday as defined by section 6108(a) of 
title 5, United States Code, or State law. The foreclosure sale shall be 
held at a location specified in the notice of default and foreclosure 
sale, which shall be a location where foreclosure real estate auctions 
are customarily held in the county or one of the counties in which the 
property to be sold is located, or at a courthouse therein, or at or on 
the property to be sold. Sale of security property situated in two or 
more counties may be held in any one of the counties in which any 
part of the security property is situated. 
(b) The foreclosure commissioner shall conduct the foreclosure sale 
in accordance with the provisions of this part and in a manner fair to 
both the mortgagor and the Secretary. The foreclosure commissioner 
shall attend the foreclosure sale in person, or, if there are two or more 
commissioners, at least one shall attend the foreclosure sale. In the 
event that no foreclosure commissioner is a natural person, the 
foreclosure commissioner shall cause its duly authorized employee to 
attend the foreclosure sale to act on its behalf. Written one-price 
sealed bids shall be accepted by the foreclosure commissioner from 
the Secretary and other persons for entry by announcement by the 
commissioner at the sale. The Secretary and any other person may 
bid at the foreclosure sale, including the Secretary or any other 
person who has submitted a written one-price bid, except that the 
foreclosure commissioner or any relative, related business entity or 
employee of such commissioner or entity shall not be permitted to bid 
in any manner on the security property subject to foreclosure sale. 
The foreclosure commissioner may serve as auctioneer, or, in accord-
ance with regulations of the Secretary, may employ an auctioneer to 
be paid from the commission provided for in section 369C(5). 
(c) The foreclosure commissioner shall have discretion, prior to or 
at the time of sale, to adjourn or cancel the foreclosure sale if the 
commissioner determines, in the commissioner's sole discretion, that 
circumstances are not conducive to a sale which is fair to the 
mortgagor and the Secretary or that additional time is necessary to 
determine whether the security property should be withdrawn from 
foreclosure as provided in section 369A. The foreclosure commis-
sioner may adjourn a sale to a later hour the same day without the 
giving of further notice, or may adjourn the foreclosure sale for not 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 429 
less than nine nor more than twenty-four days, in which case the 
commissioner shall serve a notice of default and foreclosure sale 
revised to recite that the foreclosure sale has been adjourned to a 
specified date and to include any corrections the foreclosure commis-
sioner deems appropriate. Such notice shall be served by publication, 
mailing and posting in accordance with section 369, except that 
publication may be made on any of three separate days prior to the 
revised date of foreclosure sale, and mailing may be made at any time 
at least seven days prior to the date to which the foreclosure sale has 
been adjourned. 
FORECLOSURE COSTS 
SEC. 369C. The following foreclosure costs shall be paid from the 1
2 use 3711. 
sale proceeds prior to satisfaction of any other claim to such sale 
proceeds: 
(1) necessary advertising costs and postage incurred in giving 
notice pursuant to sections 369 and 369B; 
(2) mileage for posting notices and for the foreclosure commis-
sioner's attendance at the sale at the rate provided in section 
1921 of title 28, United States Code, for mileage by the most 
reasonable road distance; 
(3) reasonable and necessary costs actually incurred in connec-
tion with any necessary search of 
title and lien records; 
(4) necessary out-of-pocket costs incurred by the foreclosure 
commissioner to record documents; and 
(5) a commission for the foreclosure commissioner for the 
conduct of the foreclosure to the extent authorized by regulations 
issued by the Secretary. 
DISPOSITION OP SALE PROCEEDS 
SEC. 369D. Money realized from a foreclosure sale shall be made 1
2 use 3712. 
available for obligation and expenditure— 
(1) first to cover the costs of foreclosure provided for in section 
369C; 
(2) then to pay valid tax liens or assessments prior to the 
mortgage; 
(3) then to pay any liens recorded prior to the recording of the 
mortgage which are required to be paid in conformity with the 
terms of sale in the notice of default and foreclosure sale; 
(4) then to service charges and advancements for taxes, assess-
ments, and property insurance premiums; 
(5) then to the interest; 
(6) then to the principal balance secured by the mortgage 
(including expenditures for the necessary protection, preserva-
tion, and repair of the security property as authorized under the 
mortgage agreement and interest thereon if provided for in the 
mortgage agreement); and 
(7) then to late charges. 
Any surplus after payment of the foregoing shall be paid to holders of Surplus 
liens recorded after the mortgage and then to the appropriate Proceeds. 
mortgagor. If the person to whom such surplus is to be paid cannot be 
located, or if the surplus available is insufficient to pay all claimants 
and the claimants cannot agree on the allocation of the surplus, or if 
any person claiming an interest in the mortgage proceeds does not 
agree that some or all of the sale proceeds should be paid to a 
claimant as provided in this section, that part of the sale proceeds in 
question may be deposited by the foreclosure commissioner with an 
95 STAT. 430 
PUBLIC LAW 97-35—AUG. 13, 1981 
appropriate official or court authorized under law to receive disputed 
funds in such circumstances. If such a procedure for the deposit of 
disputed funds is not available, and the foreclosure commissioner 
files a bill of interpleader or is sued as a stakeholder to determine 
entitlement to such funds, the foreclosure commissioner's necessary 
costs in taking or defending such action shall be deductible from the 
disputed funds. 
TRANSFER OF TITLE AND POSSESSION 
i^Tror ^71 q 
^^^' ^^^^' ^^^ "^^ foreclosure commissioner shall deliver a deed or 
use 3713. 
deeds to the purchaser or purchasers and obtain the balance of the 
purchase price in accordance with the terms of sale provided in the 
notice of 
default and foreclosure sale. 
Qy) Subject to subsection (c), the foreclosure deed or deeds shall 
convey all of the right, title, and interest in the security property 
covered by the deed which the Secretary as holder, the foreclosure 
commissioner, the mortgagor, and any other persons claiming by, 
through, or under them, had on the date of execution of the mortgage, 
together with all of the right, title, and interest thereafter acquired 
by any of them in such property up to the hour of sale, and no judicial 
proceeding shall be required ancillary or supplementary to the 
procedures provided in this part to assure the validity of the convey-
ance or confirmation of such conveyance. 
(c) A purchaser at a foreclosure sale held pursuant to this part shall 
be entitled to possession upon passage of title to the mortgaged 
property, subject to an interest or interests senior to that of the 
mortgage and subject to the terms of any lease of a residential tenant 
for the remaining term of the lease or for one year, whichever period 
is shorter. Any other person remaining in possession after the sale 
and any residential tenant remaining in possession after the appli-
cable period shall be deemed a tenant at sufferance. 
(d) There shall be no right of redemption, or right of possession 
based upon right of redemption, in the mortgagor or others subse-
quent to a foreclosure pursuant to this part. 
'T^- 
(e) When conveyance is made to the Secretary, no tax shall be 
imposed or collected with respect to the foreclosure commissioner's 
deed, whether as a tax upon the instrument or upon the privilege of 
conveying or transferring title to the property. Failure to collect or 
pay a tax of the t5rpe and under the circumstances stated in the 
preceding sentence shall not be grounds for refusing to record such a 
deed, for failing to recognize such recordation as imparting notice or 
for denying the enforcement of such a deed and its provisions in any 
State or Federal court. 
RECORD 
OF 
FORECLOSURE 
AND 
SALE 
Deed affidavit. 
SEC. 369F. (a) To establish a sufficient record of foreclosure and 
1
2 use 3714. 
g
g
^
i
g
^ ^jjg foreclosure commissioner shall include in the recitals of the 
deed to the purchaser or prepare an affidavit or addendum to the 
deed stating— 
(1) that the mortgage was held by the Secretary; 
(2) the particulars of the foreclosure commissioner's service of 
notice of default and foreclosure sale in accordance with sections 
369and369B; 
(3) that the foreclosure was conducted in accordance with the 
provisions of this part and with the terms of the notice of default 
and foreclosure saie; 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 431 
(4) a correct statement of the costs of foreclosure, calculated in 
accordance with section 369C; and 
(5) the name of the successful bidder and the amount of the 
successful bid. 
(b) The deed executed by the foreclosure commissioner, the foreclo-
sure conmiissioner's affidavit and any other instnmients submitted 
for recordation in relation to the foreclosure of the security property 
under this part shall be acc^ted for recordation by the re^trar of 
deeds or other appropriate ofncial of the county or counties in which 
the security property is located upon tendering of payment of the 
usual recording fees for such instruments. 
COMPUTATION OF TIME 
SEC. 369G. Periods of time provided for in this part shall be 
calculated in consecutive calendar days including the day or days on 
which the actions or events occur or are to occur for which the period 
of time is provided and including the day on which an event occurs or 
is to occur from which the period is to be calculated. 
12 u s e 3715. 
SEPARABILITY 
SEC. 369H. If any clause, sentence, paragraph or part of this part 1
2 use 3716. 
shall, for any reason, be adjudged by a court of competent jurisdiction 
to be invalid or invsdid as applied to a class of cases, such judgment 
shall not affect, impair, or invalidate the remainder thereof and of 
this part, but shall be confined in its operation to the clause, sentence, 
paragraph, or part thereof directly involved in the controversy in 
which such 
judgment shsdl have been rendered. 
REGULATIONS 
SEC. 3691. The Secretary is authorized to issue such regulations as 1
2 use 3717. 
may be necessary to carry out the provisions of 
this part. 
PART 7—EFFECTIVE DATE 
EFFECTIVE DATE 
SEC. 371. (a) Except as otherwise provided in this subtitle, the 
provisions of this subtitle shall take effect on October 1, 1981. 
(b) The amendments made by sections 324, 325, and 326(a) shall 
apply only with respect to contracts entered into on and after Octo-
ber 1,1981. 
Subtitle B—Banking and Related Programs 
SHORT TITLE 
SEC. 380. This subtitle may be cited as the "Banking and Related 
Programs Authorization Adjustment Act". 
12 u s e 3701 
note. 
Ante, pp. 405, 
406. 
Banking and 
Related 
Programs 
Authorization 
Adjustment Act. 
12 u s e 635 note. 
EXPORT-IMPORT BANK OF THE UNITED STATES 
SEC. 381. (a) Section 7(a) of the Export-Import Bank Act of 1945 (12 
U.S.C. 635e(a)) is amended— 
(1) by inserting "(1)" after "Sec. 7. (a)"; and 
(2) by adding at the end thereof the following: 
95 STAT. 432 
PUBLIC LAW 97-35—AUG. 13, 1981 
Report to 
Congress. 
"(2) Within the limits of funds and borrowing authority available to 
the Bank pursuant to this Act, gross obligations for the principal 
amount of direct loans authorized by the Bank during fiscal years 
1982 and 1983 shall not exceed $10,478,000,000, of which amount 
$5,065,000,000 is designated for fiscal year 1982 and $5,413,000,000 is 
designated for fiscal year 1983.". 
(b) On or before December 15,1981, the Secretary of the Treasury 
shall transmit a report to both Houses of the Congress regarding the 
status of negotiations within the Organization for Economic Coopera-
tion and Development on improving the International Arrangement 
on Guidelines for Officially Supported Export Credits and on the 
status of any other multilateral or bilateral negotiations or discus-
sions for the purpose of improving any other arrangements, stand-
stills, minutes, and practices involving official export financing in 
which the United States participates. Such report shall include— 
(1) an assessment of the progress, if any, that has been made in 
these negotiations, and of the prospects for a successful conclu-
sion to these negotiations within a reasonable time; and 
(2) a recommendation by the Secretary of the Treasury as to 
whether the Congress, in order to improve the prospects for a 
successful conclusion to these negotiations, should enact legisla-
tion for the purpose of enhancing the ability of the Export-Import 
Bank of the United States to offer or support export credit fully 
competitive with the subsidized official export credit offered or 
supported by other governments. 
Appropriation 
authorization. 
Effective date. 
31 u s e 369 note. 
DEPARTMENT 
OF 
THE 
TREASURY 
SEC. 382. (a) Section 5 of the Act of November 8,1978 (92 Stat. 3092; 
Public Law 95-612), is amended— 
(1) in subsection (a), by striking out "$24,000,000 for fiscal year 
1979 and $22,375,000 for fiscal year 1980," and inserting in lieu 
thereof "$22,896,000 for fiscal year 1982, and such sums as may 
be necessary for each fiscal year thereafter"; and 
(2) in subsection (b), by striking out "for fiscal year 1980 not to 
exceed $800,000" and inserting in lieu thereof "not to exceed 
$1,000,000 for fiscal year 1982, and such sums as may be neces-
sary for each fiscal year thereafter,". 
(b) The last sentence of section 3552 of the Revised Statutes (31 
U.S.C. 369) is amended to read as follows: "There are authorized to be 
appropriated for fiscal year 1982 not to exceed $54,706,000 for all 
expenditures (salaries and expenses) of the mints and assay offices 
not herein otherwise provided for.". 
(2) The amendment made by paragraph (1) shall take effect on 
October 1,1981. 
Repeal. 
COUNCIL ON WAGE AND PRICE STABILITY 
SEC. 383. Section 6 of the Council on Wage and Price Stability Act 
(12 U.S.C. 1904 note) is hereby repealed. 
USURY PROVISION 
SEC. 384. Section 501(a)(l)(C)(vi) of the Depository Institutions 
Deregulation and Monetary Control Act of 1980 (12 U.S.C. 1735f-7 
note) is amended by inserting "or a residential manufactured home" 
after "residential real property". 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 433 
RESERVE REQUIREMENTS 
SEC. 385. (a) Section 19(b)(8)(E) of the Federal Reserve Act (12 U.S.C. 
461(b)(8)(E)) is amended by striking out the first two sentences thereof 
and inserting in lieu thereof the following: "This subparagraph 
applies to any depository institution that, on August 1,1978, (i) was 
engaged in business as a depository institution in a State outside the 
continental limits of the United States, and (ii) was not a member of 
the Federal Reserve System at any time on or after such date. Such a 
depository institution shall not be required to maintain reserves 
against its deposits held or maintained at its offices located in a State 
outside the continental limits of the United States until the first day 
of the sixth calendar year which begins after the effective date of the 
Monetary Control Act of 1980.". 
(b) The third sentence of section 19(b)(8)(E) of such Act (12 U.S.C. 
461(b)(8)(E)) is amended by striking out "its deposits" and inserting in 
lieu thereof "such deposits". 
Subtitle C—National Consumer Cooperative Bank Act 
Amendments 
SHORT TITLE 
SEC. 390. This subtitle may be cited as the "National Consumer 
Cooperative Bank Act Amendments of 1981". 
94 Stat. 133. 
National 
Consumer 
Cooperative 
Bank Act 
Amendments 
of 1981. 
12 u s e 3001 
note. 
ACCELERATION OF FINAL GOVERNMENT EQUITY REDEMPTION DATE 
SEC. 391. (a)(1) The National Consumer Cooperative Bank Act (12 
U.S.C. 3001 et seq.) is amended by inserting after section 115 the Post, p. 436. 
following: 
Publication in 
Federal 
Register. 
ACCELERATION OF FINAL GOVERNMENT EQUITY REDEMPTION DATE 
"SEC. 116. (a)(1)(A) The Final Government Equity Redemption Date 1
2 use 3026 
shall occur on December 31,1981, or not later than 10 days after the 
date of the enactment of the first Act providing for appropriations for 
fiscal year 1982 (other than continuing appropriations) for the De-
partment of Housing and Urban Development and Independent 
Agencies, whichever occurs later. 
"(B) Not later than 5 days after the Final Government Equity 
Redemption Date, the Secretary of the Treasury shall publish a 
notice in the Federal Register indicating the day on which the Final 
Government Equity Redemption Date occurred. 
"(2)(A) Before the Final Government Equity Redemption Date, the 
Secretary of the Treasury shall purchase all class A stock for which 
the Congress has appropriated funds. 
"(B) After the Final Government Equity Redemption Date, the 
Secretary of the Treasury shall not purchase any class A stock. 
"(3)(A) On the Final Government Equity Redemption Date, all class 
A stock held by the Secretary of the Treasury on such date shall be 
redeemed by the Bank in exchange for class A notes which are issued 
by the Bank to the Secretary of the Treasury on behalf of the United 
States and which have a total face value equal to the total par value 
of the class A stock which is so redeemed, plus any unpaid dividends 
on such stock. 
"(B) During the period beginning on the Final Government Equity 
Redemption Date and ending on December 31,1990, not less than 30 
95 STAT. 434 
PUBLIC LAW 97-35—AUG. 13, 1981 
12 use 3014. 
Bylaws. 
Effective date. 
12 u s e 3026 
note. 
12 use 3017a. 
Effective date. 
12 use 3017a 
note. 
26 use 1381. 
Definitions. 
26 use 1388. 
12 use 3014. 
percent of the revenue derived from the sale of stock by the Bank, 
other than the sale of class B stock or class C stock, shall be used, 
upon receipt, to retire class A notes. 
"(C) After December 31, 1990, the Bank shall maintain a repay-
ment schedule for class A notes which will assure full repayment of 
all class A notes not later than December 31, 2020. The requirement 
specified in the previous sentence is in addition to the requirement 
regarding the redemption of class A notes which is specified in section 
104(c). 
"(b)(1) The United States shall not be responsible for any obligation 
of the Bank which is incurred after the Final Government Equity 
Redemption Date. 
"(2) As soon as practicable after the date of the enactment of this 
section, the Board shall adopt bylaws which will assist in expediting 
and coordinating the activities which will occur with respect to the 
Final Government Equity Redemption Date.". 
(2) The amendment made by paragraph (1) shall take effect on the 
date of the enactment of this Act. 
(b)(1) Only for purposes of section 107(a) of the National Consumer 
Cooperative Bank Act (12 U.S.C. 3017(a)), class A notes shall be 
deemed to be paid-in capital of the Bank. 
(2) This subsection shall take effect on the day after the Final 
Government Equity Redemption Date. 
TAX STATUS OF THE BANK 
SEC. 392. (a) Section 109 of the National Consumer Cooperative 
Bank Act (12 U.S.C. 3019) is amended— 
(1) by striking out "Until the Final Government Equity Re-
demption Date, but not thereafter, the Bank" and inserting in 
lieu thereof "(a) The Bank"; and 
(2) by adding at the end thereof the following: 
"(b) Notwithstanding any other provision of law, for purposes of 
subchapter T of the Internal Revenue Code of 1954— 
"(1) the Bank shall be treated as a corporation operating on the 
cooperative basis within the meaning of section 1381(a)(2) of such 
Code; 
"(2) the term 'patronage dividend', as defined in section 1388(a) 
of such Code includes, only as such section applies to the Bank, 
any patronage refunds in the form of class B or class C stock or 
allocated surplus that are distributed or set aside by the Bank 
pursuant to section 104(i) of this Act; 
"(3) the terms 'written notice of allocation' and 'qualified 
written notices of allocation', as defined in sections 1388 (b) and 
(c) of such Code, include (to the extent of par value), only as such 
sections apply to the Bank, any class B or class C stock distrib-
uted by the Bank pursuant to section 104(i) of this Act and shall 
also include any allocated surplus set aside by the Bank pursuant 
to section 104(i) of this Act; 
"(4) patrons of the Bank shall be deemed to have consented 
under section 1388(c)(2) of such Code to the inclusion in their 
incomes of any qualified written notices of allocation received by 
such patrons from the Bank; and 
"(5) any amounts required to be included in the incomes of 
patrons of the Bank with respect to class B or class C stock or 
allocated surplus shall be treated as earnings from business done 
by such patrons of the Bank with or for their own patrons.". 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 435 
(b) The amendments made by subsection (a) shall take effect on the 
day after the Final Government Equity Redemption Date. 
Effective date. 
12 u s e 3019 
note. 
BOARD OF DIRECTORS 
Removal. 
Appointment. 
12 u s e 371. 
SEC. 393. (a) Subsections (a), Ot)), (c), and (d) of section 103 of such Act 
(12 U.S.C. 3013) are amended to read as follows: 
"(a) The Bank shall be governed by a Board of Directors (herein-
after in this Act referred to as the 'Board') which shall consist of 15 
members. AH members shall serve for a term of 3 years. After the 
expiration of the term of any member, such member may continue to 
serve until his successor has been elected or has been appointed and 
qualified. Any member appointed by the President may be removed 
for cause by the President. 
"(b)(1) The President shall appoint, by and with the advice and 
consent of the Senate— 
"(A) one member who shall be selected from among proprietors 
of small business concerns, as defined under section 3 of the 
Small Business Act, which are manufacturers or retailers; 
"(B) one member who shall be selected from among the officers 
of the agencies and departments of the United States; and 
"(C) one member who shall be selected from among persons 
having extensive experience in the cooperative field representing 
low-income cooperatives eligible to borrow from the Bank. 
"(2) Twelve members of the Board shall be elected by the holders of 
class B stock and class C stock in accordance with the provisions of 
subsection (d) and the bylaws of the Bank. 
"(c)(1) On the day after the Final Government Equity Redemption Resignation. 
Date, all members of the Board of Directors of the Bank who were 
appointed by the President shall resign, except that— 
"(A) the member who shall have been appointed by the 
President from among proprietors of small business concerns, 
and 
"(B) one member who shall be designated by the President and 
who shall have been appointed by the President from among the 
officers and employees of the agencies and departments of the 
United States Government, 
may continue to serve until their successors have been appointed and 
qualified. 
"(2) Any member of the Board of Directors of the Bank who was 
elected by the holders of class B or class C stock before the Final 
Government Equity Redemption Date shall serve the remainder of 
the term for which such member was elected. 
"(3) Any member appointed pursuant to subsection (b)(1) shall be 
entitled to sit on any committee of the Board, but not more than one 
member so appointed may sit on any one committee. 
"(d)(1) All elections of members of the Board by the holders of class 
B stock and class C stock shall be conducted in accordance with the 
bylaws of the Bank. Such bylaws shall conform to the requirements of 
this section. Nominations for such elections shall be made by the 
following classes of cooperatives: (A) housing, (B) consumer goods, (C) 
low-income cooperatives, (D) consumer services, and (E) all other 
eligible cooperatives. 
"(2)(A) Vacant shareholder directorships shall be filled so that at 
any time when there are three or more shareholder directors on the 
Board, there shall be at least one director representing each of 
the following classes of cooperatives: (i) housing cooperatives, (ii) 
Vacant 
shareholder 
directorships. 
95 STAT. 436 
PUBLIC LAW 97-35—AUG. 13, 1981 
Effective date. 
12 u s e 3013 
note. 
low-income cooperatives, and (iii) consumer goods and services 
cooperatives. 
"(B) Each nominee for a shareholder directorship of a particular 
class shall have at least three years experience as a director or senior 
officer in the class of 
cooperatives to be represented. 
"(C) No one class of cooperatives specified in paragraph (1) shall be 
represented on the Board by more than three directors. . 
(b) Section 103(h) of such Act (12 U.S.C. 3013(h)) is amended— 
(1) in the second sentence thereof, by striking out ", until the 
Final Government Equity Redemption Date" and all that follows 
through "class B and class C stock" and inserting in lieu thereof 
"the member of the Board appointed pursuant to subsection 
(b)(1)(C)"; and 
(2) by adding at the end thereof the following: "The members of 
the Board who are elected by the holders of class B stock and 
class C stock shall be compensated in accordance with the bylaws 
of the Bank. All compensation and expenses paid to the members 
of 
the Board of Directors shall be paid by the Bank.". 
(c) The amendments made by subsections (a) and (b) shall take 
effect on the day after the Final Government Equity Redemption 
Date. 
EXAMINATIONS AND AUDITS; CONFORMING AMENDMENTS 
SEC. 394. (a)(1) Section 115 of the National Consumer Cooperative 
Bank Act (12 U.S.C. 3025) is amended to read as follows: 
Reports to Con-
gress. 
Effective date. 
12 use 3025 
note. 
12 use 3014 
note. 
12 use 3012 
note. 
EXAMINATION AND AUDIT 
"SEC. 115. The Farm Credit Administration and the General 
Accounting Office are hereby authorized and directed to examine and 
audit the Bank. Reports regarding such examinations and audits 
shall be promptly forwarded to both Houses of the Congress. The 
Bank shall reimburse the Farm Credit Administration for the costs of 
any examination or audit conducted by the Farm Credit Administra-
tion.". 
(2) The amendment made by paragraph (1) shall take effect on the 
day after the Final Government Equity Redemption Date. 
(b) The second sentence of section 108(a) of such Act (12 U.S.C. 
3018(a)) is amended by striking out "October 1,1983" and inserting in 
lieu thereof "October 1,1985". 
(c)(1) The first sentence of section 104(a) of such Act (12 U.S.C. 
3014(a)) is amended by inserting "by other public or private inves-
tors," after "by public bodies,". 
(2) The amendment made by paragraph (1) shall take effect on the 
day after the Final Government Equity Redemption Date. 
(d)(1) The last sentence of section 102 of such Act (12 U.S.C. 3012) is 
amended to read as follows: "In determining whether a public 
offering is taking place for the purpose of the Securities Act of 1933, 
there shsdl be excluded from consideration all class B and class C 
stock purchases which took place prior to the date of the enactment of 
the National Consumer Cooperative Bank Act Amendments of 
1981.". 
(2) The amendment made by paragraph (1) shall take effect on the 
day after the Final Government Equity Redemption Date. 
(e)(1) The first sentence of section 105(a) of such Act (12 U.S.C. 
3015(a)) is amended by striking out "entirely owned" and inserting in 
lieu thereof "primarily owned . 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 437 
(2) The amendment made by paragraph (1) shall take effect on the 
day after the Final Government Equity Redemption Date. 
(f) Section 105(a)(5) of such Act (12 U.S.C. 3015(a)(5)) is amended by 
inserting "(except that this requirement shall not apply to any 
housing cooperative in existence on March 21, 1980, which did not 
meet such requirement on such date)" after "one vote per person 
basis". 
(g)(1) The second sentence of section 107(a) of such Act (12 U.S.C. 
3017(a)) is amended by striking out "after consultation with the 
Secretary of the Treasury". 
(2) The amendment made by paragraph (1) shall take effect on the 
day after the Final Government Equity Redemption Date. 
NONPROFIT CORPORATION 
SEC. 395. (a) The National Consumer Cooperative Bank Act (12 
U.S.C. 3001 et seq.) is amended by inserting after section 210 the 
following: 
" E S T A B L I S H M E N T O F NONPROFIT CORPORATION 
"SEC. 211. (a)(1) Upon the incorporation of the nonprofit corpora-
tion described in subsection (b), the Office of Self-Help Development 
and Technical Assistance is hereby abolished. 
"(2)(A) If the nonprofit corporation described in subsection (b) 
agrees to accept the liabilities of the Office, the Bank, notwithstand-
ing any other provision of law, shall transfer all assets, liabilities, and 
property of the Office to such nonprofit corporation on the day on 
which such nonprofit corporation is incorporated. 
"(B) Such assets shall include all sums which are appropriated to 
the Office by the Congress and all sums which are contained in the 
Account established pursuant to section 202. If any such sums are 
appropriated after the date on which the transfer described in 
subparagraph (A) occurs, the Bank shall promptly transfer such sums 
to such nonprofit corporation. 
"(b)(1) As soon as possible after the date of the enactment of this 
section, the Board shall establish a nonprofit corporation under the 
laws of the District of Columbia and, notwithstanding the laws of the 
District of Columbia, name the directors of such nonprofit corpora-
tion. 
"(2) Notwithstanding the laws of the District of Columbia, the 
Board of Directors of such nonprofit corporation shall— 
"(A) select an executive director who shall be responsible for 
the administration of such nonprofit corporation; 
"(B) set the compensation of such executive director and the 
other employees of such nonprofit corporation; 
"(C) promulgate and publish the policies of such nonprofit 
corporation and make such policies available at all times to 
eligible cooperatives; and 
"(D) perform the functions specified in subparagraphs (A) and 
(C) of paragraph (3). 
"(3) Such nonprofit corporation shall only perform— 
"(A) the functions which are authorized to be performed 
pursuant to sections 203 through 208 and section 210; 
"(B) such functions as are necessary to comply with the laws 
under which it was incorporated in the District of Columbia; and 
"(C) such functions as are necessary to remain qualified as an 
organization described in section 501(c)(3) of the Internal Reve-
nue Code of 1954. 
Effective date. 
12 u s e 3015 
note. 
Effective date. 
12 u s e 3017 
note. 
12 u s e 3051. 
12 u s e 3042. 
Functions. 
12 use 
3043-3048, 
3050. 
26 u s e 501. 
95 STAT. 438 
PUBLIC LAW 97-35—AUG. 13, 1981 
"(4) Notwithstanding any other provision of law— 
"(A) the Bank may provide administrative or staff support to 
such nonprofit corporation; and 
"(B) any member of the Board of Directors of the Bank may 
serve as a member of the Board of Directors of such nonprofit 
corporation. 
"(c)(1) Notwithstanding any other provision of law, such nonprofit 
corporation shall be deemed to be, and treated as, qualified as an 
organization described in section 501(c)(3) of the Internal Revenue 
26 use 501. 
Code of 1954 from the date on which such nonprofit corporation is 
established under the laws of the District of Columbia until the date 
on which the Internal Revenue Service makes a final determination 
on the application which such nonprofit corporation will submit to 
the Internal Revenue Service seeking status as an organization 
qualifying under such section. 
"(2) When performed by such nonprofit corporation, the functions 
described in subsection (b)(3)(A) shall be deemed to be performed for 
'charitable purposes' within the meaning of section 501(c)(3) of the 
Internal Revenue Code of 1954. 
Contributions. 
"(d)(1) The Board of Directors of the Bank may make contributions 
to the nonprofit corporation in such amounts as the Board of 
Directors of the Bank deems appropriate, except that— 
"(A) such contributions may be made only out of the Bank's 
earnings, determined in accordance with generally accepted 
accounting principles; and 
"(B) the Bank shall set aside amounts sufficient to satisfy its 
obligations to the Secretary of the Treasury for payments of 
principal and interest on class A notes and other debt before 
making any contributions to such nonprofit corporation. 
"(2) During any period in which the nonprofit corporation de-
scribed in subsection (b) is qualified as an organization described in 
section 501(c)(3) of the Internal Revenue Code of 1954, contributions 
made by the Bank pursuant to paragraph (1) shall be treated as 
charitable contributions within the meaning of section 170(c)(2) of the 
26 use 170. 
Internal Revenue Code of 1954, and may be deducted notwithstand-
ing the provisions of section 170(b)(2) of such Code. 
(3) During any period in which the nonprofit corporation de-
scribed in subsection (b) is qualified as an organization described in 
section 501(c)(3) of the Internal Revenue Code of 1954, contributions 
to such nonprofit corporation by any person shall qualify £is charita-
ble contributions, as defined in section 170(c) of such Code, for 
purposes of the charitable contribution deduction provided for in 
section 170(a) of such Code, and shall also qualify for the deductions 
for estate and gift tax purposes provided for in sections 2055 and 2522 
26 use 2055, 
of the Internal Revenue Code of 1954. 
^^2^- 
"(e) Notwithstanding the laws of the District of Columbia, the 
Board of Directors of such nonprofit corporation shall adopt and 
publish its own conflict of interest rules which shall be no less 
stringent in effect than the conflict of interest provisions adopted by 
12 use 3024. 
the Board of Directors of the Bank pursuant to section 114.'\ 
(b)(1) The first sentence of section 202 of the National Consumer 
Cooperative Bank Act (12 U.S.C. 3042) is amended by striking out 
"$10,000,000 for the fiscal year ending September 30, 1979, and for 
the next two succeeding fiscal years an aggregate amount not to 
exceed $65,000,000, for the purpose of making advances under section 
12 use 3043. 
203 of this Act" and by inserting in lieu thereof "for the purpose of 
making advances under section 203 of this Act an amount not to 
exceed $14,000,000 for fiscal year 1982". 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 439 
(2) Section 104(a) of such Act (12 U.S.C. 3014(a)) is amended by 
striking out the second and third sentences thereof and inserting in 
lieu thereof the following: "There are authorized to be appropriated 
not to exceed $47,000,000 for fiscal year 1982 for purposes of purchas-
ing class A stock.". 
(3) The amendments made by paragraphs (1) and (2) shall take 
effect on October 1,1981. 
CONFORMING AMENDMENTS; DEFINITIONS 
SEC. 396. (a) For purposes of this subtitle, the term "Final Govern-
ment Equity Redemption Date" shall have the same meaning given 
such term in section 101(5) of the National Consumer Cooperative 
Bank Act (12 U.S.C. 3011(5)). 
(b) The first sentence of section 101 of the National CJonsumer 
Cooperative Bank Act (12 U.S.C. 3011) is amended to read as follows: 
"The Congress of the United States hereby creates and charters a 
body corporate to be known as the National Consumer Cooperative 
Bank (hereinafter in this Act referred to as the 'Bank').". 
(cXD Section 104(b) of such Act (12 U.S.C. 3014(b)) is amended— 
(A) in the first sentence, by striking out "class A, class B," and 
inserting in lieu thereof "class B"; and 
(B) by amending the second and third sentences to read as 
follows: "Class A notes which are held by the United States shall 
have first preference with respect to assets and interest pay-
ments over all classes of stock issued by the Bank. So long as any 
class A notes are outstanding, the Bank shall not pay any 
dividend on any class of stock at a rate greater than the statutory 
interest rate payable on class A notes.". 
(2) Section 104(c) of such Act (12 U.S.C. 3014(c)) is amended— 
(A) by striking out the first sentence thereof; 
(B) in the second sentence— 
(i) by striking out "class A stock" and inserting in lieu 
thereof "class A notes"; 
(ii) by striking out "dividends" each place it appears 
therein and inserting in lieu thereof "interest payments"; 
and 
(iii) by striking out": Provided, That" and inserting in lieu 
thereof ", except that"; 
(C) in the third sentence, by striking out "dividends" and 
inserting in lieu thereof "interest payments"; 
(D) by amending the fourth sentence to read as follows: "Any 
such interest payment may be deferred by the Board of Directors 
with the approval of the Secretary of the Treasury, except that 
any interest payment so deferred shall bear interest at a rate 
equal to the rate determined pursuant to the first sentence of 
this subsection."; 
(E) in the fifth sentence, by striking out "any other class of 
stock" and all that follows through the end thereof and inserting 
in lieu thereof "any class of stock at any time when the deferred 
interest pa)rments on class A notes shall not have been paid in 
full, together with any unpaid interest on such notes."; 
(F) in the sixth sentence— 
(i) by striking out "class A stock" each place it appears 
therein and inserting in lieu thereof "class A notes"; 
(ii) by striking out "other"; 
(iii) by striking out "dividends" and inserting in lieu 
thereof "interest payments"; and 
Appropriation 
authorization. 
Effective date. 
12 u s e 3014 
note. 
12 u s e 3012 
note. 
89-194 0—82 
30:QL3 
95 STAT. 440 
PUBLIC LAW 97-35—AUG. 13, 1981 
(iv) by striking out "par value" and inserting in lieu 
thereof "face value"; and 
(G) in the seventh sentence— 
(i) by striking out "class A stock" each place it appears 
therein and inserting in lieu thereof "class A notes"; 
(ii) by striking out "cumulative dividends" and inserting 
in lieu thereof "interest payments"; 
(iii) by striking out": Provided, That" and inserting in lieu 
thereof ", except that"; 
(iv) bv striking out "of shares" after "fiscal year a 
number ; and 
(v) by striking out "par value" each place it appears 
therein and inserting in lieu thereof "face value". 
(3) Section 104(e) of such Act (12 U.S.C. 3014(e)) is amended— 
(A) by striking out "class A stock" each place it appears therein 
and inserting in lieu thereof "class A notes"; and 
(B) in the last sentence thereof, by striking out "statutory 
dividend" and inserting in lieu thereof "statutory interest pay-
ment". 
(4) Section 104(f) of such Act (12 U.S.C. 3014(f)) is amended— 
(A) by strikiiig out "class A stock is" and inserting in lieu 
thereof "class A notes are"; and 
(B) by striking out "class A stock as to dividends" and inserting 
in lieu thereof "class A notes as to dividends, interest pay-
ments,". 
(5) Section 104(gX2)(B) of such Act (12 U.S.C. 3014(g)(2)(B)) is 
amended by striking out "section 103(c)" and inserting in lieu thereof 
"section 103(d)(2)(A).". 
(6) The second sentence of section 104(h) of such Act (12 U.S.C. 
3014(h)) is hereby repealed. 
(7) The first sentence of section 104(i) of such Act (12 U.S.C. 3014(i)) 
is amended— 
(A) by striking out "cumulative dividends on class A stock" and 
inserting in lieu thereof "interest payments on class A notes"; 
and 
(B) by striking out "class A stock in" and inserting in lieu 
thereof "class A notes in". 
(d) Section 107 of such Act (12 U.S.C. 3017) is amended— 
(1) by striking out subsection (b); and 
(2) by redesignating subsections (c) and (d) as subsections O
t
)
) 
and (c), respectively. 
(e) The second sentence of section 108(b) of such Act (12 U.S.C. 
3018(b)) is amended by striking out ", but so long as" and all that 
follows through "class B stock in the Bank". 
(f) The last sentence of section 114 of such Act (12 U.S.C. 3024) is 
hereby repealed. 
(g) Section 203 of such Act (12 U.S.C. 3043) is amended by striking 
out "out of 
the Account" each place it appears therein. 
(h)(1) Section 201 of the Government Corporation Control Act (31 
U.S.C. 856) is amended by striking out "(7) the Rural Telephone 
Bank" and all that follows through the end thereof and inserting in 
lieu thereof "(7) the Rural Telephone Bank, (8) the United States 
Railway Association, and (9) the National Credit Union Administra-
tion Central Liquidity Facility.". 
(2) Section 302 of the Government Corporation Control Act (31 
U.S.C. 867) is amended— 
(A) by inserting "or" after "the Regional Banks for Coopera-
tives,"; and 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 441 
(B) by striking out "or the National Consumer Cooperative 
Bank,". 
(3) The second sentence of section 303(d) of the Government 
Corporation Control Act (31 U.S.C. 868(d)) is amended by striking out 
"National Consumer Cooperative Bank,". 
(4) Section 5315 of title 5, United States Code, is amended by 
striking out "Director, Office of Self-Help Development and Techni-
cal Assist^ce, National Consumer Cooperative Bank.". 
(i) The amendments made by subsections (b) through (h) shall take 
effect on the day after the Final Government Equity Redemption 
Date. 
TITLE IV—THE DISTRICT OF COLUMBIA 
LIMITATION ON THE AMOUNT OP FUNDS AUTHORIZED AND EXPENDED 
FOR LOANS FOR CAPITAL PROJECTS 
SEC. 401. (a) Subsection (c) of section 723 of the District of Columbia 
Self-Govemment and Governmental Reorganization Act (D.C. Code, 
sec. 47-241 note) is amended to read as follows: 
"(c) Subject to the limitations contained in section 603(b), there is 
authorized to be appropriated to make loans under this section the 
sum of $155,000,000 for the fiscal year ending on September 30,1982, 
the sum of $155,000,000 for the fiscal year ending on September 30, 
1983, and the sum of $155,000,000 for the fiscal year ending on 
September 30,1984.". 
(b) The amendment made by this section shall take effect on 
October 1,1981. 
TITLE V—EDUCATION PROGRAMS 
SHORT TITLE 
SEC. 501. This title may be cited as the "Omnibus Education 
Reconciliation Act of 1981". 
Subtitle A—Authorization Savings for Fiscal Years 
1982,1983, and 1984 
Effective date. 
12 u s e 3011 
note. 
D.C. Code 
47-228. 
Effective date. 
Omnibus 
Education 
Reconciliation 
Act of 1981. 
20 u s e 3489 
note. 
EFFECT ON OTHER LAWS; GENERAL RESTRICTIONS 
SEC. 502. (a) Any provision of law which is not consistent with the 
provisions of this subtitle is hereby superseded and shall have only 
such force and effect during each of the fiscal years 1982,1983, and 
1984 which is consistent with this subtitle. 
(b) Notwithstanding any authorization of appropriations for fiscal 
year 1982, 1983, or 1984 contained in any provision of law which is 
specified in this subtitle (including any authorization of appropri-
ations contained in section 528 of this title), no funds are authorized 
to be appropriated in excess of the limitations imposed upon appro-
priations by the provisions of 
this subtitle. 
(c) No funds are authorized to be appropriated for the fiscal year 
1982, 1983, or 1984 to pay for the expenses of any advisory council 
which provides advice to a program for which there are no authoriza-
tions of appropriations made under this subtitle or made by an 
amendment made by this subtitle. 
20 u s e 3489 
note. 
95 STAT. 442 
PUBLIC LAW 97-35—AUG. 13, 1981 
ACT OF MARCH 2, 1867 (HOWARD UNIVERSITY) 
2
0 use 123 note. 
SEC. 503. The total amount of appropriations to carry out the Act of 
March 2,1867 (14 Stat. 439), shall not exceed $145,200,000 for each of 
the fiscal years 1982,1983, and 1984. 
ACT OF SEPTEMBER 23, 1950 (IMPACT AID) 
SEC. 504. The total amount of appropriations to carry out the Act of 
20 use 631 note. September 23,1950 (Public Law 815,81st Congress), shall not exceed 
$20,000,000 for each of 
the 
fiscal 
years 1982,1983, and 1984. 
ACT OF SEPTEMBER 30, 1950 (IMPACT AID) 
SEC. 505. (aXD The total amount of appropriations to make pay-
20 use 237 note, ments under the Act of September 30, 1950 (Public Law 874, 81st 
Congress), shall not exceed $455,000,000 for each of the fiscal years 
1982,1983, and 1984 of 
which— 
(A) $10,000,000 shall be available for payments under section 2 
ofsuchAct;and 
(B) $10,000,000 shall be available for payments under section 7 
of 
such Act. 
20 use 237. 
Funds available for section 2 of such Act for each such fiscal year 
shall also be available for section 16 of the Act of September 23,1950 
20 use 646. 
(Public Law 815,81st Congress). 
20 use 238. 
(2) Section 3(dX2) of such Act is amended by adding at the end 
thereof the following new subparagraph: 
"(EXi) The amount of the entitlement of any local educational 
agency under this section for fiscal year 1982 with respect to children 
determined under subsection (b) with respect to such agency shall be 
the amount determined under paragraph (1) with respect to such 
children multiplied by 66% per centum. 
'Xii) The amount of the entitlement of any local educational agency 
under this section for fiscal year 1983 with respect to children 
determined under subsection (b) with respect to such agency shall be 
the amount determined under paragraph (1) with respect to such 
children multiplied by 33 V
a per centum. 
"(iii) The amount of the entitlement of any local educational 
agency under this section for fiscal year 1984 or any succeeding fiscal 
year with respect to children determined under subsection (b) with 
respect to such agency shall be zero.". 
20 use 237 note. 
(3) If the amount appropriated for making pa3anents under such 
Act for fiscal year 1982,1983, or 1984 is not sufficient to pay in full the 
20 use 237. 
sum of the entitlements established under section 2 of such Act, then 
the amount of each such entitlement shall be ratably reduced. If, for 
any fiscal year in which such a reduction is required, additional 
amounts are made available for making such payments, then such 
entitlements shall be increased on the same basis as they were 
reduced. 
20 use 238 note. 
(b) No funds are authorized to be appropriated for fiscal year 1982, 
1983, or 1984 for the purpose of making payments— 
(1) on the basis of entitlements determined under section 3(e) 
20 use 238, 239. 
or 4 of such Act; or 
94 Stat. 1500. 
(2) under sections 4A or 6 of such Act. 
20 use 239a, 
^^^i^ Subsection (d) of section 402 of the Act of September 30,1950 
20 use 243. 
(Public Law 874, 81st Congress), shall not apply during fiscal year 
1982, or any succeeding 
fiscal 
year. 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 443 
(2) Funds appropriated to the Department of Defense shall be 
available to the Secretary of Defense for payments and arrangements 
of the khid that may be made by the Secretary of Education under 
section 6 of the Act of September 30, 1950 (Public Law 874, 81st 
Congress). 
(3) The Secretaiy of Defense shall delegate to the Secretary of 
Education responsibility for the conduct of programs with funds so 
available. 
ADULT EDUCATION ACT 
SEC. 506. The total amount of appropriations to carry out the Adult 
Education Act shall not exceed $100,000,000 for each of the fiscal 
years 1982,1983, and 1984. 
ALCOHOL AND DRUG ABUSE EDUCATION ACT 
SEC. 507. The total amount of appropriations to carry out the 
Alcohol and Drug Abuse Education Act shall not exceed $3,000,000 
for fiscal year 1982. 
CAREER EDUCATION INCENTIVE AC?! 
SEC. 508. The total amount of appropriations to carry out the 
Career Education Incentive Act shall not exceed $10,000,000 for fiscal 
year 1982. 
CIVIL RIGHTS ACT OF 1964 
SEC. 509. The total amount of appropriations to carry out sections 
403, 404, and 405 of title IV of the Civil Rights Act of 1964 (42 U.S.C. 
2000c et seq.) shall not exceed $37,100,000 for each of the fiscal years 
1982,1983, and 1984. 
20 u s e 241 note. 
20 u s e 241. 
20 u s e 241 note. 
20 u s e 1211 
note. 
20 u s e 1201 
note. 
21 u s e 1002 
note. 
21 u s e 1001 
note. 
20 u s e 2603 
note. 
20 u s e 2601 
note. 
42 u s e 2000C-2 
note. 
DEPARTMENT OP EDUCATION 
SEC. 510. The total amount of appropriations for salaries and 
expenses of the Department of Education shall not exceed 
$308,000,000 for each of the fiscal years 1982, 1983, and 1984, of 
which— 
(1) $49,396,000 shall be available for the Office of Civil Rights; 
and 
(2) $12,989,000 shall be available for the Office of the Inspector 
General; 
for each such year. 
EDUCATION AMENDMENTS OF 1978 
SEC. 511. (a) No funds are authorized to be appropriated to carry out 
section 1015 of the Education Amendments of 1978 for fiscal year 
1982,1983, or 1984. 
(b)(1) No funds are authorized to be appropriated to carry out part 
A of title XV of the Education Amendments of 1978 for fiscal year 
1982,1983, or 1984. 
(2) No funds are authorized to be appropriated to carry out part B of 
title XV of the Education Amendments of 1978 for fiscal year 1982, 
1983, or 1984. 
(3) The total amount of appropriations to carry out section 1524 of 
the Education Amendments of 1978 relating to general assistance for 
the Virgin Islands shall not exceed $2,700,000 for each of the fiscal 
years 1982,1983, and 1984. 
Appropriation 
authorization. 
20 u s e 3488 
note. 
94 Stat. 1497. 
20 u s e 236 note. 
22 u s e 287 note. 
20 u s e 1123 
note. 
20 u s e 1172 
note. 
92 Stat. 2379. 
95 STAT. 444 
PUBLIC LAW 97-35—AUG. 13, 1981 
20 u s e 1231a 
note. 
94 Stat. 1499. 
20 u s e 1221-1 
note. 
94 Stat. 1502. 
(4) No funds are authorized to be appropriated to carry out section 
1526 of the Education Amendments of 1978 for fiscal year 1982,1983, 
or 1984. 
EDUCATION AMENDMENTS OF 1980 
SEC. 512. (a) No funds are authorized to be appropriated to carry out 
part D of title XIII of the Education Amendments of 1980 for fiscal 
year 1982,1983, or 1984. 
(b) No funds are authorized to be appropriated to carry out part H 
of title XIII of the Education Amendments of 1980 for fiscal year 1982, 
1983, or 1984. 
20 u s e 2702 
note. 
20 u s e 2701. 
20 u s e 2761, 
2771, 2781. 
20 u s e 2722. 
20 u s e 2921 
note. 
20 u s e 2943 
note. 
20 u s e 2954 
note. 
20 u s e 2963 
note. 
20 u s e 2971 
note. 
20 u s e 2983 
note. 
20 u s e 2992 
note. 
20 u s e 3003 
note. 
20 u s e 3018 
note. 
20 u s e 3024 
note. 
20 u s e 3034 
note. 
20 u s e 3041 
note. 
20 u s e 3057 
note. 
20 u s e 3062 
note. 
94 Stat. 1471. 
20 u s e 3065 
note. 
E L E M E N T A R Y A N D S E C O N D A R Y E D U C A T I O N ACT O P 
1965 
SEC. 513. (a) The total amount of appropriations to carry out title I 
of the Elementary and Secondary Education Act of 1965 shall not 
exceed $3,480,000,000 for fiscal year 1982. From the amount appropri-
ated in accordance with the preceding sentence, not more than 14.6 
percent of such amount for fiscal year 1982 shall be available to carry 
out sections 141, 146, and 151, of such Act. After the requirement of 
the preceding sentence is met, the Secretary of Education shall 
assure that the amount available for section 117 of such Act bears the 
same ratio to the amount appropriated in such fiscal year for title I of 
such Act as the amount available for such section 117 in fiscal year 
1980 bore to the total amount appropriated for title I of such Act in 
fiscal year 1980. 
O
b
) The total amount of appropriations to carry out title II of the 
Elementary and Secondary Education Act of 1965 shall not exceed 
$31,500,000 for fiscal year 1982. 
(c)(1) The total amount of appropriations to carry out section 303 of 
the Elementary and Secondary Education Act of 1965 shall not 
exceed $25,500,000 for fiscal year 1982. 
(2) The total amount of appropriations to carry out part B of title III 
of such Act shall not exceed $1,380,000 for fiscal year 1982. 
(3) The total amount of appropriations to carry out part C of title III 
of such Act shall not exceed $3,150,000 for fiscal year 1982. 
(4) No funds are authorized to be appropriated to carry out part D of 
title III of such Act for fiscal year 1982. 
(5) The total amount of appropriations to carry out part E of title III 
of such Act shall not exceed $3,600,000 for fiscal year 1982. 
(6) No funds are authorized to be appropriated to carry out part F of 
title III of such Act for fiscal year 1982. 
(7) The total amount of appropriations to carry out part G of title III 
of such Act shall not exceed $1,000,000 for fiscal year 1982. 
(8) No funds are authorized to be appropriated to carry out part H 
of title III of such Act for fiscal year 1982. 
(9) No funds are authorized to be appropriated to carry out part I of 
title III of such Act for fiscal year 1982. 
(10) No funds are authorized to be appropriated to carry out part J 
of title III of such Act for fiscal year 1982. 
(11) No funds are authorized to be appropriated to carry out part K 
of title III of such Act for fiscal year 1982. 
(12) The total amount of appropriations to carry out part L of title 
III of such Act shall not exceed $3,000,000 for fiscal year 1982. 
(13) No funds are authorized to be appropriated to carry out part M 
of title III of such Act for fiscal year 1982. 
(14) No funds are authorized to be appropriated to carry out part N 
of title III of such Act for fiscal year 1982. 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 445 
(d)(1) The total amount of appropriations to carry out part B of title 
IV of the Elementary and Secondary Education Act of 1965 shall not 
exceed $161,000,000 for fiscal year 1982. 
(2) The total amount of appropriations to carry out part C of title IV 
of such Act shall not exceed $66,130,000 for fiscal year 1982. 
(3) The total amount of appropriations to carry out part D of title IV 
of such Act shall not exceed $15,000,000 for fiscal year 1982. 
(e)(1) The total amount of appropriations to carry out part B of title 
V of the Elementary and Secondary Education Act of 1965 shall not 
exceed $42,075,000 for fiscal year 1982. 
(2) No funds are authorized to be appropriated to carry out part C of 
title V of such Act for fiscal year 1982. 
(f) The total amount of appropriations to carry out title VI of the 
Elementary and Secondary Education Act of 1965 shall not exceed 
$149,292,000 for fiscal year 1982. 
(g) The total amount of appropriations to carry out title VII of the 
Elementary and Secondary Education Act of 1965 shall not exceed 
$139,970,000 for each of the fiscal years 1982, 1983, and 1984. 
(h) The total amount of appropriations to carry out title VIII of the 
Elementary and Secondary Education Act of 1965 shall not exceed 
$3,138,000 for fiscal year 1982. 
(i)(l) The total amount of appropriations to carry out part A of title 
IX of the Elementary and Secondary Education Act of 1965 shall not 
exceed $5,652,000 for fiscal year 1982. 
(2) No funds are authorized to be appropriated to carry out part B of 
title IX of such Act for fiscal year 1982. 
(3) The total amount of appropriations to carry out part C of title IX 
of such Act shall not exceed $6,000,000 for each of the fiscal years 
1982,1983, and 1984. 
(4) No funds are authorized to be appropriated to carry out part D of 
title IX of such Act for fiscal year 1982. 
(5) The total amount of appropriations to carry out part E of title IX 
of such Act shall not exceed $2,250,000 for fiscal year 1982. 
(j)(l) Funds appropriated in an appropriation Act for fiscal year 
1982 for title I of the Elementary and Secondary Education Act of 
1965 which are intended for use by a State or local educational agency 
in the school year 1982-1983 shall remain available to such agency 
but shall be expended and used in accordance with chapter 1 of the 
Education Consolidation and Improvement Act of 1981. 
(2) Funds appropriated in an appropriation Act for fiscal year 1981 
for title I of the Elementary and Secondary Education Act of 1965 
which are not obligated by a State or local educational agency prior to 
July 1, 1982, shall remain available to such agency but shall be 
expended and used in accordance with chapter 1 of the Education 
Consolidation and Improvement Act of 1981. 
20 u s e 3101 
note. 
20 u s e 3111 
note. 
20 u s e 3121 
note. 
20 u s e 3163 
note. 
20 u s e 3171 
note. 
20 u s e 3194 
note. 
20 u s e 3222 
note. 
20 u s e 3282 
note. 
20 u s e 3313 
note. 
20 u s e 3331 
note. 
20 u s e 3348 
note. 
20 u s e 3352 
note. 
20 u s e 3367 
note. 
20 u s e 2702 
note. 
Post, p. 464. 
EDUCATION CONSOLIDATION AND IMPROVEMENT ACT OF 1981 
SEC. 514. (a)(1) The total amount of appropriations to carry out 
chapter 1 of the Education Consolidation and Improvement Act of 
1981 shall not exceed $3,480,000,000 for each of the fiscal years 1983 
and 1984. 
(2) From the amount appropriated in accordance with the para-
graph (1), not more than 14.6 percent of such amount for each of the 
fiscal years 1983 and 1984 shall be available to carry out programs 
described in sections 141, 146, and 151 of the Elementary and 
Secondary Education Act of 1965. After the requirement of the 
preceding sentence is met, the Secretary of Education shall assure 
20 u s e 3802 
note. 
20 u s e 2761, 
2771, 2781. 
95 STAT. 446 
PUBLIC LAW 97-35—AUG. 13, 1981 
20 u s e 2722. 
Post, p. 464. 
20 u s e 2701 
Post, p. 469. 
Post, p. 469. 
that the amount available for the programs described in section 117 
of the Elementary and Secondary Education Act of 1965 bears the 
same ratio to the amount appropriated in each such fiscal year for 
chapter 1 of the Education Consolidation and Improvement Act of 
1981 as the amount available for such section 117 in fiscal year 1980 
bore to the total amount appropriated for title I of the Elementary 
and Secondary Education Act of 1965 in fiscal year 1980. 
(bXD The total amount of appropriations to carry out chapter 2 of 
the Education Consolidation and Improvement Act of 1981 shall not 
exceed $589,368,000 for each of the fiscal years 1982,1983, and 1984. 
(2XA) Funds appropriated in an appropriation Act for fiscal year 
1982 for any program described in section 561(a) (1), (2), (3), (5), and (6) 
of this Act which are intended for use by a State or local educational 
agency in the school year 1982-1983 shall remain available to such 
agency but shall be expended and used in accordance with chapter 2 
of the Education Consolidation and Improvement Act of 1981. 
(B) Funds appropriated in an appropriation Act for fiscal year 1981 
for any program described in section 561(a) (1), (2), (3), (5), and (6) of 
this Act which are not obligated by a State or local educational 
agency prior to July 1, 1982, shall remain avsiilable to such agency 
but shall be expended and used in accordance with chapter 2 of the 
Education (Consolidation and Improvement Act of 1981. 
94 Stat. 1498. 
20 u s e 1221e 
note. 
20 u s e 1221e-l 
note. 
20 u s e 1221e-la 
note. 
GENERAL EDUCATION PROVISIONS ACT 
SEC. 515. (a) The total amount of appropriations to carry out section 
405 of the (Jeneral Education Provisions Act shall not exceed 
$55,614,000 for each of the fiscal years 1982,1983, and 1984. 
(b) The total amount of appropriations to carry out section 406 of 
the Genered Education Provisions Act shall not exceed $8,947,000 for 
each of the fiscal years 1982,1983, and 1984. 
(c) The total amount of appropriations to carry out section 406A(1) 
of the General Education Provisions Act shall not exceed $1,875,000 
for fiscal year 1982. 
(d) The total amount of appropriations to carry out section 406A(2) 
of the General Education Provisions Act shall not exceed $5,000,000 
for each of the fiscal years 1982,1983, and 1984. 
94 Stat. 1373. 
20 u s e 1005 
note. 
94 Stat. 1377. 
20 u s e 1019 
note. 
94 Stat. 1384. 
20 u s e 1029 
note. 
94 Stat. 1385. 
20 u s e 1031 
note. 
94 Stat. 1386. 
20 u s e 1041 
note. 
20 u s e 1047J 
note. 
HIGHER EDUCATION ACT OF 1965 
SEC. 516. (aXD No funds are authorized to be appropriated to carry 
out part A of title I of the Higher Education Act of 1965 for fiscal year 
1982,1983, or 1984. 
(2) The total amount of appropriations to carry out part B of title I 
of such Act shall not exceed $8,000,000 for fiscal year 1982, 1983, or 
1984. 
(bXD The total amount of appropriations to carry out part A of title 
II of the Higher Education Act of 1965 shall not exceed $5,000,000 for 
each of the fiscal years 1982,1983, and 1984. 
(2) The total amount of appropriations to carry out part B of title II 
of such Act shall not exceed $1,200,000 for each of the fiscal years 
1982,1983, and 1984. 
(3) The total amount of appropriations to carry out part C of title II 
of such Act shall not exceed $6,000,000 for each of the fiscal years 
1982,1983, and 1984. 
(4) No funds are authorized to be appropriated to carry out part D of 
title II of such Act for fiscal year 1982,1983, or 1984. 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 447 
(5) No funds available for carrying out part A and section 224 of 
part B of such title for any such fiscal year shall be made available to 
any institution, organization, or agency which is a recipient of 
assistance under part C of such title. 
(cXD The total amount of appropriations to carry out title III of the 
Higher Education Act of 1965 shall not exceed $129,600,000 for each 
of the fiscal years 1982,1983, and 1984. 
(2) Section 381(a)(1) of the Higher Education Act of 1965 is amended 
by striking out the period at the end of clause (B) and by inserting in 
lieu thereof a semicolon and the word "or", and by adding at the end 
thereof the following new clause: 
"(C) which is an institution of higher education which includes 
a substantial number of minority and educationally disadvan-
taged students, which provides a medical education program 
which leads to a doctor of medicine degree or which is not less 
than a two year program fully acceptable toward such a degree, 
and which in fiscal year 1980 received a grant as a two year 
medical school under section 788(a) of the Health Professions 
Educational Assistance Act of 1976.". 
(d)(1)(A) The total amount of appropriations to carry out subpart 1 
of part A of title IV of the Higher Education Act of 1965 shall not 
exceed $2,650,000,000 for fiscal year 1982, $2,800,000,000 for fiscal 
year 1983, and $3,000,000,000 for fiscal year 1984. 
(B) If the Secretary of Education determines that it is necessary to 
waive any provision of subpart 1 of part A of title IV of the Higher 
Education Act of 1965 to meet the authorizations specified in subpar-
agraph (A) of this paragraph, the Secretary shall notify the Commit-
tee on Labor and Human Resources of the Senate and the Committee 
on Education and Labor of the House of Representatives. The 
notification shall contain a description of each provision of such 
subpart that the Secretary proposes to waive and the reasons for the 
waiver. The Secretary may waive each provision contained in the 
notification submitted under this subparagraph if the Committee on 
Labor and Human Resources of the Senate and the Committee on 
Education and Labor of the House of Representatives within 30 days 
after the receipt approve of the waiver of that provision. Before the 
Secretary may act under this subparagraph, each such committee 
must approve of the waiver of each provision requested in the 
notification. 
(2) The total amount of appropriations to carry out subpart 2 of part 
A of title IV of such Act shall not exceed $370,000,000 for each of the 
fiscal years 1982,1983, and 1984. 
(3) The total amount of appropriations to carry out subpart 3 of part 
A of title IV of such Act shall not exceed $76,800,000 for each of the 
fiscal years 1982,1983, and 1984. 
(4) The total amount of appropriations to carry out subpart 4 of part 
A of title IV of such Act shall not exceed $165,000,000 for the fiscal 
year 1982, $170,000,000 for each of the fiscal years 1983 and 1984. 
(5) The total amount of appropriations to carry out subpart 5 of part 
A of title IV of such Act shall not exceed $7,500,000 for each of the 
fiscal years 1982,1983, and 1984. 
(6)(A) No funds are authorized to be appropriated to carry out 
section 419 of such Act for fiscal year 1982,1983, or 1984. 
(B) The total amount of appropriations to carry out section 420 of 
such Act shall not exceed $12,000,000 for each of the fiscal years 1982, 
1983, and 1984. 
94 Stat. 
1385. 
20 use 
note. 
94 Stat. 
20 use 
94 Stat. 
20 use 
note. 
94 Stat. 
20 use 
1384, 
1029 
1386. 
1041. 
1390. 
1069c 
1395. 
1064. 
42 u s e 295g-8. 
20 u s e 1070a 
note. 
Waiver 
notification to 
congressional 
committees. 
20 u s e 1070b 
note. 
20 u s e 1070c 
note. 
94 Stat. 1407. 
20 u s e 1070d 
note. 
94 Stat. 1411. 
20 u s e 1070d-2 
note. 
20 u s e 1070e 
note. 
94 Stat. 1412. 
20 u s e 1070e-l 
note. 
95 STAT. 448 
PUBLIC LAW 97-35—AUG. 13, 1981 
94 Stat. 1433. 
42 u s e 2751 
note. 
94 Stat. 1437. 
20 u s e 1087aa 
note. 
94 Stat. 1454. 
20 u s e 1098 
note. 
94 Stat. 1459. 
20 u s e 1101 
note. 
94 Stat. 1459. 
20 u s e 1119 
note. 
94 Stat. 1461. 
20 u s e 1119b-5 
note. 
94 Stat. 1464. 
20 u s e 1119c 
note. 
94 Stat. 1464. 
20 u s e 1127 
note. 
94 Stat. 1472. 
20 u s e 1132a-l 
note. 
94 Stat. 1481. 
20 u s e 1133 
note. 
20 u s e 1134 
note. 
94 Stat. 1482. 
20 u s e 1134g 
note. 
94 Stat. 1484. 
20 u s e 1134h 
note. 
94 Stat. 1486. 
20 u s e 1134m 
note. 
94 Stat. 1487. 
20 u s e 1134p 
note. 
94 Stat. 1489. 
20 u s e 1135a-3 
note. 
(7) The total amount of appropriations to carry out part C of title IV 
of such Act shall not exceed $550,000,000 for each of the fiscal years 
1982,1983, and 1984. 
(8) The total amount of appropriations to carry out part E of title IV 
of such Act shall not exceed $286,000,000 for each of the fiscal years 
1982,1983, and 1984. 
(9) The total amount of appropriations to carry out section 491 of 
such Act shall not exceed $1,000,000 for fiscal year 1982 and 
$2,000,000 for fiscal year 1983. 
(e)(1) The total amount of appropriations to carry out part A of title 
V of the Higher Education Act of 1965 shall not exceed $22,500,000 for 
fiscal year 1982. 
(2)(A) The total amount of appropriations to carry out part B of title 
V of such Act shall not exceed $9,100,000 for fiscal year 1982. 
(B) The last sentence of section 531 of such Act shall not apply to 
the funds appropriated to carry out part B of title V of such Act for 
fiscal year 1982,1983, or 1984. 
(3) No funds are authorized to be appropriated to carry out part C of 
title V of such Act for fiscal year 1982,1983, or 1984. 
(4) No funds are authorized to be appropriated to carry out part D of 
title V of such Act for fiscal year 1982,1983, or 1984. 
(f) The total amount of appropriations to carry out title VI of the 
Higher Education Act of 1965 shall not exceed $30,600,000 for each of 
the 
fiscal 
years 1982,1983, and 1984. 
(g) No funds are authorized to be appropriated to carry out part A 
or B of title VII of the Higher Education Act of 1965 for fiscal year 
1982,1983, or 1984. 
(h) The total amount of appropriations to carry out title VIII of the 
Higher Education Act of 1965 shall not exceed $20,000,000 for each of 
the 
fiscal 
years 1982,1983, and 1984. 
(i)(l) No funds are authorized to be appropriated to carry out part A 
of title IX of such Act for fiscal year 1982,1983, or 1984. 
(2) The total amount of appropriations to carry out part B of title IX 
of the Higher Education Act of 1965 shall not exceed $14,000,000 for 
each of the fiscal years 1982,1983, and 1984. 
(3) No funds are authorized to be appropriated to carry out part C of 
title IX of such Act for fiscal year 1982,1983, or 1984. 
(4) The total amount of appropriations to carry out part D of title IX 
of such Act shall not exceed $1,000,000 for each of the fiscal years 
1982,1983, and 1984. 
(5) The total amount of appropriations to carry out part E of title IX 
of such Act shall not exceed $1,000,000 for each of the fiscal years 
1982,1983, and 1984. 
(j) The total amount of appropriations to carry out title X of the 
Higher Education Act of 1965 shall not exceed $13,500,000 for each of 
the fiscal years 1982,1983, and 1984. 
INDIAN EDUCATION ACT 
20 u s e 241ff 
note. 
20 u s e 241aa 
note. 
SEC. 517. The total amount of appropriations to carry out the 
Indian Education Act shall not exceed $81,700,000 for fiscal year 
1982, $88,400,000 for the fiscal year 1983, and $95,300,000 for the 
fiscal year 1984. 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 449 
JOHNSON-O'BIALLEY ACT; SNYDER ACT; NAVAJO COMMUNITY COLLEGE ACT; 
TRIBALLY CONTROLLED COMMUNITY COLLEGE ASSISTANCE ACT OF 1978 
25 use 13 note. 
SEC. 518. The total amount of 
appropriations— 
(1) to carry out the Act of 
April 16» 1934» commonly referred to 
as the JohnsonO'Mallev Act; 
25 use 452 
(2) to carry out all education programs under the direction of "
o
*
® 
the Office of 
Indian Education Pn^rams in the Bureau of Indian 
Affairs of the Department of the mterior authorized under the 
Act of 
November 2,1921, commonly referred to as the Snyder Act 25 use 13. 
(and not otherwise expressly authorized by law); 
(3) to carry out the Navsyo Community College Act; and 25use640a 
(4) to carry out the Tribally Controlled Community College "^^ 
Assistance Actof 1978; 
25 use 1801 
shall not exceed $262,300,000 for fiscal year 1982, $276,100,000 for the '^"^ 
fiscal year 1983, and $290,400,000 for 
fiscal 
year 1984. 
JOINT RESOLUTION OF OCTOBER 19, 1972 (ELLENDER FELLOWSHIP 
PROGRAM) 
SEC. 519. The total amount of appropriations to carry out the joint 
resolution of October 19,1972, shall not exceed $1,000,000 for each of 86 stat. 907. 
the 
fiscal 
years 1982,1983, and 1984. 
LIBRARY SERVICES AND CONSTRUCTION ACT 
20 use 351b 
SEC. 520. (a) The total amoimt of appropriations to carry out the 
Library Services and Construction Act shidl not exceed $80,000,000 «
« T
T
Q
P or. „^.^ 
for eachof 
thefiscalyears 1982,1983,and 1984of 
which— 
^
" ^^ ^^^ ''°^-
(1) not more than $65,000,000 shall be available for title I of 
such Act; and 
20 use 352. 
(2) not more than $15,000,000 shall be available for title m of 
such Act, 
20USe355e. 
for each such year. 
(b) No funds are authorized to be appropriated to carry out title n of 
the Library Services and Construction Act for fiscal year 1982,1983, 20 use 355a. 
or 1984. 
BfUSEUM SERVICES ACT 
SEC. 521. The total amount of appropriations to carry out the 20 use 96? note. 
Museum Services Act shall not exceed $9,600,000 for each of 
the fiscal 20 use 96i note. 
years 1982,1983, and 1984. 
NATIONAL COMBOSSION ON LIBRARIES AND INFORBfATION SCIENCE ACT 
SEC. 522. The total amount of appropriations to carry out the 
National Commission on Libraries and Information Science Act shall 
not exceed $700,000 for each of the fiscal years 1982,1983, and 1984. 
20 use 1506 
note. 
20 use 1501 
note. 
NATIONAL FOUNDATION ON THE ARTS AND THE HUBIANITIES ACT OF 
1965 
20 use 951 note. 
SEC. 528. The total amount of appropriations to the National 20 use 960 note. 
Endowment for the Arts shall not exceed $119,300,000 for each of the 
fiscal years 1982,1983, and 1984. 
SEC. 524. The total amount of appropriations to the National ^^ use 96o note. 
Endowment for the Humanities shall not exceed $118,700,000 for 
each of 
the 
fiscal 
years 1982,1983, and 1984. 
95 STAT. 450 
PUBLIC LAW 97-35—AUG. 13, 1981 
94 Stat. 
1799-1807. 
8 u s e 1522 note. 
REFUGEE EDUCATION CONSOLIDATION 
SEC. 525. The total amount of appropriations to carry out titles I 
through IV of the Refugee Education Assistance Act of 1980 shall not 
exceed $5,000,000 for fiscal year 1982, $7,500,000 for fiscal year 1983, 
and $10,000,000 for fiscal year 1984. 
REFUGEE CUBAN AND HAITIAN PROGRAMS 
8 use 1
5
2
2 note. 
SEC. 526. (aXD The total amount of appropriations to carry out 
Cuban and Haitian reception activities shall not exceed $20,000,000 
for fiscal year 1982. 
(2) No funds are authorized to be appropriated to Cuban and 
Haitian reception activities for the fiscal year 1983. 
(b) The total amount of appropriations to carry out Cuban and 
Haitian domestic activities shall not exceed $94,000,000 for fiscal year 
1982 and $59,000,000 for fiscal year 1983. 
20 u s e 2302 
note. 
20 u s e 2301 
note. 
VOCATIONAL EDUCATION ACT OF 1963 
SEC. 527. The total amount of appropriations to carry out the 
Vocational Education Act of 1963 shall not exceed $735,000,000 for 
each of the fiscal years 1982,1983, and 1984. 
20 u s e 3489. 
20 u s e 236 et 
seq. 
20 u s e 631 et 
seq. 
20 u s e 1221. 
20 u s e 241aa. 
92 Stat. 2313, 
2365, 2373. 
94 Stat. 1502. 
20 u s e 1201 
note. 
20 u s e 2532. 
94 Stat. 487. 
20 u s e 3601 
note. 
20 u s e 2301 
note. 
42 u s e 2000c. 
25 u s e 351 note. 
25 u s e 640a. 
note. 
20 u s e 1801 
note. 
20 u s e 3341. 
Postsecondary 
Student 
Assistance 
Amendments 
of 1981. 
20 u s e 1001 
note. 
GENERAL EXTENSION OF AUTHORIZATIONS 
SEC. 528. Subject to the limitations contained in subtitle A of this 
title, there are authorized to be appropriated for fiscal years 1982, 
1983, and 1984 such sums as may be necessary to carry out each of the 
following provisions of law: 
(1) the Act of September 30, 1950 (Public Law 874, 81st 
Congress); 
(2) the Act of September 23, 1950 (Public Law 815, 81st 
Congress); 
(3) the (General Education Provisions Act; 
(4) the Indian Education Act; 
(5) titles XI, XIV, and XV of the Education Amendments of 
1978 and part H of title XIII of the Education Amendments of 
1980; 
(6) the Adult Education Act; 
(7) section 342 of the Education Amendments of 1976; 
(8) the Asbestos School Hazards Detection and Control Act; 
(9) the Joint Resolution of October 19, 1972 (86 Stat. 907); 
(10) the Vocational Education Act of 1963; 
(11) title IV of the Civil Rights Act of 1964; 
(12) the Library Services and Construction Act; 
(13) the Navajo Community College Act and the Tribally 
Controlled Community College Assistance Act of 1978; and 
(14) part C of title IX of the Elementary and Secondary 
Education Act of 1965, relating to Women's Educational Equity. 
Subtitle B—Student Assistance Provisions 
SHORT TITLE 
SEC. 531. This subtitle may be cited as the "Postsecondary Student 
Assistance Amendments of 1981". 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 451 
ELIGIBIUTY FOR SUBSIDIZED LOANS 
SEC. 582. (a) Section 428(aX2) of the Higher Education Act of 1965 
(hereafter in this subtitle referred to as the "Act") is amended to read 
as follows: 
"(2XA) Each student qualifying for a portion of 
an interest payment 
under paragraph (1) sh^— 
"(i) have provided to the lender a statement from the eligible 
institution, at which the student has been accepted for enroll-
ment, or at which the student is in attendance, which— 
"(I) sets forth such student's estimated cost of attendance; 
and 
"(II) sets forth such student's estimated financial assist-
ance; and 
"(ii) meet the requirements of subparagraph (B). 
"(B) For the purpose of clause (ii) of subparagraph (A), a student 
shall qualify for a portion of an interest pajnnent under paragraph (1) 
if the adjusted gross income of such student's family— 
"(i) is less than or equal to $30,000; or 
"(ii) is greater than $30,000, and the eligible institution has 
provided the lender with a statement evidencing a determination 
of need for a loan and the amount of such need, subject to the 
provisions of 
subparagraph (F). 
"(C) For the purpose of paragraph (1) and this paragraph— 
"(i) a student's estimated cost of attendance means, for the 
period for which the loan is sought, the tuition and fees applica-
ble to such student together with the institution's estimate of 
other expenses regisonably related to attendance at such institu-
tion, including, but not limited to, the cost of room and board, 
reasonable transportation costs, and costs for books and supplies; 
"(ii) a student's estimated financial assistance means, for the 
period for which the loan is sought, the amount of assistance 
such student will receive under subparts 1 and 2 of part A, and 
parts C and E of this title, any amount paid under the Social 
Security Act to, or on account of, the student which would not be 
paid if he were not a student, and any amount paid the student 
under chapters 32,34, and 35 of title 38, United States Code, plus 
other scholarship, grant, or loan assistance; and 
"(iii) the determination of need and of the amount of a loan by 
an eligible institution under subparagraph (B)(ii) with respect to 
a student shall be calculated by subtracting from the estimated 
cost of attendance at the eligible institution the total of the 
expected family contribution with respect to such student plus 
any estimated financial assistance reasonably available to such 
student. 
"(D) The Secretary shall submit a separate schedule of expected 
family contributions to the President of the Senate and the Speaker 
of the House of Representatives not later than the submission of, and 
in accordance with the procedures for, the proposed schedule of 
expected family contributions under section 482, except as provided 
in subparagraph (E). 
"(E)(i) The initial separate schedule required by subparagraph (D) 
shall— 
"(I) be submitted not later than August 15,1981; 
"(II) be effective on October 1, 1981, except £is is otherwise 
provided in division (ii); 
20 u s e 1078. 
20 u s e 1070a, 
1070b; 
42 u s e 2751; 
20 u s e 1087aa. 
42 u s e 1305. 
38 u s e 1601 et 
seq., 1651 et seq., 
1700 et seq. 
Schedule of 
expected 
family 
contributions. 
94 Stat. 1445. 
20 u s e 1089. 
95 STAT. 452 
PUBLIC LAW 97-35—AUG. 13, 1981 
94 Stat. 1445. 
20 u s e 1089. 
20 u s e 1232. 
Congressional 
disapproval. 
20 u s e 1070a, 
1070b-l. 
20 u s e 1078. 
Repeal. 
20 u s e 1087-3a, 
1078 note. 
20 u s e 1001 
note. 
20 u s e 1071. 
94 Stat. 1424. 
20 u s e 1078-2. 
94 Stat. 1425. 
20 u s e 1087-1. 
94 Stat. 1430. 
20 u s e 1087-2. 
"(Ill) not be the subject of public comment otherwise required 
by section 482(a)(1) of this Act or section 431 of the General 
Education Provisions Act; and 
"(IV) be subject to amendment prior to the next regular 
submission of a separate schedule as required by subparagraph 
(D) only in accordance with division (iv) of this subparagraph. 
"(ii) If either the Senate or the House of Representatives adopts, 
prior to October 1, 1981, a resolution of disapproval of the schedule 
submitted under division (i), such schedule shall not take effect. If 
such schedule is so disapproved, or if the Secretary does not submit 
such a schedule by August 15, 1981, then beginning on October 1, 
1981, the expected family contribution for purposes of this paragraph 
shall be determined by the eligible institution in accordance with 
regulations promulgated under section 411 or 413B, as in effect for 
the period beginning on July 1,1981, governing the determination of 
expected family contribution. 
(iii) The method of determining the expected family contribution 
established under this subparagraph shall remain in effect until 
superseded by the taking effect of the next schedule submitted in 
accordance with subparagraph (D) or amended in accordance with 
division (iv) of this subparagraph. 
"(iv) Any amendment promulgated by the Secretary to the initial 
separate schedule established under this subparagraph shall be 
transmitted to the President of the Senate and the Speaker of the 
House of Representatives not later than the time of its publication in 
the Federal Register. If either the Senate or House of Representatives 
adopts, within 30 legislative days following the publication of such 
amendment, a resolution of disapproval of such amendment, such 
amendment shall not take effect. 
"(F) For the purpose of a student described in clause (ii) of 
subparagraph (B), the amount of the loan which is qualified for a 
payment under paragraph (1) is the amount of the need of such 
student as determined by the eligible institution, except that, if the 
amount of need is equal to or more than $500, but is less than $1,000, 
the amount of the loan which is qualified for such payment shall be 
$1,000.". 
(b)(1) Section 42803)(l)(A)(i) of the Act is amended by striking out 
"section 428(a)(2)(B)(i)" and inserting in lieu thereof "section 
428(a)(2)(C)(i)". 
(2) Section 439B of the Act is repealed. Nothing in this paragraph or 
in any other provision of this title, or in any provision of the Higher 
Education Act of 1965 as amended by this title, shall be construed to 
permit any analysis of need for the purposes of loans under part B of 
title IV of such Act other than that expressly required by section 
428(a)(2) of such Act as amended by this section or to require a 
student seeking to qualify under section 428(a)(2)(B)(i) to prove any 
element of need other than compliance with the adjusted gross 
income amount specified in such section. 
(3) Section 428B03)(3) of the Act is amended by striking out "No" 
and inserting in lieu thereof "Any loan under this section may be 
counted as part of the student's expected family contribution in the 
determination of need under this title, but no". 
(4) Section 438G3)(5) of the Act is amended to read as follows: 
"(5) As used in this section, the term 'eligible loan' means a loan— 
"(A)(i) on which a portion of the interest is paid on behalf of the 
student and for his account to the holder of the loan under 
section 428(a); 
"(ii) which is made under section 428B or 439(o); or 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 453 
"(iii) which was made prior to October 1,1981; and 
"(B) which is insured under this part, or made under a program 
covered by an agreement under section 428(b) of this Act.". 20 use 1078. 
NEED ANALYSIS AMENDMENTS 
SEC. 533. (a)(1) Section 482(a)(1) of the Act is amended by striking 
out everything after the comma following the words "family income, 
which," and inserting in lieu thereof the following: "together with 
any amendments published in the Federal Register, no later than 
September 1,1981, June 1,1982, and June 1 of each succeeding year, 
shall become effective July 1 of the calendar year which succeeds 
such calendar year, except as is otherwise provided in paragraph (2). 
During the thirty-day period following publication of a schedule the 
Secretary shall provide interested parties with an opportunity to 
present their views and make recommendations with respect to such 
schedule. Such schedule shall be adjusted annually.". 
(2) Section 482(a)(2) of the Act is amended to read as follows: 
"(2) The schedule of expected family contributions required for 
each academic year, including any amendments thereto published 
pursuant to paragraph (1), shall be transmitted to the President of 
the Senate and the Speaker of the House of Representatives not later 
than the time of its publication in the Federal Register. If either the 
Senate or House of Representatives adopts, prior to October 15,1981, 
July 15, 1982, or July 15 of any succeeding year, following the 
submission of such schedule and any amendments thereto as re-
quired by this paragraph, a resolution of disapproval of such schedule 
or amendments, in whole or in part, the Secretary shall publish a new 
schedule of expected family contributions in the Federal Register not 
later than fifteen days after the adoption of such resolution of 
disapproval. Such new schedule shall take into consideration such 
recommendations as may be made in either House in connection with 
such resolution. If within fifteen days following the submission of the 
revised schedule, either the Senate or the House of Representatives 
again adopts a resolution of disapproval, in whole or in part, of such 
revised schedule, the Secretary shall publish a new schedule of 
expected family contributions in the Federal Register not later than 
fifteen days after the adoption of such resolution of disapproval. This 
procedure shall be repeated until neither the Senate nor the House of 
Representatives adopts a resolution of disapproval. The Secretary 
shall publish together with each new schedule a statement identify-
ing the recommendations made in either House in connection with 
such resolution of disapproval and explaining his reasons for the new 
schedule.". 
(3) The first sentence of section 431(d)(1) of the General Education 
Provisions Act is amended by inserting after "final regulation" the 
first time it appears the following: "(except expected family contribu-
tion schedules and any amendments thereto promulgated pursuant 
to sections 428(a)(2) (D) and (E) and 482(a) (1) and (2) of the Higher 
Education Act of 1965)". 
(b) Section 482(b)(4) of the Act is amended to read as follows: 
"(4) In determining the expected family contribution under this 
section for any academic year after academic year 1981-1982, the 
Secretary shall establish a series of assessment rates to be applied to 
parental discretionary income.". 
94 Stat. 1445. 
20 u s e 1089. 
New or revised 
schedules, 
congressional 
disapproval. 
Publication in 
Federal 
Register. 
Publication in 
Federal 
Register. 
20 u s e 1232. 
Ante, p. 451. 
94 Stat. 1445. 
20 u s e 1089. 
95 STAT. 454 
PUBLIC LAW 97-35—AUG. 13, 1981 
AUXILIARY PROGRAM 
94 Stet. 1419. 
SEC. 534. (aXD Section 427A of the Act is amended by redesignating 
2
0 use 1077a. 
subsection (c) as subsection (d) and by inserting after subsection (b) 
the following: 
''(cXD Except as otherwise provided in this subsection, the applica-
9
f
t ^
T
Q
r
- ^ftls 9 
^
^
® ^^*® of 
interest on loans made pursuant to section 428B on or after 
20 use 1078-2. 
October 1, 1981, shall be 14 per centum per anniun on the unpaid 
principal balance of 
the loan. 
''(2) If for any twelve-month period beginning on or after October 1, 
1981, the Secretary, after consultation with the Secretary of the 
Treasury, determines that the average of 
the bond equivalent rates of 
ninety-one-day Treasury bills auctioned for such twelve-month 
period is equal to or less than 14 per centum, the applicable rate of 
i n t e r s for loans made pursuant to section 428B on and after the first 
day of the first month beginning after the date of publication of such 
determination shall be 12 per centum per annum on the unpaid 
principal balance of the loan. 
"(3) If for any twelve-month period beginning on or after the date of 
publication of a determination under paragraph (2), the Secretary, 
after consultation with the Secretary of the Treasury, determines 
that the average of the bond equivalent rates of ninety-one-day 
Treasury bills auctioned for such twelve-month period exceeds 14 per 
centum, the applicable rate of interest for loans made pursuant to 
section 428B on and after the first dav of the first month beginning 
after the date of publication of that determination under this para-
graph shall be 14 per centum per annum on the unpaid principal 
balance of 
the loan. . 
(2) Section 428B(cX3) is amended by striking out everything after 
''unpaid principal balance of the loan," and inserting in lieu thereof 
the following: "except as otherwise required by section 427A(c).". 
?
f
t i^h Iftll 1 
*) Section 438(bX2) of 
the Act is amended— 
^0 ubL io«7-i. 
(J) jjy striking out subparagraphs (A), (B), and (C) and inserting 
in lieu thereof the following: 
"(2XA) Subject to subparagraph (B) and paragraph (4), the special 
allowance paid pursuant to this subsection on loans shall be com-
puted (i) by determining the average of the bond equivalent rates of 
ninety-one-day Treasury bills auctioned for such three month period, 
(ii) by subtracting the applicable interest rate on such loans from 
such average, (iii) by ad(ung 3.5 per centum to the resultant per 
centum, and (iv) by dividing the resultant per centum by four."; 
(2) by redesignating subparagraph (D) as subparagraph (B); and 
(3) by striking out "subparagraph (A), (B), or (C)" in subpara-
graph (B) (as so redesignated) and inserting in lieu thereof 
subparagraph (A)". 
(cXD Section 428B(a) of the Act is amended by inserting "(1)" after 
"(a)" and by adding at the end thereof the following new paragraph: 
"(2) Graduate or professional students (as defined by regulations of 
the Secretary) and independent undergraduate students (as defined 
94 Stat. 1445. 
in section 482(cX2)) shall be eligible to borrow funds under this section 
20 use 1089. 
ijj amounts specified in subsection (b) (treating graduate and profes-
sional students as parents for the purposes of such subsection), and 
unless otherwise specified in subsections (c) and (d), such loans shall 
have the same terms, conditions, and benefits as all other loans made 
under this part.". 
O
f
t ^^h lani'o 
(2) Section 428B(b) of the Act is amended by adding at the end 
^^ use 1078-2. 
thereof the following new paragraph: 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 455 
"(4)(A) Subject to subparagraph (B) of this paragraph, the maxi-
mum amount an independent undergraduate student may borrow 
under this section in any academic year or its equivalent (as defined 
by regulation by the Secretary) is equal to (i) $2,500, minus (ii) the 
amount of all other loans under this part to such student for such 
academic year or its equivalent. 
"(B) The aggregate insured unpaid principal amount for insured 
loans made to an independent undergraduate student under this part 
(including loans made under this section) shall not exceed $12,500.". 
(3) The heading of section 428B of the Act is amended to read as 
follows: 
"AUXILIARY LOANS TO ASSIST STUDENTS". 
INDEPENDENT STUDENT LOAN LIMITATIONS 
SEC. 535. (a) Section 425(a)(1) of the Act is amended— 
94 Stat. 1416. 
(1) by striking out clause (A) and by redesignating clauses (B), ^^ ^SC 1075. 
(C), and (D) as clauses (A), (B), and (C), respectively; and 
(2) by striking out "clause (C)" in the last sentence of such 
section and inserting in lieu thereof "clause (B)". 
(b) Section 425(a)(2) of the Act is amended— 
(1) by striking out "(other than an independent student)"; and 
(2) by striking out "$15,000 in the case of any independent 
student who has not successfully completed a program of under-
graduate education,". 
(c) The matter preceding subdivision (i) of section 428(b)(1)(A) of the 
Act is amended— 
Ante, p. 452. 
(1) by striking out "(other than an independent student)"; and 
(2) by striking out "or not more than $3,000 in the case of an 
independent student (defined in accordance with section 
482(c)(2)) who has not successfully completed a program of 94 Stat. 1445. 
undergraduate education,". 
^^ USC 1089. 
(d) Section 428(b)(1)(B) of the Act is amended— 
(1) by striking out "(other than an independent student)"; and 
(2) by striking out "$15,000 in the case of any independent 
student who has not successfully completed a program of under-
graduate education,". 
(e) Section 428 
A of the Act is amended— 
94 Stat. 1416, 
(1) by striking out ", other than an independent student," in 1417. 
subsection (a)(1)(A) and in subsection (a)(2)(A); 
20 USC 1078-1. 
(2) by striking out "$3,000 (in the case of an independent 
student (as defined in section 482(c)(2)) who has not successfully 
completed a program of undergraduate education)," in each such 
subsection; 
(3) by striking out "(other than an independent student)" in 
each such subsection; and 
(4) by striking out "$15,000 in the case of any independent 
student who has not successfully completed a program of under-
graduate education," in each such subsection. 
ORIGINATION FEES 
SEC. 536. (a) Section 438 of the Act is amended by redesignating 94 Stat. 1425. 
subsection (c) as subsection (d) and by inserting after subsection (b) ^0 USC 1087-1. 
the following new subsection: 
"(c)(1) Notwithstanding subsection (b), the total amount of interest 
and special allowance payable under section 428(a)(3)(A) and subsec- 20 USC 1078. 
9-194 0—82 
31 : QL3 
95 STAT. 456 
PUBLIC LAW 97-35—AUG. 13, 1981 
tion (b) of this section, respectively, to any holder shall be reduced by 
the Secretary by the amount which the lender is authorized to charge 
as an origination fee in accordance with paragraph (2) of this 
subsection. If the total amount of interest and special allowance 
20 use 1078. 
payable under section 428(a)(3)(A) and subsection (b) of this section, 
respectively, is less than the amount the lender was authorized to 
charge borrowers for origination fees in that quarter, the Secretary 
shall deduct the excess amount from the subsequent quarters' pay-
ments until the total amount has been deducted. 
"(2) With respect to any loan (other than loans made under section 
94 Stat. 1424, 
428B and section 439(o)) for which a completed note or other written 
20^TJsr 078-2 
evidence of the loan was sent or delivered to the borrower for signing 
1087-2 
®^ °^ after 10 days after the date of enactment of the Postsecondary 
Ante, p. 450. 
Student Assistance Amendments of 1981, each eligible lender under 
this part is authorized to charge the borrower an origination fee in an 
amount not to exceed 5 per centum of the principal amount of the 
loan, which may be deducted from the proceeds of the loan prior to 
payment to the borrower. 
"(3) Such origination fee shall not be taken into account for 
94 Stat. 1419. 
purposes of determining compliance with section 427A. 
20 use 1077a. 
«(4) "pj^g lender shall disclose to the borrower the amount and 
method of calculating the origination fee. For any loan for which the 
lender is authorized to charge an origination fee and which is made 
prior to August 1,1982— 
"(A) this disclosure need not meet the requirements of the 
Truth in Lending Act (15 U.S.C. 1601 et seq.) or the disclosure 
requirements of any State law; 
"(B) for purposes of such Act, a lender may disclose either in 
the note or other written evidence of the loan or in a supplemen-
tary letter (which need not be signed by the borrower); 
"(C) for purposes of such Act, the origination fee shall not be 
taken into account in calculating and disclosing the annual 
percentage rate; and 
"(D) a lender or an assignee shall not incur civil liability under 
15 use 1640. 
section 130 of such Act nor be subject to any administrative 
15 use 1607. 
enforcement action pursuant to section 108 of such Act for 
disclosures in connection with such loans.". 
20 use 1078. 
(b) Section 428(a)(3)(A) of the Act is amended by inserting "and 
Ante, p. 455. 
subject to section 438(c)" after "Except as provided in paragraph (8)". 
ADMINISTRATIVE SAVINGS; TECHNICAL AMENDMENTS 
SEC. 537. (aXD Section 428(e) of the Act is repealed. 
O
A fjih }^B- 
(2) The first sentence of section 489(a) of the Act is amended by 
20 use 1096. 
striking out "$10" and inserting in lieu thereof "$5". 
20 use 1077. 
(b)(1) Section 427(c) of the Act is amended by striking out "$360" 
each place it appears and inserting in lieu thereof "$600". 
20 use 1078. 
(2) Section 428(bXlXL) of the Act is amended by striking out "$360" 
each place it appears and inserting in lieu thereof "$600". 
(c) Section 428(c) of the Act is amended— 
(1) in paragraph (2XD), by striking out "but shall not otherwise 
provide for subrogation of the United States to rights of any 
insurance beneficiary" and inserting in lieu thereof "but shall 
provide for subrogation of the United States to the rights of any 
insurance beneficiary only to the extent required for purposes of 
paragraph (8)"; and 
(2) by adding at the end thereof the following new paragraph: 
PUBLIC LAW 97-35-AUG. 13,1981 
95 STAT. 457 
"(8) If the Secretary determines that the protection of the Federal 
fiscal interest so requires, a State or nonprofit private institution or 
organization with which the Secretary has an agreement under 
subsection (b) shall assign to the Secretary any loan of which it is the 
holder and for which the Secretary has made a payment pursuant to 
paragraph (1) of 
this subsection.". 
(dXD The matter following section 428(bXl)(MXviii) of the Act is 20 use 1078. 
amended by striking out", and that no repayment of principal of any 
loan for any period of study, training, service, or unemployment 
described in this clause or any combination thereof shall begin until 
six months after the completion of such period or combination 
thereof. 
(2) Section 427(aX2XC) of 
the Act is amended— 
20 use 1077. 
(A) by striking out "that any such period" and inserting in lieu 
thereof "and that any such period"; and 
(B) by striking out", and that no repayment of principal of any 
loan for a period of study, training, service, or unemployment 
described in this clause or any combination thereof shall begin 
until six months after the completion of such period or combina-
tion thereof. 
(eXD Section 427(aX2XB) of the Act is amended by striking out "not 
earlier than". 
(2) Section 428(b)(lXE) of the Act is amended by striking out "not 
earlier than". 
AMENDMENTS CONCERNING THE STUDENT LOAN MARKETING 
ASSOCIATION 
SEC. 538. (a) Section 439(a) of the Act is amended by striking out 20 use 1087-2. 
"insured" wherever it appears, and by inserting after "student ^" ^°^ ^""^• 
loans," the first time it appears the following: "including loans which 
are insured". 
(b) Section 439(a) of the Act is further amended by striking out 
"and" at the end of clause (1), and by striking the period at the end of 
clause (2) and inserting in lieu thereof the following: "; and (3) to 
assure nationwide the establishment of adequate loan insurance 
programs for students, to provide for an additional program of loan 
insurance to be covered by agreements with the Secretary.". 
(c) Section 439(d)(1) of the Act is amended to read as follows: 
"(dXD The Association is authorized, subject to the provisions of 
this section— 
"(A) pursuant to commitments or otherwise to make advances 
on the security of, purchase, or repurchase, service, sell or resell, 
offer participations, or pooled interests or otherwise deal in, at 
prices £ind on terms and conditions determined by the Associ-
ation, student loans which are insured by the Secretary under 
this part or by a State or nonprofit private institution or 
organization with which the Secretary has an agreement under 
section 428(b); 
"(B) to buy, sell, hold, underwrite, and otherwise deal in 
obligations, if such obligations are issued, for the purpose of 
making or purchasing insured loans, by a State or nonprofit 
private institution or organization which has an agreement with 
the Secretary under section 428(b) or by an eligible lender in a 
State described in section 435(gXl) (D) or (F); 
"(C) to undertake a program of loan insurance pursuant to 
agreements with the Secretary under sections 428 and 428(A), 
and except with respect to loans under section 439(o), the Secre-
95 STAT. 458 
PUBLIC LAW 97-35—AUG. 13, 1981 
20 use 1087-2. 
20 use 1087dd. 
tary may enter into an agreement with the Association for such 
purpose only if the Secretary determines that (i) ehgible borrow-
ers are seelong and unable to obtain loans under this part, and 
(ii) no State or nonprofit private institution or organization 
having an agreement with the Secretary for a program of loan 
insurance under this part is capable of or willing to provide a 
program of loan insurance for such borrowers; and 
"(D) to undertake any other activity which the Board of 
Directors of the Association determines to be in furtherance of 
the programs of insured student loans authorized under this part 
or will otherwise support the credit needs of 
students. 
The Association is further authorized to undertake any activity with 
regard to student loans which are not insured or guaranteed as 
provided for in this subsection as it may undertake with regard to 
insured or guaranteed student loans. Any warehousing advance 
made on the security of 
such loans shall be subject to the provisions of 
paragraph (3) of this subsection to the same extent as a warehousing 
advance made on the security of 
insured loans.". 
(d) Section 439(1) of the Act is amended by adding at the end thereof 
the following: "The obligations of the Association shall be deemed to 
be obligations of the United States for purposes of section 3701 of the 
Revised Statutes (31 U.S.C. 742). For the purpose of 
the distribution of 
its property pursuant to section 726 of title 11, United States Code» 
the Association shall be deemed a person within the meaning of such 
title.". 
DIRECT STUDENT LOAN INTEREST RATE 
SEC. 539. Section 464(cXl)(D) of the Act is amended by striking out 
"October 1,1980," and inserting in lieu thereof "Juty 1,1981, or 5 per 
centum in the case of any loan made on or after October 1, 1981,". 
20 use 1078 
note. 
20 use 1078. 
EFFECTIVE DATES 
SEC. 540. (a) Except as provided in subsection (b), the amendments 
made by this subtitle take effect on October 1,1981. 
(bXD The amendments made by section 532 (other than subsection 
(b)(4)) shall apply to loans for which the statement required by section 
428(a)(2XA) of the Act is completed by the eligible institution on or 
after October 1,1981. 
(2) The amendments made by section 534(b) shall apply to loans 
made on or after October 1,1981. 
(3) The amendments made by section 536 shall take effect as 
provided therein. 
(4) The amendments made by section 538 shall take effect 30 days 
after the date of enactment of this Act. 
Consolidated 
Refugee 
Education 
Assistance Act. 
8 use 1522 note. 
20 use 239a. 
Subtitle C—Refugee Education Consolidation 
SHORT TITLE 
SEC. 541. This subtitle may be cited as the "Consolidated Refugee 
Education Assistance Act". 
REPEALER 
SEC. 542. The following provisions are hereby repealed: 
(1) Section 4A of the Act of September 30, 1950 (Public Law 
81-874). 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 459 
(2) Titles I and 11 of the Indochina Refugee Children Assistance 
Act of 1976. 
(3) Section 317 of 
the Adult Education Act. 
AMENDMENTS 7 0 TITLE I OF THE REFUGEE EDUCATION ASSISTANCE ACT 
OF 1980 
20 u s e 1211b 
note. 
20 u s e 1211b. 
8 u s e 1522 note. 
"Eligible 
participant.' 
8 u s e 1157. 
8 u s e 1182. 
SEC. 543. (aXD Section 101 of the Refugee Education Assistance Act 
of 1980 is amended— 
(A) by striking out paragraph (1) and by redesignating para-
graphs (2) and (3) as paragraphs (1) and (2), respectively; 
(B) by inserting after paragraph (2) (as so redesignated) the 
following new paragraph: 
"(3) The term 'eligible participant' means any alien who— 
"(A) has been admitted into the United States as a refugee 
under section 207 of the Immigration and Nationality Act; 
"(B) has been paroled into the United States as a refugee 
by the Attorney General pursuant to section 212(d)(5) of such 
Act; 
"(C) is an applicant for asylum, or has been granted 
asylum, in the United States; or 
"(D) has fled from the alien's country of origin and has, 
pursuant to an Executive order of the President, been 
permitted to enter the United States and remain in the 
United States indefinitely for humanitarian reasons; 
but only during the 36-month beginning with the first month in 
which the alien entered the United States (in the case of an alien 
described in (A), (B), or (D)) or the month in which the alien 
applied for asylum (in the case of an alien described in subpara-
graph (C))."; and 
(C) by striking out paragraph (4) and redesignating paragraph 
(5) as paragraph (4). 
(2) For purposes of the Refugee Education Assistance Act of 1980, 
an alien who entered the United States on or after November 1,1979, 
and is in the United States with the immigration status of a Cuban-
Haitian entrant (status pending) shall be considered to be an eligible 
participant (within the meaning of section 101(3) of such Act), but 
only during the 36-month period beginning with the first month in 
which the alien entered the United States as such an entrant or 
otherwise first acquired such status. 
(b) Section 103(bXlXA) of the Refugee Education Assistance Act of 8 use 1
5
2
2 note. 
1980 is amended by striking out "aggregate of the amounts to which 
all States are entitled" and inserting in lieu thereof "amount author-
ized to be appropriated". 
(c) Section 104 of the Refugee Education Assistance Act of 1980 is 8 use 1522 note. 
amended by striking out "1 percent of the amounts which that State 
educational agency is entitled to receive for that period under this 
Act" and inserting in lieu thereof "2 percent of the amount which 
that State educational agency receives for that period under this 
Act". 
(d) Title I of the Refugee Education Assistance Act of 1980 is 
amended by adding at the end thereof the following new section: 
8 u s e 1522 note. 
CONSULTATION WITH OTHER AGENCIES 
"SEC. 106. To the extent that may be appropriate to facilitate the 
determination of the amount of any reductions under sections 
201(b)(2), 301(b)(3), and 401(b)(2), the Secretary shall consult with the 8 use 1522 note. 
95 STAT. 460 
PUBLIC LAW 97-35—AUG. 13, 1981 
8 u s e 1522 note. 
Grants to State 
educational 
agencies. 
8 u s e 1522 note. 
Grant 
entitlement 
formula. 
20 u s e 843. 
8 u s e 1522 note. 
heads of other agencies providing assistance to eligible participants 
in order to secure information concerning the disbursement of funds 
for educational puiposes under programs administered by them and 
provide, wherever feasible, for coordination among those programs 
and the programs under titles II through IV of 
this Act.". 
AMENDMENTS TO TITLE II OF THE REFUGEE EDUCATION ASSISTANCE ACT 
OF 1980 
SEC. 544. (a) Section 201 of the Refugee Education Assistance Act is 
amended— 
(1) by amending the first sentence of subsection (aXD to read as 
follows: "The Secretary shall, in accordance with the provisions 
of this title, make grants to State educational agencies for fiscal 
year 1981, and for each subsequent fiscal year, for the purposes of 
assisting local educational agencies of that State in providing 
basic education for eligible participants enrolled in elementary 
or secondary public schools. ; 
(2) in the second sentence of subsection (aXD, by striking out 
"Cuban and Haitian refugee children" and inserting in lieu 
thereof "eligible participants'*: 
(3) by amending subsection (bXD to read as follows: 
"Oi>Xl) As soon as possible after the date of the enactment of the 
Consolidated Refugee Education Assistance Act, the Secretary shall 
establish a formula (reflecting the availability of the full amount 
authorized for this title under section 20303)) by which to determine 
the amount of the grant which each State educational agency is 
entitled to receive under this title for any fiscal year. The formula 
established by the Secretary shall take into account the number of 
years that an eligible participant assisted under this title has resided 
within the United States and the relative costs, by grade level, of 
providing education for elementary and secondaiy school children. 
On the beisis of the formula the Secretaiy shall allocate among the 
State educational agencies, for each fiscal vear, the amounts availa-
ble to carry out this title, subject to such reductions or adjustments as 
may be required under paragraph (2) or subsection (c). Funds shall be 
allocated among State educational agencies pursuant to the formula 
without regard to variations in educational costs among different 
geographical areas."; 
(4) by amending the first sentence of subsection 03X2) to read as 
follows: "The amount of the grant to which a State educational 
agency is otherwise entitled for any fiscal year, as determined 
under paragraph (1), shall be reduced by the amounts made 
available for such fiscal vear under any other Federal law (other 
than section 303 of the Elementary and Secondary Education Act 
of 1965) for expenditure within the State for the same purposes 
as those for which funds are made available under this title, 
except that the reduction shall be made only to the extent that 
(A) such amounts are made available for such purposes specifi-
cally because of the refugee, parolee, or asylee status of the 
individuals to be served by such funds, and (B) such amounts are 
made available to provide assistance to individuals eligible for 
services under this title."; and 
(5) in subsection (c), by striking out "Cuban and Haitian 
refugee children" and inserting in lieu thereof "eligible 
participants". 
0>) Section 202(a) of 
the Refugee Education Assistance Act of 1980 is 
amended— 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 461 
(1) by amending paragraph (2) to read as follows: 
"(2) provide assurances that such payments will be distributed 
among local educational agencies within that State in accord-
ance with the formula established by the Secretary under section 
201, subject to any reductions in payments for those local 8 use 1522 note. 
educational agencies identified under paragraph (3) to which 
funds described by section 201(bX2) are made available for the 
same purposes under other Federal laws;"; 
(2) by redesignating paragraphs (3) and (4) as paragraphs (4) 
and (5), respectively; and 
(3) by inserting after paragraph (2) the following: 
"(3) specify the amount of funds described by section 201(b)(2) 
which are made available under other Federal laws for expendi-
ture within the State for the same purposes as those for which 
funds are made available under this title and the local educa-
tional agencies to which such funds are made available;", 
(c) Section 203 of the Refugee Education Assistance Act of 1980 is 8 use 1522 note. 
amended— 
(1) by amending the section heading to read as follows: 
"PAYMENTS AND AUTHORIZATIONS"; 
(2) by inserting "(a)" after the section designation; and 
(3) by adding at the end the following new subsection: 
"(b) For fiscal year 1981 and for each subsequent fiscal year, there 
is authorized to be appropriated, in the manner specified under 
section 102, to make payments under this title an amount equal to the 8 use 1522 note. 
product of— 
"(1) the total number of eligible participants enrolled in 
elementary or secondary public schools under the jurisdiction of 
local educational agencies within all the States (other than the 
jurisdictions to which section 103 is applicable) during the fiscal 8 use 1522 note. 
year for which the determination is made, 
multiplied by— 
"(2) $400.". 
AMENDMENTS TO TITLE III OF THE REFUGEE EDUCATION ASSISTANCE 
ACT OF 1980 
SEC. 545. (a) The heading of title III of the Refugee Education 
Assistance Act of 1980 is amended by striking out "REFUGEE". 
(b) Section 301 of the Refugee Education Assistance Act of 1980 is 
amended— 
(1) in subsection (a), by striking out "for each of the fiscal years 
1981,1982, and 1983" and inserting in lieu thereof "for fiscal year 
1981, and for each subsequent fiscal year,"; 
(2) by amending subsection (bXD to read as follows: 
"(b)(1) Except as provided in paragraph (3) of this subsection and in 
subsections (c) and (d) of this section, the amount of the grant to 
which a State educational agency is entitled under this title for any 
fiscal year shall be equal to the sum of— 
"(A) the amount equal to the product of (i) the number of 
eligible participants enrolled during the period for which the 
determination is made in elementary or secondary public schools 
under the jurisdiction of each local educational agency described 
under paragraph (2) within that State, or in any elementary or 
secondary nonpublic school within the district served by each 
Grants to State 
educational 
agencies. 
8 u s e 1522 note. 
95 STAT. 462 
PUBLIC LAW 97-35—AUG. 13, 1981 
such local educational agency, who have been eligible partici-
pants less than one year, multiplied by (ii) $700; 
"(B) the amount equal to the product of (i) the number of 
eligible participants enrolled during the period for which the 
determination is made in elementary or secondary public schools 
under the jurisdiction of each local educational agency described 
under paragraph (2) within that State, or in any elementary or 
secondary nonpublic school within the district served by each 
such local educational agency, who have been eligible partici-
pants at least one year but not more than two years, multiplied 
by (ii) $500; and 
"(C) the product of (i) the number of eligible participants 
enrolled during the period for which the determination is made 
in elementary or secondary public schools under the jurisdiction 
of each local educational agency described under paragraph (2) 
within that State, or in any elementary or secondary nonpublic 
school within the district served by each such local educational 
agency, who have been eligible participants more than two years 
but not more than three years, multiplied by (ii) $300."; 
(3) in subsection (bX2), by striking out "Cuban and Haitian 
refugee children and Indocninese refugee children" and insert-
ing in lieu thereof "eligible participants ; 
(4) in the first sentence of subsection (bX3), by striking out 
"Cuban and Haitian refugee children and Indochinese refugee 
children" and all that follows through the period and inserting in 
lieu thereof "eligible participants, except that no reduction 
under this paragraph shall be made for any funds made available 
to the State under section 303 of the Elementary and Secondary 
20 use 843. 
Education Act of 1965."; 
(5) in subsection (bX5), by striking out "Cuban and Haitian 
refugee children who meet the requirements of section 101(1)" 
and inserting in lieu thereof "eligible participants who meet the 
requirements of section 101(4)"; and 
(6) in subsection (c), by striking out "Cuban and Haitian 
refugee children and Indochinese refugee children" and insert-
ing in lieu thereof "eligible participants . 
8 use 1522 note. 
(b) Section 302 of the Refugee Education Assistance Act of 1980 is 
amended by striking out "Cuban and Haitian refugee children and 
Indochinese refugee children" each place it appears and inserting in 
lieu thereof "eligible participants". 
8 use 1522 note. 
(c) Section 303(a) of the Refugee Education Assistance Act of 1980 is 
amended— 
(1) in paragraph (3), by inserting before the semicolon ", subject 
to any reductions in payments for local educational agencies 
identified under paragraph (5) to take into account the funds 
8 use 1522 note. 
described by section 301(bX3) that are made available for educa-
tional, or education-related, services or activities for eligible 
participants enrolled in elementary or secondary public schools 
under the jurisdiction of such agencies or elementary or second-
ary nonpublic schools within the districts served by such 
agencies; ; 
(2) by redesignating paragraphs (5) and (6) as paragraphs (6) 
and (7), respectively; 
(3) by inserting after paragraph (4) the following: 
"(5) specify (A) the amount of funds described by section 
301(b)(3) that are made available under other Federal laws to 
agencies or other entities for educational, or education-related, 
services or activities within the State because of a significant 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 463 
concentration of 
eligible participants, and (B) the local education-
al agencies within whose districts are eligible participants pro-
vided services from such funds who are enrolled in elementary or 
secondary schools under the jurisdiction of such agencies, or in 
elementary or secondary nonpublic schools served by such agen-
cies;"; and 
(4) in paragraph (7), as so redesignated, by striking out "Cuban 
and Haitian refugee children and Indochinese refugee children" 
and inserting in lieu thereof "eligible participants". 
AMENDMENTS TO TITLE IV OF THE REFUGEE EDUCATION ASSISTANCE 
ACT OF 1980 
SEC. 546. (a) Title IV of the Refugee Education Assistance Act of 8 use 1522 note. 
1980 is amended by striking out "Cuban and Haitian refugee adults" 
and "Haitian and Cuban refugee adults" each place such terms 
appear and inserting in lieu thereof "eligible participants". 
(b)(1) Section 401(a) of the Refugee Education Assistance Act of 
1980 is amended by striking out "for each of the fiscal years 1982 and 
1983" and inserting in lieu thereof "for fiscal year 1982, and for each 
subsequent fiscal year". 
(2) The first sentence of section 401(b)(2) of the Refugee Education 8 use 1
5
2
2 note. 
Assistance Act of 1980 is amended to read as follows: "The amount of 
the grant to which a State educational agency is otherwise entitled 
for any fiscal year, as determined under paragraph (1), shall be 
reduced by the amounts made available for such fiscal year under 
any other Federal law (other than section 303 of the Elementary and 
Secondary Education Act of 1965) for expenditure within the State for 20 use 843. 
the same purposes as those for which funds are made available under 
this title, except that the reduction shall be made only to the extent 
that (A) such amounts are made available for such purposes specifi-
cally because of the refugee, parolee, or asylee status of the individ-
uals to be served by such funds, and (B) such amounts are made 
available to provide assistance to individuals eligible for services 
under this title.". 
(c) Section 403(a) of the Refugee Education Assistance Act of 1980 is 8 use 1
5
2
2 note. 
amended— 
(1) by redesignating paragraphs (2) and (3) as paragraphs (3) 
and (4), respectively; and 
(2) by inserting after paragraph (1) the following: 
"(2) specify the amount of reduction required under section 
401(b)(2);". 
EFFECTIVE DATE 
SEC. 547. This subtitle shall take effect on October 1,1981. 
Subtitle D—Elementary and Secondary Education 
Block Grant 
SEC. 551. This subtitle may be cited as the "Education Consolida-
tion and Improvement Act of 1981". 
8 u s e 1522 note. 
Education 
eonsolidation 
and 
Improvement 
Act of 1981. 
20 u s e 3801 
note. 
95 STAT. 464 
PUBLIC LAW 97-35—AUG. 13, 1981 
CHAPTER 1—FINANCIAL ASSISTANCE TO MEET SPECIAL 
EDUCATIONAL NEEDS OF DISADVANTAGED CHILDREN 
DECLARATION OF POLICY 
20 use 3801. 
SEC. 552. The Congress declares it to be the policy of the United 
States to continue to provide financial assistance to State and local 
educational agencies to meet the special needs of educationally 
deprived children, on the basis of entitlements calculated under title 
20 use 2701. 
I of the Elementary and Secondary Education Act of 1965, but to do so 
in a manner which will eliminate burdensome, unnecessary, and 
unproductive paperwork and free the schools of unnecessary Federal 
supervision, direction, and control. Further, the Congress recognizes 
the special educational needs of children of low-income families, and 
that concentrations of such children in local educationed agencies 
adversely affect their ability to provide educational programs which 
will meet the needs of such children. The Congress also finds that 
Federal assistance for this purpose will be more effective if education 
officials, principals, teachers, and supporting i)ersonnel are fi^eed 
from overly prescriptive regulations and administrative burdens 
which are not necessary for fiscal accountability and make no 
contribution to the instructional program. 
DURATION OP ASSISTANCE 
20 use 3802. 
SEC. 553. During the period beginning October 1,1982, and ending 
September 30, 1987, the Secretary shall, in accordance with the 
provisions of this subtitle, make payments to State educational 
agencies for grants made on the basis of enticements created under 
title I of the Elementary and Secondary Education Act of 1965 and 
calculated in accordance with provisions of that title in effect on 
September 30,1982. 
APPLICABILITY OP TITLE I PROVISIONS OP LAW 
20 use 3803. 
SEC. 554. (a) PROGRAM ELIGIBILITY.—Except as otherwise provided 
in this subtitle, the Secretary shall make payments based up<m^ the 
amount of, and e^gibility for, grants as determined under the 
following provisions of title I of the Elem^itary and Secoodary 
Education Act in effect on September 30,1982: 
20 use 2711. 
(1) Part A~"Programs Operated by Local Education 
Afirencies' 
* 
t 
(A) Subpart 1—"Basic Grants"; and 
20 use 2721. 
(B) Subpart 2^"Special Grants". 
20 use 2761. 
(2) Part B^"Programs Operated 
t^^ State Agwicies'V 
(A> Subpart 1—"Programs 
for 
Migratory Children"j 
20 use 2771. 
(B) Subpart 2^"Programs for Handicapped ChHAren"; 
20 use 2781. 
(Q Subpart 3—"Programs for Ne^ected and DeHnqaent 
OffldterfWd 
20 use 2791. 
(0) Subpart 4—"General Provisions for State Operated 
Ptograms^. 
O
b
) AmstaistAAtPm PROVISIONS.—The Secretary, in making ^le 
payments and determinations specified m subsection (a), [dftau con-
untie to use 
tihie 
following provisions of title I of the Elementary and 
Secondary Education Act as in effect on September 30,1982: 
20 use 2841. 
(1) Part E—"Payments": 
(A) Section 191—"Payment Metiwds"; 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 465 
(B) Section 192—"Amount of Payments to Local Educa- 20 use 2842. 
tional Agencies"; 
(C) Section 193—"Adjustments Where Necessitated by 20 use 2843. 
Appropriations"; and 
(D) Section 194—"Payments for State Administration", 20 use 2844. 
subject to subsection (d) of 
this section. 
(2) Part F—"General Provisions": 
20 use 2851. 
(A) Section 197—"Limitation on Grants to Puerto Rico"; 20 use 2853. 
and 
(B) Section 198—"Definitions" and conforming amend- 20 use 2854. 
ments to other Acts, except that only those definitions 
applicable to this subtitle shall be used. 
(c) APPUCABILITY RULE.—The provisions of 
title I of 
the Elementary 
and Secondary Education Act of 1965 which are not specifically made 20 use 2701. 
applicable by this chapter shall not be applicable to programs 
authorized under this chapter. 
(d) AMENDMENT.—Section 194(aXl) of the Elementary and Second- 20 use 2844. 
ary Education Act of 1965 is amended by striking out "1.5 per 
centmn" and inserting in lieu thereof "1 per centum". 
AUTHORIZED PROGRAMS 
SEC. 555. (a) GENERAL.—Each State and local educational agency 20 use 3804. 
shall use the payments imder this chapter for programs and projects 
(including the acquisition of equipment and, where necessary, the 
construction of school facilities) which are designed to meet the 
special educational needs of 
educationally deprivedchildren. 
(b) PROGRAM DESIGN.—State agency programs shall be designed to 
serve those categories of children counted for eligibility for grants 
under section 554(aX2) in accordance with the requirements of this 
chapter. 
(c) PROGRAM DESCRIPTION.—^A local education agency may use 
funds received under this chapter only for programs and projects 
which are designed to meet the special educational needs of educa-
tionally deprived children identified in accordance with section 
556(bX2), Eind which are included in an application for assistance 
approved by the State educational agency. Such programs and 
projects may include the acquisition of equipment and instructional 
materials, employment of special instructional and counseling and 
guidance personnel, employment and training of teacher aides, 
payments to teachers of amounts in excess of regular salary sched-
ules as a bonus for service in schools serving project areas, the 
training of teachers, the construction, where necessary, of school 
facilities, other expenditures authorized under title I of the Elemen-
tary and Secondary Education Act as in effect September 30,1982, 
and planning for such programs and projects. 
(d) RECORDS AND INFORMATION.—Each State educational agency 
shall keep such records and provide such information to the Secre-
tary as may be required for fiscal audit and program evaluation 
(consistent with the responsibilities of the Secretary under this 
chapter). 
APPROVAL OP APPLICATIONS 
SEC. 556. (a) APPLICATION BY LOCAL EDUCATIONAL AGENCY.—A local 20 use 3805. 
educational agency may receive a grant under this chapter for any 
fiscal year if it has on file with me State educational agency an 
application wMch describes the programs and projects to be con-
ducted with such assistance for a period of not more than three years, 
95 STAT. 466 
PUBLIC LAW 97-35—AUG. 13, 1981 
and such application has been approved by the State educational 
agency. 
0)) APPLICATION ASSURANCES.—The application described in subsec-
tion (a) shall be approved if it provides assurances satisfactory to the 
State educational agency that the local educational agency Will keep 
such records and provide such information to the State educationsu 
agency as may be required for fiscal audit and program evaluation 
(consistent with the responsibilities of the State agency under this 
chapter), and that the programs and projects described— 
dXA) are conducted in attendance areas of such agency having 
the highest concentrations of low-income children; 
(B) are located in all attendance areas of 
an agency which has a 
uniformly high concentration of 
such children; or 
(C) are designed to utilize part of the available funds for 
services which promise to provide significant help for all such 
children served by such agency; 
(2) are based upon an annual assessment of educational needs 
which identifies educationally deprived children in all ehgible 
attendance areas, permits selection of those children who have 
the greatest need for special assistance, and determines the 
needs of participating children with sufficient specificity to 
ensure concentration on those needs; 
(8) are of sufficient size, scope, and quality to give reasonable 
promise of substantial progress toward meeting the s ^ i a l 
educational needs of the children being served suid are designed 
and implemented in consultation with parents and teachers of 
such children; 
(4) will be evaluated in terms of 
their effectiveness in achieving 
the goals set for them, and that such evaluations shall include 
objective measurements of educational achievement in basic 
skills and a determination of whether improved performance is 
sustained over a period of more than one year; and 
(5) make provision for services to educationally deprived chil-
dren attending private elementary and secondary schools in 
accordance with section 557. 
PARTICIPATION OF CHILDREN ENROLLED IN PRIVATE SCHOOLS 
20 use 3806. 
SEC 557. (a) GENERAL REQUIREMENTS.—To the extent consistent 
with the number of educationally deprived children in the school 
district of the local educational agency who are enrolled in private 
elementary and secondary schools, such agency shall make provi-
sions for including special educational services and arrangements 
(such as dual enrollment, educational radio and television, and 
mobile educational services and equipment) in which such children 
can participate and which meet the requirements of sections 555(c), 
556(b) (2), (3), and (4), and 558(b). Expenditures for educational 
services and arrangements pursuant to this section for educationally 
deprived children in private schools shall be equal (taking into 
account the number of children to be served and the special educa-
tional needs of such children) to expenditures for children enrolled in 
the public schools of the local educational agency. 
(b) BYPASS PROVISION.—(1) If a local educational agency is prohibit-
ed by law from providing for the participation in specisd programs for 
educationally deprived children enrolled in private elementary and 
secondary schools as required by subsection (a), the Secretary shall 
waive such requirements, and shall arrange for the provision of 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 467 
services to such children through arrangements which shall be 
subject to the requirements of subsection (a). 
(2) If the Secretary determines that a local educational agency has 
substantially failed to provide for the participation on an equitable 
basis of educationally deprived children enrolled in private elemen-
tary and secondary schools as required by subsection (a), he shall 
arrange for the provision of services to such children through 
arrangements which shall be subject to the requirements of subsec-
tion (a), upon which determination the provisions of subsection (a) 
shall be waived. 
(3)(A) When the Secretary arranges for services pursuant to this 
subsection, he shall, after consultation with the appropriate public 
and private school officials, pay to the provider the cost of such 
services, including the administrative cost of arranging for such 
services, from the appropriate allocation or allocations under this 
chapter. 
(B) Pending final resolution of any investigation or complaint that 
could result in a determination under this subsection, the Secretary 
may withhold from the allocation of the affected State or local 
educational agency the amount he estimates would be necessary to 
pay the cost of such services. 
(C) Any determination by the Secretary under this section shall 
continue in effect until the Secretary determines that there will no 
longer be any failure or inability on the part of the local educational 
agency to meet the requirements of subsection (a). 
(4)(A) The Secretary shall not take any final action under this 
subsection until the State educational agency and local educational 
agency affected by such action have had an opportunity, for at least 
forty-five days after receiving written notice thereof, to submit 
written objections and to appear before the Secretary or his designee 
to show cause why such action should not be taken. 
(B) If a State or local educational agency is dissatisfied with the 
Secretary's final action after a proceeding under subparagraph (A) of 
this paragraph, it may within sixty days after notice of such action, 
file with the United States court of appeals for the circuit in which 
such State is located a petition for review of that action. A copy of the 
petition shall be forthwith transmitted by the clerk of the court to the 
Secretary. The Secretary thereupon shall file in the court the record 
of the proceedings on which he based his action, as provided in section 
2112 of title 28, United States Code. 
(C) The findings of fact by the Secretary, if supported by substantial 
evidence, shall be conclusive; but the court, for good cause shown, 
may remand the case to the Secretary to take further evidence, and 
the Secretary may thereupon make new or modified findings of fact 
and may modify his previous action, and shall file in the court the 
record of the further proceedings. Such new or modified findings of 
fact shall likewise be conclusive if supported by substantial evidence. 
(D) Upon the filing of a petition under subparagraph (B), the court 
shall have jurisdiction to affirm the action of the Secretary or to set it 
aside, in whole or in part. The judgment of the court shall be subject 
to review by the Supreme Court of the United States upon certiorari 
or certification as provided in section 1254 of title 28, United States 
Code. 
(c) Any bypass determination by the Secretary under title I of the 
Elementary and Secondary Education Act of 1965 prior to the 20 use 2701. 
effective date of this chapter shall remain in effect to the extent 
consistent with the purposes of this chapter. 
95 STAT. 468 
PUBLIC LAW 97-35—AUG. 13, 1981 
GENERAL PROVISIONS 
20 use 3807. 
SEC. 558. (a) MAINTENANCE OP EPFORT.—(1) Except as provided in 
paragraph (2), a local educational agency may receive funds under 
this chapter for any fiscal year only if the State educationsJ agency 
finds that either the combined fiscal effort per student or the 
aggregate expenditures of that agency and the State with respect to 
the provision of free public education by that agency for the preced-
ing fiscal year was not less than 90 per centum of such combined 
fiscal effort or aggregate expenditures for the second preceding fiscal 
year. 
(2) The State educational agency shall reduce the amount of the 
allocation of funds under this chapter in any fiscal year in the exact 
proportion to which a local educational agency fails to meet the 
requirement of paragraph (1) by falling below 90 per centum of both 
the combined fiscal effort per student and aggregate expenditures 
(using the measure most favorable to such local agency), and no such 
lesser amount shall be used for computing the enort required under 
paragraph (1) for subsequent years. 
Waiver of 
(3) The State educational agencry may waive, for one fiscal year 
requirements. 
only, the requirements of this subsection if the State educational 
agency determines that such a waiver would be equitable due to 
exceptional or uncontrollable circumstances such as a natural disas-
ter or a precipitous and unforeseen decline in the financial resources 
of the local educational agency. 
(b) FEDERAL FUNDS TO SUPPLEMENT, NOT SUPPLANT REGULAR NON-
FEDERAL FUNDS.—A local educational agency may use funds received 
under this chapter only so as to supplement and, to the extent 
practical, increase the level of funds that would, in the absence of 
such Federal funds, be made available from non-Federal sources for 
the education of pupils participating in programs and projects 
assisted under this chapter, and in no case may such funds be so used 
as to supplant such funds from such non-Federal sources. In order to 
demonstrate compliance with this subsection a local education agen-
cy shall not be required to provide services under this chapter 
outside the regular classroom or school program. 
(c) CoMPARABiuTY O
P SERVICES.—(1) A local oducational agency 
may receive funds under this chapter only if State and local fun<b 
will be used in the district of such agency to provide services in 
project areeis which, taken as a whole, are at least comparable to 
services being provided in areas in such district whicn are not 
receiving funds under this chapter. Where all school attendance 
areeis in the district of the agency are designated as project areas, the 
agency may receive such funds only if State and local funds are used 
to provide services which, taken as a whole, are substantially compa-
rable in each project area. 
(2) A local educational agency shall be deemed to have met the 
requirements of pargigraph (1) if it has filed with the State educa-
tional agency a written assurance that it has established— 
(A) a districtwide salsiry schedule; 
(B) a policy to ensure equivalence among schools in teachers, 
administrators, and auxiliary personnel; and 
(C) a policy to ensure equivalence among schools in the 
provision of curriculum materials and instructional supplies. 
Unpredictable changes in student enrollment or personnel assign-
ments which occur after the beginning of a school year shall not be 
included as a factor in determining comparability of services. 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 469 
(d) EXCLUSION OP SPECIAL STATE AND LOCAL PROGRAM FUNDS.—For 
the purposes of determining compliance with the requirements of 
subsections (b) and (c), a locm educational agency may exclude State 
and local funds expended for carrying out special programs to meet 
the educational needs of educationmly deprived children, if such 
programs are consistent with the purposes of this chapter. 
(e) ALLOCATION OF FUNDS IN CERTAIN STATES.—In any State in 
which a large number of local educational ^encies overlap county 
boundaries, the State educational agency is authorized to make 
allocations of basic grants and special incentive grants directly to 
local educational agencies without regard to counties, if such alloca-
tions were made during fiscal year 1982, except that (1) precisely the 
same factors are used to determine the amount of such grants to 
counties, and (2) a local educational agency dissatisfied with such 
determination is afforded an opportunity for a hearing on the matter 
by the State educational agency. 
CHAPTER 2—CONSOLIDATION OF FEDERAL PROGRAMS FOR 
ELEMENTARY AND SECONDARY EDUCATION 
STATEMENT OF PURPOSE 
SEC. 561. (a) It is the purpose of this chapter to consolidate the 20 use 38ii. 
program authorizations contained in— 
(1) titles II, m, IV, V, VI, Vm, and IX (except part C) of the 
Elementary and Secondary Education Act of 1965; 
20 use 2881 
(2) the Alcohol and Drug Abuse Education Act; 
2941,3081,3i4i, 
(3) part A and section 532 of title V of the Higher Education 334}' '^'^^' ^^^^' 
Act of 1965; 
21 use 1001 
(4) the Follow Through Act (on a phased basis); 
note^ 
(5) section 3(a)(1) of the National Science Foundation Act of 20 use 1101, 
1950 relating to precoUege science teacher training; and 
Post% 568 
(6) the Career Education Incentive Act; 
42 u ^ 1862. 
into a single authorization of grants to States for the same purposes 20 use 2601 
set forth in the provisions of law specified in this sentence, but to be note. 
used in accordance with the educational needs and priorities of State 
and local educational agencies as determined by such agencies. It is 
the further purpose and intent of Congress to financially assist State 
and local educational agencies to improve elementary and secondary 
education (including preschool education) for children attendiag both 
public and private schools, and to do so in a manner designed to 
greatly reduce the enormous administrative and paperwork burden 
imposed on schools at the expense of their ability to educate children, 
(b) The basic responsibility for the administration of funds made 
available under this chapter is in the State educational agencies, but 
it is the intent of Congress that this responsibility be carried out with 
a minimum of paperwork and that the responsibility for the design 
and implementation of programs assisted under the chapter shall be 
mainly that of local educational agencies, school superintendents and 
principals, and classroom teachers and supporting personnel, because 
they have the most direct contact with students and are most directly 
responsible to parents. 
AUTHORIZATION OF APPROPRIATIONS; DURATION OF ASSISTANCE 
SEC. 562. (a) There are authorized to be appropriated such sums as 20 use 3812. 
may be necessary for fiscal year 1982 and each of the five succeeding 
fiscal years to carry out the provisions of this chapter. 
95 STAT. 470 
PUBLIC LAW 97-35—AUG. 13, 1981 
(b) During the period beginning July 1,1982, and ending September 
30,1987, the Secretary shall, in accordance with the provisions of this 
subtitle, make payments to State educational agencies for the pur-
poses of 
this chapter. 
(c) Funds available under previously authorized programs shall be 
available for the purpose of such pa:pients in accordance with section 
^nte, p. 445. 
514(bX2) of the Omnibus Education Reconciliation Act of 1981. 
ALLOTMENTS TO STATES 
20 use 3813. 
SEC. 563. (a) From the sxmis appropriated to carry out this chapter 
in any fiscal year, the Secretary shall reserve not to exceed 1 per 
centum for payments to Guam, American Samoa, the Virgin Islands, 
the Trust Territory of the Pacific Islands, and the Northern Mariana 
Islands, to be allotted in accordance with their respective needs. The 
Secretary shall reserve an additional amount, not to exceed 6 per 
centum of the sums appropriated, to carry out the purposes of section 
583. From the remednder of such sums the Secretary shall allot to 
each State an £unount which bears the same ratio to the amount of 
such remainder as the school-age population of the State bears to the 
school-age population of all States, except that no State shall receive 
less than an amount equal to 0.5 per centum of such remainder, 
(b) For the purposes of this section: 
"School-age 
(1) The term "school-age population" means the population 
population.' 
3gg(j 
flyg 
through seventeen. 
"States." 
(2) The term "States" includes the fifty States, the District of 
Columbia, and Puerto Rico. 
STATE APPUCATIONS 
20 use 3814. 
SEC. 564. (a) Any State which desires to receive grants under this 
chapter shall file an application with the Secretary which— 
(1) designates the State educational agency as the State agency 
responsible for the administration and supervision of programs 
assisted under this chapter; 
(2) provides for a process of active and continuing consultation 
with the State educational agency of an advisory committee, 
appointed by the Governor and determined by the Governor to be 
broadly representative of the educational interests and the 
gener^ public in the State, including persons representative o
f
— 
(A) public and private elementary and secondary school-
children; 
(B) classroom teachers; 
(C) parents of elementary and secondary schoolchildren; 
(D) local boards of education; 
(E) local and regional school administrators (including 
principals and superintendents); , 
(F) institutions of higher education; and 
(G) the State legislature; 
to advise the State educational agency on the allocation among 
authorized functions of funds (not to exceed 20 per centum of the 
amount of the State's £dlotment) reserved for State use under 
section 565(a), on the formula for the allocation of funds to local 
educational agencies, and on the planning, development, sup-
port, implementation, and evaluation of State programs assisted 
under this chapter; 
(3) sets forth the planned allocation of funds reserved for State 
Post, pp. 472,473, 
use Under section 565(a) among subchapters A, B, and C of this 
475. 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 471 
chapter and among the authorized programs and projects which 
are to be implemented, and the allocation of such mnds required 
to implement section 586, including administrative costs of 
carrying out the responsibilities of the State educational agency 
under this chapter; 
(4) provides for timel^r public notice and public dissemination 
of the information provided pursuant to paragraphs (2) and (3); 
(5) beginning with fiscal year 1984, provides for an annual 
evaluation of the efiTectiveness of programs assisted under this 
chapter, which shall include comments of the advisory commit-
tee, and shall be made available to the public; and 
(6) provides that the State educational agency will keep such Recordkeeping. 
records and provide such information to the Secretary as may be 
required for fiscal audit and program evaluation (consistent with 
the responsibilities of the Secretary under this chapter); and 
(7) contains assurances that there is compUance with the 
specific requirements of 
this chapter. 
(b) An application filed by the State under subsection (a) shall be for 
a period not to exceed three fbscal years, and may be amended 
annually as may be necessary to reflect changes without filing a new 
application. 
ALLOCATION TO LOCAL EDUCATIONAL AGENCIES 
SEC. 565. (a) From the sum made available each year under section 20 use 3815. 
563, the State educational agency shall distribute not less than 80 per 
centum to local educational agencies within such State according to 
the relative enrollments in public and nonpublic schools within the 
school districts of such agencies, ai^usted, in accordance with criteria 
approved by the Secretary, to provide higher per pupil allocations to 
local educational agencies which have the greatest numbers or 
percentages of children whose education imposes a higher than 
average cost per child, such as— 
(1) children from low-income families, 
(2) children living in economically depressed urbeui and rural 
areas, and 
(3) children living in sparsely populated areas. 
(b) The Secretary shall approve criteria suggested by the State 
educational agency for adjusting allocations under subsection (a) if 
such criteria are reasonably calculated to produce an equitable 
distribution of funds with reference to the factors set forth in 
subsection (a). 
(c) From the funds paid to it pursuant to sections 563 and 564 
during each fiscal year,-the State educational agency shall distribute 
to each local educational agency which has submitted an application 
as required in section 566 the amount of its allocation as determined 
under subsection (a). 
LOCAL APPLICATIONS 
SEC. 566. (a) A local educational agency may receive its allocation of 20 use 3816. 
funds under this chapter for any year in which it has on file with the 
State educational agency an application which— 
(1) sets forth the planned allocation of funds among sub-
chapters A, B, and C of this chapter and for the programs i'ost, pp. 472,473, 
authorized by such subchapters which it intends to support, ^'^^• 
including the allocation of such funds required to implement 
section 586; 
-194 0—82 
32:QL3 
95 STAT. 472 
PUBLIC LAW 97-35—AUG. 13, 1981 
(2) provides assurances of compliance with provisions of this 
chapter relating to such programs, including the participation of 
children enrolled in private, nonprofit schools in accordance with 
section 586; 
Recordkeeping. 
(3) agrees to keep such records, and provide such information 
to the State educational agency as reasonably may be required 
for fiscal audit and program evaluation, consistent with the 
responsibilities of the State agency under this chapter; and 
(4) in the allocation of funds for programs authorized by this 
chapter, and in the design, planning, and implementation of such 
programs, provides for systematic consultation with parents of 
children attending elementary and secondary schools in the area 
served by the local agency, with teachers and administrative 
personnel in such schools, and with other groups as may be 
deemed appropriate by the local educational agency. 
(b) An application filed by a local educational agency under 
subsection (a) shall be for a period not to exceed three fiscal years, 
may provide for the allocation of funds among programs and pur-
poses authorized by this chapter for a period of three years, and may 
be amended annually as may be necessary to reflect changes without 
filing a new application. 
(c) Each local educational agency shall have complete discretion, 
subject only to the provisions of this chapter, in determining how 
funds the agency receives under this section shall be divided among 
the purposes oi this chapter in accordance with the application 
submitted under this section. 
Subchapter A—Basic Skills Development 
USE OF FUNDS 
20 use 3821. 
SEC. 571. Funds allocated for use under this subchapter shall be 
used by State and local educational agencies to develop and imple-
ment a comprehensive and coordinated program designed to improve 
elementary and secondary school instruction in the basic skills of 
reading, mathematics, and written and oral communication, as 
formerly authorized by title II of the Elementary and Secondary 
20 use 2881. 
Education Act of 1965, relating to basic skills improvement, including 
the special mathematics program as formerly authorized by section 
20 use 2912. 
232 of 
such title. 
Grants and 
contracts. 
20 u s e 3822. 
STATE LEADERSHIP AND SUPPORT SERVICES 
SEC. 572. (a) In order to achieve the purposes of this subchapter, 
State educational agencies may use funds reserved for State pro-
grams to make grants to and enter into contracts with local educa-
tional agencies, institutions of higher education, and other public and 
private agencies, organizations, and institutions— 
(1) to carry out planning, research and development, demon-
stration projects, training of leadership personnel, short term 
and regular session teacher training institutes; and 
(2) for the development of instructional materials, the dissemi-
nation of information, and technical assistance to local educa-
tional agencies. 
Each State educational agency may also use such funds for technical 
assistance and training for State boards of education. 
(b) State educational agencies may support activities designed to 
enlist the assistance of parents and volunteers working with schools 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 473 
to imi)rove the performance of children in the basic skills. Such 
activities may include— 
(1) the development and dissemination of materials that par-
ents may use in the home to improve their children's perform-
ance in those skills; and 
(2) voluntary training activities for parents to encourage and 
assist them to help their children in developing basic skills; 
except that such activities conducted in local areas shall be conducted 
with the approval of and in conjunction with programs of local 
educational agencies. 
SCHOOL LEVEL PROGRAMS 
SEC. 573. (a) In planning for the utilization of funds it allocates for 20 use 3823. 
this chapter (from its allotment under section 565) a local educational 
agency shall provide for the participation of children enrolled in 
private elementary and secondary schools (and of teachers in such 
schools) in accordance with section 586. Such plans shall be developed 
in conjunction with and involve continuing consultation with teach-
ers and principals in such district. Such planning shall include a 
systematic strategy for improving basic skills instruction for all 
children which provides for planning and implementation at the 
school building level, involving teachers, administrators, and (to the 
extent practicable) parents, and utilizing all available resources in a 
comprehensive program. The programs shall include— 
(1) diagnostic assessment to identify the needs of all children in 
the school; 
(2) the establishment of learning goals and objectives for 
children and for the school; 
(3) to the extent practicable, pre-service and in-service training 
and development programs for teachers, administrators, teacher 
aides and other support personnel, designed to improve instruc-
tion in the basic skills; 
(4) activities designed to enlist the support and participation of 
parents to aid in the instruction of their children; and 
(5) procedures for testing students and for evaluation of the 
effectiveness of programs for maintaining a continuity of effort 
for individual children. 
(b) The programs described in subsection (a) may include such 
areawide or districtwide activities as learning centers accessible to 
students and parents, demonstration and training programs for 
parents, and other activities designed to promote more effective 
instruction in the basic skills. 
Subchapter B—Educational Improvement and Support Services 
STATEMENT OF PURPOSE 
SEC. 576. It is the purpose of this subchapter to permit State and 20 use 3831. 
local educational agencies to use Federal funds (directly, and through 
grants to or contracts with educational agencies, local educational 
agencies, institutions of higher education, and other public and 
private agencies, organizations, and institutions) to carry out selected 
activities from among the full range of programs and projects 
formerly authorized under title IV, relating to educational improve- 20 U
S
C 3081. 
ment, resources, and support, title V, relating to State leadership, 2
0 use 3141. 
title VI, relating to emergency school aid, of the Elementary and 20 use 3i9i. 
Secondary Education Act of 1965, section 3(a)(1) of the National 
95 STAT. 474 
PUBLIC LAW 97-35—AUG. 13, 1981 
42 use 1862. 
Science Foundation Act of 1950, relating to precoUege science teacher 
training, and part A and section 532 of title V of the Higher 
20 use 1101, 
Education Act of 1965, relating to the Teacher Corps and teacher 
^^^^^ 
centers, in accordance with the planned allocation of funds set forth 
in the applications under sections 564 and 566, in conformity with the 
other requirements of 
this chapter. 
AUTHORIZED ACTIVITIES 
20 use 3832. 
SEC. 577. Programs and projects authorized under this subchapter 
include— 
(1) the acquisition and utilization— 
(A) of school library resources, textbooks, and other 
printed and published instructional materials for the use of 
children and teachers in public and private elementary and 
secondary schools which shall be used for instructional 
purposes only, and 
(B) of instructional equipment and materials suitable for 
use in providing education in academic subjects for use by 
children and teachers in elementary and secondary schools 
which shall be used for instructional purposes only, 
which take into account the needs of children in both public and 
private schools based upon periodic consultation with teachers, 
librarians, media specialists, and private school officials; 
(2) the development of programs designed to improve local 
educational practices in elementary and secondary schools, and 
particularly activities desired to address educational problems 
such as the education of cmldren with special needs (education-
ally deprived children, gifted and talented children, including 
children in private schools); 
(3) programs designed to assist local educational agencies, upon 
their request, to more effectively address educational problems 
caused by the isolation or concentration of minority group 
children m certain schools if such assistance is not conditioned 
upon any requirement that a local educational agency which 
assigns students to schools on the basis of 
geogpraphic attendance 
areas adopt any other method of student assignment, and that 
such assistance is not made available for the transportation of 
students or teachers or for the acquisition of equipment for such 
transportation; 
(4) comprehensive guidance, counseling, and testing programs 
in elementary and secondary schools and State and local support 
services necessary for the effective implementation and evmua-
tion of such programs (including those designed to help prepare 
students for employment); 
(5) programs and projects to improve the planning, manaj^e-
ment and implementation of educational programs, including 
fiscal management, by both State and local educational agencies, 
and the cooperation of such agencies with other public agencies; 
(6) programs and projects to assist in teacher training and in-
service staff development, particularly to better prepare both 
new and in-service ^rsonnel to deal with contempNorary teaching 
and learning requirements and to provide assistance in the 
teaching and learning of educationally deprived students; and 
(7) programs and projects to assist local educational agencies to 
meet the needs of children in schools imdergoing desegregation 
and to assist such agencies to develop and implement plans for 
desegregation in the schools of 
such agencies. 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 475 
Subchapter C—Special Projects 
STATEMENT OF PURPOSE 
SEC. 581. It is the purpose of this subchapter to permit State and 20 use 3841. 
local educational agencies to use Federal funds (directly and through 
grants to or contracts with educational agencies, local educational 
agencies, institutions of higher education, and other public and 
private g^encies, organizations, and institutions) to carry out selected 
activities from among the full range of programs and projects 
formerly authorized under title III, relating to special projects, title 
VIII, relating to community schools, and title IX (except part C), 
relating to gifted and talented children, educational proficiency 
standards, safe schools program, and ethnic heritage program, of the 
Elementary and Secondary Education Act of 1965, the Career Educa- 20 use 2941, 
tion Incentive Act, and part B of title V of the Economic Opportunity |o^us? 2601 
Act of 1964, relating to Follow Through programs, in accordance with ^o^g 
the planned allocation of funds set forth in the applications under 42 use 2929. 
sections 564 and 566, in conformity with the other requirements of 
this chapter. 
AUTHORIZED ACTIVITIES 
SEC. 582. Programs and projects authorized under this subchapter 20 use 3842. 
include— 
(1) special projects (as may be determined to be desirable by the 
State or local educational agencies) in such areas as— 
(A) preparation of students to use metric weights and 
measurements when such use is needed; 
(B) emphasis on the arts as an integral part of the 
curriculum; 
(C)(i) in-school partnership programs in which the parents 
of school-age children participate to enhance the education 
and personal development of the children, previously au-
thorized by part B of the Headstart-FoUow Through Act; 42 use 2929. 
(ii) preschool partnership programs in which the schools 
work with parents of preschool children in cooperation with 
programs funded under the Headstart-FoUow Through Act; 42 use 2921. 
(D) consumer education; 
(E) preparation for employment, the relationship between 
basic academic skill development and work experience, and 
coordination with youth employment programs carried out 
under the Comprehensive Employment and Training Act; 
(F) career education previously authorized by the Career 
Education Incentive Act; 
(G) environmental education, health education, education 
about legal institutions and the American system of law and 
its underlying principles, and studies on population and the 
effects of population changes; 
(H) academic and vocational education of juvenile delin-
quents, youth offenders, and adult criminal offenders; and 
(I) programs to introduce disadvantaged secondary school 
students to the possibilities of careers in the biomedical and 
medical sciences, and to encourage, motivate, and assist 
them in the pursuit of such careers; 
(2) the use of public education facilities as community centers 
operated by a local education agency in conjunction with other 
local governmental agencies and community organizations and 
groups to provide educational, recreational, health care, cul-
95 STAT. 476 
PUBLIC LAW 97-35—AUG. 13, 1981 
tural, and other related community and human services for the 
community served in accordance with the needs, interests, and 
concerns of the community and the agreement and conditions of 
the governing board of 
the local educational agency; and 
(3) additional programs, including— 
(A) special programs to identify, encourage, and meet the 
special educational needs of children who give evidence of 
high performance capability in areas such as intellectual, 
creative, artistic, leadership capacity, or specific academic 
fields, and who require services or activities not ordi-
narily provided by the school in order to fully develop such 
capabilities; 
(B) establishment of educational proficienQr standards for 
reading, writing, mathematics, or other subjects, the admin-
istration of examinations to measure the proficiency of 
students, and implementation of 
programs (coordinated with 
Ante, p. 472. 
those Under subchapter A of this chapter) designed to assist 
students in achieving levels of proficiency compatible with 
established standards; 
(C) programs designed to promote safety in the schools and 
to reduce the incidence of crime and vanaalism in the school 
environment; 
(D) planning, developing, and implementing ethnic heri-
tage studies programs to provide all persons with an 
oi>portunity to learn about and appreciate the unique con-
tributions to the American national heritage made by the 
various ethnic groups, and to enable students better to 
understand their own cultural heritage as well as the 
cultural heritage of others; and 
(E) programs involving training and advisory services 
42 use 2000c. 
under title IV of 
the Civil Rights Act of 1964. 
Subchapter D—Secretary's Discretionary Funds 
DISCRETIONARY PROGRAM AUTHORIZED 
20 use 3851. 
SEC. 583. (a) From the sums reserved by the Secretary pursuant to 
the second sentence of section 563(a) the Secretary is authorized to 
cany out directly or throujgh grants to or contracts with State and 
local educational agencies, institutions of higher education, and other 
public and private agencies, organizations, and institutions, pro-
grams and projects which— 
(1) provide a national source for gathering and disseminating 
information on the efTectiveness of programs designed to meet 
the special educational needs of educationally deprived children, 
and others served by this subtitle, and for assessing the needs of 
such individuals, including programs and projects formerly au-
thorized by section 376 of the Elementary and Secondary Educa-
20 use 3041. 
tion Act of 1965 and programs and projects formerly funded 
under the "National Dimision Network" program; 
(2) carry out research and demonstrations related to the 
purposes of 
this subtitle; 
(3) are designed to improve the training of teachers and other 
instructional personnel needed to carry out the purposes of this 
subtitle; or 
(4) are designed to assist State and local educational agencies 
in the implementation of 
programs under this subtitle. 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 477 
20 u s e 2911. 
21 u s e 1001 
note. 
(b) From the funds reserved for the purposes of this section, the 
Secretary shall first fund— 
(1) the Inexpensive Book Distribution Program (as carried out 
through "Reading is Fundamental") as formerly authorized by 
part C of title II of the Elementary and Secondary Education Act 
of 1965, 
(2) the programs of national significance in the "Arts in 
Education Program as formerly authorized by part C of title III 
ofsuchAct, and 
(3) programs in alcohol and drug abuse education as formerly 
authorized by the Alcohol and Drug Abuse Education Act, 
at least in amounts necessary to sustain the activities described in 
this sentence at the level of operations during fiscal year 1981, and 
then utilize the remainder of such funds for the other authorized 
activities described in subsection (a). 
Subchapter E—General Provisions 
MAINTENANCE OF EFFORT; FEDERAL FUNDS SUPPLEMENTARY 
SEC. 585. (a)(1) Except as provided in paragraph (2), a State is 20 use 3861. 
entitled to receive its full allocation of funds under this chapter for 
any fiscal year if the Secretary finds that either the combined fiscal 
effort per student or the aggregate expenditures within the State 
with respect to the provision of free public education for the preced-
ing fiscal year was not less than 90 per centum of such combined 
fiscal effort or aggregate expenditures for the second preceding fiscal 
year. 
(2) The Secretary shall reduce the amount of the allocation of funds 
under this chapter in any fiscal year in the exact proportion to which 
the State fails to meet the requirements of paragraph (1) by falling 
below 90 per centum of both the fiscal effort per student and 
aggregate expenditures (using the measure most favorable to the 
State), and no such lesser amount shall be used for computing the 
effort required under paragraph (1) for subsequent years. 
(3) The Secretary may waive, for one fiscal year only, the require- Waiver o
f 
ments of this subsection if he determines that such a waiver would be requirements. 
equitable due to exceptional or uncontrollable circumstances such as 
a natural disaster or a precipitous and unforeseen decline in the 
financial resources of the State. 
(b) A State or local educational agency may use and allocate funds 
received under this chapter only so as to supplement and, to the 
extent practical, increase the level of funds that would, in the absence 
of Federal funds made available under this chapter, be made availa-
ble from non-Federal sources, and in no case may such funds be used 
so as to supplant funds from non-Federal sources. 
(c) The Secretary is specifically authorized to issue regulations to Regulations. 
enforce the provisions of 
this section. 
PARTICIPATION OF CHILDREN ENROLLED IN PRIVATE SCHOOLS 
SEC. 586. (a)(1) To the extent consistent with the number of 
children 20 use 3862. 
in the school district of a local educational agency which is eligible to 
receive funds under this chapter or which serves the area in which a 
program or project assisted under this chapter is located who are 
enrolled in private nonprofit elementary and secondary schools, or 
with respect to instructional or personnel training programs funded 
by the State educational agency from funds reserved for State use 
95 STAT. 478 
PUBLIC LAW 97-35—AUG. 13, 1981 
under section 565, such agency after consultation with appropriate 
private school officials, shall provide for the benefit of such children 
in such schools secular, neutral, and nonideological services, materi-
als, and equipment including the participation of the teachers of such 
children (and other educational personnel serving such children) in 
training programs, and the repair, minor remodeling, or construction 
of public facilities as may be necessary for their provision (consistent 
with subsection (c) of this section), or, if such service, materials, and 
equipment are not feasible or necessary in one or more such private 
schools as determined by the local educational agency after consulta-
tion with the appropriate private school officials, shall provide such 
other arrangements as will assure equitable participation of such 
children in the purposes and benefits of this chapter. 
Contract 
(2) If no program or project is carried out under subsection (a)(1) of 
authority. 
t;his section in the school district of a local educational agency, the 
State educational agency shall make arrangements, such as through 
contracts with nonprofit agencies or organizations, under which 
children in private schools in that district are provided with services 
and materials to the extent that would have occurred if the local 
educational agency had received funds under this chapter. 
(3) The requirements of this section relating to the participation of 
children, teachers, and other personnel serving such children shall 
apply to programs and projects carried out under this chapter by a 
State or local educational agency, whether directly or through grants 
to or contracts with other public or private agencies, institutions, or 
organizations. 
(b) Expenditures for programs pursuant to subsection (a) shall be 
equal (consistent with the number of children to be served) to 
expenditures for programs under this chapter for children enrolled in 
the public schools of the local educational agency, taking into account 
the needs of the individual children and other factors which relate to 
such expenditures, and when funds available to a local educational 
agency under this chapter are used to concentrate programs or 
projects on a particular group, attendance area, or grade or age level, 
children enrolled in private schools who are included within the 
group, attendance area, or grade or age level selected for such 
concentration shall, after consultation with the appropriate private 
school officials, be assured equitable participation in the purposes 
and benefits of such programs or projects. 
(c)(1) The control of funds provided under this chapter and title to 
materials, equipment, and property repaired, remodeled, or con-
structed therewith shall be in a public agency for the uses and 
purposes provided in this chapter, and a public agency shall adminis-
ter such funds and property. 
(2) The provision of services pursuant to this section shall be 
provided by employees of a public agency or through contract by such 
public agency with a person, an association, agency, or corporation 
who or which, in the provision of such services, is independent of such 
private school and of any religious organizations, and such employ-
ment or contract shall be under the control and supervision of such 
public agency, and the funds provided under this chapter shall not be 
commingled with State or local funds. 
Waiver of 
(d) If by reason of any provision of law a State or local educational 
requirements. 
agency is prohibited from providing for the participation in programs 
of children enrolled in private elementary and secondary schools, as 
required by this section, the Secretary shall waive such requirements 
and shall arrange for the provision of services to such children 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 479 
through arrangements which shall be subject to the requirements of 
this section. 
(eXD If the Secretary determines that a State or a local educational Waiver of 
agency has substantially failed or is unwilling to provide for the requirements. 
participation on an equitable basis of children enrolled in private 
elementary and secondary schools as required by this section, he may 
waive such requiremente and shall arrange for the provision of 
services to such children through arrangements which shall be 
subject to the requirements of 
thte section. 
(2) Pending final resolution of any investigation or complaint that 
could result in a determination under this subsection or subsection 
(d), the Secretary may withhold from the allocation of the affected 
State or local educational agency the amount he estimated would be 
necessary to pay the cost of those services. 
(f) Any determination by the Secretary under this section shall 
continue in effect until the Secretary determines that there will no 
longer be any failure or inability on the part of the State or local 
educational agency to meet the requirements of subsections (a) and 
(b). 
(g) When the Secretary arranges for services pursuant to this 
section, he shall, after consultation with the appropriate public and 
private school officials, pay the cost of such services, including the 
administrative costs of arranging for those services, from the appro-
priate allotment of the State under this chapter. 
(h)(1) The Secretary shall not take any final action under this 
section until the State educational agency and the local educational 
agency affected by such action have had an opportunity, for at least 
forty-five days after receiving written notice thereof, to submit 
written objections and to appear before the Secretary or his designee 
to show cause why that action should not be taken. 
(2) If a State or local educational agency is dissatisfied with the 
Secretary's final action after a proceeding under paragraph (1) of this 
subsection, it may within sixty days after notice of such action, file 
with the United States court of appeals for the circuit in which such 
State is located a petition for review of that action. A copy of the 
petition shall be forthwith transmitted by the clerk of 
the court to the 
Secretary. The Secretary thereupon shall file in the court the record 
of the proceedings on which he based this action, as provided in 
section 2112 of title 28, United States Code. 
(3) The findings of fact by the Secretary, if supported by substantial 
evidence, shall be conclusive; but the court, for good cause shown, 
may remand the case to the Secretary to take further evidence and 
the Secretary may thereupon make new or modified findings of fact 
and may modify his previous action, and shall file in the court the 
record of the further proceedings. Such new or modified findings of 
fact shall likewise be conclusive if supported by substantial evidence. 
(4) Upon the filing of such petition, the court shall have jurisdiction 
to affirm the action of the Secretary or to set it aside, in whole or in 
part. The judgment of the court shall be subject to review by the 
Supreme Court of the United States upon certiorari or certification as 
provided in section 1254 of title 28, United States Code. 
(i) Any bypass determination by the Secretary under titles II 
through VI and VIII and IX of the Elementary and Secondary 
Education Act of 1965 prior to the effective date of this chapter shall 20 U
S
C 2881, 
remain in effect to the extent consistent with the purposes of this ^^^^' ^^81, 33ii. 
chapter. 
95 STAT. 480 
PUBLIC LAW 97-35—AUG. 13, 1981 
20 u s e 3863. 
20 u s e 2881, 
2941, 3081, 3141, 
3191, 3281, 3311, 
3341. 
20 u s e 1101, 
1119a. 
21 u s e 1001 
note. 
20 u s e 2601 
note. 
Post, p. 508. 
REPEALS 
SEC. 587. (a) Effective October 1,1982, the provisions o
f
— 
(1) titles II, III, IV, V, VI, VIII, and IX (except part C) of the 
Elementary and Secondary Education Act of 1965; 
(2) part A and section 532 of title V of the Higher Education 
Act of 1965; 
(3) the Alcohol and Drug Abuse Education Act; and 
(4) the Career Education Incentive Act; 
are repealed. 
(b) Effective October 1,1984, subchapter C of chapter 8 of subtitle A 
of title VI of this Act, relating to Follow-Through programs is 
repealed. 
CHAPTER 3—GENERAL PROVISIONS 
FEDERAL REGULATIONS 
20 use 3871. 
SEC. 591. (a) The Secretary is authorized to issue regulations— 
(1) relating to the discharge of duties specifically assigned to 
the Secretary under this subtitle; 
(2) relating to proper fiscal accounting for funds appropriated 
under this subtitle and the method of making payments author-
ized under this subtitle; and 
(3) which are deemed necessary to reasonably insure that there 
is compliance with the specific requirements and assurances 
required by this subtitle. 
Qo) In all other matters relating to the details of planning, develop-
ing, implementing, and evaluating programs and projects by State 
and local educational agencies the Secretanr shall not issue regula-
tions, but may consult with appropriate State, local, and private 
educational agencies and, upon request, provide technical assistance, 
information, and suggested guidelines designed to promote the devel-
opment and implementation of effective instructional programs and 
to otherwise assist in canying out the purposes of this subtitle. 
(c) Regulations issued pursuant to this subtitle shall not have the 
standing of a Federal statute for the purposes of judicial review. 
WITHHOLDING OF PAYMENTS 
20 use 3872. 
SEC. 592. (a) Whenever the Secretary after reasonable notice to any 
State educational agency and an opportunity for a hearing on the 
record, finds that there has been a failure to comply substantially 
with any assurances required to be given or conditions required to be 
met under this subtitle the Secretary shall notify such agency of 
these findings and that beginning sixty days after the date of such 
notification, further payments will not be made to the State under 
this subtitle, or affected chapter thereof (or, in his discretion, that the 
State educational agency shall reduce or terminate further payments 
under the subtitle or affected chapter thereof, to specified local 
educational agencies or State agencies affected by the failure) until 
he is satisfied that there is no longer any such failure to comply. Until 
he is so satisfied, (1) no further payments shall be made to the State 
under the subtitle or affected chapter thereof, or (2) payments by the 
State educational agency under the subtitle or affected chapter 
thereof shall be limited to local educational agencies and State 
agencies not affected by the failure, or (3) payments to particular 
local educational agencies shall be reduced, as the case may be. 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 481 
(b) Upon submission to a State of a notice under subsection (a) that 
the Secretary is withholding pa3mients, the Secretary shall take such 
action as may be necessary to bring his action to the attention of the 
public within the State. 
JUDICIAL REVIEW 
SEC. 593. (a) If any State is dissatisfied with the Secretary's action 20 use 3873. 
under section 592(a), such State may, within sixty days after notice of 
such action, file with the United States court of appeals for the circuit 
in which such State is located a petition for review of that action. A 
copy of the petition shall be forthwith transmitted by the clerk of the 
court to the Secretary. The filing of such petition shall act to suspend 
any withholding of funds by the Secretary pending the judgment of 
the court and prior to a final action on any review of such judgment. 
The Secretary thereupon shall file in the court the record of the 
proceedings on which he based his action, as provided in section 2112 
of title 28, United States Code. 
(b) A State educational agency shall be presumed to have complied 
with this subtitle, but the findings of fact by the Secretary, if 
supported by the weight of evidence, may overcome such presump-
tion. The court may remand the case to the Secretary to take further 
evidence, and the Secretary may thereupon make new or modified 
findings of fact and may modify his previous action, and shall file in 
the court the record of the further proceedings. 
(c) Upon the filing of such petition, the court shall have jurisdiction 
to affirm the action of the Secretary or to set it aside, in whole or in 
part. The judgment of the court shall be subject to review by the 
Supreme Court of the United States upon certiorari or certification as 
provided in section 1254 of title 28, United States Code. 
AVAILABILITY OF APPROPRIATIONS 
SEC. 594. Notwithstanding any other provision of law, unless 20 use 3874. 
expressly in limitation of this section, funds appropriated in any 
fiscal year to carry out activities under this subtitle shall become 
available for obligation on July 1 of such fiscal year and shall remain 
available for obligation until the end of the succeeding fiscal year. 
DEFINITIONS 
SEC. 595. (a) Except as otherwise provided herein as used in this 20 use 3875. 
subtitle— 
(1) the term "State" means a State, Puerto Rico, Guam, the 
District of Columbia, American Samoa, the Virgin Islands, the 
Northern Mariana Islands, or the Trust Territory of the Pacific 
Islands; 
(2) the term "Secretary" means the Secretary of Education; 
(3) the term "State educational agency" means the officer or 
agency primarily responsible for the State supervision of public 
elementary and secondary schools; 
(4) the term "local educational agency" means a public board 
of education or other public authority legally constituted within 
a State for either administrative control or direction of, or to 
perform a service function for, public elementary or secondary 
schools in a city, county, township, school district, or other 
political subdivision of a State, or such combination of school 
districts or counties as are recognized in a State as an adminis-
trative agency for its public elementary or secondary schools. 
Such term includes any other public institution or agency having 
95 STAT. 482 
PUBLIC LAW 97-35—AUG. 13, 1981 
administrative control and direction of a public elementary or 
secondary school; 
(5) the term "parent" includes a legal guardian or other person 
standing in loco parentis; 
(6) the term "free public education" means education which is 
provided at public expense, under public supervision and direc-
tion, and without tuition charge, and which is provided as 
elementary or secondary school education in the applicable 
State, except that such term does not include any education 
provided beyond grade twelve; 
(7) the term "elementary school" means a day or residential 
school which provides elementary education, as determined 
under State law, and the term "secondary school" means a day or 
residential school which provides secondary education, as deter-
mined under State law, except that it does not include any 
education provided beyond grade twelve; 
(8) the term "construction" includes the preparation of draw-
ings and specifications for school faciUties; erecting, building, 
acquiring, altering, remodeling, improving, or exten^g school 
facilities; and the inspection and supervision of the construction 
of 
school facilities; 
(9) the term "equipment" includes machinery, utilities, and 
building equipment and any necessary enclosure or structures to 
house them, and includes all other items necessary for the 
functioning of a particular facility as a faciUty for the provision 
of educational services, including items such as instructional 
equipment and necessary furniture, printed, published, and 
audio-visual instructional materials, and books, periodicals, doc-
uments, and other related materials; and 
(10) the term "school facilities" means classrooms and related 
faciUties (including initial equipment) for free public education 
and interests in land (includmg site, grading, and improvements) 
on which such facilities are constructed, except that such term 
does not include those gymnasiums and similar facilities 
intended primarily for exhibitions for which admission is to be 
charged to the general public. 
(b) Any term used in provisions referenced by section 554 and not 
defined in this section shall have the same meaning as that term was 
given in title I of the Elementary and Secondary Education Act of 
20 use 2701. 
1965 in effect prior to October 1,1981. 
APPUCATION OF OTHER LAWS 
20 use 3876. 
SEC. 596. (a) Sections 434, 435, and 436 of the General Education 
20 use 1232c, 
Provisions Act (relating to "State Educational Agency Monitoring 
I232d, I232e. 
^j^^ Agency Application") shall not apply to programs authorized 
under this subtitle except to the extent that they relate to fiscal 
control and fund accounting procedures (including the title to prop-
erty acquired with Federal funds), and shall not be construed to 
authorize the Secretary to require any reports or take £iny actions not 
specifically authorized by this subtitle. 
20 use 1225. 
(b) Section 412 of the General Education Provisions Act shall apply 
to any funds appropriated for £iny fiscal year pursuant to this 
subtitle. 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 483 
TITLE VI—HUMAN SERVICES PROGRAMS 
Subtitle A—Authorizations Savings for Fiscal Years 
1982,1983, and 1984 
CHAPTER 1—GENERAL PROVISIONS 
EFFECT ON OTHER LAWS 
SEC. 601. (a) Any provision of law which is not consistent with the 
provisions of this subtitle hereby is superseded and shall have only 
such force and effect during each of the fiscal years 1982, 1983, and 
1984 which is consistent with this subtitle. 
(b) Notwithstanding any authorization of appropriations for fiscal 
year 1982, 1983, or 1984 contained in any provision of law which is 
specified in this subtitle, no funds are authorized to be appropriated 
in excess of the limitations imposed upon appropriations by the 
provisions of 
this subtitle. 
CHAPTER 
2—EDUCATION 
OF 
THE 
HANDICAPPED 
PROGRAMS 
42 u s e 9801 
note. 
EDUCATION OF THE HANDICAPPED ACT 
SEC. 602. (a)(1) There is authorized to be appropriated to carry out 
part B of the Education of the Handicapped Act, other than sections 
618 and 619, $969,850,000 for fiscal year 1982, and $1,017,900,000 for 
each of 
the 
fiscal 
years 1983 and 1984. 
(2) There is authorized to be appropriated to carry out section 618 of 
such Act $2,300,000 for each of the fiscal years 1982 and 1983. 
(3) There is authorized to be appropriated to carry out section 619 of 
such Act $25,000,000 for each of the fiscal years 1982 and 1983. 
(b)(1) There is authorized to be appropriated to carry out section 621 
of the Education of the Handicapped Act (relating to regional 
resource centers) $9,800,000 for each of the fiscal years 1982 and 1983. 
(2) There is authorized to be appropriated to carry out section 622 of 
such Act $16,000,000 for each of the fiscal years 1982 and 1983. 
(3) There is authorized to be appropriated to carry out section 623 of 
such Act $20,000,000 for each of the fiscal years 1982 and 1983. 
(4) There is authorized to be appropriated to carry out sections 621 
and 624 of such Act (relating to projects for severely handicapped 
children) $5,000,000 for each of the fiscal years 1982 and 1983. 
(5) There is authorized to be appropriated to carry out section 625 of 
such Act $4,000,000 for each of the fiscal years 1982 and 1983. 
(6) There is authorized to be appropriated to carry out sections 631, 
632, and 634 of such Act $58,000,000 for each of the fiscal years 1982 
and 1983. 
(7) There is authorized to be appropriated to carry out section 633 of 
such Act $1,000,000 for each of the fiscal years 1982 and 1983. 
(8) There is authorized to be appropriated to carry out part E of 
such Act $20,000,000 for each of the fiscal years 1982 and 1983. 
(9) There is authorized to be appropriated to carry out part F of 
such Act $19,000,000 for each of the fiscal years 1982 and 1983. 
20 u s e 1411 
note. 
20 u s e 1418, 
1419. 
20 u s e 1418 
note. 
20 u s e 1419 
note. 
20 u s e 1421 
note. 
20 u s e 1422 
note. 
20 u s e 1423 
note. 
20 u s e 1421 
note. 
20 u s e 1424a 
note. 
20 u s e 1431 
note. 
20 u s e 1433 
note. 
20 u s e 1444 
note. 
20 u s e 1454 
note. 
95 STAT. 484 
PUBLIC LAW 97-35—AUG. 13, 1981 
CHAPTER 8—VOCATIONAL REHABILITATION PROGRAMS 
GENERAL AUTHORIZATION UNDER REHABIUTATION ACT OF 1973 
SEC. 603. There is authorized to be appropriated to carry out the 
29 use 701 note. Rehabilitation Act of 1973 $1,009,260,000 for fiscal year 1982, and 
$1,054,160,000 for fiscal year 1983. 
SPECIFIC SPENDING LIMITS UNDER REHABILITATION ACT OF 1973 
29 use 701 note. 
SEC. 604. (a) Of the amounts authorized to be appropriated in 
section 603, not to exceed $250,000 shall be available, for each of the 
fiscal years 1982 and 1983, to carry out section 12 of the Rehabilita-
29 use 711. 
tion Act of 1973. 
(b) Notwithstanding the authorization of appropriations made in 
section 603, no funds are authorized to be appropriated to carry out 
2
9 use 713. 
section 14 of the Rehabilitation Act of 1973 for fiscal year 1982 or 
1983. 
(c) Of the amounts authorized to be appropriated in section 603, 
such sums as may be necessary shall be available, for each of the 
fiscal years 1982 and 1983, to carry out section 15 of the Rehabilita-
29 use 714. 
tion Act of 1973. 
(d) Of the amounts authorized to be appropriated in section 603, not 
to exceed $899,000,000 for fiscal year 1982, and not to exceed 
$943,900,000 for fiscal year 1983, shall be available for the purpose of 
making grants to States pursuant to State entitlements under part B 
2
9 use 730. 
of title I of the Rehabilitation Act of 1973. 
(e) Notwithstanding the authorization of appropriations made in 
section 603, no funds are authorized to be appropriated to carry out 
29 use 740. 
section 120(a) of the Rehabilitation Act of 1973 for fiscal year 1982 or 
1983. 
(f) Of the amounts authorized to be appropriated in section 603, not 
to exceed $650,000 shall be available, for each of the fiscal years 1982 
and 1983, for the purpose of making grants to Indian tribes under 
29 use 750. 
part D of 
title I of 
the Rehabilitation Act of 1973. 
(g)(1) Of the amounts authorized to be appropriated in section 603, 
not to exceed $3,500,000 shall be available, for each of the fiscal years 
1982 and 1983, to carry out section 112 of the Rehabilitation Act of 
29 use 732. 
1973. 
(2) The requirement for the setting aside of funds established in the 
first sentence of section 112(a) of such Act shall not have any force or 
effect for each of 
the fiscal years 1982 and 1983. 
(h) Of the amounts authorized to be appropriated in section 603, not 
to exceed $35,000,000 shall be available, for each of the fiscal years 
29 use 760. 
1982 and 1983, to carry out title II of the Rehabilitation Act of 1973. 
(i) Notwithstanding the authorization of appropriations made in 
section 603, no funds are authorized to be appropriated to carry out 
29 use 771. 
section 301 of the Rehabilitation Act of 1973 for fiscal year 1982 or 
1983. 
(j) Notwithstanding the authorization of appropriations made in 
section 603, no funds are authorized to be appropriated to carry out 
29 use 772. 
section 302 of the Rehabilitation Act of 1973 for fiscal year 1982 or 
1983. 
(k) Of 
the amounts authorized to be appropriated in section 603, not 
to exceed $25,500,000 shall be available, for each of the fiscal vears 
1982 and 1983, to carry out section 304 of the Rehabilitation Act of 
29 use 774. 
1973. 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 485 
(1) Notwithstanding the authorization of appro|)riations made in 
section 603, no funds are authorized to be appropriated to carry out 
section 305 of the Rehabilitation Act of 1973 for fiscal year 1982 or 29 use 775. 
1983. 
(mXD Of the amounts authorized to be appropriated in section 603, 
not to exceed $12,210,000 shall be available, for each of the fiscal 
years 1982 and 1983, to carry out sections 310,311,312,314, and 315 of 
the Rehabilitation Act of 1973. 
29 use 777, 
(2) The requirement for the setting aside of funds established in the JJ 
Ja, 777b, 777d, 
first sentence of section 310(b) of such Act shall not have any force or ""^® 
effect for each of the fiscal years 1982 and 1983. 
(n) Of the amounts authorized to be appropriated in section 603, not 
to exceed $2,000,000 shall be available, for each of the fiscal years 
1982 and 1983, to carry out section 316 of the Rehabilitation Act of 
1973. 
29 use 777f. 
(o) Of the amounts authorized to be appropriated in section 603, not 
to exceed $3,500,000 shall be available, for each of the fiscal years 
1982 and 1983, to carry out section 313 of the Rehabilitation Act of 
1973. 
29 use 777c. 
(p) Of the amounts authorized to be appropriated in section 603, not 
to exceed $256,000 shall be available, for each of the fiscal years 1982 
and 1983, to carry out title IV of the Rehabilitation Act of 1973. 29 use 780. 
(q) Of the amounts authorized to be appropriated in section 603, 
such sums as may be necessary shall be available, for each of the 
fiscal years 1982 and 1983, to carry out section 502 of the Rehabilita-
tion Act of 1973. 
29 use 792. 
(r) Notwithstanding the authorization of appropriations made in 
section 603, no funds are authorized to be appropriated to carry out 
section 506 of the Rehabilitation Act of 1973 for fiscal year 1982 or 29 use 794b. 
1983. 
(s) Notwithstanding the authorization of appropriations made in 
section 603, no funds are authorized to be appropriated to carry out 
part A of title VI of the Rehabilitation Act of 1973 for fiscal year 1982 29 use 795. 
or 1983. 
(t) Of the amounts authorized to be appropriated in section 603, not 
to exceed $8,000,000 shall be available, for each of the fiscal years 
1982 and 1983, to carry out part B of title VI of the Rehabilitation Act 
of 1973. 
29USe795g. 
(u) Notwithstanding the authorization of appropriations made in 
section 603, no funds are authorized to be appropriated to carry out 
part A, C, or D of title VII of the Rehabilitation Act of 1973 for fiscal 29 use 796,796f, 
year 1982 or 1983. 
"^^^g. 
(v) Of the amounts authorized to be appropriated in section 603, not 
to exceed $19,400,000 shall be available, for each of the fiscal years 
1982 and 1983, to carry out part B of title VII of the Rehabilitation 
Act of 1973. 
29USe796e. 
CHAPTER 4—OTHER HANDICAPPED PROGRAMS AND 
SERVICES 
AMERICAN PRINTING HOUSE FOR THE BUND; GALLAUDET COLLEGE; 
KENDALL SCHOOL; MODEL SECONDARY SCHOOL FOR THE DEAF; NA-
TIONAL TECHNICAL INSTITUTE FOR THE DEAF ACT 
SEC. 605. (a) The total amount of appropriations to carry out the Act 
of March 3, 1979 (20 Stat. 468), relating to the American Printing 20 use lOi note. 
House for the Blind, shall not exceed $5,000,000 for each of the fiscal 
years 1982,1983, and 1984. 
95 STAT. 486 
PUBLIC LAW 97-35—AUG. 13, 1981 
20 u s e 681 note. 
42 u s e 3001 
note. 
42 u s e 3056. 
42 u s e 3056f 
note. 
"Eligible 
individual." 
42 u s e 3056e. 
"Part-time 
employment 
position. 
42 u s e 3020c. 
(b) The total amount of appropriations to carry out the Act of June 
18,1954 (68 Stat. 265), relating to Gallaudet College, shall not exceed 
$52,000,000 for each of the fiscal years 1982,1983, and 1984. Amounts 
appropriated pursuant to this subsection also shall be available for 
the administration of the Kendall Demonstration Elementary School 
and the Model Secondary School for the Deaf. 
(c) The total amount of appropriations to carry out the National 
Technical Institute for the Deaf Act shall not exceed $26,300,000 for 
each of 
the fiscal years 1982,1983, and 1984. 
CHAPTER 5—OLDER AMERICAN PROGRAMS 
OLDER AMERICANS ACT OF 1965 
SEC. 606. (a) There is authorized to be appropriated to carry out the 
Older Americans Act of 1965 (other than title V of such Act) 
$715,000,000 for fiscal year 1982 and $793,312,000 for fiscal year 1983. 
(b)(1) There is authorized to be appropriated to carry out title V of 
the Older Americans Act of 1965— 
(A) $277,100,000 for fiscal year 1982 and $293,726,000 for fiscal 
year 1983; and 
(B) such additional sums as may be necessary for each such 
fiscal year to enable the Secretary of Labor, through the oper-
ation of older American community service emplojnnent pro-
grams under such title, to provide for at least 54,200 part-time 
employment positions for eligible individuals. 
(2) For purposes of 
this subsection: 
(A) The term "eligible individual" has the meaning given it in 
section 507(2) of 
the Older Americans Act of 1965. 
(B) The term "part-time emplojnment position" means an 
employment position with a workweek of at least 20 hours. 
(c) Section 213 of the Older Americans Act of 1965 is amended by 
striking out ", where such organization demonstrates clear superior-
ity with respect to the quality of services covered by such contract". 
CHAPTER 6-DOMESTIC VOLUNTEER SERVICE PROGRAMS 
42 u s e 5081. 
AUTHORIZATIONS UNDER DOMESTIC VOLUNTEER SERVICE ACT OF 1973 
SEC. 607. (a) Section 501 of the Domestic Volunteer Service Act of 
1973 is amended to read as follows: 
NATIONAL VOLUNTEER ANTIPOVERTY PROGRAMS 
"SEC. 501. There is authorized to be appropriated to carry out title I 
42 use 4951. 
of this Act $25,763,000 for fiscal year 1982 and $15,391,000 for fiscal 
year 1983. Of the amounts appropriated under this section, not less 
than $16,000,000 shall first be available for carrying out part A of 
title I for fiscal year 1982, and not less than $8,000,000 shall first be 
available for carrying out part A of title I for fiscal year 1983.". 
42 use 5082. 
(bXD Section 502(a) of the Domestic Volunteer Service Act of 1973 is 
amended to read as follows: 
"SEC. 502. (a) There is authorized to be appropriated $28,691,000 for 
fiscal year 1982 and $30,412,000 for fiscal year 1983, for the purpose of 
carrying out programs under part A of 
title II of this Act.". 
(2) Section 502(b) of such Act is amended to read as follows: 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 487 
"(b) There is authorized to be appropriated $49,670,000 for fiscal 
year 1982 and $52,650,000 for fiscal year 1983, for the purpose of 
carrying out programs under part B of 
title II of this Act.". 
^2 use son. 
(3) Section 502 of such Act is amended by adding at the end thereof 42 use 5082. 
the following new subsection: 
"(c) There is authorized to be appropriated $16,610,000 for fiscal 
year 1982 and $17,607,000 for fiscal year 1983, for the purpose of 
carrying out part C of 
title II of 
this Act.". 
42 use 5021. 
(c) Section 504 of the Domestic Volunteer Service Act of 1973 is 42 use 5084. 
amended to read as follows: 
"ADMINISTRATION AND COORDINATION 
"SEC. 504. There is authorized to be appropriated for the adminis-
tration of this Act, as authorized in title IV of this Act, $30,091,000 for 42 use 504i. 
fiscal year 1982 and $29,348,000 for fiscal year 1983.". 
AMENDMENTS TO DOMESTIC VOLUNTEER SERVICE ACT OF 1973 
SEC. 608; (a) Section 114(a) of the Domestic Volunteer Service Act of Grants and 
1973 is amended to read as foUows: 
4^^*4974 
"SEC. 114. (a) The Director is authorized to make grants and 
contracts for projects and programs which encourage and enable 
students in secondaiy, secondary vocational, and post-secondary 
schools to participate in service-learning programs on an in-school or 
out-of-school basis in assignments of a character and on such terms 
and conditions as are described in subsections (a) and (c) of section 
103.". 
(b) Section 211 of the Domestic Volunteer Service Act of 1973 is 42 use 5011. 
amended— 
(1) by striking out subsection (b); and 
(2) by redesignating subsections (c), (d), (e), and (f) as subsec-
tions (b), (c), (d), and (e), respectively. 
(c) Title II of the Domestic Volunteer Service Act of 1973 is 
amended— 
(1) by redesignating part C as part D; and 
(2) by inserting after section 212 the following new part: 
"PART C—SENIOR Ck)MPANiONS PROGRAM 
"GRANTS AND CONTRACTS FOR THE PROGRAM 
"SEC. 213. (a) The Director is authorized to make grants to or 42 use 5013. 
contracts with public and nonprofit private agencies and organiza-
tions to pay part or all of the cost of development and operation of 
projects (including direct payments to individuals serving under this 
part in the same manner as provided in section 211(a)) designed for 
the purpose of providing opportunities for low-income persons aged 
60 or over to serve as 'senior companions' to persons with exceptional 
needs. Senior companions may provide services designed to help older 
persons requiring long-term care, including services to persons re-
ceiving home health care, nursing care, home-delivered meals or 
other nutrition services; services designed to help persons deinstitu-
tionalized from mental hospitals, nursing homes, and other institu-
tions; and services designed to assist persons having developmental 
disabilities and other special needs for companionship. 
89-194 0—82 
33 : QL3 
95 STAT. 488 
PUBLIC LAW 97-35—AUG. 13, 1981 
42 use 5011. 
"(b) The provisions of section 211(d) and section 211(e) and such 
other provisions of part B as the Director determines to be necessary 
shall apply to the provisions of 
this part.". 
(d) The heading of part B of the Domestic Volunteer Service Act of 
1973 is amended to read as follows: 
"PART B—FOSTER GRANDPARENT PROGRAM". 
(eXD The item relating to part B of 
title II in the table of 
contents of 
the Domestic Volunteer Service Act of 1973 is amended to read as 
follows: 
"PART B—FOSTER GRANDPARENT PROGRAM". 
(2) The table of contents of such Act is amended by inserting after 
the item relating to part B the following new items: 
"PART C—SENIOR (COMPANIONS PROGRAM 
"Sec. 213. Grants and contracts for the program.". 
(3) The item relating to part C of title 11 in the table of contents of 
such Act is amended by striking out "PART C" and inserting in lieu 
thereof "PART D". 
42 use 4973. 
(f)(1) Section 113(cX2) of the Domestic Volunteer Service Act of 1973 
is amended by striking out "Secretary of Health, Education, and 
Welfare" and inserting in lieu thereof "Secretary of Health and 
Human Services". 
42 use 5021. 
(2) Section 221 of 
such Act is amended— 
(A) by striking out "the Community Services Administration,"; 
and 
(B) by striking out "Health, Education, and Welfare" and 
inserting in lieu thereof "Health and Human Services". 
42 use 5057. 
(3) Section 417(cX2) of such Act is amended by striking out "Secre-
tary of Health, Education, and Welfare or the Secretary of Health 
and Human Resources, as the case may be," and inserting in lieu 
thereof "Secretary of 
Health and Human Services". 
CHAPTER 
7—CHILD 
ABUSE 
PREVENTION 
AND 
TREATMENT 
PROGRAMS 
STATE GRANTS UNDER CHILD ABUSE PREVENTION AND TREATMENT ACT 
42 use 5103 
SEC. 609. There is authorized to be appropriated to make grants to 
^0^ 
States under section 4(bXl) of the Child Abuse Prevention and 
42 use 5103. 
Treatment Act $7,000,000 for each of the fiscal years 1982 and 1983. 
DISCRETIONARY PROGRAMS 
42 use 5107. 
SEC. 610. (aXD The Secretary of Health and Human Services, either 
directly, through grants to States and public and private, nonprofit 
organizations and agencies, or through jointly financed cooperative 
arrangements with States, public agencies, and other agencies and 
organizations, is authorized to provide for activities of nationed 
significance related to child abuse prevention and treatment and 
adoption reform, including operation of a national center to collect 
and disseminate information regarding child abuse and neglect, and 
operation of a national adoption information exchange system to 
facilitate the adoptive placement of children. 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 489 
(2) The Secretary, in carrying out the provisions of this subsection, 
shall provide for the continued operation of the National Center on 
Child Abuse and Neglect in accordance with section 2(a) of the Child 
Abuse Prevention and Treatment Act for each of the fiscal years 1982 42 use 5ioi. 
and 1983. 
(3) If the Secretary determines, in fiscal year 1982 or 1983, to carry 
out any of the activities described in section 2(b) of the Child Abuse 
Prevention and Treatment Act, the Secretary shall carry out such 
activities through the National Center on Child Abuse and Neglect. 
(b) There is authorized to be appropriated to cariy out this section 
$12,000,000 for each of the fiscal years 1982 and 1983. Of the amounts 
appropriated under this subsection for any fiscal year, not less than 
$2,000,000 shall be available to carry out title II of the Child Abuse 
Prevention and Treatment and Adoption Reform Act of 1978. 
42 use 5iii. 
CHAPTER 8—COMMUNITY SERVICES PROGRAMS 
Appropriation 
authorization. 
Subchapter A—Community Economic Development 
SHORT TITLE 
SEC, 611. This subchapter may be cited as the "Community Eco-
nomic Development Act of 1981". 
Community 
Economic 
Development 
Act of 1981. 
42 u s e 9801 
note. 
STATEMENT OP PURPOSE 
SEC. 612. The purpose of this subchapter is to encourage the 
development of special programs by which the residents of urban and 
rural low-income areas may, through self-help and mobilization of 
the community at large, with appropriate Federal assistance, 
improve the quality of their economic and social participation in 
community life in such a way as to contribute to the elimination of 
poverty and the establishment of permanent economic and social 
benefits. 
DEFINITION 
42 u s e 9801. 
42TJSC 9802. 
SEC. 613. For purposes of this subchapter, the term "community 
development corporation" means a nonprofit organization responsi-
ble to residents of the area it serves which is receiving financial 
assistance under part 1 and any organization more than 50 percent of Post, p. 490. 
which is owned by such an organization, or otherwise controlled by 
such an organization, or designated by such an organization for the 
purpose of this subchapter. 
SOURCE OF FUNDS 
SEC. 614. The Secretary is authorized to use funds made available to 42 Use 9803. 
the Secretary under section 681(b) for purposes of carr5dng out the Post, p. 518. 
provisions of this subchapter. 
ADVISORY COMMUNITY INVESTMENT BOARDS 
SEC. 615. (aXD The President is authorized to establish a National 
Advisory Community Investment Board (hereinafter in this section 
referred to as the "Investment Board"). Such Investment Board shall 
be composed of 15 members appointed, for staggered terms and 
without regard to the civil service laws, by the President, in consulta-
tion with the Secretary of Health and Human Services (hereinafter in 
Establishment. 
42 u s e 9804: 
95 STAT. 490 
PUBLIC LAW 97-35—AUG. 13, 1981 
this subchapter referred to as the "Secretary"). Such members shall 
be representative of the investment and business communities and 
appropriate fields of endeavor related to this subchapter. The Invest-
ment Board shall meet at the call of the chairperson, but not less 
often than 3 times each year. The Secretary and the administrator of 
community economic development programs shall be ex officio mem-
bers of the Investment Board. 
(2) The Secretary shall carry out the provisions of this subchapter 
through the Office of Community Services established in section 
676(a). 
(b) The Investment Board shall promote cooperation between 
private investors and businesses and community development corpo-
ration projects through— 
(1) advising the Secretary and the community development 
corporations on ways to facilitate private investment; 
(2) advising businesses and other investors of opportunities in 
community development corporation projects; and 
(3) advising the Secretary, community development corpora-
tions, and private investors and businesses of 
ways in which they 
might engage in mutually beneficial efforts. 
(c) The governing body of each Community Development Corpora-
tion may establish an advisory community investment board com-
posed of not to exceed 15 members who shall be appointed by the 
governing body after consultation with appropriate local officials. 
Each such board shall promote cooperation between private investors 
and businesses and the governing body of the Community Develop-
ment Corporation through— 
(1) advising the governing body on ways to facilitate private 
investors; 
(2) advising businesses and other investors of opportunities in 
Community Development Corporation projects; and 
(3) advising the governing body, private investors, and busi-
nesses of ways in which they might engage in mutually beneficial 
efforts. 
PART 1—URBAN AND RURAL SPECL^L IMPACT PROGRAMS 
STATEMENT OF PURPOSE 
42 use 9805. 
SEC. 616. The purpose of this part is to establish special programs of 
assistance to nonprofit private locally initiated community develop-
ment corporations which (1) are directed to the solution of the critical 
problems existing in particular communities or neighborhoods (de-
fined without regard to political or other subdivisions or boundaries) 
within those urban and rural areas having concentrations or substan-
tial numbers of low-income persons; (2) are of sufficient size, scope, 
and duration to have an appreciable impact in such communities, 
neighborhoods, and rural areas in arresting tendencies toward 
dependency, chronic unemplojnnent, and community deterioration; 
(3) hold forth the prospect of continuing to have such impact after the 
termination of financial assistance under this part; and (4) provide 
financial and other assistance to start, expand, or locate enterprises 
in or near the area to be served so as to provide emplojmaent and 
ownership opportunities for residents of such areas, including those 
who are disadvantaged in the labor market because of their limited 
speaking, reading, and writing abilities in the English language. 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 491 
ESTABLISHMENT AND SCOPE OF PROGRAMS 
SEC. 617. (a) The Secretary is authorized to provide financdal Grants. 
assistance in the form of 
grants to nonprofit and for profit community ^2 use 9806. 
development corporations and other affiliated and supportive agen-
cies and organizations associated with qualifying community develop-
ment corporations for the payment of all or part of the cost of 
programs which are designed to cany out the purposes of this part. 
Financial assistance shall be provided so that each community 
economic development program is of sufficient size, scope, and 
duration to have an appreciable impact on the area served. Such 
programs may include— 
(1) community business and commercial development pro-
grams, including (A) programs which provide financial and other 
assistance (including equity capital) to start, expand, or locate 
businesses in or near the area served so as to provide employ-
ment and ownership opportunities for residents of such areas; 
and (B) programs for small businesses located in or owned by 
residents of such areas; 
(2) community physical development programs, including in-
dustrial parks and housing activities, which contribute to an 
improved environment and which create new training, employ-
ment and ownership opportunities for residents of such area; 
(3) training and public service employment programs and 
related services for unemployed or low-income persons which 
support and complement community development programs 
financed under this part, including, without limitation, activities 
such as those described in the Comprehensive Emplo3rment and 
Training Act; and 
(4) social service programs which support and complement 
community business and commercial development programs 
financed under this part, including child care, educational serv-
ices, health services, credit counseling, energy conservation, 
recreation services, and programs for the maintenance of hous-
ing facilities. 
(b) The Secretary shall conduct programs assisted under this part 
so as to contribute, on an equitable basis between urban and rural 
areas, to the elimination of poverty and the establishment of perma-
nent economic and social benefits in such areas. 
FINANCIAL ASSISTANCE REQUIREMENTS 
SEC. 618. (a) The Secretary, under such regulations as the Secretary 42 use 9807. 
may establish, shall not provide financial assistance for any commu-
nity economic development program under this part unless the 
Secretary determines that— 
(1) such community development corporation is responsible to 
residents of the area served (A) through a governing body not less 
than 50 percent of the members of which are area residents; and 
(B) in accordance with such other guidelines as may be estab-
lished by the Secretary, except that the composition of the 
governing bodies of organizations owned or controlled by the 
community development corporation need not be subject to such 
residency requirement; 
(2) the program will be appropriately coordinated with local 
planning under this subchapter with housing and community 
development programs, with employment and training pro-
95 STAT. 492 
PUBLIC LAW 97-36-AUG. 13,1981 
grams, and with other relevant planning for physical and human 
resources in the areas served; 
(3) adequate technical assistance is made available and com-
mitted to the programs being supported; 
(4) such fmancial assistance will materially further the pur-
poses of 
this part; 
(5) the applicant is fulfilling or will fulfill a need for services, 
supplies, or facilities which is otherwise not being met; 
(6) all projects and related facilities will, to the maximum 
feasible extent, be located in the areas served; 
(7) projects will, where feasible, promote the development of 
entrepreneurial and management skills and the ownership or 
participation in ownership of assisted businesses and housing, 
cooperatively or otherwise, by residents of the area served; 
(8) projects will be planned and carried out with the fullest 
possible participation of resident or local businessmen and repre-
sentatives of financial institutions, including participation 
through contract, joint venture, partnership, stock ownership or 
membership on the governing boards or advisory councils of such 
projects consistent with the self-help purposes of 
this subchapter; 
(9) no participant will be employed on projects involving 
political parties, or the construction, operation, or maintenance 
of so much of any facility as is used or to be used for sectarian 
instruction or as a place for religious worship; 
(10) the program will not result in the (hsplacement of em-
ployed workers or impair existing contracts for services, or result 
in the substitution of Federal or other funds in connection with 
work that would otherwise be performed; 
(11) the rates of pay for time spent in work training and 
education, and other conditions of employment, will be appropri-
ate and reasonable in the light of such factors as the type of 
work, 
geographical region, and proficiency of the participant; 
(12) the progreim will, to the maximum extent feasible, contrib-
ute to the occupational development or upward mobility of 
individual participants; 
(13) preference will be given to low-income or economically 
disadvantaged residents of the areas served in filling jobs and 
training opportuiiities; and 
(14) training programs carried out in connection with projects 
financed under this part shall be designed wherever feasible to 
provide those persons who successfully complete such training 
with skills which are also in demand in communities, neighbor-
hoods, or rural areas other than those for which programs are 
established under this part. 
(b) Financial assistance under this section shall not be extended to 
assist in the relocation of establishments from one location to another 
if such relocation would result in a substantial increase in unemploy-
ment in the area of original location. 
(c) Financial assistance for commercial development under this 
part shall not be extended until the community economic develop-
ment program that has applied for assistance under this subchapter 
has specified in some detail its development goals and its develop-
ment timetable. The Secretary, in providing continued financial 
assistance to a community economic development program, shall give 
serious consideration to the experience such program has had in 
meeting development goals or in adhering to development timetables. 
PUBLIC LAW 97-35-AUG. 13,1981 
95 STAT. 493 
FEDERAL SHARE 
SEC. 619. (aXD Assistance provided under this subchapter to any 42 use 9808. 
program described in section 618(a) shall not exceed 90 percent of the 
cost of such program, including costs of administration, unless the 
Secretary determines that the assistance in excess of such percentage 
is required in furtherance of the purposes of this subchapter. Non-
Federal contributions may be in cash or in kind, fairly evaluated, 
including but not limited to plant, equipment, and services. 
(2) The assistance referred to in paragraph (1) shall be made 
available (A) for deposit to the order of grantees which have demon-
strated successfid program performance, under conditions which the 
Secretary deems appropriate, within 80 days following approval of 
the grant agreement by the Secretary and such grantee; or (B) 
whenever the Secretary deems appropriate, in accordance with 
applicable rules and regulations prescribed by the Secretary of the 
Treasury, and including any other conditions which the Secretary of 
Health and Human Services deems appropriate, within 30 days 
following approval of the grant agreement by the Secretary and such 
grantee. 
(b) Property acquired as a result of capital investments made by 
any community development corporation with funds granted as ite 
Federal share of the cost of programs carried out under this sub-
chapter, and the proceeds from such property, shall become the 
property of the community development corporation and shall not be 
considered to be Federal property. The Federal Government retains 
the right to direct that on severance of the grant relationship the 
assets purchased with grant funds shall continue to be used for the 
original purpose for which they were granted. 
PART 2—SPECIAL RURAL PROGRAMS 
STATEMENT OF PURPOSE 
SEC. 620. It is the purpose of this part to meet the special economic 42 use 9809. 
needs of rural communities or areas with concentrations or substan-
tigil numbers of low-income persons by providing support to self-help 
programs which promote economic development and independence, 
as a supplement to existing similar programs conducted by other 
departments and agencies of the Federal Government. Such pro-
grams should encourage low-income families to pool their talents and 
resources so as to create and expand rural economic enterprise. 
FINANCIAL ASSISTANCE 
SEC. 621. (a) The Secretary is authorized to provide financial 42 use 9810. 
assistance, including loans having a maximum maturity of fifteen 
years and in amounts not resulting in an aggregate principal indebt-
edness of more than $3,500 at any one time, to any low-income rural 
family where, in the judgment of the Secretary, such financial 
assistance has a reasonable possibility of effecting a permanent 
increase in the income of such families, or will contribute to the 
improvement of their living or housing conditions, by assisting or 
permitting them to— 
(1) acquire or improve real estate or reduce encumbrances or 
erect improvements thereon; 
95 STAT. 494 
PUBLIC LAW 97-35—AUG. 13, 1981 
(2) operate or improve the operation of farms not larger than 
family sized, including but not limited to the purchase of feed, 
seed, fertilizer, livestock, poultry, and equipment; or 
(8) participate in cooperative associations, or finance nonagri-
cultral enterprises which will enable such families to supplement 
their income, 
(b) The Secretary is authorized to provide financial assistance to 
local cooperative associations or local public and private nonprofit 
organizations or agencies in rural areas containing concentrations or 
substantial numbers of low-income persons for the purpose of defray-
ing all or part of the costs of establishing and operating cooperative 
programs for farming, purchasing, marketing, processing, and to 
improve their income as producers and their purchasing power as 
consumers, and to provide such essentials as credit and health 
services. Costs which may be defrayed shall include— 
(1) administrative costs of staff and overhead; 
(2) costs of planning and developing new enterprises; 
(3) costs of acquiring technical assistance; and 
(4) initial capital where it is determined by the Secretary that 
the poverty of the families participating in the program and the 
social conditions of the rural area require such assistance. 
UMITATION ON ASSISTANCE 
42 use 9811. 
SEC. 622. No financial assistance shall be provided under this part 
unless the Secretary determines that— 
(1) any cooperative association receiving assistance has a 
minimum of fifteen active members, a majority of which are low-
income rural persons; 
(2) adequate technical assistance is made available and com-
mitted to the programs being supported; 
(3) such financial assistance will materially further the pur-
poses of this part; and 
(4) the applicant is fulfilling or will fulfill a need for services, 
supplies, or facilities which is otherwise not being met. 
PART 
3—DEVELOPMENT 
LOANS 
TO 
COMMUNITY 
ECONOMIC 
DEVELOPMENT 
PROGRAMS 
DEVELOPMENT LOAN FUND 
42 use 9812. 
SEC. 623. (a) The Secretary is authorized to make or guarantee 
loans (either directly or in cooperation with banks or other organiza-
tions through agreements to participate on an immediate or deferred 
basis) to community development corporations, to families and local 
cooperatives and the designated supportive organizations of coopera-
tives eligible for financial assistance under this subchapter, to private 
nonprofit organizations receiving assistance under subtitle B of this 
Post, p. 511. 
title, or to public and private nonprofit organizations or agencies, for 
business facilities and community development projects, including 
community development credit unions, which the Secretary deter-
mines will carry out the purposes of this part. No loans, guarantees, 
or other financial assistance shall be provided under this section 
unless the Secretary determines that— 
(1) there is reasonable assurance of repayment of the loan; 
(2) the loan is not otherwise available on reasonable terms 
from private sources or other Federal, State, or local programs; 
and 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 495 
(3) the amount of the loan, together with other funds available, 
is adequate to assure completion of the project or achievement of 
the purposes for which the loan is made. 
Loans made by the Secretary pursuant to this section shall bear 
interest at a rate not less than a rate determined by the Secretary of 
the Treasury taking into consideration the average market yield on 
outstanding Treasury obligations of comparable maturity, plus such 
additional charge, if any, toward covering other costs of the program 
as the Secretary of Health and Human Services may determine to be 
consistent with its purposes, except that, for the 5 years following the 
date in which funds are initially available to the borrower, the rate of 
interest shall be set at a rate considered appropriate by the Secretary 
in light of the particular needs of the borrower, which rate shall not 
be lower than 1 percent. All such loans shall be repayable within a 
period of not more than 30 years. 
O
b
) The Secretary is authorized to adjust interest rates, grant 
moratoriums on repajmient of principal and interest, collect or 
compromise any obligations held by the Secretary, and to take such 
other actions in respect to such loans as the Secretary shall deter-
mine to be necessary or appropriate, consistent with the purposes of 
this section. 
(c)(1) To carry out the lending and guaranty functions authorized 
under this part, there shall be established a Development Loan Fund 
consisting of two separate accounts, one of which shall be a revolving 
fund called the Rural Development Loan Fund and the other of which 
shedl be a revolving fund called the Community Development Loan 
Fund. The capital of each such revolving fund shall remain available 
until expended. 
(2) The Rural Development Loan Fund shall consist of the remain-
ing funds provided for in part A of title III of the Economic Opportu-
nity Act of 1964, as in effect on September 19,1972, and such amounts 
as may be deposited in such fund by the Secretary out of funds made 
available from appropriations for purposes of carrying out this part. 
The Secretary shgQl utilize the services of the Farmers Home Admin-
istration in administering such fund. 
(3) The Community Development Loan Fund shall consist of such 
amounts as may be deposited in such fund by the Secretary out of 
funds made available from appropriations for purposes of canying 
out this subchapter. The Secretary may make deposits in the Commu-
nity Development Loan Fund in any fiscal year in which the Secre-
tary has made available for grants to community development 
corporations under this subchapter not less than $60,000,000 out of 
funds made available from appropriations for purposes of carrjdng 
out this subchapter. 
Rural 
Development 
Loan Fund and 
Community 
Development 
Loan Fund^ 
Establishment. 
42 u s e 285L 
ESTABUSHMENT OF MODEL COMMUNITY ECONOMIC DEVELOPMENT 
FINANCE CORPORATION 
SEC. 624. To the extent he deems appropriate, the Secretary shall 42 use 9813. 
utilize funds available under this part to prepare a plan of action for 
the establishment of a Model Community Economic Development 
Finance Corporation to provide a user-controlled independent and 
professionally operated long-term financing vehicle with the princi-
pal purpose of providing financial support for community economic 
development corporations, cooperatives, other affiliated and support-
ive agencies and organizations associated with community economic 
development corporations, and other entities eligible for assistance 
under this subchapter. 
95 STAT. 496 
PUBLIC LAW 97-35—AUG. 13, 1981 
PART 4—SUPPORTIVE PROGRAMS AND ACTIVITIES 
42 use 9814. 
42 u s e 9815. 
15 u s e 681. 
15 use 682, 683, 
696. 
Regulations. 
15 u s e 637. 
42 use 3161. 
42 use 3131, 
3141._ 
42 use 3142. 
Regulations. 
TRAINING AND TECHNICAL ASSISTANCE 
SEC. 625. (a) The Secretary shall provide, directly or through 
grants, contracts, or other arrangements, such technical assistance 
and training of personnel as may be required to effectively imple-
ment the purposes of this subchapter. No financial assistance shall be 
provided to any public or private organization under this section 
unless the Secretary provides the beneficiaries of these services with 
opportunity to participate in the selection of and to review the quality 
and utility of the services furnished them by such organization. 
(b) Teclmical assistance to community development corporations 
and both urban and rural cooperatives may include planning, man-
agement, legal assistance or support, preparation of feasibility stud-
ies, product development, marketing, and the provision of stipends to 
encourage skilled professionals to engage in full-time activities under 
the direction of a community organization financially assisted under 
this subchapter. 
(c) Training for employees of community development corporations 
and for employees and members of urban and rur^ cooperatives shall 
include on-the-job training, classroom instruction, and scholarships 
to assist them in development, managerial, entrepreneurial, plan-
ning, and other technical and organizational skills which will contrib-
ute to the effectiveness of programs assisted under this subchapter. 
SMALL BUSINESS ADMINISTRATION AND DEPARTMENT OF COMMERCE 
PROGRAMS 
SEC. 626. (aXD Funds granted under this subchapter which are 
invested directly or indirectly, in a small investment company, local 
development company, limited small business investment company, 
or small business investment company licensee under section 301(d) 
of the Small Business Investment Act of 1958 shall be included as 
"private paid-in capital and paid-in surplus", "combined paid-in 
capital and paid-in surplus", and "paid-in capital" for purposes of 
sections 302,303, and 502, respectively, of the Small Business Invest-
ment Act of 1958. 
(2) Not later than 90 days after the date of the enactment of this 
Act, the Administrator of the Small Business Administration, after 
consultation with the Secretary, shall promulgate regulations to 
ensure the availability to community development corporations of 
such programs as shall further the purposes of this subchapter, 
including programs under section 8(a) of the Small Business Act. 
(bXl) Areas selected for assistance under this subchapter shall be 
deemed "redevelopment areas" within the meaning of section 401 of 
the Pubic Works and Economic Development Act of 1965, shall 
qualify for assistance under the provisions of title I and title 11 of such 
Act, and shall be deemed to have met the overall economic develop-
ment program requirements of section 202(b)(10) of such Act. 
(2) Not later than 90 days after the date of the enactment of this 
Act, the Secretary of Commerce shall prescribe regulations which 
will ensure that community development corporations Eind coopera-
tives shall qualify for assistance and shall be eligible to receive such 
assistance under all such programs of the Economic Development 
Administration as shall further the purposes of this subchapter. 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 497 
DEPARTMENT OP HOUSING AND URBAN DEVELOPMENT PROGRAMS 
SEC. 627. The Secretary of Housing and Urban Development, after 42 U
S
C 9816. 
consultation with the ^retary, shall take all necessary steps to 
assist community development corporations and local cooperative 
associations to qualify for and receive (1) such assistance in connec-
tion with technical assistance, counseling to tenants and home-
owners, and loans to sponsors of low-income and moderate-income 
housing under section 106 of the Housing and Urban Development 
Act of 1968, as amended bv section 811 of the Housing and Commu-
nity Development Act of 1974; (2) such land for housing and business 1
2 uSc i70ix. 
location and expansion under title I of the Housing and Community 
Development Act of 1974; and (3) such funds for comprehensive 42iJSC530i. 
planning under section 701 of the Housing Act of 1954, as amended by 
section 401 of the Housing and Community Development Act of 1974, 40 use 461. 
as shall further the purposes of this subchapter. 
DEPARTMENT OF AGRICULTURE AND FARMERS HOME ADMINISTRATION 
PROGRAMS 
SEC. 628. The Secretary of Agriculture or, where appropriate, the 42 use 9817. 
Administrator of the Farmers Home Administration, after consulta-
tion with the Secretary of Health and Human Services, shall take all 
necessary steps to ensure that community development corporations 
and local cooperative associations shall qualify for and shall 
receive— 
(1) such assistance in connection with housing development 
under the Housing Act of 1949, as amended; 
42 use 1441 
(2) such assistance in connection with housing, business, indus- *
^
°
*
®
-
trial, and community development under the Consolidated 
Farmers Home Administration Act of 1961 and the Rural Devel- ^ use 1921 note, 
opment Act of 1972; and 
7 use 1921 note. 
(3) such further assistance under all such programs of the 
United States Dep£u*tment of Agriculture; as shall further the 
purposes of this subchapter. 
COORDINATION AND ELIGIBILITY 
SEC. 629. (a) The Secretary shall take all necessary and appropriate 42 use 98i8. 
steps to encourage Federal departments and agencies and State and 
local governments to make grants, provide technical assistance, enter 
into contracts, and generally support and cooperate with community 
development corporations and local cooperative associations. 
(b) Eligibility for assistance under other Federal programs shall not 
be denied to any applicant on the ground that it is a community 
development corporation or £my other entity assisted under th& 
subchapter. 
EVALUATION AND RESEARCH 
SEC. 630. (a) Each program for which grants are made under this 42TJSC^gI5. 
subchapter shall provide for a thorough evaluation of the effective-
ness of the program in achieving its purposes, which evaluation shall 
be conducted by such public or private organizations as the Secretary 
in consultation with existing grantees familiar with programs carried 
out under the Community Services Block Grant Act may designate. Post, p. 511. 
and all or part of the costs of evaluation may be paid from funds 
appropriated to carry out this part. In evaluating the performance pf 
any community development corporation funded under part 1, the 
criteria for evaluation shall be based upon such program objectives. 
95 STAT. 498 
PUBLIC LAW 97-35—AUG. 13, 1981 
goals, and priorities as are consistent with the purposes of this 
subchapter and were set forth by such community development 
corporation in its proposal for fun(Ung as approved and agreed upon 
by or as subsequently modified from time to time by mutual agree-
ment between the Secretary and such community development 
corporation. 
(b) The Secretary shall conduct, either directly or through grants or 
other arrangements, research and demonstration projects designed to 
suggest new programs and policies to achieve the purposes of this 
subchapter in such ways as to provide opportunities for emplo3rment, 
ownership, and a better quality of life for low-income residents. 
PLANNING GRANTS 
42 use 9820. 
SEC. 631. In order to facilitate the purposes of this subchapter, the 
Secretary is authorized to provide financial assistance to any public 
or private nonprofit agency or organization for planning of commu-
nity economic development programs and cooperative programs 
under this subchapter. 
NONDISCRIMINATION PROVISIONS 
42 use 9821. 
SEC. 632. (a) The Secretary shall not provide financial assistance for 
any program, project, or activity under this subchapter unless the 
grant or contract with respect thereto specifically provides that no 
person with responsibilities in the operation thereof will discriminate 
with respect to any such program, project, or activity because of race, 
creed, color, national origin, sex, political affiliation, or beliefs, 
(b) No person in the United States shall on the ground of sex be 
excluded from participation in, be denied the benefits of, be subjected 
to discrimination under, or be denied employment in connection with 
any program or activity receiving assistance under this subchapter. 
The Secretary shall enforce the provisions of the preceding sentence 
42 use 2000d-i. in accordance with section 602 of the Civil Rights Act of 1964. Section 
42 use 2000d-2. 603 of such Act shall apply with respect to any action taken by the 
Secretary to enforce such sentence. This section shall not be con-
strued as affecting any other legal remedy that a person may have if 
such person is excluded from participation in, denied the benefits of, 
subjected to discrimination under, or denied employment in connec-
tion with, any program, project, or activity receiving assistance under 
this subchapter. 
AVAILABILITY OP CERTAIN APPROPRIATED FUNDS 
42 use 9822. 
SEC. 633. Funds appropriated to the Rural Development Loan Fund 
42 use 2981. 
under title VII of the Economic Opportunity Act of 1964 (as in effect 
on the day before the date of the enactment of this Act), and interest 
accumulated in such fund, shall be deposited in the Rural Develop-
ment Loan Fund established under section 623(c)(1) and shall con-
tinue to be available to carry out the purposes of such fund. Funds 
appropriated to the Community Development Credit Union Revolv-
ing Loan Fund under title VII of the Economic Opportunity Act of 
1964 (as in effect on the day before the date of the enactment of this 
Act), and interest accumulated in such fund, shall continue to be 
available to carry out the purposes of such fund. 
PUBLIC LAW 97-35—AUG. 13,1981 
95 STAT. 499 
Subchapter B—Head Start Programs 
Head start Act. 
SHORT TTTLE 
SEC. 635. This subchapter may be cited as the "Head Start Act". 42 use 980i 
note. 
STATEMENT OF PURPOSE AND POUCY 
SEC. 636. (a) In recognition of 
the role which Project Head Start has 42 use 9831. 
played in the effective delivery of 
comprehensive health, educational, 
nutritional, social, and other services to economically disadvantaged 
children and their families, it is the jpurpose of this subchapter to 
extend the authority for the appropriation of 
funds for such program. 
(b) In carrying out the provisions of this subchapter, the Secretary 
of Health and Human Services shall continue the administrative 
arrangement responsible for meeting the needs of migrant and 
Indian children and shall assure that appropriate funding is provided 
to meet such needs. 
DEFINrnONS 
SEC. 637. For purposes of 
this subchapter: 
42 use 9832. 
(1) The term "Secretary" means the Secretary of Health and 
Human Services. 
(2) The term "State" means a State, the Commonwealth of 
Puerto Rico, the District of Columbia, Guam, American Samoa, 
the Virgin Islands, the Trust Territory of the Pacific Islands, and 
the Northern Mariana Islands. 
(3) The term "financial assistance" includes assistance pro-
vided by grant, agreement, or contract, and payments may be 
made in installments and in advance or by way of reimburse-
ment with necessary adjustments on account of overpayments or 
underpa}mients. 
FINANCIAL ASSISTANCE FOR HEAD START PROGRAMS 
SEC. 638. The Secretary may, upon application by an agency which 42 use 9833. 
is eligible for designation as a Head Start agency pursuant to section 
641, provide financial assistance to such agency for the planning, 
conduct, administration, and evaluation of a Head Start program 
focused primarily upon children from low-income families who have 
not reached the age of compulsory school attendance which (1) will 
provide such comprehensive health, nutritional, educational, social, 
and other services as will aid the children to attain their full 
potential; and (2) will provide for direct participation of the parents of 
such children in the development, conduct, and overall program 
direction at the local level. 
AUTHORIZATION OF APPROPRIATIONS 
SEC. 639. There is authorized to be appropriated for carrying out 42 use 9834. 
the provisions of this subchapter $950,000,000 for fiscal year 1982, 
$1,007,000,000 for fiscal year 1983, and $1,058,357,000 for fiscal year 
1984. 
ALLOTMENT OF FUNDS; UMITATIONS ON ASSISTANCE 
SEC. 640. (aXD Of the sums appropriated pursuant to section 639 for 42 use 9835. 
any fiscal year beginning after September 30, 1981, the Secretary 
shall allot such sums in accordance with paragraphs (2) and (3). 
95 STAT. 500 
PUBLIC LAW 97-35~-AUG. 13,1981 
(2) The Secretary shall reserve 13 percent of the amount appropri-
ated for each fiscal year for use in accordance with the following 
order of 
priorities— 
(A) Indian and migrant Head Start programs and services for 
handicapped children, except that— 
(i) there shall be made available for use by Indian and 
migrant Head Start programs, on a nationwide basis, no less 
funds for fiscal year 1982 and each subsequent fiscal year 
than were obligated for use by Indian and migrant Head 
Start programs for fiscal year 1981; and 
(ii) cost-of-living adjustments shall be made with respect to 
such Indian and migrant Head Stsirt programs for fiscal year 
1982 and each subsequent fiscal year, and such adjustments 
shall, at the minimum, reflect changes in the Consumer 
Price Index published by the Bureau of Labor Statistics of 
the Department of Labor; 
(B) payments to Guam, American Samoa, the Trust Territory 
of the Pacific Islands, the Northern Mariana Islands, and the 
Virgin Islands according to their respective needs, except that 
such amount shall not exceed one-half of 1 percent of the sums 
appropriated for any fiscsil year; 
(C) training and technical assistance activities which are 
sufficient to meet the needs associated with program expansion 
and to foster program and management improvement activities; 
and 
(D) discretionary payments made by the Secretary. 
(3) The Secretary shall allot the remaining 87 percent of the 
amounts appropriated in each fiscal year among the States, in 
accordance with latest satisfactory data so that— 
(A) each State receives an amount which is equal to the 
amount the State received for fiscal year 1981; and 
(B)(i) 33 V
a percent of any amount available after all allotments 
have been made under clause (A) for such fiscal year shall be 
distributed on the basis of the relative number of children from 
birth through 18 years of age, on whose behalf pajrments are 
made under the program of aid to families with dependent 
children under a State plan approved under part A of title IV of 
the Social Security Act in each State £is compared to all States; 
and 
(ii) 66% percent of such amount shall be distributed on the 
basis of the relative number of children from birth through 5 
years of age living with families with incomes below the poverty 
line in each State as compared to all States. 
(4) For purposes of this subsection, the term "State" does not 
include Guam, American Samoa, the Virgin Islands, the Northern 
Mariana Islands, or the Trust Territory of the Pacific Islands. 
(b) Financial assistance extended under this subchapter for a Head 
Start program shall not exceed 80 percent of the approved costs of the 
assisted program or activities, except that the Secretary may approve 
assistance in excess of such percentage if the Secretary determines, in 
accordance with regulations establishing objective criteria, that such 
action is required in furtherance of the purposes of this subchapter. 
Non-Feder£d contributions may be in cash or in kind, fairly evalu-
ated, including plant, equipment, or services. The Secretary shall not 
require non-Federal contributions in excess of 20 percent of the 
approved costs of programs or activities assisted under this sub-
chapter. 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 501 
(c) No programs shall be approved for assistance under this 
subchapter unless the Secretary is satisfied that the services to be 
provided under such program will be in addition to, and not in 
substitution for, comparable services previously provided without 
Federal assistance. The requirement imposed by the preceding sen-
tence shall be subject to such regulations as the Secretary may 
prescribe. 
(d) The Secretary shall establish policies and procedures designed 
to assure that for fiscal year 1982 and thereafter no less than 10 
gercent of the total number of enrollment opportunities in Head 
tart programs in each State shall be available for handicapped 
children (as defined in paragraph (1) of section 602 of the Education of 
the Handicapped Act) and that services shall be provided to meet 
their special needs. The Secretary shall report to the Congress at 
least annually on the status of handicapped children in Head Start 
programs, including the number of children being served, their 
handicapping conditions, and the services being provided such 
children. 
(e) The Secretary shall adopt appropriate administrative measures 
to assure that the benefits of this subchapter will be distributed 
equitably between residents of rural and urban areas. 
20 u s e 3192. 
Report to 
Congress. 
DESIGNATION OF HEAD START AGENCIES 
SEC. 641. (a) The Secretary is authorized to designate as a Head 42 use 9836. 
Start agency any local public or private nonprofit agency which (1) 
has the power and authority to carry out the purposes of this 
subchapter and perform the functions set forth in section 642 within 
a community; and (2) is determined by the Secretary to be capable of 
planning, conducting, administering, and evaluating, either directly 
or by other arrangements, a Head Start program. 
(b) For purposes of this subchapter, a community may be a city, "eommunity.' 
county, or multicity or multicounty unit within a State, an Indian 
reservation, or a neighborhood or other area (irrespective of bound-
aries or political subdivisions) which provides a suitable organiza-
tional base and possesses the commonality of interest needed to 
operate a Head Start program. 
(c) In the administration of the provisions of this section, the 
Secretary shall give priority in the designation of Head Start agen-
cies to any local public or private nonprofit agency which is receiving 
funds under any Head Start program on the date of the enactment of 
this Act, except that— 
(1) the Secretary shall, before giving such priority, determine 
that the agency involved meets program and fiscal requirements 
established by the Secretary; and 
(2) if there is no such agency because of any change in the 
assistance furnished to programs for economically disadvantaged 
persons, then the Secretary shall give priority in the designation 
of Head Start agencies to any successor agency which is operated 
in substantially the same manner as the predecessor agency 
which did receive funds in the fiscal year preceding the fiscal 
year for which the determination is made. 
The provisions of clause (2) shall apply only to agencies actually 
operating Head Start programs. 
(d) The Secretary shall require that the practice of significantly 
involving parents and area residents affected by the program in 
selection of Head Start agencies be continued. 
95 STAT. 502 
PUBLIC LAW 97-35—AUG. 13, 1981 
POWERS AND FUNCTIONS OF HEAD START AGENCIES 
42 use 9837. 
SEC. 642. (a) In order to be designated as a Head Start agency under 
this subchapter, an agency must have authority under its charter or 
applicable law to receive and administer funds under this subchapter, 
funds and contributions from private or local public sources which 
may be used in support of a Head Start program, and funds under any 
Federal or State assistance program pursuant to which a public or 
private nonprofit agency (as the case may be) organized in accordance 
with this subchapter, could act as grantee, contractor, or sponsor of 
projects appropriate for inclusion in a Head Start program. Such an 
agency must also be empowered to transfer funds so received, and to 
delegate powers to other agencies, subject to the powers of its 
governing board and its overall program responsibilities. The power 
to transfer funds and delegate powers must include the power to 
make transfers and delegations covering component projects in all 
cases where this will contribute to efficiency and effectiveness or 
otherwise further program objectives. 
(b) In order to be so designated, a Head Start agency must also (1) 
establish effective procedures by which parents and area residents 
concerned will be enabled to directly participate in decisions that 
influence the character of programs affecting their interests; (2) 
provide for their regular participation in the implementation of such 
programs; (3) provide technical and other support needed to enable 
parents and area residents to secure on their own behalf available 
assistance from public and private sources; and (4) establish proce-
dures to seek reimbursement, to the extent feasible, from other 
agencies for services for which any such other agency is responsible, 
which are provided to a Head Start participant by the Head Start 
agency. 
(c) The head of each Head Start agency shall coordinate with other 
programs serving the children in the Head Start agency to carry out 
the provisions of this subsection. 
SUBMISSION OF PLANS TO GOVERNORS 
42 use 9838. 
SEC. 643. In carrjdng out the provisions of this subchapter, no 
contract, agreement, grant, or other assistance shall be liiade for the 
purpose of carrying out a Head Start program within a State unless a 
plan setting forth such proposed contract, agreement, grant, or other 
assistance has been submitted to the Governor of the State, and such 
plan has not been disapproved by the Governor within 30 days of such 
submission, or, if so disapproved, has been reconsidered by the 
Secretary and found by the Secretary to be fully consistent with the 
provisions and in furtherance of the purposes of this subchapter. 
Funds to cover the costs of the proposed contract, agreement, grant, 
or other assistance shall be obligated from the appropriation which is 
current at the time the plan is submitted to the Governor. This 
section shall not, however, apply to contracts, agreements, grants, 
loans, or other assistance to any institution of higher education in 
existence on the date of the enactment of this Act. 
ADMINISTRATIVE REQUIREMENTS AND STANDARDS 
42 use 9839. 
SEC. 644. (a) Each Head Start agency shall observe standards of 
organization, management, and administration which will assure, so 
far as reasonably possible, that all program activities are conducted 
in a manner consistent with the purposes of this subchapter and the 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 503 
objective of providing assistance effectively, efficiently, and free of 
any taint of partisan political bias or personal or family favoritism. 
Each such agency shall establish or adopt rules to carry out this 
section, which shall include rules to assure full staff accountability in 
matters governed by law, regulations, or agency policy. Each agency 
shall also provide for reasonable public access to information, includ-
ing public hearings at the request of appropriate community groups 
and reasonable public access to books and records of the agency or 
other agencies engaged in program activities or operations involving 
the use of authority or funds for which it is responsible. Each such 
agency shall adopt for itself and other agencies using funds or 
exercising authority for which it is responsible, rules designed to (1) 
establish specific standards governing salaries, salary increases, 
travel and per diem allowances, and other employee benefits; (2) 
assure that only persons capable of discharging their duties with 
competence and integrity are employed and that employees are 
promoted or advanced under impartisd procedures calculated to 
improve agency performance and effectiveness; (3) guard against 
personal or financial conflicts of interest; and (4) define employee 
duties in an appropriate manner which will in any case preclude 
employees from participating, in connection with the performance of 
their duties, in any form of picketing, protest, or other direct action 
which is in violation of law. 
(b) No financial assistance shall be extended under this subchapter 
in any case in which the Secretary determines that the costs of 
developing and administering a program assisted under this sub-
chapter exceed 15 percent of the total costs, including non-Federal 
contributions to such costs, of such program. The Secretary shall 
establish by regulation, criteria for determining (1) the costs of 
developing and administering such program; and (2) the total costs of 
such program. In any case in which the Secretary determines that the 
cost of administering such program does not exceed 15 percent of 
such total costs but is, in the judgment of the Secretary, excessive, the 
Secretary shall forthwith require the recipient of such financial 
assistance to take such steps prescribed by the Secretary as will 
eliminate such excessive administrative cost, including the sharing 
by one or more Head Start agencies of a common director and other 
administrative personnel. The Secretary may waive the limitation 
prescribed by this subsection for specific periods of time not to exceed 
12 months whenever the Secretary determines that such a waiver is 
necessary in order to carry out the purposes of this subchapter. 
(c) The Secretary shall prescribe rules or regulations to supplement Regulations 
subsection (a), which shall be binding on all agencies carrying on 
Head Start program activities with financial assistance under this 
subchapter. The Secretary may, where appropriate, establish special 
or simplified requirements for smaller agencies or agencies operating 
in rural areas. Policies and procedures shall be established to ensure 
that indirect costs attributable to the common or joint use of facilities 
and services by programs assisted under this subchapter and other 
programs shall be fairly allocated among the various programs which 
utilize such facilities and services, 
(d) At least 30 days prior to their effective date, all rules, regula-
tions, guidelines, instructions, and application forms shall be pub-
lished in the Federal Register and shall be sent to each grantee with 
the notification that each such grantee h£is the right to submit 
comments pertaining thereto to the Secretary prior to the final 
adoption thereof. 
Publication in 
Federal 
Register. 
89-194 0—82 
34:QL3 
95 STAT. 504 
PUBLIC LAW 97-35—AUG. 13, 1981 
PARTICIPATION IN HEAD START PROGRAMS 
42 use 9840. 
SEC. 645. (a)(1) The Secretary shall by regulation prescribe eligibil-
ity for the participation of persons in Head Start programs assisted 
under this subchapter. Except as provided in paragraph (2), such 
criteria may provide (A) that children from low-income families shall 
be eligible for participation in programs assisted under this sub-
chapter if their families' incomes are below the poverty line, or if 
their families are eligible or, in the absence of child care, would 
potentially be eligible for public assistance; and (B) pursuant to such 
regulations as the Secretary shall prescribe, that programs assisted 
under this subchapter may include, to a reasonable extent, participa-
tion of children in the area served who would benefit from such 
programs but whose families do not meet the low-income criteria 
prescribed pursuant to clause (A). 
(2) Whenever a Head Start program is operated in a community 
with a population of 1,000 or less individuals and— 
(A) there is no other preschool program in the community; 
(B) the community is located in a medically underserved area, 
as designated by the Secretary pursuant to section 330(bX3) of the 
42 use 254c. 
Public Health Service Act and is located in a health manpower 
shortage area, as designated by the Secretary pursuant to section 
42 use 254e. 
332(a)(1) of such Act; 
(C) the community is in a location which, by reason of remote-
ness, does not permit reasonable access to the types of services 
described in clauses (A) and (B); and 
(D) not less than 50 percent of the families to be served in the 
community are eligible under the eligibility criteria established 
by the Secretary under paragraph (1); 
the Head Start program in each such locality shall establish the 
criteria for eligibility, except that no child residing in such commu-
nity whose family is eligible under such eligibility criteria shall, by 
virtue of such project's eligibility criteria, be denied an opportunity to 
participate in such program. 
(b) The Secretary shall not prescribe any fee schedule or otherwise 
provide for the charging of any fees for participation in Head Start 
programs, unless such fees are authorized by legislation hereafter 
enacted. Nothing in this subsection shall be construed to prevent the 
families of children who participate in Head Start programs and who 
are willing and able to pay the full cost of such participation from 
doing so. 
APPEALS, NOTICE, AND HEARING 
42 use 9841. 
SEC. 646. The Secretary shall prescribe procedures to assure that— 
(1) special notice of and an opportunity for a timely and 
expeditious appeal to the Secretary will be provided for an 
agency or organization which desires to serve as a delegate 
agency under this subchapter and whose application to the Head 
Start agency has been wholly or substantially rejected or has not 
been acted upon within a period of time deemed reasonable by 
the Secretary, in accordance with regulations which the Secre-
tary shall prescribe; 
(2) financial assistance under this subchapter shall not be 
suspended, except in emergency situations, unless the recipient 
agency has been given reasonable notice and opportunity to show 
cause why such action should not be taken; and 
(3) financial assistance under this subchapter shall not be 
terminated, an application for refunding shall not be denied, and 
PUBLIC LAW 97-36—AUG. 13, 1981 
95 STAT. 605 
a suspension of financial assistance shall not be continued for 
longer than 30 days, unless the recipient has been afforded 
reasonable notice and opportunity for a full and fair hearing. 
RECORDS AND AUDITS 
SEC. 647. (a) Each recipient of financial assistance under this 42 use 9842. 
subchapter shall keep such records as the Secretary shall prescribe, 
including records which fully disclose the amount and disposition by 
such recipient of the proceeds of such financial-assistance, the total 
cost of the project or undertaking in connection with which such 
financial assistance is given or used, the amount of 
that portion of the 
cost of the project or undertaking supplied by other sources, and such 
other records as will facilitate an effective audit. 
(b) The Secretary and the Comptroller General of the United 
States, or any of their duly authorized representatives, shall have 
access for the purpose of audit and examination to any books, 
documents, papers, and records of the recipients that are pertinent to 
the financial assistance received under this subchapter. 
TECHNICAL ASSISTANCE AND TRAINING 
SEC. 648. The Secretary may provide, directly or through grants or 42 use 9843. 
other arrangements (1) technical assistance to communities in devel-
oping, conducting, and administering programs under this sub-
chapter; and (2) training for specialized or other personnel needed in 
connection with Head Start programs. 
RESEARCH, DEMONSTRATION, AND PILOT PROJECTS 
SEC. 649. (a) The Secretanr may provide financial assistance Grants and 
through grants or contracts for research, demonstration, or pilot 42"TVCP*^Q44 
projects conducted by public or private agencies which are designed 
to test or Eissist in the development of new approaches or methods 
that will aid in overcoming special problems or otherwise in further-
ing the purposes of 
this subchapter. 
(b) The Secretary shall establish an overall plan to govern the 
approval of research, demonstration, or pilot projects and the use of 
all research authority under this subchapter. Such plan shall set 
forth specific objectives to be achieved and priorities among such 
objectives. 
ANNOUNCEMENT OF RESEARCH, DEMONSTRATION, AND PILOT PROJECTS 
CONTRACTS 
SEC. 650. (a) The Secretary shall make a public announcement 42 use 9845. 
concerning— 
(1) the title, purpose, intended completion date, identity of the 
grantee or contractor, and proposed cost of any grant or contract 
with a private or non-Federal public agency or organization for 
any research, demonstration, or pilot project under this sub-
chapter; and 
(2) the results, findings, data, or recommendations made or 
reported as a result of such activities. 
(b) The public announcements required by subsection (a)(1) shall be 
made within 80 days of making such grants or contracts, and the 
public announcements required by subsection (aX2) shall be made 
within 90 days of the receipt of such results. 
95 STAT. 506 
PUBLIC LAW 97-35—AUG. 13, 1981 
Report to 
congressional 
committees. 
Grants and 
contracts. 
42 use 9846. 
42 u s e 2701 
note. 
Report to 
congressional 
committees. 
42 u s e 9847. 
(c) The Secretary shall take necessary action to assure that all 
studies, proposals, and data produced or developed with Federal 
funds employed under this subchapter shall become the property of 
the United States. 
(d) The Secretary shall publish summaries of the results of activi-
ties carried out pursuant to this subchapter not later than 90 days 
after the completion thereof. The Secretary shall submit to the 
appropriate committees of the Congress copies of all such summaries. 
EVALUATION 
SEC. 651. (a) The Secretary shall provide, directly or through grants 
or contracts, for the continuing evaluation of programs under this 
subchapter, including evaluations that measure and evaluate the 
impact of programs authorized by this subchapter, in order to 
determine their effectiveness in achieving stated goals, their impact 
on related programs, and their structure and mechanisms for deliv-
ery of services, including, where appropriate, comparisons with 
appropriate control groups composed of persons who have not partici-
pated in such programs. Evaluations shgdl be conducted by persons 
not directly involved in the administration of the progr£im or project 
operation. 
O
t
)
) The Secretary shall operate the programs and projects covered 
by this subchapter in accordance with Head Start performance 
standards. Any revisions in such standards shall result in standards 
which are no less comprehensive than those in effect on the date of 
the enactment of the Economic Opportunity Amendments of 1978. 
The extent to which such standards have been met shall be consid-
ered in deciding whether to renew or supplement financial assistance 
authorized under this subchapter. 
(cXD In carrjdng out evaluations under this subchapter, the Secre-
tary shall establish working relationships with the faculties of 
colleges or universities located in the area in which any such 
evaluation is being conducted, unless there is no such college or 
university willing and able to participate in the evaluation. For 
purposes of the preceding sentence, for any single evaluation, areas 
in which such working relationships are established may not be 
larger than 3 contiguous States. 
(2) In carrying out evaluations under this subchapter, the Secretary 
may require Head Start agencies to provide for independent 
evsduations. 
(d) In carrying out evaluations under this subchapter, the Secre-
tary shall, whenever feasible, arrange to obtain the specific views of 
persons participating in and served by programs and projects assisted 
under this subchapter about such programs and projects. 
(e) The Secretanr shall publish the results of evaluative research 
and summaries of evaluations of program and project impact and 
effectiveness not later than 90 days after the completion thereof. The 
Secretary shall submit to the appropriate committees of the Congress 
copies of all such research studies and evaluation summaries. 
(f) The Secretary shall take the necessary action to assure that all 
studies, evaluations, proposals, and data produced or developed with 
assistance under this subchapter shall become the property of the 
United States. 
POVERTY UNE 
SEC. 652. (a) The Secretary shall revise annually (or at any shorter 
interval the Secretary deems feasible and desirable) a poverty line 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 507 
which, except as provided in section 645, shall be used as a criterion of 
eligibility for participation in Head Start programs. 
(b) The revision required by subsection (a) shall be accomplished by 
multiplying the official poverty line (as defined by the Office of 
Management and Budget) by the percentage change in the Consumer 
Price Index during the annual or other interval immediately preced-
ing the time at which the revision is made. 
(c) Revisions required by subsection (a) shall be made and issued not 
more than 30 days after the date on which the necessary Consumer 
Price Index data become available. 
COMPARABILITY OF WAGES 
SEC. 653. The Secretary shall take such action as may be necessary 42 use 9848. 
to assure that persons employed in canying out programs financed 
under this subchapter shall not receive compensation at a rate which 
is (1) in excess of the average rate of compensation paid in the area 
where the program is carried out to a substantial number of the 
persons providing substantially comparable services, or in excess of 
the average rate of compensation paid to a substantial number of the 
persons providing substantially comparable services in the area of 
the person's immediately preceding emplo5mient, whichever is 
higher; or (2) less than the minimum wage rate prescribed in section 
6(a)(1) of the Fair Labor Standards Act of 1938. 
29 use 206. 
NONDISCRIMINATION PROVISIONS 
SEC. 654. (a) The Secretary shall not provide financial assistance for 42 use 9849. 
any program, project, or activity under this subchapter unless the 
grant or contract with respect thereto specifically provides that no 
person with responsibilities in the operation thereof will discriminate 
with respect to any such program, project, or activity because of race, 
creed, color, national origin, sex, political affiliation, or beliefs. 
(b) No person in the United States shall on the ground of sex be 
excluded from participation in, be denied the benefits of, be subjected 
to discrimination under, or be denied emplojrment in connection with 
any program or activity receiving assistance under this subchapter. 
The Secretary shall enforce the provisions of the preceding sentence 
in accordance with section 602 of the Civil Rights Act of 1964. Section 42 use 2000d-i, 
603 of such Act shall apply with respect to any action taken by the 2000d-2. 
Secretary to enforce such sentence. This section shall not be con-
strued as affecting any other legal remedy that a person may have if 
such person is excluded from participation in, denied the benefits of, 
subjected to discrimination under, or denied employment in connec-
tion with, any program, project, or activity receiving assistance under 
this subchapter. 
(c) The Secretary shall not provide financial assistance for any 
program, project, or activity under this subchapter unless the grant 
or contract relating to the financial assistance specifically provides 
that no person with responsibilities in the operation of the program, 
project, or activity will discriminate against any individual because of 
a handicapping condition in violation of section 504 of the Rehabilita-
tion Act of 1973. 
2
9 use 794. 
UMITATION WITH RESPECT TO CERTAIN UNLAWFUL ACTIVITIES 
SEC. 655. No individual employed or assigned by any Head Start 42 use 9850. 
agency or other agency assisted under this subchapter shall, pursu-
95 STAT. 508 
PUBLIC LAW 97-35—AUG. 13, 1981 
ant to or during the performance of services rendered in connection 
with any program or activity conducted or assisted under this 
subchapter by such Head Start agency or such other agency, plan, 
initiate, participate in, or otherwise aid or assist in the conduct of any 
unlawful demonstration, rioting, or civil disturbance. 
POLITICAL ACTIVITIES 
42 use 9851. 
SEC. 656. (a) For purposes of chapter 15 of title 5, United States 
5 use 1501 et 
Code, any agency which assumes responsibility for planning, develop-
*^9- 
ing, and coordinating Head Start programs and receives assistance 
under this subchapter shall be deemed to be a State or local agency. 
5 use 1502. 
For purposes of clauses (1) and (2) of section 1502(a) of such title, any 
agency receiving assistance under this subchapter shall be deemed to 
be a State or local agency. 
O
i
>
) Programs assisted under this subchapter shall not be carried on 
in a manner involving the use of program funds, the provision of 
services, or the emplojmient or assignment of personnel in a manner 
supporting or resulting in the identSication of such programs with (1) 
any partisan or nonpartiseui political activity or any other political 
activity associated with a candidate, or contending faction or group, 
in an election for public or party office; (2) any activity to provide 
voters or prospective voters with transportation to the polls or 
similar assistance in connection with any such election; or (3) any 
voter registration activity. The Secretary, after consultation with the 
Office of Personnel Management, shall issue rules and regulations to 
provide for the enforcement of this section, which shall include 
provisions for summary suspension of assistance or other action 
necessary to permit enforcement on an emergency basis. 
ADVANCE FUNDING 
42 use 9852. 
SEC. 657. For the purpose of affording adequate notice of funding 
available under this subchapter, appropriations for carrying out this 
subchapter are authorized to be included in an appropriation Act for 
the fiscal year preceding the fiscal year for which they are available 
for obligation. 
Follow Through 
Subchapter C—Follow Through Programs 
Act. 
SHORT TITLE 
42 use 9801 
SEC. 661. This subchapter may be cited as the "Follow Through 
note. 
Act". 
FINANCIAL ASSISTANCE FOR FOLLOW THROUGH PROGRAMS 
42 use 9861. 
SEC. 662. (a) The Secretary of Education (hereinafter in this 
subchapter referred to as the "Secretary") is authorized to provide 
financial assistance in the form of grants to local educational agen-
cies, combinations of such agencies, and, as provided in subsection (b), 
any other public or appropriate nonprofit private agencies, organiza-
tions, and institutions for the purpose of canying out Follow Through 
programs focused primarily on children from low-mcome families in 
kindergarten and primary grades, including such children enrolled 
in private nonprofit elementary schools, who were previously en-
rolled in Head Start or similar programs. Other children in kinder-
garten and primary grades, including such other children enrolled in 
private nonprofit elementary schools, who were previously enrolled 
in preschool programs of a compensatory nature which received 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 509 
Federal financial assistance may participate in such Follow Through 
programs. 
(b) Whenever the Secretary determines— 
(1) that a local educational agency receiving assistance under 
subsection (a) is unable or unwilling to include in a Follow 
Through program children enrolled in nonprofit private schools 
who would otherwise be eligible to participate therein; or 
(2) that it is otherwise necessary in order to accomplish the 
purposes of this section; 
the Secretary may provide financial assistance for the purpose of 
carrying out a Follow Through program to any other public or 
appropriate nonprofit private agency, organization, or institution. 
(c) Programs to be assisted under this section shall provide such 
comprehensive educational, health, nutritional, social, and other 
services as will aid in the continued development of children 
described in subsection (a) to their full potential. Such projects shall 
provide for the direct participation of the parents of such children in 
the development, conduct, and overall direction of the program at the 
local level. If the Secretary determines that participation in the 
project of children who are not from low-income families will serve to 
carry out the purposes of this section, the Secretary may provide for 
the inclusion of such children from non-low-income families, but only 
to the extent that their participation will not dilute the effectiveness 
of the services designed for children described in subsection (a). 
AUTHORIZATION OP APPROPRIATIONS 
SEC. 668. (aXD There is authorized to be appropriated for carrying 42 use 9862. 
out the purposes of this subchapter $44,300,000 for fiscal year 1982, 
$22,150,000 for fiscal year 1983, and $14,767,000 for fiscal year 1984. 
(2) Funds appropriated under this section for fiscal years 1982 and 
1983 shall remedn available for obligation and expenditure during the 
fiscal year succeeding the fiscal year for which they are appropriated. 
(b) Financial £issistance extended under this subchapter for a 
Follow Through program shall not exceed 80 percent of the approved 
costs of the assisted program or activities, except that the Secretary 
may approve assistance in excess of such percentage if the Secretary 
determines, in accordance with regulations establishing objective 
criteria, that such action is required in furtherance of the purposes of 
this subchapter. Non-Federal contributions may be in cash or in kind, 
fairly evEiluated, including plant, equipment, or services. The Secre-
tary shall not require non-Federal contributions in excess of 20 
percent of the approved costs of programs or activities assisted under 
this subchapter. 
(c) No project shall be approved for assistance under this sub-
chapter unless the Secretary is satisfied that the services to be 
provided under such project will be in addition to, and not in 
substitution for, services previously provided without Federal assist-
ance. The requirement imposed by the preceding sentence shall be 
subject to such regulations as the Secretary may adopt. 
RESEARCH, DEMONSTRATION, AND PILOT PROJECTS 
SEC. 664. (a) The Secretary may provide financial assistance 42 use 9863. 
through grants or contracts for research, demonstration, or pilot 
projects conducted by public and private agencies which are designed 
to test or assist in the development of new approaches or methods 
95 STAT. 510 
PUBLIC LAW 97-35—AUG. 13, 1981 
that will aid in overcoming special problems or in otherwise further-
ing the purposes of this subchapter. 
0)) The Secretary shall establish an overall plan to govern the 
approval of research, demonstration, or pilot prmects and the use of 
all research authority under this subchapter. Such plan shall set 
forth specific objectives to be achieved and priorities among such 
objectives. 
42 u s e 9864. 
Summaries, 
submittal to 
congressional 
committees. 
ANNOUNCEMENT OF RESEARCH, DEMONSTRATION, AND PILOT PROJECT 
CONTRACTS 
SEC. 665. (a) The Secretary shall make a public announcement 
concerning— 
(1) the title, purpose, intended completion date, identity of the 
grantee or contractor, and proposed cost of any grant or contract 
with a private or non-Federal public agency or organization for 
any research, demonstration, or pilot project under this sub-
chapter; and 
(2) the results, findings, data, or recommendations made or 
reported as a result of such activities. 
(b) The public announcements required by subsection (a)(1) shall be 
made not later than 30 days after making such grants or contracts, 
and the public announcements required by subsection (aX2) shall be 
made not later than 90 days after the receipt of such results. 
(c) The Secretary shall take necessary action to assure that all 
studies, proposals, and data produced or developed with Federal 
funds employed under this subchapter shall become the property of 
the United States. 
(d) The Secretary shall publish summaries of the results of activi-
ties carried out pursuant to this subchapter not later than 90 days 
after the completion thereof The Secretary shall submit to the 
appropriate committees of the Congress copies of all such summaries. 
42 u s e 9865. 
Submittal to 
congressional 
committees. 
EVALUATION 
SEC. 666. (a) The Secretary shall provide, directly or through grants 
or contracts, for the continuing evaluation of programs under this 
subchapter, including evaluations that measure and evaluate the 
impact of programs authorized by this subchapter, in order to 
determine their effectiveness in achieving stated goals, their impact 
on related programs, and their structure and mechanism for delivery 
of services, including, where appropriate, comparisons with appropri-
ate control groups composed of persons who have not participated in 
such programs. Evaluations shall be conducted by persons not 
directly involved in the administration of the program or project. 
(b) The Secretary shall develop and publish general standards for 
evaluation of program and project effectiveness in achieving the 
objectives of this subchapter. The extent to which such standards 
have been met shall be considered in deciding whether to renew or 
supplement financial assistance authorized under this subchapter. 
(c) In carrying out evaluations under this subchapter, the Secretary 
shall, whenever feasible, arrange to obtain the specific views of 
persons participating in and served by programs and projects assisted 
under this subchapter about such programs and projects. 
(d) The Secretary shall publish the results of evaluative research 
and summaries of evaluations of program and project impact and 
effectiveness not later than 90 days after the completion thereof The 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 511 
Secretary shall submit to the appropriate committees of the Congress 
copies of 
all such research studies and evaluation summaries. 
(e) The Secretary shall take the necessary action to assure that all 
studies, evaluations, proposals, and data produced or developed with 
assistance under this section become the property of the United 
States. 
TECHNICAL ASSISTANCE AND TRAINING 
SEC. 667. The Secretary may provide, directly or through grants or 42 use 9866. 
other appropriate arrangements (1) technical assistance to Follow 
Througn programs in developing, conducting, and administering 
programs under this subchapter; and (2) training for specialized or 
other personnel which is nei^ed in connection with Follow Through 
programs. 
SPECIAL CONDITIONS 
SEC. 668. (a) Recipients of financial assistance under this sub- 42 use 9867. 
chapter shall provide maximum employment opportunities for resi-
dents of the area to be served, and to parents of children who are 
participating in projects assisted under this subchapter. 
(b) Fmancial assistance under this subchapter shall not be suspend-
ed for failure to comply with applicable terms and conditions, except 
in emergency situations, nor shall an application for refunding be 
denied, unless the recipient agency has been given reasonable notice 
and opportunity to show cause why such action should not be taken. 
(c) Fmancial assistance under tnis subchapter shall not be termi-
nated for failure to comply with applicable terms and conditions 
unless the recipient has been afforded reasonable notice and opportu-
nity for a full and fair hearing. 
APPUCABIUTY OF PROVISIONS OF SUBCHAPTER B 
SEC. 669. The provisions of sections 637 (other than section 637(1)), 42 Use 9868. 
653, 654, 655, 656, and 657 shall apply to the administration of tMs 
subchapter. 
REPEALER 
SEC. 670. Effective October 1,1984, the provisions of 
this subchapter Ante, p. 508. 
are repealed. 
^^F^Jf^K 
^ 
note, 9801 note. 
Subtitle B—Community Services Block Grant Program ^
J
J
J
j
^
^
'
^
^
f
o
c
k 
Grant Act. 
SHORT TITLE 
SEC. 671. This subtitle may be cited as the "Community Services 42 use 990i 
Block Grant Act". 
*
^
o
t
e
. 
COMMUNITY SERVICES GRANTS AUTHORIZED 
SEC. 672. (a) The Secretary is authorized to make grants in 42 use 9901. 
accordance with the provisions of 
this subtitle, to States to ameliorate 
the causes of 
poverty in communities within the State. 
(b) There is authorized to be appropriated $389,375,000 for the fiscal 
year 1982 and for each of 
the 4 succeeding fiscal years to carry out the 
provisions of 
this subtitle. 
DEFINITIONS 
SEC. 673. For purposes of 
this subtitle: 
42 use 9902. 
95 STAT. 512 
PUBLIC LAW 97-35--AUG. 13, 1981 
(1) The term "eligible entity" means any organization which 
was officially designated as a community action agency or a 
conmiunity action program under the provisions of section 210 of 
42 use 2790. 
the Economic Opportunity Act of 1964 for 
fiscal 
year 1981, unless 
such community action agency or a conmiunity action program 
lost its designation under section 210 of such Act as a result of a 
failure to comply with the provisions of 
such Act. 
(2) The term "poverty line" means the official poverty line 
established by the Director of the Office of Management and 
Budget. The Secretary shall revise the poverty line annually (or 
at any shorter interval the Secretary deems feasible and desir-
able) which shall be used as a criterion of eligibility in commu-
nity service block grant programs. The required revision shall be 
accomplished by multiplying the official poverty line by the 
percentage change in the Consumer Price Index during the 
annual or other interval immediately preceding the time at 
which the revision is made. 
(3) The term "Secretary" means the Secretary of Health and 
Human Services. 
(4) The term "State" means each of the several States, the 
District of Columbia, the Commonwealth of Puerto Rico, Guam, 
the Virgin Islands, American Samoa, the Commonwealth of the 
Northern Mariana Islands, and the Trust Territory of the Pacific 
Islands. 
STATE ALLOCATIONS 
42 use 9903. 
SEC. 674. (aXD The Secretary shall 
fi*om 
the amount appropriated 
under section 672 for each fiscal year which remains after— 
(A) the Secretary makes the apportionment required in subsec-
tion (bXD; and 
(B) the Secretary determines the amount necessary for the 
purposes of section 681(b); 
allot to each State an amount which bears the same ratio to such 
remaining amount as the amount received by the State for fiscal year 
42 use 2808. 
1981 under section 221 of the Economic Opportunity Act of 1964 bore 
to the total amount received by all States for fiscal year 1981 under 
such part, except that no State shall receive less than one 
quarter of 1 
percent of the amount appropriated under section 672 for such fiscal 
year. 
(2) For purposes of this subsection, the term "State" does not 
include Guam, American Samoa, the Virgin Islands, the Northern 
Mariana Islands, and the Trust Territory of the Pacific Islands. 
(b)(1) The Secretary shall apportion one-half of 1 percent of the 
amount appropriated under section 672 for each fiscal year on the 
basis of need among Guam, American Samoa, the Virgin Islands, the 
Northern Mariana Islands, and the Trust Territory of the Pacific 
Islands. 
(2) Each jurisdiction to which paragraph (1) applies may receive 
grants under this subtitle upon an application submitted to the 
Secretary containing provisions which describe the programs for 
which assistance is sought under this subtitle, and which are consist-
ent with the requirements of 
section 675. 
(cXD If, with respect to any State, the Secretary— 
(A) receives a request from the governing body of an Indian 
tribe or tribal organization within the State that assistance 
under this subtitle be made directly to such tribe or organization; 
and 
PUBUC LAW 97-88—AUG. 13,1981 
95 STAT. 513 
(B) determines that the members of such tribe or tribal 
organization would be better served by means of grants made 
directly to provide benefits under this subtitle; 
the Secretary shall reserve from amounts which would otherwise be 
allotted to such State under this subtitle for the fiscal year the 
amount determined under paragraph (2). 
(2) The Secretary shall reserve for the purpose of paragraph (1) 
from sums that would otherwise be allotted to such State not less 
than 100 percent of an amount which bears the same ratio to the 
State's allotment for the fiscal year involved as the population of all 
eligible Indians for whom a determination under this paragraph has 
been made bears to the poi)ulation of all individuals eugible for 
assistance under this subtitle in such State. 
(3) The sums reserved by the Secretary on the basis of a determina-
tion under this subsection shall be granted to the Indian tribe or 
tribal organization serving the individuals for whom such a determi-
nation has been made. 
(4) In order for an Indian tribe or tribal organization to be eligible 
for an awsurd for a fiscal year under this subsection, it shall submit to 
the Secretary a plan for such fiscal year which meets such criteria as 
the Secretary may prescribe bv r^iuation. 
(5) The terms Indian tribe and "tribal organization" mean those "Indian tribe," 
tribes, bands, or other organized groups of Indians recognized in the ^ 
wfon " 
State in which they reside or considered by the Secretary of the 
^^ 
Interior to be an Indian tribe or an Indian organization for any 
purpose. 
APPUCATIONS AND REQUIREMENTS 
SEC. 675. (a) Each State desiring to receive an allotment for a fiscal 42 use 9904. 
year under this subtitle shall submit an appUcation to the Secretary. 
Each such application shall be in such form as the Secretary shsul 
require. Each such application shall contain assurances by the chief 
executive ofQcer of the State that the State will comply with subsec-
tion (b) and will meet the conditions enumerated in subsection (c). 
(b) After the expiration of the first fiscal year in which a State 
received funds under this subtitle, no funds shall be allotted to such 
State for any fiscal year under this subtitle unless the legislature of 
the State conducts public hearings on the proposed use and distribu-
tion of funds to be provided under this subtitle for such fiscal year. 
(c) As part of the annual application required by subsection (a]!, the 
chief executive officer of each State shall certify that the State agrees 
to— 
(1) use the funds available under this subtitle— 
(A) to provide a range of services and activities having a 
measurable and potentially major impact on causes of pov-
erty in the community or those areas of the community 
where poverty is a particularly acute problem; 
(B) to provide activities designed to assist low-income 
participants including the elderly poor— 
(i) to secure and retain meaningful employment; 
(ii) to attain an adequate education; 
(iii) to make better use of available income; 
(iv) to obtain and maintain adequate housing and a 
suitable living environment; 
(v) to obtain emergency assistance through loans or 
grants to meet immediate and urgent individual and 
family needs, including the need for health services, 
95 STAT. 514 
PUBLIC LAW 97-35—AUG. 13, 1981 
nutritious food, housing, and employment-related 
assistance; 
(vi) to remove obstacles and solve problems which 
block the achievement of self-sufficiency; 
(vii) to achieve greater participation in the affairs of 
the communitv; and 
(viii) to make more effective use of other programs 
related to the purposes of this subtitle; 
(C) to provide on an emergency basis for the provision of 
such supplies and services, nutritious foodstuffs, and related 
services, as may be necessary to counteract conditions of 
starvation and malnutrition among the poor; 
(D) to coordinate and establish linkages between govern-
mental and other social services programs to assure the 
effective delivery of such services to low-income individuals; 
and 
(E) to encourage the use of entities in the private sector of 
the community in efforts to ameliorate poverty in the 
community; 
(2)(A)(i) use, for fiscal year 1982 only, not less than 90 percent of 
the funds allotted to the State under section 674 to make grants 
to use for the purposes described in clause (1) to eligible entities 
(as defined in section 673(1)) or to organizations serving seasonal 
or migrant farmworkers; and 
(ii) use, for fiscal year 1983 and for each subsequent fiscal year, 
not less than 90 percent of the funds allotted to the State under 
section 674 to make grants to political subdivisions of the State 
for the political subdivisions to use for the purposes described in 
clause (1) directly or to nonprofit private community organiza-
tions which have a board which meets the requirements of clause 
(3), or to migrant and seasonal farm worker organizations; and 
(B) provide assurances that the State will not expend more 
than 5 percent of its allotment under section 674 for administra-
tive expenses at the State level; 
(3) provide assurances that, in the case of a community action 
agency or nonprofit private organization, each board will be 
constituted so as to assure that (A) one-third of the members of 
the board are elected public officials, currently holding office, or 
their representatives, except that if the number of elected 
officials reasonably available and willing to serve is less than 
one-third of the membership of the board, membership on the 
board of appointive public officials may be counted in meeting 
such one-third requirement; (B) at least one-third of the members 
are persons chosen in accordance with democratic selection 
procedures adequate to assure that they are representative of the 
poor in the area served; and (C) the remainder of the members 
are officials or members of business, industry, labor, religious, 
welfare, education, or other msgor groups and interests in the 
community; 
(4) give special consideration in the designation of local com-
munity action agencies under this subtitle to any community 
action agency which is receiving funds under any Federal antipo-
verty program on the date of the enactment of this Act, except 
that (A) the State shall, before giving such special consideration, 
determine that the agency involved meets program and fiscal 
requirements established by the State; and (B) if there is no such 
agency because of any change in the assistance furnished to 
programs for economically disadvantaged persons, the State 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 515 
shall give special consideration in the designation of community 
action agencies to any successor agency which is operated in 
substantially the same manner as the predecessor agency which 
did receive funds in the fiscal year preceding the fiscal year for 
which the determination is made; 
(5) provide assurances that the State may transfer funds, but 
not to exceed 5 percent of its allotment under section 674, for the 
provisions set forth in this subtitle to services under the Older 
Americans Act of 1965, the Head Start program under sub- 42USC300i 
chapter B of chapter 8 of subtitle A of this title, or the energy ^o^-
crisis intervention program under title XXVI of this Act (relat- 
of'^QQ^' 
mg to low-mcome home energy assistance); 
(6) prohibit any political activities in accordance with subsec-
tion (e); 
(7) prohibit any activities to provide voters and prospective 
voters with transportation to the polls or provide similar assist-
ance in connection with an election or any voter registration 
activity; 
(8) provide for coordination between antipoverty programs in 
each community, where appropriate, with emergency energy 
crisis intervention programs under title XXVI of this Act (relat-
ing to low-income home energy assistance) conducted in such 
community; 
(9) provide that fiscal control and fund accounting procedures 
will be established as may be necessary to assure the proper 
disbursal of and accounting for Federal funds paid to the State 
under this subtitle, including procedures for monitoring the 
assistance provided under this subtitle, and provide that at legist 
every year each State shall prepare, in accordance with subsec-
tion (f), an audit of its expenditures of amounts received under 
this subtitle and amounts transferred to carry out the purposes 
of 
this subtitle; and 
(10) permit and cooperate with Federal investigations under-
taken in accordance with section 679. 
The Secretary may not prescribe the manner in which the States will 
comply with the provisions of this subsection. 
(d)(1) In addition to the requirements of subsection (c), the chief 
executive officer of each State shall prepare and furnish to the 
Secretary a plan which contains provisions describing how the State 
will carry out the assurances contained in subsection (c). The chief 
executive officer of each State may revise any plan prepared under 
this paragraph and shall furnish the revised plan to the Secretary. 
(2) Each plan prepared under paragraph (1) shall be made available 
for public inspection within the State in such a mgmner as will 
facilitate review of, and comment on, the plan. 
(e) For purposes of chapter 15 of title 5, United States Code, any 5 use i50i et 
nonprofit private organization receiving assistance under this subti- *^9-
tie which has responsibility for planning, developing, and coordinat-
ing community antipoverty programs shall be deemed to be a State or 
local agency. For purposes of clauses (1) and (2) of section 1502(a) of 
such title, any such organization receiving assistance under this 5 use 1502. 
subtitle shall l
>
i
e deemed to be a State or local agency. 
(f) Each audit required by subsection (c)(9) shall be conducted by an 
entity independent of any agency administering activities or services 
carried out under this subtitle and shall be conducted in accordance 
with genereilly accepted accounting principles. Within 30 days after 
the completion of each audit, the chief executive officer of the State 
95 STAT. 516 
PUBLIC LAW 97-35—AUG. 13, 1981 
shall submit a copy of such audit to the legislature of the State and to 
the Secretary. 
(g) The State shall repay to the United States amounts found not to 
have been expended in accordance with this subtitle or the Secretary 
may offset such amounts against any other amount to which the 
State is or may become entitled under this subtitle. 
(h) The Comptroller General of the United States shall, from time 
to time, evaluate the expenditures by States of grants under this 
subtitle in order to assure that expenditures are consistent with the 
provisions of this subtitle and to determine the effectiveness of the 
State in accomplishing the purposes of this subtitle. 
Office of 
Community 
Services. 
Establishment. 
42 u s e 9905. 
42 u s e 9906. 
42 u s e 6101 
note. 
29 u s e 794. 
42 u s e 2000d. 
ADMINISTRATION 
SEC. 676. (a) There is established in the Department of Health and 
Human Services an Office of Community Services. The Office shall be 
headed by a Director. 
(b) The Secretary shall carry out his functions under this subtitle 
through the Office of Community Services established in subsection 
(a). 
NONDISCRIMINATION PROVISIONS 
SEC. 677. (a) No person shall on the ground of race, color, national 
origin, or sex be excluded from participation in, be denied the benefits 
of, or be subjected to discrimination under, any program or activity 
funded in whole or in part with funds made available under this 
subtitle. Any prohibition against discrimination on the basis of age 
under the Age Discrimination Act of 1975 or with respect to an 
otherwise qualified handicapped individual as provided in section 504 
of the Rehabilitation Act of 1973 shall also apply to any such program 
or activity. 
O
t
>
) Whenever the Secretary determines that a State that has 
received a payment under this subtitle has failed to comply with 
subsection (a) or an applicable regulation, he shall notify the chief 
executive officer of the State and shall request him to secure 
compliance. If within a reasonable period of time, not to exceed 60 
days, the chief executive officer fails or refuses to secure compliance, 
the Secretary is authorized to (1) refer the matter to the Attorney 
General with a recommendation that an appropriate civil action be 
instituted; (2) exercise the powers and functions provided by title VI 
of the Civil Rights Act of 1964, the Age Discrimination Act of 1975, or 
section 504 of the Rehabilitation Act of 1973, as may be applicable; or 
(3) take such other action as may be provided by law. 
(c) When a matter is referred to the Attorney General pursuant to 
subsection (b), or whenever he has reason to believe that the State is 
engaged in a pattern or practice in violation of the provisions of this 
section, the Attorney General may bring a civil action in any 
appropriate United States district court for such relief as may be 
appropriate, including injunctive relief. 
PAYMENTS TO STATES 
42 use 9907. 
SEC. 678. (a) From its allotment under section 674, the Secretary 
shall make payments to each State in accordance with section 203 of 
the Intergovernmental Cooperation Act of 1968 (42 U.S.C. 4213), for 
use under this subtitle. 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 517 
(b) Pa5maents to a State from its allotment for any fiscal year shall 
be expended by the State in such fiscal year or in the succeeding fiscal 
year. 
WITHHOLDING 
Notice and 
hearing. 
42 u s e 9908. 
SEC. 679. (aXD The Secretary shall, eifter adequate notice and an 
opportunity for a hearing conducted within the affected State, 
withhold funds from any State which does not utilize its allotment 
substantially in accordance with the provisions of this subtitle and 
the assurances such State provided under section 675. 
(2) The Secretary shall respond in an expeditious and speedy 
manner to complaints of a substantial or serious nature that a State 
has failed to use funds in accordcmce with the provisions of this 
subtitle or the assurances provided by the State under section 675. 
For purposes of this paragraph, a violation of any one of the 
assurances contained in section 675(c) that constitutes a disregard of 
that assurance shall be considered a serious complaint. 
(b)(1) The Secretary shall conduct in several States in each fiscal investigations. 
year investigations of the use of funds received by the States under 
this subtitle in order to evaluate compliance with the provisions of 
this subtitle. 
(2) Whenever the Secretary determines that there is a pattern of 
complaints from any State in any fiscal year, he shall conduct an 
investigation of the use of funds received under this subtitle by such 
State in order to ensure compliance with the provisions of this 
subtitle. 
(3) The Comptroller General of the United States may conduct an 
investigation of the use of funds received under this subtitle by a 
State in order to ensure compliance with the provisions of this 
subtitle. 
(c) Pursuant to an investigation conducted under subsection (b), a 
State shall make appropriate books, documents, papers, and records 
available to the Secretary or the Comptroller General of the United 
States, or any of their duly authorized representatives, for examina-
tion, copying, or mechanical reproduction on or off the premises of 
the appropriate entity upon a reasonable request therefor. 
(d) In conducting any investigation under subsection (b), the Secre-
tary may not request any information not readily available to such 
State or require that any information be compiled, collected, or 
transmitted in any new form not already available. 
UMITATION ON USE OF GRANTS FOR CONSTRUCTION 
SEC. 680. (a) Except as provided in subsection (b), grants made 42 use 9909. 
under this subtitle (other than amounts made available under section 
681(b)) may not be used by the State, or by any other person with 
which the State makes arrangements to carry out the purposes of this 
subtitle, for the purchase or improvement of land, or the purchase, 
construction, or permanent improvement (other than low-cost resi-
dential weatherization or other energy-related home repairs) of any 
building or other facility. 
(b) The Secretary may waive the limitation contained in subsection 
(a) upon the State's request for such a waiver if he finds that the 
request describes extraordinary circumstances to justify the pur-
chase of land or the construction of facilities (or the making of 
permanent improvements) and that permitting the waiver will con-
tribute to the State's ability to carry out the purposes of this subtitle. 
95 STAT. 518 
PUBLIC LAW 97-35—AUG. 13, 1981 
DISCRETIONARY AUTHORITY OF SECRETARY 
42 use 9910. 
SEC. 681. (a) The Secretary is authorized, either directly or through 
grants, loans, or ^arantees to States and public and other organiza-
tions and agencies, or contracts or jointly financed cooperative 
arrangements with States and public and other organizations and 
agencies, to provide for— 
(1) training related to the purposes of this subtitle; and 
(2) ongoing activities of national or regional significance re-
lated to the purposes of this subtitle, including special emphasis 
programs for— 
(A) special programs of assistance to private, locally initi-
ated communit3r development programs which sponsor en-
terprises providing emplo3mient and business development 
opportunities for low-income residents of the area; 
(B) Rural Development Loan Fund revolving loans and 
guarantees under subchapter A of chapter 8 of subtitle A of 
this title; 
(C) community development credit union programs admin-
istered under subchapter A of chapter 8 of subtitle A of this 
Ante, p. 489. 
title; 
(D) technical assistance and training programs in rural 
housing and community facilities development; 
(E) assistance for migrants and seasonal farmworkers; and 
(F) national or regional programs designed to provide 
recreational activities for low-income youth. 
(b) Of the amounts appropriated under section 672(b) for any fiscal 
year, not more than 9 percent of such amounts shall be available to 
the Secretary for purposes of carr3ang out this section and subchapter 
A of chapter 8 of subtitle A of this title. 
TRANSITION PROVISIONS 
42 use 9911. 
SEC. 682. (a)(1) The purpose of this section is to permit, for fiscal 
year 1982 only, States to choose to operate programs under the block 
grant established by this subtitle or to have the Secretary operate 
programs under the provisions of law repealed by section 683(a). 
(2) The Secretary shall carry out the provisions of this section 
through the Office of Community Services established in section 
676(a). 
(b)(1) Notwithstanding the provisions of section 683(a) or any other 
provision of law, a State may, for fiscal year 1982 only, make a 
determination that the State chooses not to operate programs under 
the block grant established by this subtitle. If the State makes such a 
determination, the State's allotment under section 674 shall be used 
within the State by the Secretary to carry out programs (in accord-
ance with paragraph (4)) under the provisions of law in effect on 
September 30,1981, but repealed by section 683(a). 
(2) The provisions of paragraph (1) apply to the provisions of law 
referred to in such paragraph, regardless of whether there is a 
specific termination provision or other provision of law repealing or 
otherwise terminating any program subject to this Act. 
(3) Each State which, pursuant to paragraph (1), determines to have 
the Secretary operate programs under the provisions of law in effect 
on September 30, 1981, but repealed by section 683(a), shall give 
notice to the Secretary of such determination. Such notice shall be 
submitted to the Secretary prior to the beginning of the first quarter 
of fiscal year 1982 and at least 30 days before the beginning of any 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 519 
other quarter during such fiscal year. For purposes of this section, the 
quarters for fiscal year 1982 shall commence on October 1, January 1, 
April 1, and July 1 of 
fiscal year 1982. 
(4) In any case in which the Secretary carries out programs under 
paragraph (1), the Secretary shall provide for the carrying out of such 
programs by making grants for such purpose to eligible entities (as 
defined in section 673(1)). 
(c) The Secretary shall provide such assistemce to the States as the 
States may require in order to carry out the provisions of this section. 
(d) The Secretary may reserve not more than 5 percent of any 
State's allotment for administration of such State's programs under 
the block grant established by this subtitle, if such State has made a 
determination that the State chooses not to operate programs under 
the block grant established by this subtitle, and the Secretary is 
carrying out such State's programs under the provisions of law in 
effect on September 30,1981. 
(e) Upon the enactment of this Act, the Director of the Office of 
Management and Budget is authorized to provide for termination of 
the affairs of the C!ommunity Services Administration. He shall 
provide for the transfer or other disposition of personnel, assets, 
liabilities, grants, contracts, property, records, and unexpended bal-
ances of appropriations, authorizations, allocations, and other funds 
held, used, arising from, available to, or to be made available in 
connection with implementation of the authorities terminated by 
section 683(a) as necessary to effectuate the purposes of this subtitle. 
REPEALER; REAUTHORIZATION PROVISIONS; TECHNICAL AND 
CONFORMING PROVISIONS 
42 use 9912. 
Repeal. 
42 use 2701. 
SEC. 683. (a) Effective October 1, 1981, the Economic Opportunity 
Act of 1964, other than titles VIII and X of such Act, is repealed. 
(b) There is authorized to be appropriated such sums as may be 
necessary for each of the fiscal years 1982,1983, and 1984, to carry out 
title VIII of the Economic Opportunity Act of 1964. 
4
2 use 2991. 
(c)(1) Any reference in any provision of law to the poverty line set 
forth in section 624 of the Economic Opportunity Act of 1964 shall be 42 use 297ic. 
construed to be a reference to the poverty line defined in section 
673(2) of this Act. 
(2) Any reference in any provision of law to any community action 
agency designated under title II of the Economic Opportunity Act of 
1964 shall be construed to be a reference to private nonprofit 
community organizations eligible to receive funds under this subtitle. 
(3) No action or other proceeding commenced by or against any 
officer in the official capacity of such individual as an officer of any 
agency administering the Act repealed by subsection (a) of this 
section shall abate by reason of the enactment of this Act. 
TITLE VII—EMPLOYMENT PROGRAMS 
COMPREHENSIVE EMPLOYMENT AND TRAINING ACT 
SEC. 701. (a) Section 112 of the Comprehensive Employment and 
Training Act is amended to read as follows: 
"AUTHORIZATION OF APPROPRIATIONS 
"SEC. 112. (a) There are authorized to be appropriated for fiscal 
year 1982 for the purpose of carrying out this Act— 
29 use 822. 
-194 O—82 
35:QL3 
95 STAT. 520 
PUBLIC LAW 97-35—AUG. 13, 1981 
29 use 841, 846, 
"(1) $1,430,775,000 for carrying out parts A, B, and C of title 11; 
852 
"(2) $219,015,000 for carrying out titles III and V, of which not 
29 use 871,891. 
jj^^j.^ ^j^g^^ ^3 million may be transferred to the National Occupa-
tional Information Coordinating Committee established pursu-
ant to section 161(b) of the Vocational Education Act of 1963 for 
purposes described in section 315 of this Act; 
29 use 893. 
"(3) $576,200,000 for carrying out part A of title IV; 
29 use 923. 
"(4) $628,263,000 for carrying out part B of title IV; 
29 use 942. 
"(5) $766,100,000 for carrying out part C of title IV; 
29 use 981. 
"(6) $274,700,000 for carrying out title VII; and 
"(7) $75,462,000 for the expenses of the Department of Labor in 
administering this Act. 
"(bXD For the purpose of affording adequate notice of funding 
available under this Act, appropriations under this Act are author-
ized to be included in an appropriation Act for the fiscal year 
preceding the fiscal year for which they are first available for 
obligation. 
"(2) In order to effect a transition to the advance funding method of 
timing appropriation action, the provisions of this subsection shall 
apply notwithstanding that its initial application will result in the 
enactment in the same year (whether in the same appropriation Act 
or otherwise) of two separate appropriations, one for the then current 
fiscal year and one for the succeeding fiscal year.". 
29 use 842. 
(b) The matter preceding clause (i) of section 202(aX2XA) of the Act 
is amended by striking out "Eighty-five percent" and inserting in lieu 
thereof "Eighty-six and one-half percent". 
(c) Section 202 of the Comprehensive Employment and Training 
Act is amended by adding the following subsection at the end thereof: 
"(h) Notwithsteinding the provisions of subsections (b), (c), (d), and 
(e) of this section, not more than 10 y2 percent of the amounts 
available for this title shall be available for the purposes specified in 
such subsections. The Governor of each State may in his own 
discretion determine the amount of funds to be used for each of the 
functions specified in such subsections but not to exceed the amounts 
29 use 909. 
(dXD Section '433(aXl) of the Comprehensive Employment and 
Training Act is amended by striking out "75" and inserting in lieu 
thereof ^85". 
29 use 912. 
(2) Section 436(aX2) of such Act is amended by striking out ", but 
services to youth under that title shall not be reduced because of the 
availability of financial assistance under this subpart". 
(eXD Title IV of the Comprehensive Employment and Training Act 
is amended by inserting after section 402 the following new section: 
"TRANSFERABILITY OF FUNDS 
29 use 892a. 
"SEC. 403. (a) Twenty p r c e n t of the funds available to a prime 
29 use 893. 
sponsor in fiscal year 1982 to carry out part A of this title may, at the 
prime sponsor's discretion, be used in accordance with the provisions 
29 use 942. 
of part C and 20 percent of the funds available to a prime sponsor in 
fiscal year 1982 to carry out part C of this title may, at the prime 
sponsor's discretion, be used in accordance with the provisions of part 
A. 
"(b) Funds available to a prime sponsor under subpart 2 of part A of 
29 use 899. 
this title may, at the prime sponsor's discretion, be used in accord-
ance with the provisions of subpart 3 of part A of this title. Any funds 
allocated under subpart 2 of part A of this title which are reallocated 
29 use 818. 
by the Secretary pursuant to section 108 may, in the Secretary's 
PUBLIC LAW 97-35—AUG. 13,1981 
95 STAT. 521 
discretion, be allocated for use in accordance with the provisions of 
subpart 3 of part A of this title.". 
29 use 907. 
(2) The table of contents of such Act is amended by inserting after 
the item pertaining to section 402 the following new item: 
"403. Transferability of funds.". 
(f) Section 702 of the Comprehensive Employment and Training Act 29 use 982. 
is amended— 
(1) by striking out "Eighty-five" in subsection (bXD and insert-
ing in lieu thereof "Ninety-five"; and 
(2) by striking out paragraph (2) and inserting in lieu thereof 
the following: 
"(2) Funds available to prime sponsors under this title may be used 
to promote coordination with economic development activities sup-
ported by Federal, State, or local funds. Funds used for such coordi-
nated activities shall not be taken into account in the computation of 
cost per participant or cost per placement for purposes of program 
evaluation.". 
(g) If, during the second session of the 97th Congress, neither the 2
9 use 822 note. 
House of Representatives nor the Senate have passed legislation 
replacing or amending the Comprehensive Emplo3mient and Train-
ing Act by September 10, 1982, the provisions of section 112 of that 
Act (relating to authorization of appropriations) applicable to fiscal ^f^te, p. 519. 
1982 shall be applicable to 
fiscal 
1983. 
THE WAGNER-PEYSER ACT 
SEC. 702. Section 5(b) of the Act of June 6,1933 (commonly known 
as the Wagner-Peyser Act), is amended by inserting before the period 29 use 49d. 
at the end thereof a comma and the following: %ut not to exceed 
$677,800,000 in the fiscal year beginning October 1, 1981. For pur-
poses of this subsection, the term 'proper and efficient administration 
of its public employment offices' sh^dl mean only such functions as 
are necessary to carry out the provisions of this Act and shall not 
include functions authorized or required under the Internal Revenue 
Code of 1954, the Immigration and Nationality Act, or chapter 41 of 26 use l et seq.; 
title 38, United States Code.". 
8 use uoi et 
38 u s e 2001 et 
seq. 
TITLE VIII—SCHOOL LUNCH AND CHILD 
NUTRITION PROGRAMS 
CHANGES IN REIMBURSEMENT FOR SCHOOL LUNCHES AND BREAKFASTS 
SEC. 801. (a) Section 4 of the National School Lunch Act is 42 use 1753. 
amended— 
(1) by inserting "(a)" after "SEC. 4."; 
(2) in subsection (a) (as so designated), by striking out the 
second sentence; and 
(3) by adding at the end thereof the following new subsection: 
"Ot>Xl) The Secretary shall make food assistance pajnnents to each 
State educational agency each fiscal year, at such times as the 
Secretarj^ may determine, from the sums appropriated for such 
purpose, m a total amount equal to the product obtained by multi-
plying— 
"(A) the number of lunches (consisting of a combination of 
foods which meet the minimum nutritional requirements pre-
scribed by the Secretsiry under section 9(a) of this Act) served 
95 STAT. 522 
PUBLIC LAW 97-35—AUG. 13, 1981 
during such fiscal year in schools in such State which participate 
in the school lunch program under this Act under agreements 
with such State educational agency; by 
"(B) the national average lunch pa5mient prescribed in para-
graph (2) of this subsection. 
"(2) The national average lunch payment for each lunch served 
shall be 10.5 cents (as adjusted pursuant to section 11(a) of this Act) 
except that for each lunch served in school food authorities in which 
60 percent or more of the lunches served in the school lunch program 
during the second preceding school year were served free or at a 
reduced-price, the national average lunch pajnnent shall be 2 cents 
more.". 
42 use 1759a. 
(b) Section 11(a) of the National School Lunch Act is amended— 
(1) by inserting "(1)" after "SEC. 11. (a)"; 
(2) in the third sentence, by striking out "(1)" and inserting in 
lieu thereof "(A)" and by striking out "(2)" and inserting in lieu 
thereof "(B)"; and 
(8) by striking out the fifth sentence and all that follows 
through the end of the subsection and inserting in lieu thereof 
the following: 
"(2) The special-assistance factor prescribed by the Secretary for 
free lunches shall be 98.75 cents and the special-assistance factor 
for reduced-price lunches shall be 40 cents less than the special-
assistance factor for free lunches. 
"(3)(A) The Secretary shall prescribe on July 1, 1982, and on each 
subsequent July 1, an annual adjustment in the following: 
"(i) The national average payment rates for lunches (as estab-
Ante, p. 521. 
lished Under section 4 of this Act). 
"(ii) The special assistance factor for lunches (as established 
under paragraph (2) of this subsection). 
"(iii) The national average payment rates for breakfasts (as 
^"/^- 
established under section 4(b) of the Child Nutrition Act of 1966). 
"(iv) The national average pa5nnent rates for supplements (as 
Post, p. 528. 
established under section 17(c) of this Act). 
"(B) The annual adjustment under this paragraph shall reflect 
changes in the cost of operating meal programs under this Act and 
the Child Nutrition Act of 1966, as indicated by the change in the 
series for food away from home of the Consumer Price Index for all 
Urban Consumers, published by the Bureau of Labor Statistics of the 
Department of Labor. Each annual adjustment shall reflect the 
changes in the series for food away from home for the most recent 
12-month period for which such data are available. The adjustments 
made under this paragraph shall be computed to the nearest one-
fourth cent.". 
42 use 1773. 
(c)(1) Section 4(b)(1) of the Child Nutrition Act of 1966 is amended to 
read as follows: 
"(b)(lXA) The Secretary shall make breakfast assistance payments 
to each State educational agency each fiscal year, at such times as the 
Secretary may determine, from the sums appropriated for such 
purpose, in an amount equal to the product obtained by multi-
plying— 
"(i) the number of breakfasts served during such fiscal year to 
children in schools in such States which participate in the school 
breakfast program under agreements with such State educa-
tional Eigency; by 
"(ii) the national average breakfast payment for free break-
fasts, for reduced-price breakfasts, or for breakfasts served to 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 523 
children not eligible for free or reduced-price meals, as appropri-
ate, as prescribed in clause (B) of this paragraph. 
"(B) The national average payment for each free breakfast shall be 
57 cents (as adjusted pursuant to section 11(a) of the National School 
Lunch Act), TTie national average payment for each reduced-price Ante, p. 522. 
breakfast shall be one-half of the nationsd average payment for each 
free breakfast, adjusted to the nearest one-fourth cent, except that in 
no case shall the difference between the amount of the national 
average pajmaent for a free breaWast and the national average 
pajnnent for a reduced-price breakfast exceed 30 cents. The national 
average payment for each breakfast served to a child not eligible for 
free or reduced-price meals shall be 8.25 cents (as adjusted pursuant 
to section 11(a) of the National School Lunch Act). 
"(C) No school which receives breakfast assistance pa5mients under 
this section may charge a price of more than 30 cents for a reduced-
price breakfast. 
"(D) No breakfast assistance payment may be made under this 
subsection for any breakfast served by a school unless such breakfast 
consists of a combination of foods which meet the minimum nutri-
tional requirements prescribed by the Secretary under subsection (e) 
of this section.". 
(2) Section 4(bX2) of the Child Nutrition Act of 1966 is amended— Ante, p. 522. 
(A) in clause (B)(ii)— 
(i) by striking out "on a semiannual basis each July 1 and 
January 1" and inserting in lieu thereof "on an annual basis 
each July 1"; and 
(ii) by striking out "six-month" and inserting in lieu 
thereof "twelve-month"; and 
(B) in clause (C), by striking out "five" and inserting in lieu 
thereof "thirty". 
(3)(A) Section 4(d) of the Child Nutrition Act of 1966 is amended to 42 use 1773. 
read £is follows: 
"(d)(1) Each State educational agency shall provide additional 
assistance to schools in severe need, which shall include only— 
"(A) those schools in which the service of breakfasts is required 
pursuant to State law; and 
"(B) those schools (having a breakfast program or desiring to 
initiate a breakfast program) in which, during the most recent 
second preceding school year for which lunches were served, 40 
percent or more of the lunches served to students at the school 
were served free or at a reduced-price, and in which the rate per 
meal established by the Secretary is insufficient to cover the 
costs of the breakfast program. 
The provision of eligibility specified in clause (A) of this paragraph 
shall terminate effective July 1,1983, for schools in States where the 
State legislatures meet annually and shall terminate effective 
July 1, 1984, for schools in States where the State legislatures meet 
biennially. 
"(2) A school, upon the submission of appropriate documentation 
about the need circumstances in that school and the school's eligibil-
ity for additional assistance, shall be entitled to receive 100 percent of 
the operating costs of the breakfast program, including the costs of 
obtaining, preparing, and serving food, or the meal reimbursement 
rate specified in paragraph (2) of section 4(b) of this Act, whichever is 
less.". 
95 STAT. 524 
PUBLIC LAW 97-35—AUG. 13, 1981 
REDUCTION IN COMMODITY ASSISTANCE FOR LUNCHES 
SEC. 802. The first sentence of section 6(e) of the National School 
42 use 1755. 
Lunch Act is amended to read as follows: "The national average value 
of donated foods, or cash payments in lieu thereof, shall be 11 cents, 
adjusted on July 1,1982, and each July 1 thereafter to reflect changes 
in the Price Index for Food Used in Schools and Institutions.". 
REVISION OF INCOME EUGIBILITY GUIDEUNES 
42 use 1758. 
SEC. 803. (a) Section 9(b) of the National School Lunch Act is 
amended— 
(1) by amending paragraph (1) to read as follows: 
"(IXA) Not later than June 1 of each fiscal year, the Secretary shall 
prescribe income guidelines for determining eligibility for free and 
reduced-price lunches during the 12-month period beginning July 1 of 
such fiscal year and ending June 30 of the following flscal year. For 
the school years ending June 30,1982, and June 30,1983, the income 
guidelines for determining eligibility for free lunches shall be 130 
percent of the applicable family-size income levels contained in the 
nonfarm income poverty guidelines prescribed by the Office of 
Management and Budget, as adjusted annually in accordance with 
subparagraph (B). Beginning July 1,1983, the income guidelines for 
determining eligibilit)^ for free lunches for any school year shall be 
the same as the gross income eligibility standards announced by the 
Secretary for any such period for eligibility for participation in the 
7 use 2011 note, food Stamp program under the Food Stamp Act of 1977. The income 
guidelines for determining eligibility for reduced-price lunches for 
any school year shall be 185 percent of the applicable family-size 
income levels contained in the nonfarm income poverty guidelines 
prescribed by the Office of Management and Budget, as adjusted 
annually in accordance with subparagraph (B). The Office of Manage-
ment and Budget guidelines shall be revised at annual intervals, or at 
any shorter interval deemed feasible and desirable. 
"(B) The revision required by subparagraph (A) of this paragraph 
shall be made by multiplying— 
"(i) the official poverty line (as defined by the Office of 
Management and Budget); by 
"(ii) the percentage change in the Consumer Price Index 
during the einnual or other interval immediately preceding the 
time at which the adjustment is made. 
Revisions under this subparagraph shall be made not more than 30 
days after the date on which the consumer price index data required 
to compute the adjustment becomes available."; 
(2) by redesignating paragraph (2) (and any references thereto) 
as paragraph (5) and by inserting after paragraph (1) the follow-
ing new paragraphs: 
"(2)(A) Following the determination by the Secretary under para-
graph (1) of this subsection of the income eligibility guidelines for 
each school year, each State educational agency shall announce the 
income eligibility guidelines, by family-size, to be used by schools in 
the State in making determinations of eligibility for free and reduced-
price lunches. Local school authorities shall, each year, publicly 
announce the income eligibility guidelines for free and reduced-price 
lunches on or before the opening of school. 
"(B) Applications for free and reduced-price lunches, in such form 
as the Secretary may prescribe or approve, and any descriptive 
material, shall be distributed to the parents or guardians of children 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 525 
in attendance at the school, and shall contain only the family-size 
income levels for reduced-price meal eligibility with the explanation 
that households with incomes less than or equal to these values would 
be eligible for free or reduced-price lunches. Such forms and descrip-
tive material may not contain the income eligibility guidelines for 
free lunches. 
"(C) Eligibility determinations shall be made on the basis of a 
complete application executed by an adult member of the household. 
The Secretary, States, and local school food authorities may seek 
verification of the data contained in the application. Local school food 
authorities shall undertake such verification of the information 
contained in these applications as the Secretary may by regulation 
prescribe and, in accordance with such regulations, make appro-
priate changes in the eligibility determinations on the basis of such 
verification. 
"(3) Any child who is a member of a household whose income, at the 
time the application is submitted, is at an annual rate which does not 
exceed the applicable family-size income level of the income eligibil-
ity guidelines for free lunches, as determined under paragraph (1), 
shall be served a free lunch. Any child who is a member of a 
household whose income, at the time the application is submitted, is 
at an annual rate greater than the applicable family-size income level 
of the income eligibility guidelines for free lunches, as determined 
under paragraph (1), but less than or equal to the applicable family-
size income level of the income eligibility guidelines for reduced-price 
lunches, as determined under paragraph (1), shall be served a 
reduced-price lunch. The price charged for a reduced-price lunch 
shall not exceed 40 cents. 
"(4) No physical segregation of or other discrimination against any 
child eligible for a free lunch or a reduced-price lunch under this 
subsection shall be made by the school nor shall there by any overt 
identification of any child by special tokens or tickets, announced or 
published lists of names, or by other means."; and 
(3) in the second sentence of paragraph (5), as so redesignated 
by paragraph (2) of this subsection, by striking out "solely". 
(b) Section 9 of the National School Lunch Act is further amended 42 use 1758. 
by adding at the end thereof the following new subsection: 
"(d)(1) The Secretary shall require as a condition of eligibility for 
receipt of free or reduced-price lunches that the member of the 
household who executes the application furnish the social security 
account numbers of all adult members of the household of which such 
person is a member. 
"(2) No member of a household may be provided a free or reduced-
price lunch under this Act unless— 
"(A) appropriate documentation, as prescribed by the Secre-
tary, of the income of such household has been provided to the 
appropriate local school food authority; or 
(B) documentation showing that the household is participat-
ing in the food stamp program under the Food Stsimp Act of 
1977 has been provided to the appropriate local school food 
authority.". 
(c) Notwithstanding any other provision of law, the Secretary of Study. 
Agriculture shall conduct a pilot study to verify the data submitted l^^Y^ ^^^^ 
on a sample of applications for free and reduced-price meals. In 
conducting the pilot study, the Secretary may require households 
included in the study to furnish social security numbers of all 
household members and such other information as the Secretary may 
require, including, but not limited to, pay stubs, documentation of the 
note. 
95 STAT. 526 
PUBLIC LAW 97-35—AUG. 13, 1981 
current status of household members who are recipients of public 
assistance, unemplojmient insurance documents, and written state-
ments from employers, as a condition for receipt of free or reduced-
price meals. 
42 use 1758 
(d) For the school year ending June 30, 1982, the Secretary may 
"°^- 
prescribe procedures for implementing the revisions made by the 
amendments contained in this section to the income eligibility 
guidelines for free and reduced-price lunches under section 9 of the 
42 use 1758. 
National School Lunch Act. Such procedures may allow school food 
authorities to (1) use applications distributed at the beginning of the 
school year when making eligibility determinations based on the 
revised income eligibility guidelines, or (2) distribute new applica-
tions and make determinations using such applications. 
REVISION OF STATE REVENUE MATCHING REQUIREMENTS 
42 use 1756. 
SEC. 804. Section 7 of the National School Lunch Act is amended to 
read as follows: 
42 use 1753. 
"SEC. 7. (aXD Funds appropriated to carry out section 4 of this Act 
during any fiscal year shall be available for payment to the States for 
disbursement by State educational agencies in accordance with such 
agreements, not inconsistent with the provisions of this Act, as may 
be entered into by the Secretary and such State educational agencies 
for the purpose of assisting schools within the States in obtaining 
agricultural commodities and other foods for consumption by chil-
dren in furtherance of the school lunch program authorized under 
this Act. For any school year, such pajnnents shall be made to a State 
only if, during such school year, the amount of the State revenues 
(excluding State revenues derived from the operation of the program) 
appropriated or used specifically for program purposes (other than 
any State revenues expended for salaries and administrative ex-
penses of the program at the State level) is not less than 30 percent of 
the funds made avsiilable to such State under section 4 of this Act for 
the school year beginning July 1,1980. 
"(2) If, for any school year, the per capita income of a State is less 
than the average per capita income of all the States, the amount 
required to be expended by a State under paragraph (1) for such year 
shall be an amount bearing the same ratio to the amount equal to 30 
percent of the funds made available to such State under section 4 of 
this Act for the the school year beginning July 1, 1980, as the per 
capita income of such State bears to the average per capita income of 
all the States. 
"(b) The State revenues provided by any State to meet the require-
ment of subsection (a) shall, to the extent the State deems practicable, 
be disbursed to schools participating in the school lunch program 
under this Act. No State in which the State educational agency is 
prohibited by law from disbursing State appropriated funds to pri-
vate schools shall be required to match Federal funds made available 
for meals served in such schools, or to disburse, to such schools, any of 
the State revenues required to meet the requirements of subsection 
(a). 
"(c) The Secretary shall certify to the Secretary of the Treasury, 
from time to time, the amounts to be paid to any State under this 
section and shall specify when such payments are to be made. The 
Secretary of the Treasury shall pay to the State, at the time or times 
fixed by the Secretary, the amounts so certified.". 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 527 
TERMINATION OF FOOD SERVICE EQUIPBIENT ASSISTANCE 
SEC. 805. (a) Section 5 of the National School Lunch Act is repealed. Repeals. 
(b) Section 5 of the Child Nutrition Act of 1966 is repealed. ^^ use 1754. 
42 u s e 1774. 
NUTRITION EDUCATION AND TRAINING PROGRAM 
SEC. 806. The second sentence of section 19(jX2) of the Child 
Nutrition Act of 1966 is amended to read as follows: "There is 42 use 1788. 
authorized to be appropriated for the grants referred to in the 
preceding sentence not more than $15,000,000 for fiscal year 1981» 
and not more than $5,000,000 for each subsequent fiscal year.". 
REVISION OF THE SPECIAL MILK PROGRAM 
SEC. 807. Section 3 of the Child Nutrition Act of 1966 is amended— 42 use 1772. 
(1) in the first sentence— 
(A) in clause (1), by inserting "which do not participate in a 
mesJ service prc^ram authorized under this Act or the 
National School Lunch Act," after "under,"; and 
42 use I75i 
(B) in clause (2), by inserting ", which do not participate in ^°^' 
a meal service program authorized under this Act or the 
National School Lunch Act" after "training of children"; 
(2) in the fourth sentence, by inserting "which does not 
participate in a meal service prc^am authorized under this Act 
or the National School Lunch Act" after "institution"; 
(3) in the fifth sentence, by striking out "also"; and 
(4) by striking out the eighth sentence. 
LIMITATION ON PRIVATE SCHOOL PARTICIPATION 
SEC. 808. (a) Section 12(dX6) of the National School Lunch Act is 42 use 1760. 
amended by inserting in the first sentence "except private schools 
whose average yearly tuition exceeds $1,500 per child," after 
"under,". 
(b) Section 15(c) of the Child Nutrition Act of 1966 is amended by 42 use 1784. 
inserting in the first sentence "except private schools whose average 
yearly tuition exceeds $1,500 per child," after "such school,". 
SUMMER FOOD SERVICE PROGRAM 
SEC. 809. Section 13 of the National School Lunch Act is amended— 42 use I76i. 
(1) in subsection (aXl)— 
(A) in clause (B), by striking out "nonresidential public or 
private nonprofit institutions," and inserting in lieu thereof 
"public or private nonprofit school food authorities, local, 
municipal, or county governments,"; and 
(B) in clause (C), by striking out "33 V
s percent" and 
inserting in lieu thereof "50 percent"; and 
(2) by adding at the end of subsection (a) the following new 
paragraph: 
"(6) Service institutions that are local, municipal, or county govern-
ments shall be eligible for reimbursement for meals served in 
programs under this section only if such programs are operated 
directly by such governments.". 
95 STAT. 528 
PUBLIC LAW 97-35—AUG. 13, 1981 
REVISION OF CHILD CARE FOOD PROGRAM 
42 use 1766. 
SEC. 810. (a) Section 17(a) of the National School Lunch Act is 
amended— 
(1) in the second sentence, by adding at the end before the 
period the following: "(but only if such organization receives 
compensation under such title for at least 25 percent of the 
children for which the organization provides such nonresidential 
day care services)"; and 
(2) by adding after the third sentence the following: "Reim-
bursement may be provided under this section only for meals or 
supplements served to children not over 12 years of age (except 
that such age limitation shall not be applicable for children of 
migrant workers if 15 years of age or less or for handicapped 
children).". 
(b) Section 17(b) of the National School Lunch Act is amended by 
striking out "served in the manner specified in subsection (c)" and 
inserting in lieu thereof "as provided in subsection (f)". 
(c) Section 17(c) of the National School Lunch Act is amended to 
read as follows: 
"(cXD For purposes of this section, the national average pa5anent 
rate for free lunches and suppers, the national average pa5mient rate 
for reduced-price lunches and suppers, and the national average 
pajnnent rate for paid lunches and suppers shall be the same as the 
national average pa3nnent rates for free lunches, reduced-price 
lunches, and paid lunches, respectively, under sections 4 and 11 of 
f2 use 1753, 
this Act as appropriate (as adjusted pursuant to section 11(a) of this 
"^^^- 
Act). 
"(2) For purposes of this section, the national average payment rate 
for free breakfasts, the national average payment rate for reduced-
price breakfasts, and the national average paj^ment rate for paid 
breakfasts shall be the same as the national average payment rates 
for free breakfasts, reduced-price breakfasts, and paid breakfasts, 
Ante, p. 522. 
respectively, under section 4(b) of the Child Nutrition Act of 1966 (as 
adiusted pursuant to section 11(a) of this Act). 
(3) For purposes of this section, the national average pajnnent rate 
for free supplements shall be 30 cents, the national average payment 
rate for reduced-price supplements shall be one-half the rate for free 
supplements, and the national average pajnnent rate for paid supple-
ments shall be 2.75 cents (as adjusted pursuant to section 11(a) of this 
Act). 
"(4) Determinations with regard to eligibility for free and reduced-
price meals and supplements shall be made in accordance with the 
income eligibility guidelines for free lunches and reduced-price 
42 use 1758. 
lunches, respectively, under section 9 of this Act.". 
(d) Section 17(f) of the National School Lunch Act is amended— 
(1) by amending paragraph (2) to read as follows: 
"(2)(A) Subject to subparagraph (B) of this paragraph, the disburse-
ment for any fiscal year to any State for disbursement to institutions, 
other than family or group day care home sponsoring organizations, 
for meals provided under this section shall be equal to the sum of the 
products obtained by multiplying the total number of each type of 
meal (breakfast, lunch or supper, or supplement) served in such 
institution in that fiscal year by the applicable national average 
payment rate for each such type of meal, as determined under 
subsection (c). 
"(B) No reimbursement may be made to any institution under this 
paragraph, or to family or group day care home sponsoring organiza-
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 529 
tions under paragraph (3) of this subsection, for more than two meals 
and one supplement per day per child."; 
(2) by striking out paragraph (3) and by redesignating para-
graphs (4) and (5) (and any references thereto) as paragraphs (3) 
and (4), respectively; and 
(3) in paragraph (3), as so redesignated— 
(A) by redesignating the fourth sentence and all that 
follows through the end of the paragraph as subparagraph 
(C); and 
(B) by amending all that precedes subparagraph (C) (as so 
redesignated) to read as follows: 
"(3)(A) Institutions that participate in the program under this 
section as family or group day care home sponsoring organizations 
shall be provided, for payment to such homes, a reimbursement 
factor set by the Secretary for the cost of obtaining and preparing 
food and prescribed labor costs, involved in providing meals under 
this section, without a requirement for documentation of such costs, 
except that reimbursement shall not be provided under this subpara-
graph for meals or supplements served to the children of a person 
acting as a family or group day care home provider unless such 
children meet the eligiblity standards for free or reduced-price meals 
under section 9 of this Act. The reimbursement factor in effect as of 
the date of the enactment of this sentence shall be reduced by 10 
percent. The reimbursement factor under this subparagraph shall be 
adjusted on July 1 of each year to reflect changes in the Consumer 
Price Index for food away from home for the most recent 12-month 
period for which such data are available. The reimbursement factor 
under this subparagraph shall be rounded to the nearest one-fourth 
cent. 
"(B) Family or group day care home sponsoring organizations shall 
also receive reimbursement for their administrative expenses in 
amounts not exceeding the maximum allowable levels prescribed by 
the Secretary. Such levels shall be adjusted July 1 of each year to 
reflect changes in the Consumer Price Index for all items for the most 
recent 12-month period for which such data are available. The 
maximum allowable levels for administrative expense payments, as 
in effect as of the date of the enactment of this subparagraph, shall be 
adjusted by the Secretary so as to achieve a 10 percent reduction in 
the total amount of reimbursement provided to institutions for such 
administrative expenses. In making the reduction required by the 
preceding sentence, the Secretary shall increase the economy of scale 
factors used to distinguish institutions that sponsor a greater number 
of family or group day care homes from those that sponsor a lesser 
number of such homes.". 
(e) Section 17(g) of the National School Lunch Act is amended by 42 use 1766. 
striking out paragraph (2) and by redesignating paragraphs (3) and (4) 
(and any references thereto) as paragraphs (2) and (3), respectively. 
(f) Section 17 of the National School Lunch Act is further amended 
by striking out subsections (i) and (n). 
(g) Section 17(o) of the National School Lunch Act is amended in the 
second sentence by striking out "the availability of food service 
equipment funds under the program,". 
FOOD NOT INTENDED TO BE CONSUMED 
SEC. 811. The third sentence of section 9(a) of the National School 
Lunch Act is amended by striking out "in any junior high school or 42 use 1758. 
middle school". 
95 STAT. 530 
PUBLIC LAW 97-35—AUG. 13, 1981 
STATE PLAN REQUIREMENTS 
42 use 1759a. 
SEC. 812. Section 11(e) of the National School Lunch Act is 
amended— 
(1) by striking out paragraph (1) and redesignating paragraphs 
(2) and (3) (and any references thereto) as paragraphs (1) and (2), 
respectively; and 
(2) in paragraphs (1) and (2), as so redesignated, by striking out 
the second sentence of each such paragraph. 
COMMODITY ONLY SCHOOLS 
42 use 1762a. 
SEC. 813. (a) Section 14 of the National School Lunch Act is 
amended by adding at the end thereof the following new subsection: 
"(f) Commodity only schools shall be eligible to receive donated 
commodities equal in value to the sum of the national average value 
Ante, p. 524. 
of donated foods established under section 6(e) of this Act and the 
42 use 1753. 
national average payment established under section 4 of this Act. 
Such schools shall be eligible to receive up to 5 cents per meal of such 
value in cash for processing and handling expenses related to the use 
of such commodities. Lunches served in such schools shall consist of a 
combination of foods which meet the minimum nutritional require-
ments prescribed by the Secretary under section 9(a) of this Act, and 
shall represent the four basic food groups, including a serving of fluid 
milk.". 
42 use 1759a. 
(b) Section 11 of the National School Lunch Act is further amended 
by adding at the end thereof the following new subsection: 
"(f) Commodity only schools shall also be eligible for special-
assistance payments under this section. Such schools shall serve 
meals free to children who meet the eligibility requirements for free 
Ante, p. 524. 
meals under section 9(b) of this Act, and shall serve meals at a 
reduced price, not exceeding the price specified in section 9(bX3) of 
this Act, to children meeting the eligibility requirements for reduced-
price meals under such section. No physical segregation of, or other 
discrimination against, any child eligible for a free or reduced-priced 
lunch shall be made by the school, nor shall there be any overt 
identification of any such child by any means.". 
42 use 1772. 
(c) Section 3 of the Child Nutrition Act of 1968 is further amended 
b y -
(1) inserting "(a)" after "SEC. 3."; and 
(2) by adding at the end thereof the following new subsection: 
"(b) Commodity only schools shall not be eligible to participate in 
the special milk program under this section. For the purposes of the 
preceding sentence, the term 'commodity only schools' means schools 
that do not participate in the school lunch program under the 
National School Lunch Act, but which receive commodities made 
available by the Secretary for use by such schools in nonprofit limch 
programs.". 
42 use 1760. 
(d) Section 12(d) of the National School Lunch Act is further 
amended by adding at the end thereof the following new paragraph: 
"(8) 'Commodity only schools' means schools that do not participate 
in the school lunch program under this Act, but which receive 
commodities made available by the Secretary for use by such schools 
in nonprofit lunch programs." 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 531 
STATE ADMINISTRATIVE EXPENSES 
SEC. 814. (a) Section 7(aX2) of the Child Nutrition Act of 1966 is 42 use 1776. 
amended by striking out "September 30,1978" in the second sentence 
and inserting in lieu thereof September 30,1981". 
(b) Section 7(e) of the Child Nutrition Act is amended to read as 
follows: 
"(e) Notwithstanding any other provision of law, funds made 
available to each State under this section shall remain available for 
obligation and expenditure by that State during the fiscal year 
immediately following the fiscal year for which such funds were 
made available. For each fiscal year the Secretary shall establish a 
date by which each State shall submit to the Secretary a plan for the 
disbursement of funds provided under this section for each such year, 
and the Secretary shall reallocate any unused funds, as evidenced by 
such plans, to other States as the Secretary considers appropriate. . 
AUTHORIZATIONS FOR WIC PROGRAM 
SEC. 815. Section 17(g) of the Child Nutrition Act of 1966 is amended 4
2 use 1786. 
by striking out in the first sentence "and such sums as may be 
necessary for the three subsequent fiscal years," and inserting in lieu 
thereof '^$1,017,000,000 for the fiscal year ending September 30,1982, 
$1,060,000,000 for the fiscal year ending September 30, 1983, and 
$1,126,000,000 for the fiscal year ending September 30,1984,". 
CLAIMS ADJUSTMENT AUTHORITY 
SEC. 816. Section 16 of the Child Nutrition Act of 1966 is amended— 42 use 1785. 
(1) by inserting "(a)" after "SEC 16."; and 
(2) by adding at the end thereof the following new subsection: 
"(b) With regard to any claim arising under this Act or under the 
National School Lunch Act, the Secretary shall have the authority to 42 use 1751 
determine the amount of, to settle and to adjust any such claim, and ^°^^-
to compromise or deny such claim or any part thereof. The Secretary 
shall also have the authority to waive such claims if the Secretary 
determines that to do so would serve the purposes of either such Act. 
Nothing contained in this subsection shall be construed to diminish 
the authority of the Attorney General of the United States under 
section 516 of title 28, United States Code, to conduct litigation on 
behalf of the United States.". 
UMITATIONS ON SECRETARY'S AUTHORITY TO DIRECTLY ADMINISTER 
PROGRAMS 
SEC. 817. (a) Section 10 of the National School Lunch Act is 42 use 1759. 
amended to read as follows: 
"DISBURSEMENT TO SCHOOLS BY THE SECRETARY 
"SEC. 10. (a) The Secretary shall withhold funds payable to a State 
under this Act and disburse the funds directly to schools, institutions, 
or service institutions within the State for the purposes authorized by 
this Act to the extent that the Secretary has so withheld and 
disbursed such funds continuously since October 1, 1980, but only to 
such extent (except as otherwise required by subsection O
t
>
)
)
. Any 
funds so withheld and disbursed by the Secretary shall be used for the 
same purposes, and shall be subject to the same conditions, as 
applicable to a State disbursing funds made available under this Act. 
95 STAT. 532 
PUBLIC LAW 97-35—AUG. 13, 1981 
If the Secretary is administering (in whole or in part) any program 
authorized under this Act, the State in which the Secretary is 
administering the program may, upon request to the Secretary, 
assume administration of that program. 
"(b) If a State educational agency is not permitted by law to 
disburse the funds paid to it under this Act to any of the nonpublic 
schools in the State, the Secretary shall disburse the funds directly to 
such schools within the State for the same purposes and subject to the 
same conditions as are authorized or required with respect to the 
disbursements to public schools within the State by the State educa-
tional agency.". 
42 use 1761. 
(b) Section 18 of the National School Lunch Act is further amended 
by striking out subsection (i). 
42 use 1766. 
(c) Section 17 of the National School Lunch Act is further 
amended— 
(1) by striking out subsection (m); and 
(2) by redesignating subsections (j)> (k), (1), (o), (p), (q), aivd (r), as 
suljsections (i), 0'), (k), (1), (m), (n), and (o), respectively. 
42 use 1773 
(d) Section 4 of the Child Nutrition Act of 1966 is further amended 
by striking out subsection (f) and redesignating subsection (g) as 
subsection (f). 
(e) The Child Nutrition Act of 1966 is further amended by inserting 
after section 4 the following new section: 
"DISBURSEMENT TO SCHOOLS BY THE SECRETARY 
Ante, p. 527. 
"SEC. 5, (a) The Secretary shall withhold funds payable to a State 
42 use 1774. 
under this Act and disburse the funds directly to schools or institu-
tions within the State for the purposes authorized by this Act to the 
extent that the Secretary has so withheld and disbursed such funds 
continuously since October 1,1980, but only to such extent (except as 
otherwise required by subsection (b)). Any funds so withheld and 
disbursed by the Secretary shall be used for the same purposes, and 
shall be subject to the same conditions, as applicable to a State 
disbursing funds made available under this Act. If the Secretary is 
administering (in whole or in part) any program authorized under 
this Act, the State in which the Secretary is administering the 
program may, upon request to the Secretary, assume administration 
of that program. 
"(b) If a State educational agency is not permitted by law to 
disburse the funds paid to it under this Act to any of the nonpublic 
schools in the State, the Secretary shall disburse the funds directly to 
such schools within the State for the same purposes and subject to the 
same conditions as are authorized or required with respect to the 
disbursements to public schools within the State by the State educa-
tional agency.". 
42 use 1788. 
(f) Section 19(d) of the Child Nutrition Act of 1966 is amended by 
striking out paragraph (6). 
COST SAVINGS REVISIONS BY THE SECRETARY 
SEC. 818. As soon as possible after the date of the enactment of this 
Act, the Secretary of Agriculture shall review regulations promul-
42 use 1779. 
gated under section 10 of the Child Nutrition Act of 1966 (including 
regulations pertaining to nutritional requirements for meals) for the 
purposes of determining ways in which cost savings might be accom-
plished at the local level in the operation of meal programs under the 
42 use 1751 
National School Lunch Act and the Child Nutrition Act of 1966 
note, 1771 note. 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 533 
without impairing the nutritional value of such meals. Not later than Regulations. 
90 days after the date of the enactment of this Act, on the basis of 
such review, the Secretary of Agriculture shall promulgate such 
regulations as the Secretary considers appropriate to effectuate such 
cost savings. 
CONFORMING AND MISCELLANEOUS AMENDMENTS 
SEC. 819. (a) Section 11 of the National School Lunch Act is 42 use I759a. 
amended— 
(1) by striking out "financing the cost of in the first sentence 
in subsection (b); and 
(2) by striking out "or 5" in subsection (d). 
(b) Section 4(c) of the Child Nutrition Act of 1966 is amended by 42 use 1773. 
striking out "financing the costs of in the first sentence. 
(c) Section 12 of the National School Lunch Act is amended— 42 use 1760. 
(1) in subsection (d)— 
(A) by striking out paragraph (3); and 
(B) by redesignating paragraphs (4) through (8) (and any 
references thereto) as paragraphs (3) through (7), respec-
tively; and 
(2) by striking out the second sentence of subsection (h). 
(d) Section 8 of the National School Lunch Act is amended— 42 use 1757. 
(1) by striking out "or 5" in the first sentence; 
(2) by striking out "to finance the cost of obtaining" in the 
second sentence and inserting in lieu thereof "to obtain ; 
(3) by striking out "and food service equipment assistance in 
connection with such program" in the second sentence; and 
(4) by striking out "Federal food-cost contribution rate" both 
places it occurs in the fifth and sixth sentences and inserting in 
lieu thereof "per meal reimbursement rate". 
(e) Section 7 of the Child Nutrition Act of 1966 is amended by 42 use 1776. 
striking out "3, 4, and 5" in subsections (aXD, (aX2), and (b) and 
inserting in lieu thereof "3 and 4". 
(f) Section 11(a) of the Child Nutrition Act of 1966 is amended by 42 use 1780. 
striking out "section 3 through 5" and inserting in lieu thereof 
"sections 3 and 4". 
(g) Section 4(a) of the National School Lunch Act is amendied in the 42 use 1753. 
first sentence by striking out", excluding the sum specified in section 
5,". 
(h) Section 6(aX2) of the National School Lunch Act is amended— 42 use 1755. 
(1) by striking out "sections 4 and 5" and inserting in lieu 
thereof "section 4"; and 
(2) by striking out "sections 4, 5, and 7" and inserting in lieu 
thereof "sections 4 and 7" 
(i) Section 15(f) of the National School Lunch Act is amended by 42 use 1763. 
striking out "annually" in the second sentence and inserting in lieu 
thereof "biennially". 
(j) Section 14 of the National School Lunch Act (42 U.S.C. 1762a) is 
amended— 
(1) by striking out "title VII" in paragraph (1) of subsection (a) 
and inserting in lieu thereof "title III"; and 
(2) by striking out "section 707(aX4) of the Older Americans Act 
of 1965 (42 U.S.C. 3045(aX4)) or for cash payments in lieu of such 
donations under section 707(dXl) of such Act (42 U.S.C. 
3045f(dXl))" in the first sentence of subsection (c) and inserting in 
lieu thereof "section 311(aX4) of the Older Americans Act of 1965 
(42 U.S.C. 303(KaX4)) or for cash payments in lieu of such 42 use 3030a. 
95 STAT. 534 
PUBLIC LAW 97-35—AUG. 13, 1981 
donations under section SlKcXD of such Act (42 U.S.C. 
42 u s e 3030a. 
3030(cXl))". 
(k) The second sentence of section 17(fKl) of the National School 
42 use 1766. 
Lunch Act is amended by striking out "financing the cost of. 
EFFECTIVE DATES AND REPEALER 
42 use 1753 
SEC. 820. (a) The provisions of this title shall take effect as follows: 
^°^- 
(1) The amendments made by the following sections shall take 
effect on the first day of the month following the date of the 
enactment of this Act, or on September 1, 1981, whichever is 
earlier: 
(A) section 801; 
(B) that portion of the amendment made by section 810(c) 
pertaining to the reimbursement rate for supplements; 
(C) that portion of the amendment made by section 
810(d)(1) pertaining to the limitation on the number of meals 
for which reimbursement may be made under the child care 
food program; 
(D) that portion of the amendment made by section 
810(dX3) which reduces the meal reimbursement factor by 10 
percent; and 
(E) section 811. 
(2) The amendments made by sections 802 and 804 shall take 
effect on July 1,1981. 
(3) The amendments made by sections 807, 808, and 810(aX2) 
shall take effect on the first day of the second month following 
the date of 
the enactment of 
this Act. 
(4) The amendments made by the following sections shall take 
effect October 1, 1981: sections 805, 806, 809, 810(aXl), 810(f), 
810(g), 812,814,817, and 819. 
(5) The amendments made by section 813 shall take effect 90 
days after the date of 
the enactment of 
this Act. 
(6) The amendments made by the following provisions shall 
take effect January 1, 1982: subsections (b), (c), (d), and (e) of 
section 810, except that— 
(A) the amendment made by section 810(c) pertaining to 
the reimbursement rate for supplements shall take effect as 
provided under paragraph (1) of this subsection; 
(B) the amendment made by section 810(dXl) pertaining to 
the limitation on the number of meals for which reimburse-
ment may be made shall take effect as provided under 
paragraph (1) of 
this subsection; and 
(C) the amendment made by section 810(dX3) which re-
duces the meal reimbursement factor by 10 percent shall 
take effect as provided under paragraph (1) of this 
subsection, 
(7) The following provisions shall take effect on the date of the 
enactment of this Act: 
(A) the amendments made by subsections (a) and (b) of 
section 803 and the provisions of subsections (c) and (d) of 
section 803; 
(B) the amendment made by section 815; 
(C) the amendment made by section 816; and 
(D) the provisions of section 818. 
(b) The Omnibus Reconciliation Act of 1980 (Public Law 96-499) is 
amended— 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 535 
94 Stat. 2599. 
42 u s e 1753 
note. 
94 Stat. 2600. 
42 u s e 1755 
note. 
94 Stat. 2600. 
42 u s e 1758 
note. 
Regulations. 
42 u s e 1753 
note. 
(1) by striking out subsection (a) of section 201 effective 
September 1, 1981, or the first day of the first month following 
the month in which this Act is enacted, whichever is earlier; 
(2) by striking out subsection (a) of section 202 effective July 1, 
1981; and 
(3) by striking out subsections (a) and (b) of section 203 effective 
on the date of 
the enactment of 
this Act. 
(c) Not later than 60 da^s after the date of the enactment of this 
Act, the Secretary of Agriculture shall promulgate regulations to 
implement the amendments made by this title. 
TITLE IX—HEALTH SERVICES AND 
FACILITIES 
Subtitle A—Block Grants 
PREVENTIVE HEALTH, HEALTH SERVICES, AND PRIMARY CARE HEALTH 
BLOCK GRANTS 
SEC. 901. Effective October 1,1981, the Public Health Service Act is 42 use 3
0
0
w 
amended by adding at the end the following new title: 
^°^-
"TITLE XIX—BLOCK GRANTS 
"PART A—PREVENTIVE HEALTH AND HEALTH SERVICES BLOCK 
GRANT 
"AUTHORIZATION OF APPROPRIATIONS 
"SEC. 1901. (a) For the purpose of allotments under section 1902, 42 use 300w. . 
there is authorized to be appropriated $95,000,000 for 
fiscal 
year 1982, 
$96,500,000 for fiscal year 1983, and $98,500,000 for fiscal year 1984. 
"(b) Of the amount appropriated for any fiscal year under subsec-
tion (a), at least $3,000,000 shall be made available for allotments 
under section 1902(b). 
"ALLOTMENTS 
"SEC. 1902. (aXD From the amounts appropriated under section 42 use 300w-i. 
1901 for any fiscal year and available for allotment under this 
subsection, the Secretary shall allot to each State an amount which 
bears the same ratio to the available amounts for that fiscal year as 
the amounts provided by the Secretary under the provisions of law 
listed in paragraph (2) to the State and entities in the State for fiscal 
year 1981 bore to the total amount appropriated for such provisions of 
law for 
fiscal 
year 1981. 
"(2) The provisions of law referred to in paragraph (1) are the 
following provisions of law as in effect on September 30, 1981: 
"(A) The authority for grants under section 317 for preventive 42 use 247b. 
health service programs for the the control of rodents. 
"(B) The authority for grants under section 317 for establishing 
and maintaining community and school-based fluoridation 
programs. 
"(C) The authority for grants under section 317 for preventive 
health service programs for h^)ertension. 
"(D) Sections 401 and 402 of the Health Services and Centers 
Amendments of 1978. 
42 use 247b-i, 
"(E) Section 314(d). 
247b-2. 
va-./ w^Kxwu WX-.VW. 
42 u s e 246. 
-194 0—82 
36 : QL3 
95 STAT. 536 
PUBLIC LAW 97-35—AUG. 13, 1981 
42 use 255. 
"(F) Section 839(a). 
42 use 
"(G) Sections 1202,1203, and 1204. 
300d 
300d 3. 
UQ^^ From the amount required to be made available under section 
1901(b) for allotments under this subsection for any fiscal year, the 
Secretary shall make allotments to each State on the basis of the 
population of the State. 
"(c) To the extent that all the funds appropriated under section 
1901 for a fiscal year and available for allotment in such fiscal year 
are not otherwise allotted to States because— 
"(1) one or more States have not submitted an application or 
description of activities in accordance with section 1905 for the 
fiscal year; 
"(2) one or more States have notified the Secretary that they do 
not intend to use the full amount of their allotment; or 
"(3) some State allotments are offset or repaid under section 
1906(b)(3); 
such excess shall be allotted among each of the remaining States in 
proportion to the amount otherwise allotted to such States for the 
fiscal year without regard to this subsection. 
"(d)(1) If the Secretary— 
"(A) receives a request from the governing body of an Indian 
tribe or tribal organization within any State that funds under 
this part be provided directly by the Secretary to such tribe or 
organization, and 
"(B) determines that the members of such tribe or tribal 
organization would be better served by means of grants made 
directly by the Secretary under this part, 
the Secretary shall reserve from amounts which would otherwise be 
allotted to such State under subsection (a) for the fiscal year the 
amount determined under paragraph (2). 
"(2) The Secretary shall reserve for the purpose of paragraph (1) 
from amounts that would otherwise be allotted to such State under 
subsection (a) an amount equal to the amount which bears the same 
ratio to the State's allotment for the fiscal year involved as the total 
amount provided or allotted for fiscal year 1981 by the Secretary to 
such tribe or tribal organization under the provisions of law referred 
to in subsection (a) bore to the total amount provided or allotted for 
such fiscal year by the Secretary to the State and entities (including 
Indian tribes and tribal organizations) in the State under such 
provisions of law. 
"(3) The amount reserved by the Secretary on the basis of a 
determination under this subsection shall be granted to the Indian 
tribe or tribal organization serving the individuals for whom such a 
determination has been made. 
"(4) In order for an Indian tribe or tribal organization to be eligible 
for a grant for a fiscal year under this subsection, it shedl submit to 
the Secretary a plan for such fiscal year which meets such criteria as 
the Secretary may prescribe. 
"Indian tribe," 
"(5) The terms 'Indian tribe' and 'tribal organization' have the 
and "tribal 
same meaning given such terms in section 4(b) and section 4(c) of the 
ol^^^ar^A Knv> 
Indian Self-Determination and Education Assistance Act. 
"(e) The Secretary shall conduct a study for the purpose of devising 
a formula for the equitable distribution of funds available for allot-
ment to the States under this section. In conducting the study, the 
Secretary shall take into account— 
"(1) the financial resources of the various States, 
"(2) the populations of the States, and 
25 use 450b. 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 537 
"(3) any other factor which the Secretary may consider 
appropriate. 
Before June 30, 1982, the Secretary shall submit a report to the 
Congress respecting the development of a formula and make such 
recommendations as the Secretary may deem appropriate in order to 
ensure the most equitable distribution of funds under allotments 
under this section. 
"PAYMENTS UNDER ALLOTMENTS TO STATES 
"SEC. 1903. (aXD For each fiscal year, the Secretary shall make 42 use 300w-2. 
payments, as provided by section 203 of the Intergovernmental 
Cooperation Act of 1968 (42 U.S.C. 4213), to each State from its 
allotment under section 1902 (other than any amount reserved under 
section 1902(d)) from amounts appropriated for that fiscal year. 
"(2) Any amount paid to a State for a fiscal year and remaining 
unobligated at the end of such year shall remain available for the 
next fiscal year to such State for the purposes for which it was made. 
"(b) The Secretary, at the request of a State, may reduce the 
amount of payments under subsection (a) by— 
"(1) the fair market value of any supplies or equipment 
furnished the State, and 
"(2) the amount of the pay, allowances, and travel expenses of 
any officer or employee of the Government when detailed to the 
State and the amount of any other costs incurred in connection 
with the detail of such officer or employee, 
when the furnishing of supplies or equipment or the detail of an 
officer or employee is for the convenience of and at the request of the 
State and for the purpose of conducting activities described in section 
1904. The amount by which any pa5mient is so reduced shall be 
available for pa3maent by the Secretary of the costs incurred in 
furnishing the supplies or equipment or in detailing the personnel, on 
which the reduction of the payment is based, and the amount shall be 
deemed to be part of the pajnnent and shall be deemed to have been 
paid to the State. 
"USE OP ALLOTMENTS 
"SEC. 1904. (aXD Except as provided in subsections (b) and (c), 42USC300w-3. 
amounts paid to a State under section 1903 from its allotment under 
section 1902(a) and amounts transferred by the State for use under 
this part may be used for the following: 
"(A) Preventive health service programs for the control of 
rodents and community and school-based fluoridation programs. 
"(B) Establishing and maintaining preventive health service 
programs for screening for, the detection, diagnosis, prevention, 
and referral for treatment of, and follow-up on compliance with 
treatment prescribed for, hjrpertension. 
"(C) Community based programs for the purpose of demon-
strating and evaluating optimal methods for organizing and 
delivering comprehensive preventive health services to defined 
populations, comprehensive programs designed to deter smoking 
and the use of alcoholic beverages simong children and adoles-
cents, and other risk-reduction and health education programs. 
"(D) Comprehensive public health services. 
"(E) Demonstrate the establishment of home health agencies 
(as defined in section 1861(m) of the Social Security Act) in areas 42 use I395x. 
where the services of such agencies are not available. Amounts 
95 STAT. 538 
PUBLIC LAW 97-35—AUG. 13, 1981 
provided for such agencies may not be used for the direct 
provision of health services. 
"(F) FeasibiUty studies and planning for emergency medical 
services systems and the establishment, expeuision, and improve-
ment of such systems. Amounts for such systems may not be used 
for the costs of the operation of the systems or the purchase of 
equipment for the systems. 
"(G) Providing services to rape victims and for rape 
prevention. 
Amounts provided for the activities referred to in the preceding 
sentence may also be used for related planning, administration, and 
educational activities. 
"(2) Except as provided in subsection (b), amounts paid to a State 
under section 1903 from its allotment under section 1902(b) may only 
be used for providing services to rape victims and for rape prevention. 
"(3) The Secretary may provide technical assistance to States in 
planning and operating activities to be carried out under this part. 
"(b) A State may not use amounts paid to it under section 1903 to— 
"(1) provide inpatient services, 
"(2) make cash payments to intended recipients of health 
services, 
"(3) purchase or improve land, purchase, construct, or perma-
nently improve (other than minor remodeling) any building or 
other facility, or purchase major medical equipment, 
"(4) satisfy any requirement for the expenditure of non-
Federal funds as a condition for the receipt of Federal funds, or 
"(5) provide financial assistance to any entity other than a 
public or nonprofit private entity. 
Except as provided in subsection (aXlXE), the Secretary may waive 
the limitation contained in paragraph (3) upon the request of a State 
if the Secretary finds that there are extraordinary circumstances to 
justify the waiver and that granting the waiver will assist in carrying 
out this part. 
"(c) A State may transfer not more than 7 percent of the amount 
allotted to the State under section 1902(a) for einy fiscal year for use 
by the State under parts B and C of this title and title V of the Social 
^o^hEnqm' ^^^ 
Security Act in such fiscal year £is follows: At any time in the first 
use 701. 
three quarters of the fiscal year a State may transfer not more than 3 
percent of the allotment of the State for the fiscal year for such use, 
and in the last quarter of a fiscal year a State may transfer for such 
use not more than the remainder of the amount of its allotment 
which may be transferred. 
"(d) Of the am<"unt paid to any State under section 1903, not more 
than 10 percent paid from each of its allotments under subsections (a) 
and (b) of section 1902 may be used for administering the funds made 
available under section 1903. The State will pay from non-Federal 
sources the remaining costs of administering such funds. 
"APPLICATION AND DESCRIPTION OF ACTIVITIES 
42 use 300W-4. 
"SEC. 1905. (a) In order to receive an allotment for a fiscal year 
under section 1902 each State shall submit an application to the 
Secretary. Each such application shall be in such form and submitted 
by such date as the Secretary shall require. Each such application 
shall contain assurances that the legislature of the State has com-
plied with the provisions of subsection (b) and that the State will meet 
the requirements of subsection (c). 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 539 
"(b) After the expiration of the first fiscal year in which a State 
receives an allotment under section 1902, no funds shall be allotted to 
such State for any fiscal year under such section unless the legisla-
ture of the State conducts public hearings on the proposed use and 
distribution of funds to be provided under section 1903 for such fiscal 
year. 
"(c) As part of the annual application required by subsection (a), the 
chief executive officer of each State shall certify that the State— 
"(1) agrees to use the funds alloted to it under section 1902 in 
accordance with the requirements of this part; 
"(2) except as provided in subsection (e), shall make grants for 
fiscal year 1982 to each entity within the State which received a 
grant or contract under section 1202,1203, or 1204 in fiscal year ^^-JJ^f^o,.^, „ 
1981 and which would be eligible to receive a grant or contract 300d-i-300<i-3. 
under such section (as in effect on September 30, 1981) for such 
fiscal year if such grants or contracts were made under such 
section; 
"(3) agrees to establish reasonable criteria to evaluate the 
effective performance of entities which receive funds from the 
allotment of the State under this part and procedures for 
procedural and substantive independent State review of the 
failure by the State to provide funds for any such entity. 
"(4) agrees to make grants for preventive health service pro-
grams for h5rpertension in amounts equal to— 
"(A) for fiscal year 1982, 75 percent of the total amount 
provided by the &cretary in fiscal year 1981 to the State and 
entities in the State under section 317 for such programs, 
"(B) for fiscal year 1983, 70 percent of such total amount, 
and 
"(C) for fiscal year 1984, 60 percent of such total amount. 
"(5) agrees to permit and cooperate with Federal investigations 
undertaken in accordance with section 1907; 
"(6) has identified those populations, areas, and localities in 
the State with a need for the services for which funds may be 
provided by the State under this part; 
"(7) agrees that Federal funds made available under section 
1903 for £uiy period will be so used as to supplement and increase 
the level of State, local, £md other non-Federal funds that would 
in the absence of such Federal funds be made available for the 
programs and activities for which funds are provided under that 
section and will in no event supplant such State, local, and other 
non-Federal funds; and 
"(8) has in effect a system to protect from inappropriate 
disclosure patient and rape victim records maintained by the 
State in connection with an activity funded under this part or by 
any entity which is receiving payments from the allotment of the 
State under this part. 
The Secretary may not prescribe for a State the manner of compli-
ance with the requirements of this subsection. 
"(d) The chief executive officer of a State shall, as part of the 
application required by subsection (a), also prepare and furnish the 
Secretary (in accordance with such form as the Secretary shall 
provide) with a description of the intended use of the payments the 
State will receive under section 1903 for the fiscal year for which the 
application is submitted, including information on the programs and 
activities to be supported and services to be provided. The description 
shall be made public within the State in such manner as to facilitate 
comment from any person (including £uiy Federal or other public 
95 STAT. 540 
PUBLIC LAW 97-35-AUG. 13, 1981 
agency) during development of the description and after its transmit-
tal. The description shall be revised (consistent with this section) 
throughout the year as may be necessary to reflect substantial 
changes in the programs and activities assisted by the State under 
this part, and any revision shall be subject to the requirements of the 
preceding sentence. 
"(e) A State shall be required to make a grant to an entity as 
prescribed by subsection (c)(2) unless— 
"(1) the State recommends on the basis o
f
— 
"(A) any Federal finding. Federal administrative action, or 
judicial proceeding with respect to any such entity, or 
"(B) a review of such entity in accordance with the criteria 
and procedures required under subsection (c)(3), 
that the State not be required to make such grants; and 
"(2) the Secretary approves the recommendation of the State 
under paragraph (1) based upon a substantive and procedural 
review of the record made by the State in making its recommen-
dation under paragraph (1). 
"REPORTS AND AUDITS 
42USC300W-5. 
"SEC. 1906. (a)(1) Each State shall prepare and submit to the 
Secretary annual reports on its activities under this part. Such 
reports shall be in such form and contain such information as the 
Secretary determines (after consultation with the States and the 
Comptroller General) to be necessary (A) to determine whether funds 
were expended in accordance with this part and consistent with the 
needs within the State identified pursuant to section 1905(c)(6), (B) to 
secure a description of the activities of the State under this part, and 
(C) to secure a record of the purposes for which funds were spent, of 
the recipients of such funds, and of the progress made toward 
achieving the purposes for which the funds were provided. Copies of 
the report shall be provided, upon request, to any interested person 
(including any public agency), 
i 
"(2) In determining the information that States must include in the 
report required by this subsection, the Secretary may not establish 
reporting requirements that are burdensome. 
"(b)(1) Each State shall establish fiscal control and fund accounting 
procedures as may be necessary to assure the proper disbursal of and 
accounting for Federal funds paid to the State under section 1903 and 
! 
funds transferred under section 1904(c) for use under this part. 
"(2) Each State shall annually audit its expenditures from pay-
ments received under section 1903. Such State audits shall be 
conducted by an entity independent of any agency administering a 
program funded under this part and, in so far as practical, in 
accordance with the Comptroller General's standards for auditing 
governmental organizations, progreims, activities, and functions. 
Within 30 days following the date each audit is completed, the chief 
executive officer of the State shall transmit a copy of that audit to the 
Secretary. 
Notice and 
"(3) Each State shall, after being provided by the Secretary with 
hearing. 
adequate notice and opportunity for a hearing within the State, repay 
to the United States amounts found not to have been expended in 
accordance with the requirements of this part or the certification 
provided by the State under section 1905. If such repayment is not 
made, the Secretary shall, after providing the State with adequate 
notice and opportunity for a hearing within the State, offset such 
PUBLIC LAW 97-35—AUG. 13,1981 
95 STAT. 541 
Public 
inspection. 
amounts against the amount of any allotment to which the State is or 
may become entitled imder this part. 
(4) The State shall make copies of the reports and audits required 
by this section available for public inspection within the State. 
"(5) The Comptroller General of the United States shall, from time 
to time, evaluate the expenditures by States of grants under this part 
in order to assure that expenditures are consistent with the provi-
sions of this part and the certification provided by the State under 
section 1905. 
"(6) Not later than October 1,1983, the Secretary shall report to the 
Congress on the activities of the States that have received funds 
under this part and ma>[ include in the report any recommendations 
for appropriate changes in legislation. 
"(c) Title XVII of the Omnibus Budget Reconciliation Act of 1981 Post, p. 753 
shall not apply with respect to audits of funds allotted under this 
part. 
"WITHHOLDING 
Report to 
Congress. 
"SEC. 1907. (aXD The Secretary shall, after adequate notice and an 
opportunity for a hearii^ conducted within the affected State, 
withhold funds from any State which does not use its allotment in 
accordance with the requirements of this part or the certification 
provided under section 1905. The Secretary shall withhold such fimds 
until the Secretary finds that the reason for the withholding has been 
removed and there is reasonable assurance that it will not recur. 
"(2) The Secretai^ may not institute proceedings to withhold funds 
under paragraph (1) unless the Secretary has conducted an investiga-
tion concerning whether the State has used its allotment in accord-
ance with the requirements of this part or the certification provided 
under section 1905. Investigations required by this paragraph shall 
be conducted within the affected State by qualified investigators. 
"(3) The Secretary shall respond in an expeditious manner to 
complaints of a substantial or serious nature that a State has failed to 
use funds in accordance with the requirements of this part or 
certifications provided under section 1905. 
"(4) The Secretary may not withhold funds under parg^aph (1) 
from a State for a minor failure to comply with the requirements of 
this part or certifications provided under section 1905. 
"(bXl) The Secretary shall conduct in several States in each fiscal 
year investigations of the use of funds received by the States under 
this part in order to evaluate compliance with the requirements of 
this part and certifications provided under section 1905. 
"(2) The Comptroller General of the United States may conduct 
investigations of the use of funds received under this part by a State 
in order to insure compliance with the requirements of this part and 
certifications provided under section 1905. 
"(c) Each State, and each entity which has received funds from an 
£illotment made to a State under this part, shall make appropriate 
books, documents, papers, and records avaUable to the Secretary or 
the Comptroller General of the United States, or any of their duly 
authorized representatives, for examination, copjdng, or mechanical 
reproduction on or off the premises of the appropriate entity upon a 
reasonable request therefor. 
"(dXD In conducting any investigation in a State, the Secretary or 
the Comptroller General of 
the United States may not make a request 
for any information not readily available to such State or an entity 
which has received funds from an allotment made to the State under 
Notice and 
hearing. 
42 use 300W-6. 
95 STAT. 542 
PUBLIC LAW 97-35—AUG. 13, 1981 
this part or make an unreasonable request for information to be 
compiled, collected, or transmitted in any form not readily available. 
"(2) Paragraph (1) does not apply to the collection, compilation, or 
transmittal of data in the course of a 
judicial proceeding. 
"NONDISCRIMINATION 
42 use 300W-7. 
"SEC. 1908. (aXD For the purpose of applying the prohibitions 
against discrimination on the basis of age under the Age Discrimina-
42 use 6101 
tion Act of 1975, on the basis of handicap under section 504 of the 
29 use 794 
Rehabilitation Act of 1973, on the basis of sex under title IX of the 
20 use 1681 
Education Amendments of 1972, or on the basis of race, color, or 
42 use 2000d. 
national origin under title VI of the Civil Rights Act of 1964, 
programs and activities funded in whole or in part with funds made 
available under this part are considered to be programs and activities 
receiving Federal financial assistance. 
"(2) No person shall on the ground of sex or religion be excluded 
from participation in, be denied the benefits of, or be subjected to 
discrimination under, any program or activity funded in whole or in 
part with funds made available under this part. 
"(b) Whenever the Secretary finds that a State, or an entity that 
has received a payment from an allotment to a State under section 
1902, has failed to comply with a provision of law referred to in 
subsection (aXl), with subsection (aX2), or with an applicable regula-
tion (including one prescribed to carry out subsection (aX2)), the 
Secretary shall notify the chief executive officer of 
the State and shall 
request him to secure compliance. If within a reasonable period of 
time, not to exceed sixty days, the chief executive officer fails or 
refuses to secure compliance, the Secretary may— 
"(1) refer the matter to the Attorney General with a recom-
mendation that an appropriate civil action be instituted, 
"(2) exercise the powers and functions provided by title VI of 
the Civil Rights Act of 1964, the Age Discrimination Act of 1975, 
or section 504 of the Rehabilitation Act of 1973, as may be 
applicable, or 
"(3) take such other action as may be provided by law. 
"(c) When a matter is referred to the Attorney General pursuant to 
subsection (bXD, or whenever he has reason to believe that a State or 
an entity is engaged in a pattern or practice in violation of a provision 
of law referred to in subsection (aXl) or in violation of subsection 
(aX2), the Attorney General may bring a civil action in any appropri-
ate district court of the United States for such relief as may be 
appropriate, including injunctive relief. 
"CRIMINAL PENALTY FOR FALSE STATEMENTS 
42 use 300W-8. 
"SEC. 1909. Whoever— 
"(1) knowingly and willfully makes or causes to be made any 
false statement or representation of a material fact in connection 
with the furnishing of items or services for which payment may 
be made by a State from funds allotted to the State under this 
part, or 
"(2) having knowledge of the occurrence of any event affecting 
his initial or continued right to any such payment conceals or 
fails to disclose such event with an intent fraudulently to secure 
such payment either in a greater amount than is due or when no 
such payment is authorized. 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 543 
shall be fined not more than $25,000 or imprisoned for not more than 
five years, or both.". 
"PART B—ALCOHOL AND DRUG ABUSE AND MENTAL HEALTH 
SERVICES BLOCK GRANT 
"AUTHORIZATION OF APPROPRIATIONS 
"SEC. 1911. For the purpose of grants and allotments under section 42 use 300x. 
1912, there is authorized to be appropriated $491,000,000 for fiscal 
year 1982, $511,000,000 for fiscal year 1983, and $532,000,000 for fiscal 
year 1984. 
"GRANTS AND ALLOTMENTS 
"SEC. 1912. (aXD The Secretary may use not more than 1 percent of 42 use 300x-i. 
the amount appropriated under section 1911 for any fiscal year to 
make grants to public and nonprofit private entities for projects for 
the training and retredning of employees adversely affected by 
changes in the delivery of mental health services and for providing 
such employees assistance in securing emplo3niient. 
"(2) No grant may be made by the Secretary under paragraph (1) 
unless an application therefor has been submitted to, and approved 
by, the Secretary. Such application shall be in such form, submitted 
in such manner, and contain and be accompanied by such informa-
tion, as the Secretary may specify. No such application may be 
approved unless it contains assurances that the applicant will use the 
funds provided only for the purposes specified in the approved 
application and will establish such fiscal control and fund accounting 
procedures as may be necessary to assure proper disbursement and 
accounting of Federal funds paid to the applicant under paragraph 
(1). 
"(b)(1) From the remainder of the amount appropriated under 
section 1911 for any fiscal year, the Secretary shall allot to each State 
an amount which bears the same ratio to such remainder for that 
fiscal year as the amounts— 
"(A) which would have been provided by the Secretary to the 
State and entities in the State under the Community Mental 
Health Centers Act and the Mental Health Systems Act for fiscal 
year 1981 if the Secretary had obligated all the funds for mental 
health services available for such Acts under Public Law 96-536, 94 Stat. 3166. 
and 
"(B) provided by the Secretary to the State and entities in the 
State under the laws referred to in subparagraphs (C) and (D) of 
paragraph (2) for fiscal year 1980, 
bore to the total amount appropriated for mental health services for 
fiscal year 1981 under Public Law 96-536 under the Community 
Mental Health Centers Act and the Mental Health Systems Act and 42 USC 2689 
the total amount appropriated for fiscal year 1980 for the provisions ^°^^-
of law referred to in subparagraphs (C) and (D) of paragraph (2). ^^ f
*
^
^
- l^^f-
"(2) The provisions of law referred to in paragraph (1) are the ^otY 
following provisions of law as in effect on the day before the date of 
the enactment of the Omnibus Budget Reconciliation Act of 1981: 
"(A) The Community Mental Health Centers Act. 
"(B) The Mental Health Systems Act. 
"(C) Sections 301 and 312 of the Comprehensive Alcohol Abuse 
and Alcoholism Prevention, Treatment, and Rehabilitation Act 
of 1970. 
42 USC 4571. 
4578. 
95 STAT. 544 
PUBLIC LAW 97-35—AUG. 13, 1981 
"(D) Sections 409 and 410 of the Drug Abuse Prevention, 
21 use 1176, 
Treatment, and Rehabilitation Act. 
il'^'^- 
"(3) To the extent that all the funds appropriated under section 
1911 for a fiscal year and available for allotment in such fiscal year 
are not otherwise allotted to States because— 
"(A) one or more States have not submitted an application or 
description of activities in accordance with section 1915 for the 
fiscal year; 
"(B) one or more States have notified the Secretary that they 
do not intend to use the full amount of their allotment; or 
"(C) some State allotments are offset or repaid under section 
1916(b)(3); 
such excess shall be allotted among each of the remaining States in 
proportion to the amount otherwise allotted to such States for the 
fiscal year without regard to this paragraph. 
"(c)(1) If the Secretary— 
"(A) receives a request from the governing body of an Indian 
tribe or tribal organization within any State that funds under 
this part be provided directly by the Secretary to such tribe or 
organization, and 
(B) determines that the members of such tribe or tribal 
organization would be better served by meeuis of grants made 
directly by the Secretary under this part, 
the Secretary shall reserve from amounts which would otherwise be 
allotted to such State under subsection (b) for the fiscal year the 
amount determined under paragraph (2). 
"(2) The Secretary shall reserve for the purpose of paragraph (1) 
from amounts that would otherwise be allotted to such State under 
subsection (b) an amount equal to the amount which bears the same 
ratio to the State's allotment for the fiscal year involved as the total 
amount provided or allotted for fiscal year 1980 by the Secretary to 
such tribe or tribal organization under the provisions of law referred 
to in subsection (bX2) bore to the total amount provided or allotted for 
such fiscal year by the Secretary to the State £ind entities (including 
Indian tribes and tribal organizations) in the State under such 
provisions of law. 
"(3) The amount reserved by the Secretary on the basis of a 
determination under this subsection shall be granted to the Indian 
tribe or tribal organization serving the individuals for whom such a 
determination has been made. 
"(4) In order for an Indian tribe or tribal organization to be eligible 
for a grant for a fiscEil year under this subsection, it shall submit to 
the Secretary a plan for such fiscal year which meets such criteria as 
the Secretary may prescribe. 
"Indian tribe," 
"(5) The terms Indian tribe' and 'tribal organization' have the 
and "tribal 
same meaning given such terms in section 4(b) and section 4(c) of the 
°^t^u^AKm^ 
Indian Self-Determination and Education Assistance Act. 
"(d) The Secretary shall conduct a study for the purpose of devising 
a formula for the equitable distribution of funds available for allot-
ment to the States under subsection (b). In conducting the study, the 
Secretary shall take into account— 
"(1) the financial resources of the various States, 
"(2) the populations of the States, and 
"(3) any other factor which the Secretary may consider 
appropriate. 
Before June 30, 1982, the Secretary shall submit a report to the 
Congress respecting the development of a formula and make such 
recommendations as the Secretary may deem appropriate in order to 
25 use 450b. 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 545 
insure the most equitable distribution of funds under allotments 
under subsection (b). 
"PAYMENTS UNDER ALLOTMENTS TO STATES 
"SEC. 1913. (aXD For each fiscal year, the Secretary shall make 42 use 300x-2. 
payments, as provided by section 203 of the Intergovernmental 
Cooperation Act of 1968 (42 U.S.C. 4213), to each State from its 
allotment under section 1912(b) (other than any amount reserved 
under section 1912(c)) from smiounts appropriated for that fiscal year. 
"(2) Any amount paid to a State for a fiscal year and remaining 
unobligated at the end of such year shall remain available to such 
State for the purposes for which it was made for the next fiscal year. 
"(b) The Secretary, at the request of a State, may reduce the 
amount of pajonents under subsection (a) by— 
"(1) the fair market value of any supplies or equipment 
furnished the State, and 
"(2) the amount of the pay, allowances, and travel expenses of 
any officer or employee of the Government when detailed to the 
State and the amount of any other costs incurred in connection 
with the detail of such officer or employee, 
when the furnishing of supplies or equipment or the detail of an 
officer or employee is for the convenience of and at the request of the 
State and for the purpose of conducting activities described in section 
1914. The amount by which any pa3mient is so reduced shall be 
available for pa3nnent by the Secretary of the costs incurred in 
furnishing the supplies or equipment or in detailing the personnel, on 
which the reduction of the pajnnent is based, and the amount shall be 
deemed to be part of the payment and shall be deemed to have been 
paid to the State. 
"USE OF ALLOTMENTS 
"SEC. 1914. (a)(1) Except as provided in subsections (b) and (c), 42 use 300x-3. 
amounts paid to a State under section 1913 and amounts transferred 
by the State for use under this part may be used by the State for— 
"(A) planning, establishing, maintaining, coordinating, and 
evaluating projects for the development of more effective preven-
tion, treatment, and rehabilitation programs and activities to 
deal with alcohol and drug abuse; and 
"(B) grants to community mental health centers in accordance 
with section 1915(c) and grants to community mental health 
centers for the provision of the following services: 
"(i) Services for chronically mentally ill individuals, which 
include identification of chronically mentally ill individuals 
and assistance to such individuals in gaining access to 
essentied services through the assignment of case managers, 
"(ii) Identification and assessment of severely mentally 
disturbed children and adolescents and provision of appro-
priate services to such individuals. 
"(iii) Identification and assessment of mentally ill elderly 
individuals and provision of appropriate services to such 
individuals. 
"(iv) Services for identifiable populations which are cur-
rently underserved in the State. 
"(v) Coordination of mental health and health care serv-
ices provided within health care centers. 
95 STAT. 546 
PUBLIC LAW 97-35—AUG. 13, 1981 
Amounts provided for the activities referred to in the preceding 
sentence may also be used for related planning, administration, and 
educational activities. 
"(2) The Secretary may provide technical assistance to States in 
planning and operating activities to be carried out under this part. 
"(b) A State may not use amounts paid to it under section 1913 to— 
"(1) provide inpatient services in the case of amounts provided 
for community mental health centers or provide inpatient hospi-
tal services in the case of amounts provided for alcohol or drug 
abuse programs, 
"(2) make cash payments to intended recipients of health 
services, 
"(3) purchase or improve land, purchase, construct, or perma-
nently improve (other than minor remodeling) any building or 
other facility, or purchase major medical equipment, 
"(4) satisfy any requirement for the expenditure of non-
Federal funds as a condition for the receipt of Federal funds, or 
"(5) provide financial assistance to any entity other than a 
public or nonprofit private entity. 
The Secretary may waive the limitation contained in paragraph (3) 
upon the request of a State if the Secretary finds that there are 
extraordinary circumstances to justify the waiver and that granting 
the waiver will assist in canying out this part. 
"(c) A State may transfer not more than 7 percent of the amount 
allotted to the State under section 1912 for any fiscal year for use by 
the State under parts A and C of this title and title V of the Social 
Ante, p. 535, 
Security Act in such fiscal year as follows: At any time in the first 
4
2
* n'<?r 7m 
three quarters of the fiscal year a State may transfer not more than 3 
use 701. 
percent of the allotment of the State for the fiscal year for such use, 
and in the last quarter of a fiscal year a State may transfer for such 
use not more than the remainder of the amount of its allotment 
which may be transferred. 
"(d) Of the amount paid to any State under section 1913, not more 
than 10 percent may be used for administering the funds made 
available under such section. The State will pay from non-Federal 
sources the remaining costs of administering such funds. 
"APPLICATION AND DESCRIPTION OP ACTIVITIES 
42 use 300x-4. 
"SEC. 1915. (a) In order to receive an allotment for a fiscal year 
under section 1912(b) each State shall submit an application to the 
Secretary. Each such application shall be in such form and submitted 
by such date as the Secretary shall require. Each such application 
shall contain assurances that the legislature of the State has com-
plied with the provisions of subsection (b) and that the State will meet 
the requirements of subsection (c). 
"(b) After the expiration of the first fiscal year in which a State 
receives an allotment under section 1912(b), no funds shall be allotted 
to such State for any fiscal year under such section unless the 
legislature of the State conducts public hearings on the proposed use 
and distribution of funds to be provided under section 1913 for such 
fiscal year. 
"(c) As part of the annual application required by subsection (a), the 
chief executive officer of each State shall certify as follows: 
"(1) The State agrees to use the funds alloted to it under section 
1912 in accordance with the requirements of this part. 
"(2) Except as provided in subsection (e), for fiscal years 1982, 
1983, and 1984, the State agrees to make grants, subject to 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 547 
paragraphs (3) and (4), to each community mental health center 
within the State which received a grant under the Community 
Mental Health Centers Act in fiscal year 1981 and which would 42 use 2689 
be eligible to receive a grant for its operation under that Act (as ^°^-
in effect on the day before the date of the enactment of the 
Omnibus Budget Reconciliation Act of 1981) for such 
fiscal 
year if 
such grants were made under such Act. 
"(3) The State agrees to make grants to community mental 
health centers in the State for the provision of comprehensive 
mental health services— 
"(A) principally to individuals residing in a defined geo-
graphic area (hereinafter in this section referred to as a 
inental health service area'), with special attention to indi-
viduals who are chronically mentally ill, 
"(B) within the limits of its capacity, to any individual 
residing or employed in its mental health service area 
regardless of ability to pay for such services, current or past 
health condition, or any other factor, and 
"(C) which are available and accessible promptly, as appro-
priate and in a manner which preserves human dignity and 
assures continuity and high quality care. 
"(4) The State agrees to require that any community mental 
health center in the State receiving a grant from the State under 
this part provide— 
"(A) outpatient services, including specialized outpatient 
services for children, the elderly, individuals who are chron-
ically mentally ill, and residents of its mental health service 
area who have been discharged from inpatient treatment at 
a mental health facility, 
"(B) 24-hour-a-day emergency care services, 
"(C) day treatment or other partial hospitalization 
services, 
"(D) screening for patients being considered for admission 
to State mental health facilities to determine the appropri-
ateness of such admission, and 
"(E) consultation and education services. 
"(5) The State agrees to establish reasonable criteria to evalu-
ate the effective performance of entities which receive funds 
from the State under this part and procedural and substantive 
independent State review procedures of the failure by the State 
to provide funds for any such entity. 
(6)(A) The State agrees to use the funds allotted to it under 
section 1912 for fiscal year 1982 for the mental health and alcohol 
and drug abuse activities prescribed by section 1914(a) as follows: 
"(i) The amount provided for mental health activities shall 
not exceed an amount which bears the same relationship to 
the funds allotted to the State for such fiscal year as the 
funds for mental health services which would have been 
received by the State and entities in the State in fiscal year 
1981 under the Community Mental Health Centers Act and 
the Mental Health Systems Act if the Secretary had obli- 94 stat. 1564. 
gated all of the funds appropriated for such Acts under 42 use 9401 
Public Law 96-536 bore to the funds which would have been gj It^t 3166 
so received by the State and entities in the State in such 
fiscal year under such Acts and the funds received by the 
State and entities in the State in fiscal year 1980 under 
sections 301 and 312 of the Comprehensive Alcohol Abuse 
and Alcoholism Prevention, Treatment, and Rehabilitation 
95 STAT. 548 
PUBLIC LAW 97-35—AUG. 13, 1981 
42 use 4571, 
Act of 1970 and sections 409 and 410 of the Drug Abuse 
21 use 1
1
7
6 
Prevention, Treatment, and Rehabilitation Act. 
1177 
' 
"(ii) The amount provided for alcohol and drug abuse 
activities shall not exceed an amount which bears the same 
relationship to the funds allotted to the State for such fiscal 
year as the funds received by the State and entities in the 
State in fiscal year 1980 under sections 301 and 312 of the 
Comprehensive Alcohol Abuse and Alcoholism Prevention, 
Treatment, and Rehabilitation Act of 1970 and sections 409 
and 410 of the Drug Abuse Prevention, Treatment, and 
Rehabilitation Act bore to the funds received by the State 
and entities in the State in such fiscal year under such 
sections and the funds for mental health services which 
would have been received by the State and entities in the 
State in fiscal year 1981 under the Community Mental 
42 use 2689 
Health Centers Act and the Mental Health Systems Act if 
?564' ^^ ^^^^ 
*
*
^
® Secretary had obligated all of the funds appropriated for 
42 use 9401 
^^*^^ ^^^ under Public Law 96-536. 
note. 
"(B) The State agrees to use 95 percent of the funds allotted to 
94 Stat. 3166. 
it under section 1912 for fiscal year 1983 for the mental health 
and alcohol and drug abuse activities prescribed by section 
1914(a) as prescribed by subparagraph (A). 
"(C) The State agrees to use 85 percent of the funds allotted to 
it under section 1912 for fiscal year 1984 for the mental health 
and alcohol and drug abuse activities prescribed by section 
1914(a) as prescribed by subparagraph (A). 
"(7) In any fiscal year, the State agrees to use funds for the 
alcohol and drug abuse activities prescribed by section 1914(a) as 
follows: 
"(A) Not less than 35 percent of the amount to be made 
available for such activities shall be used for programs and 
activities relating to alcoholism and alcohol abuse. 
"(B) Not less than 35 percent of the amount to be made 
available for such activities shall be used for programs and 
activities relating to drug abuse. 
"(8) Of the amount to be used in any fiscal year for alcohol or 
drug abuse activities, the State agrees to use not less than 20 
percent of such amount for prevention and early intervention 
programs designed to discourage the abuse of alcohol or drugs, or 
both. 
"(9) The State agrees to permit and cooperate with Federal 
investigations undertaken in accordance with section 1917. 
"(10) That the State has identified those populations, areas, 
and localities in the State with a need for mental health, alcohol 
, abuse and alcoholism, and drug abuse services. 
I "(11) That the Federal funds made available under section 1913 
! for any period will be so used as to supplement and increase the 
level of State, local, and other non-Federal funds that would in 
the absence of such Federal funds be made available for the 
programs and activities for which funds are provided under that 
section and will in no event supplant such State, local, and other 
non-Federal funds. 
"(12) That the State has in effect a system to protect from 
inappropriate disclosure patient records maintained by the State 
in connection with an activity funded under this part or by any 
entity which is receiving payments from the allotment of the 
State under this part. 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 549 
"(13) That the State shall develop and implement arrange-
ments, which are not excessively burdensome on the State, to 
locate jobs for employees affected adversely by actions taken by 
the State mental health authority to emphasize outpatient 
mental health services. 
The Secretary may not prescribe for a State the manner of compli-
ance with the requirements of this subsection. 
"(d) The chief executive officer of a State shall, as part of the 
application required by subsection (a), also prepare and furnish the 
Secretary (in accordance with such form as the Secretary shall 
provide) with a description of the intended use of the payments the 
State will receive under section 1913 for the fiscal year for which the 
application is submitted, including information on the programs and 
activities to be supported and services to be provided. The description 
shall be made public within the State in such manner as to facilitate 
comment from any person (including any Federal or other public 
agency) during development of the description and after its transmit-
tal. The description shall be revised (consistent with this section) 
throughout the year as may be necessary to reflect substantial 
changes in the programs and activities assisted by the State under 
this part, and any revision shall be subject to the requirements of the 
preceding sentence. 
"(e) A State shall be required to make a grant to a community 
mental health center under subsection (c)(2) unless— 
"(1) the State recommends on the basis of— 
"(A) any Federal finding, Federal administrative action, or 
judicial proceeding with respect to any such community 
mental health center, or 
"(B) a review of such center in accordance with the criteria 
and procedures required under subsection (c)(5), 
that the State not be required to make such grants; and 
"(2) the Secretary approves the recommendation of the State 
under paragraph (1) based upon a substantive and procedural 
review of the record made by the State in making its recommen-
dation under paragraph (1) which review demonstrates that the 
community mental health center is not providing services as 
prescribed by paragraphs (3) and (4) of subsection (c) or is engaged 
in a substantial misuse of funds. 
"REPORTS AND AUDITS 
SEC. 1916. (a) Each State shall prepare and submit to the Secretary 42 use 300x-5. 
annual reports on its activities under this part. Such reports shall be 
in such form and contain such information as the Secretary deter-
mines (after consultation with the States and the Comptroller Gen-
eral) to be necessary (1) to determine whether funds were expended in 
accordance with this part and consistent with the needs within the 
State identified pursuant to section 1915(cX10), (2) to secure a descrip-
tion of the activities of the State under this part, and (
9
D to secure a 
record of the purposes for which funds were spent, of the recipients of 
such funds, and of the progress made toward achieving the purposes 
for which the funds were provided. Copies of the report shall be 
provided, upon request, to any interested person (including any 
public agency). 
"(2) In determining the information that States must include in the 
report required by this subsection, the Secretary may not establish 
reporting requirements which are burdensome. 
95 STAT. 550 
PUBLIC LAW 97-35—AUG. 13, 1981 
"(b)(1) Each State shall establish fiscal control and fund accounting 
procedures as may be necessary to assure the proper disbursal of and 
accounting for Federal funds paid to the State under section 1913 and 
funds transferred for use under this part. 
"(2) Each State shall annually audit its expenditures from pay-
ments received under section 1913. Such State audits shall be 
conducted by an entity independent of any agency administering a 
program funded under this part and, in so far as practical, in 
accordance with the Comptroller General's standards for auditing 
governmental organizations, programs, activities, and functions. 
Within 30 days following the date each audit is completed, the chief 
executive officer of the State shall transmit a copy of that audit to the 
Secretary. 
"(3) Each State shall, after being provided by the Secretary with 
adequate notice and opportunity for a hearing within the affected 
State, repay to the United States amounts found not to have been 
expended in accordance with the requirements of this part or the 
certification provided under section 1915. If such repayment is not 
made, the Secretary shall, after providing the State with adequate 
notice and opportunity for a hearing, offset such amounts against the 
amount of any allotment to which the State is or may become entitled 
under section 1912. 
"(4) The State shall make copies of the reports and audits required 
by this section available for public inspection within the State. 
"(5) The Comptroller General of the United States shall, from time 
to time, evaluate the expenditures by States of grants under this part 
in order to assure that expenditures are consistent with the provi-
sions of this part. 
"(6) Not later than October 1,1983, the Secretary shall report to the 
Congress on the activities of the States which have received funds 
under this part and may include in the report any recommendations 
for appropriate changes in legislation. 
"(c) The provisions of title XVII of the Omnibus Budget Reconcili-
Post, p. 753. 
ation Act of 1981 shall not apply with respect to the audit of funds 
allotted under this part. 
"WITHHOLDING 
42 use 300X-6. 
"SEC. 1917. (a)(1) The Secretary shall, after adequate notice and an 
opportunity for a hearing conducted within the affected State, 
withhold funds from any State which does not use its allotment in 
accordance with the requirements of this part or the certification 
provided under section 1915. The Secretary shall withhold such funds 
until the Secretary finds that the reason for the withholding has been 
removed and there is reasonable assurance that it will not recur. 
"(2) The Secretary may not institute proceedings to withhold funds 
under paragraph (1) unless the Secretary has conducted an investiga-
tion concerning whether the State has used its allotment in accord-
ance with the requirements of this part or the certification provided 
under section 1915. Investigations required by this paragraph shall 
be conducted within the affected State by qualified investigators. 
"(3) The Secretary shall respond in an expeditious manner to 
complaints of a substantial or serious nature that a State has failed to 
use funds in accordance with the requirements of this part or the 
certification provided under section 1915. 
"(4) The Secretary may not withhold funds under paragraph (1) 
from a State for a minor failure to comply with the requirements of 
this part or the certification provided under section 1915. 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 551 
"(bXD The Secretary shall conduct in several States in each fiscal 
year investigations of the use of funds received by the States under 
this part in order to evaluate compliance with the requirements of 
this part and the certification provided under section 1915. 
"(2) The Comptroller General of the United States may conduct 
investigations of the use of funds received under this part by a State 
in order to insure compliance with the requirements of this part and 
the certification provided under section 1915. 
"(c) Each State, and each entity which has received funds from an 
allotment made to a State under this part, shall make appropriate 
books, documents, papers, and records available to the Secretary or 
the Comptroller General of the United States, or any of their duly 
authorized representatives, for examination, cop3dng, or mechanical 
reproduction on or off the premises of the appropriate entity upon a 
reasonable request therefor. 
"(dXD In conducting any investigation in a State, the Secretary or 
the Comptroller General of 
the United States may not make a request 
for any information not readily available to such State or an entity 
which has received funds from an allotment made to the State under 
this part or make an unreeisonable request for information to be 
compiled, collected, or transmitted in any form not readily available. 
"(2) Paragraph (1) does not apply to the collection, compilation, or 
transmittal of data in the course of 
a 
judicial proceeding. 
"NONDISCRIMINATION 
"SEC. 1918. (aXD For the purpose of applying the prohibitions 42 use 300x-7. 
against discrimination on the basis of ajge under the Age Discrimina-
tion Act of 1975, on the basis of handicap under section 504 of the 42 use 6ioi 
Rehabilitation Act of 1973, on the basis of sex under title IX of the gg^use 794 
Education Amendments of 1972, or on the basis of race, color, or 20 use 1681 
national origin under title VI of the Civil Rights Act of 1964, 42USe2000d. 
programs and activities funded in whole or in part with funds made 
available under this part are considered to be programs and activities 
receiving Federal financial assistance. 
"(2) No person shsill on the ground of sex or religion be excluded 
from participation in, be denied the benefits of, or be subjected to 
discrimination under, any program or activity funded in whole or in 
part with funds made available under this part. 
"(b) Whenever the Secretary finds that a State, or an entity that 
has received a pajnnent from an allotment to a State under section 
1912, has failed to comply with a provision of law referred to in 
subsection (aXD, with subsection (aX2), or with an applicable regula-
tion (including one prescribed to carry out subsection (aX2)), the 
Secretary shall notify the chief executive officer of 
the State and shall 
request him to secure compliance. If within a reasonable period of 
time, not to exceed sixty days, the chief executive officer fails or 
refuses to secure compliance, the Secretary may— 
"(1) refer the matter to the Attorney General with a recom-
mendation that an appropriate civU action be instituted, 
"(2) exercise the powers and functions provided by title VI of 
the Civil Rights Act of 1964, the Age Discrimination Act of 1975, 
or section 504 of the Rehabilitation Act of 1973, as may be 
applicable, or 
(3) take such other action as may be provided by law. 
"(c) When a matter is referred to the Attorney General pursuant to 
subsection (bXD, or whenever he has reason to believe that a State or 
an entity is engaged in a pattern or practice in violation of a provision 
89-194 0—82 
37 : QL3 
95 STAT. 552 
PUBLIC LAW 97-35—AUG. 13, 1981 
of law referred to in subsection (aXD or in violation of subsection 
(aX2), the Attorney General may bring a civil action in any appropri-
ate district court of the United States for such relief as may be 
appropriate, including injunctive relief. 
"CRIMINAL PENALTY FOR FALSE STATEMENTS 
42 use 300X-8. 
"SEC. 1919. Whoever— 
"(1) knowingly and willfuUjj^ makes or causes to be made any 
false statement or representation of a material fact in connection 
with the furnishing of items or services for which payment may 
be made by a State from funds allotted to the State under thM 
part, or 
"(2) having knowledge of the occurrence of any event affecting 
his initial or continued right to any such payment conceals or 
fails to disclose such event with an intent fraudulently to secure 
such pajrment either in a greater amount than is due or when no 
such pa3maent is authorized, 
shall be fined not more than $25,000 or imprisoned for not more than 
five years, or both. 
"TRANSITION PROVISION 
42 use 300X-9. 
"SEC. 1920. If at the request of a State the Secretary uses the 
allotment of the State during the transition period prescribed by title 
Post, p. 753. 
XVII of the Omnibus Budget Reconciliation Act of 1981 for grants 
under this part, the Secretary shall make the grants in accordance 
with the requirements of paragraphs (6), (7), and (8) of section 1915(c). 
The Secretary shsdl deduct from the allotment of the State the 
amount the Secretary (after consultation with the State) requires to 
fund such programs.'. 
"PART C—PRIMARY CARE BLOCK GRANTS 
"PLANNING GRANTS 
42 use 300y. 
"SEC. 1921. (a) The Secretary may make grants to any State to 
undertake planning and other administrative activities to enable the 
State to administer allotments provided to it under this part. The 
amount of any grant to a State shall be determined by the Secretary 
but may not exceed $150,000. 
"(b) No grant may be made under subsection (a) unless an applica-
tion therefore is submitted to, and approved by, the Secretary. Such 
an application shall be submitted in such form and manner and shall 
contain such information as the Secretary shall prescribe. 
"(c) For grants under subsection (a), there are authorized to be 
appropriated $2,500,000 for fiscal year 1982. 
"AUTHORIZATION OF APPROPRIATIONS 
42 use 300y-l. 
"SEC. 1922. For allotments under section 1924 and for grants under 
section 330, there is authorized to be appropriated $302,500,000 for 
fiscal year 1983, and $327,000,000 for fiscal year 1984. 
42 use 254c. 
"GRANTS UNDER SECTION 330 
42 use 300y-2. 
SEC. 1923, If a State does not submit an application for an allotment 
under section 1924 for a fiscal year or does not qualify for such an 
allotment for such fiscal year, the Secretary shall use funds appropri-
ated under section 1922 to make grants under section 330 to commu-
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 553 
nity health centers within the State. Before making grants under 
section 330 for community health centers within a State the Secre- 42 use 254c. 
tary shall consult with the chief executive officer of the State and 
with appropriate local officials. The amount of funds from appropri-
ations under section 1922 which may be used for grants for a fiscal 
year under section 330 for community health centers shall be the 
amount remaining after allotments are made under section 1924 for 
such 
fiscEil 
year. 
"ALLOTMENTS 
"SEC. 1924 (a). If a State submits an application under section 1927 42 use 300y-3. 
for an allotment for a fiscal year and is determined by the Secretary 
to be eligible under such section for such an allotment, the Secretary 
shall allot to such State from the amount appropriated under section 
1922 for such fiscal year an amount which bears the same ratio to the 
amount appropriated under section 1922 for that fiscal year as the 
amount granted for fiscal year 1982 by the Secretary to community 
health centers in the State under section 330 bore to the amount 
granted for that fiscal year by the Secretary under such section to 
centers in all States from appropriations for that fiscal year. 
"(b)(1) If the Secretary— 
"(A) receives a request from the governing body of an Indian 
tribe or tribal organization within any State that funds under 
this part be provided directly by the Secretary to such tribe or 
organization, and 
"(B) determines that the members of such tribe or tribal 
organization would be better served by means of grants made 
directly by the Secretary under this part, 
the Secretary shall reserve from amounts which would otherwise be 
allotted to such State under subsection (a) for the fiscal year the 
amount determined under paragraph (2). 
"(2) The Secretary shall reserve for the purpose of paragraph (1) 
from amounts that would otherwise be allotted to such State under 
subsection (a) an amount equal to the amount which bears the same 
ratio to the State's allotment for the fiscal year involved as the total 
amount granted for fiscal year 1982 by the Secretary to such tribe or 
tribal organization under section 330 bore to the total amount 
granted for such fiscal year by the Secretary to the State and entities 
(including Indian tribes and tribal organizations) in the State under 
section 330. 
"(3) From the amount reserved by the Secretary on the basis of a 
determination under this subsection, the Secretary shall make grants 
under section 330 to the Indian tribe or tribal organization serving 
the individuals for whom such a determination has been made. 
"(4) The terms Indian tribe' and 'tribal organization' have the 
same meaning given such terms in section 4(b) and section 4(c) of the 
Indian Self-Determination and Education Assistance Act. 
25 use 450b. 
"PAYMENTS UNDER ALLOTMENTS TO STATES 
"SEC. 1925. (aXD For each fiscal year, the Secretary shall make 42 use 300y-4. 
payments, as provided by section 203 of the Intergovernmental 
Cooperation Act of 1968 (42 U.S.C. 4213), from amounts appropriated 
for allotments (other than any amount reserved under section 
1924(b)) under section 1924(a) to each State which receives such an 
allotment. 
"(2) Any amount paid to a State for a fiscal year and remaining 
unobligated at the end of such year shall remain available to such 
95 STAT. 554 
PUBLIC LAW 97-35—AUG. 13, 1981 
State for the purposes for which it was made for the next fiscal year if 
the Secretary determines that the State acted in accordance with 
section 1926(a)(1) and there is good cause for funds remaining 
unobligated. 
"(b) The Secretary, at the request of a State, may reduce the 
amount of payments under subsection (a) by— 
"(1) the fair market value of any supplies or equipment 
furnished to the State, and 
"(2) the amount of the pay, allowances, and travel expenses of 
any officer or employee of the Government when detailed to the 
State and the amount of any other costs incurred in connection 
with the detail of such officer or employee, 
when the furnishing of supplies or equipment or the detail of an 
officer or employee is for the convenience of and at the request of the 
State and for the purpose of conducting activities described in section 
1926. The amount by which any payment is so reduced shall be 
available for payment by the Secretary of the costs incurred in 
furnishing the supplies or equipment or in detailing the personnel, on 
which the reduction of the payment is based, and the amount shall be 
deemed to be part of the payment and shall be deemed to have been 
paid to the State. 
"GRANTS TO COMMUNITY HEALTH CENTERS 
42 use 300y-5. 
"SEC. 1926. (a)(1) In fiscal years 1983 and 1984 each State shall use 
for grants under paragraphs (2) and (3) the entire amount allotted to 
it under section 1924 for such fiscal year and the entire amount 
required to be made available under paragraph (4). 
"(2) From the amounts paid to it under section 1925 for fiscal year 
1983 and from the State funds required to be made available under 
paragraph (4) for such fiscal year, each State shall make grants to 
each community health center which received a grant for its oper-
42 use 254c. 
ation under section 330(d) for fiscal year 1982 and which meets the 
requirements of this paragraph. A grant may be made under this 
paragraph to a community health center only— 
"(A) if the center has made an application to the State in 
accordance with section 330(e), and 
"(B) if the center meets the requirements for receiving a grant 
under section 330 for its operation. 
The amount of a grant under this paragraph to a center shall be not 
less than the amount the center received under section 330(d) for 
fiscal year 1982. If the State determines under subparagraph (B) that 
a community health center which has applied for a grant does not 
meet the requirements referred to in that subparagraph, the Secre-
tary shall review the State's determination. If the Secretary finds 
that the center does not meet such requirements, the State may 
withhold a grant to the center under this paragraph. 
"(3) In fiscEil years 1983 and 1984, each State shall make grants to 
community health centers within the State which serve medically 
underserved populations and which meet the requirements of this 
paragraph. A grant under this paragraph for fiscal year 1983 shall be 
made from any amount not obligated under paragraph (2) or (4) for 
such fiscal year, and a grant for fiscal year 1984 shall be made from 
the amounts paid to it under section 1925 for the fiscal year and from 
the State funds required to be made available under paragraph (4) for 
the fiscal year. A grant may be made under this paragraph to a 
community health center only— 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 555 
"(A) if the center has made an application to the State in 
accordance with section 330(e), and 
42 use 254c. 
"(B) if the center meets the requirements for receiving a grant 
under section 330 for its operation. 
The Umitation prescribed by section 330(gX3) shall apply with respect 
to grants under this paragraph. States shall make grants under this 
paragraph in such a manner that medically underserved populations 
which have been served by community health centers and which are 
still medically underserved populations will continue to receive 
health care, and in making such grants a State shall not, to the extent 
practicable, disrupt established provider-patient relationships. 
"(4)(A) In fiscal year 1983 a State which receives an allotment 
under section 1924 for that fiscal year shall make available, from 
State funds, for the grants described in paragraphs (2) and (3) and for 
State administrative expenses for such grants for such fiscal year an 
amount equal to 20 percent of its allotment. In fiscal year 1984 a State 
which receives an allotment under section 1924 for that fiscal year 
shall make available, from State funds, for the grants described in 
paragraphs (2) and (3) and for State administrative expenses for such 
grants for such fiscal year an amount equal to one-third of its 
allotment. 
"(B) A State, at the request of a community heedth center, may 
reduce the amount of the State's contribution under subparagraph 
(A) to the center by— 
"(i) the fair market value of any supplies or equipment fur-
nished to the center, and 
"(ii) the amount of the pay, allowances, and travel expenses of 
any officer or employee of the State when detailed to the center 
and the amount of any other costs incurred in connection with 
the detail of 
such officer or employee, 
when the furnishing of supplies or equipment or the detail of an 
officer or employee is for the convenience of and at the request of the 
center and for the purpose of activities centers assisted under this 
section. The amount by which any payment is so reduced shall be 
available for pa5mient by the State of the costs incurred in furnishing 
the supplies or equipment or in detailing the personnel, on which the 
reduction of the payment is based, and the amount shall be deemed to 
be part of the payment and shall be deemed to have been paid by the 
State under subparagraph (A). 
"(5) A State may not use any funds paid to it under section 1925 for 
the purposes of administration of the grants required by paragraphs 
(2) and (3). 
"(6) For purposes of this part— 
"(A) the term 'community health center' has the same mean- "Community 
ing as that term has under section 330(a), and 
'(B) a medically underserved population is such a population 
designated by the Secretary under section 330(b)(3). 
"(b) A State may not use amounts paid to it under section 1925 to— 
"(1) provide inpatient services, except in fiscal year 1983 in the 
case of a community health center which used funds provided 
under section 330 for fiscal year 1982 to provide such services, 
"(2) make cash payments to intended recipients of health 
services, 
"(3) purchase or improve land, purchase, construct, or perma-
nently improve (other than minor remodeling) any building or 
other facility, or purchase major medical equipment, 
"(4) satisfy any requirement for the expenditure of non-
Federal funds as a condition for the receipt of Federal funds, or 
health center. 
95 STAT. 556 
PUBLIC LAW 97-35—AUG. 13, 1981 
"(5) provide financial assistance to any entity other than a 
public or nonprofit private community health center. 
The Secretary may waive the limitation contained in paragraph (3) 
upon the request of a State if the Secretary finds that there are 
extraordinary circumstances to justify the waiver and that granting 
the waiver will assist in carrying out this part. The prohibition 
prescribed by this subsection (other than paragraph (4)) shall apply 
with respect to any amount required to be made available under 
subsection (aX4). 
"APPUCATION; ASSURANCES; DESCRIPTION OF ACTIVITIES 
42 use 300y-6. 
"SEC. 1927. (a) No state may receive an allotment for a fiscal year 
under section 1924(a) unless an application therefor has been submit-
ted to and approved by the Secretary. Such an application shall be 
submitted before the beginning of the fiscal year for which the 
allotment applied for will be made. Each such application shall be in 
such form and submitted by such date as the Secretary shall require. 
Each such application shall contain assurances that the legislature of 
the State has complied with the provisions of subsection (b) and that 
the State will meet the requirements of subsection (c). 
"(b) After the expiration of the first fiscal year in which a State 
receives an allotment under section 1924, no funds shall be allotted to 
such State for any fiscal year under such section unless the legisla-
ture of the State conducts public hearings on the proposed use and 
distribution of funds to be provided under section 1925 for such fiscal 
year. 
"(c) As part of the annual application required by subsection (a), the 
chief executive officer of each State shall certify that the State 
agrees— 
"(1) to use the funds alloted to it under section 1924 in 
accordance with the requirements of section 1926; and 
"(2) to establish, after providing reasonable notice and opportu-
nity for the submission of comments, reasonable criteria to 
evaluate the fiscal, managerial, and clinical performance of 
community health centers; and 
"(3) to establish procedural and substantive independent State 
review procedures relating to the failure by the State to provide 
funds for any such center and to the reduction of the funds paid 
to a community health center in fiscal year 1984 to an amount 
which is significantly less than the amount paid to the center by 
the State under section 1926 in fiscal year 1983. 
The application of a State shall also contain assurances, satisfactory 
to the Secretary, that the State has the administrative capability to 
administer grants under section 1926, to determine the need for 
services of community health centers by medically underserved 
populations, and to evaluate the performance of community health 
centers. 
"(d)(1) The chief executive officer of the State shall, as part of the 
application required by subsection (a), prepare and furnish to the 
Secretary (in accordance with such form as the Secretary shall 
provide) a description of the intended use of the payments the State 
will receive under section 1925 for that fiscal year and the funds the 
State is required to obligate under section 1926(a)(4) for that fiscal 
year. 
"(2) The description required by paragraph (1) shall be made public 
within the State in such manner as to facilitate comment from any 
person (including any Federal or other public agency) during develop-
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 557 
ment of the description and after its transmittal. The description 
shall be revised (consistent with this section) throughout the year as 
may be necessary to reflect substantial changes in the programs and 
activities assisted under this part, and any revision shall be subject to 
the requirements of the preceding sentence. 
"REPORTS AND AUDITS 
"SEC. 1928. (a)(1) Each State shall prepare and submit to the 42USC300y-7. 
Secretary annual reports on its activities under this part. Such 
reports shall be in such form and contain such information as the 
Secretary determines (after consultation with the States and the 
Comptroller General) to be necessary (A) to determine whether funds 
were expended in accordance with sections 1926 and 1927(c), (B) to 
secure a description of the activities under this part, and (C) to secure 
a record of the purposes for which funds were spent, of the recipients 
of such funds and of the progress made toward achieving the purposes 
for which the funds were provided. Copies of the report shall be 
provided, upon request, to any interested person (including any 
public agency). 
"(2) In determining the information that States must include in the 
report required by this subsection, the Secretary may not establish 
reporting requirements which are burdensome. 
"(b)(1) Each State shall establish fiscal control and fund accounting 
procedures as may be necessary to assure the proper disbursal of and 
accounting for Federal funds paid to the State under section 1925. 
"(2) Each State shall annually audit its expenditures from pay-
ments received under section 1925. Such State audits shall be 
conducted by an entity independent of any agency administering a 
program funded under this part and, to the extent practicable, in 
accordance with the Comptroller's General standards for auditing 
governmental organizations, programs, activities, and functions. 
Within 30 days following the date each audit is completed, the chief 
executive officer of the State shall transmit a copy of that audit to the 
Secretary. 
"(3) Each State shall, after being provided by the Secretary with 
adequate notice and opportunity for a hearing within the affected 
State, repay to the United States amounts found not to have been 
expended in accordance with the requirements of section 1926 or the 
certification and assurances provided under section 1927. If such 
repayment is not made, the Secretary shall, after providing the State 
with adequate notice and opportunity for a hearing, offset such 
amounts against the amount of any allotment to which the State is or 
may become entitled under section 1924. 
"(4) The State shall make copies of the reports and audits required Public 
by this section available for public inspection within the State, inspection. 
"(5) The Comptroller General of the United States shall, from time 
to time, evaluate the expenditures by States of grants under this part 
in order to assure that expenditures are consistent with the provi-
sions of this part. 
"(6) Not later than January 1, 1984, the Secretary shall report to 
the Congress on the activities of the States which have received funds 
under this part and may include in the report any recommendations 
for appropriate changes in legislation. 
95 STAT. 558 
PUBLIC LAW 97-35—AUG. 13, 1981 
Notice and 
hearing. 
42 use 300y-8. 
WITHHOLDING 
"SEC. 1929. (a)(1) The Secretary shall, after adequate notice and an 
opportunity for a hearing conducted within the affected State and 
subject to paragraphs (2) and (3) of this subsection, withhold funds 
from any State which does not use its allotment in accordance with 
the requirements of section 1926 or 1927. The Secretary shall with-
hold such funds until the Secretary finds that the reason for the 
withholding has been removed and there is reasonable assurance 
that it will not recur. If the Secretary withholds funds from a State 
for its failure to provide grants to community health centers in 
accordance with section 1926, the Secretary shall use the funds 
withheld to make such grants in accordance with such section. 
"(2) The Secretary may not institute proceedings to withhold funds 
under this section unless the Secretary has conducted an investiga-
tion concerning whether the State has used its allotment in accord-
ance with this part. Investigations required by this paragraph shall 
be conducted within the affected State by qualified investigators. 
"(3) The Secretary may not withhold funds under this subsection 
from a State for a minor failure to comply with the provisions of this 
part. 
"(4) The Secretary shall respond in an expeditious manner to 
complaints of a substantial or serious nature that a State has failed to 
use funds in accordance with the requirements of this part. 
"(b)(1) The Secretary shall conduct in several States in each fiscal 
year investigations of the use of funds received by the States under 
this part in order to evaluate compliance with the requirements of 
this part. 
"(2) The Comptroller General of the United States may conduct an 
investigation of the use of funds received under this part by a State in 
order to insure compliance with the requirements of this part. 
"(c) A State shall make appropriate books, documents, papers, and 
records available to the Secretary or the Comptroller General of the 
United States, or any of their duly authorized representatives, for 
examination, copying, or mechanical reproduction on or off the 
premises of the appropriate entity upon a reasonable request 
therefor. 
"(d)(1) In conducting any investigation, the Secretary or the Comp-
troller General of the United States may not request any information 
not readily available to such State or to any community health center 
which has received a grant under this part and may not make an 
unreasonable request for information to be compiled, collected, or 
transmitted in any form not readily available. 
"(2) Paragraph (1) does not apply to the collection, compilation, or 
transmittal of data in the course of a judicial proceeding. 
42 use 300y-9. 
42 use 6101 
note. 
29 use 794. 
20 use 1681. 
42 use 2000d. 
NONDISCRIMINATION 
"SEC. 1930. (aXl) For the purpose of applying the prohibitions 
against discrimination on the basis of age under the Age Discrimina-
tion Act of 1975, on the basis of handicap under section 504 of the 
Rehabilitation Act of 1973, on the basis of sex under title IX of the 
Education Amendments of 1972, or on the basis of race, color, or 
national origin under title VI of the Civil Rights Act of 1964, 
programs and activities funded in whole or in part with funds made 
available under this part are considered to be programs and activities 
receiving Federal financial assistance. 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 559 
"(2) No person shall on the ground of sex or religion be excluded 
from participation in, be denied the benefits of, or be subjected to 
discrimination under, any program or activity funded in whole or in 
part with funds made available under this part. 
"(b) Whenever the Secretary finds that a State or an entity that has 
received a pa3niient from an allotment to a State under section 1924 
has failed to comply with a provision of law referred to in subsection 
(aXD, with subsection (a)(2), or with an applicable regulation (includ-
ing one prescribed to carry out subsection (aX2)), the Secretary shall 
notify the chief executive officer of the State and shall request him to 
secure compliance. If within a reasonable period of time, not to 
exceed sixty days, the chief executive officer fails or refuses to secure 
compliance, the Secretary may— 
"(1) refer the matter to the Attorney General with a recom-
mendation that an appropriate civil action be instituted, 
"(2) exercise the powers and functions provided by title VI of 
the Civil Rights Act of 1964, the Age Discrimination Act of 1975, 42 use 2000d. 
or section 504 of the Rehabilitation Act of 1973, as may be 42 use 6ioi 
applicable, or 
"°*® 
"(3) take such other action as may be provided by law. 
^^ ^^^ ^^'*-
"(c) When a matter is referred to the Attorney General pursuant to 
subsection (bXD, or whenever he has reason to believe that a State or 
an entity is engaged in a pattern or practice in violation of a provision 
of law referred to in subsection (aXD or in violation of subsection 
(a)(2), the Attorney General may bring a civil action in any appropri-
ate district court of the United States for such relief as may be 
appropriate, including injunctive relief. 
"CRIMINAL PENALTY FOR FALSE STATEMENTS 
"SEC. 1931. Whoever— 
42 use 300y-io. 
"(1) knowingly and willfully makes or causes to be made any 
false statement or representation of a material fact in connection 
with the furnishing of items or services for which payment may 
be made by a State from funds allotted to the State under this 
part, or 
"(2) having knowledge of the occurrence of any event affecting 
his initial or continued right to any such payment conceals or 
fails to disclose such event with an intent fraudulently to secure 
such payment either in a greater amount than is due or when no 
such payment is authorized, 
shall be fined not more than $25,000 or imprisoned for not more than 
five years, or both. 
' 'ADMINISTRATION 
"SEC. 1932. Title XVII of the Omnibus Budget Reconciliation Act of 42 use 300y-li. 
1981 shall not apply with respect to the grant program authorized by Post, p. 753. 
this part.". 
REPEALS AND CONFORMING AMENDMENTS 
SEC. 902. (a) Sections 401 and 402 of the Health Services and 
Centers Amendments of 1978 are repealed. 
42 use 247b-i, 
(b) Sections 314(d) and subpart III of part D of title III of the Public ^^'^''"^ 
Health Service Act are repealed. 
42 use 246, 255. 
(cXD The second sentence of section 311(a) of the Public Health 
Service Act is amended— 
42 use 243. 
(A) by inserting "and with respect to other public health 
matters" after "diseases", and 
95 STAT. 560 
PUBLIC LAW 97-35—AUG. 13, 1981 
42 u s e 243. 
42 use 246. 
Repeals. 
42 use 
300d-300d-9, 
300d-21. 
42 use 
42 use 
42 use 
Repeals 
94 Stat. 
42 use 
42 use 
42 use 
42 use 
42 use 
42 use 
42 use 
42 use 
42 use 
2689m. 
Repeal. 
42 use 
note. 
42 use 
42 use 
300d-4. 
300d-6. 
201. 
1564. 
9411. 
9421. 
9431. 
9451. 
9502. 
9512. 
9521. 
9523. 
229d, 
2689 
9411. 
9412. 
94 
Stat. 
1602. 
42 
use 
9511. 
94 
Stat. 
1608. 
42 
use 
289k-l. 
42 
use 
225a. 
42 
use 
229b. 
(B) by striking out "and in carrying out the purposes of section 
314". 
(2) The first sentence of section 311(b) of such Act is amended by 
striking out "the purposes of section 314" and inserting in lieu 
thereof "public health activities". 
(d)(1) Sections 1201, 1202, 1203, 1204, 1205(d), 1206, 1207(a), 1208, 
1209, and 1210, and part B of title XII of the Public Health Service Act 
are repealed. 
(2) Title XII of such Act is amended by striking out— 
"PART A—ASSISTANCE FOR EMERGENCY MEDICAL SERVICES 
SYSTEMS". 
(3) Section 1205 of such Act is redesignated as section 1201. 
(4) Section 1207(b) of such Act is redesignated as section 1202. 
(5) Section 2(f) of such Act is amended by striking out "1201(2),". 
(e)(1) Section 101, part B of title I, titles II and III, and sections 502, 
602, 801, and 806 of the Mental Health Systems Act are repealed. 
(2)(A) Section 225 of the Community Mental Health Centers Act is 
transferred to title V of the Public Health Service Act, inserted after 
section 514, redesignated as section 515, and amended (A) by striking 
out "this title" and inserting in lieu thereof "the Community Mental 
Health Centers Act" and (B) by inserting "of the Community Mental 
Health Centers Act" after "section 222". 
(B) The (Community Mental Health Centers Act is repealed. 
(f)(1) Title I of the Mental Health Systems Act is amended— 
(A) by striking out "PART A—DEFINITIONS"; 
(B) by striking out "OTHER" in the section heading for section 
102; and 
(C)) by striking out paragraphs (3), (4), (6), and (7) of section 102, 
and by redesignating paragraph (5) of such section as paragraph 
(3). 
(2) The table of contents in the first section of such Act is amended 
by striking out the items relating to sections 101, 105, 106, 107, 201 
through 208, 301 through 303, 305 through 309, 315 through 317, 321, 
325 through 328,502,602,801, and 806, parts A and B of title I, title II, 
title III, and parts A, B, C, D, and E of title III. 
(3) The table of section 102 in such table of contents is amended to 
read as follows: 
"Sec. 102. Definitions.". 
(20) Section 601(a) of such Act is amended— 
(A) by striking out "community mental health centers and 
other" in paragraph (5); and 
(B) by striking out paragraph (6). 
(g)(1) The second sentence of section 455(a) of the Public Health 
Service Act is amended by striking out ", the Mental Retardation 
Facilities and Community Mental Health Centers Construction Act 
of 1963 (other than part C of title II), and the Mental Health Systems 
Act". 
(2) Section 507 of such Act is amended by striking out ", appropri-
ations available under the Community Mental Health Centers Act 
for construction and staffing of community mental health centers 
and alcoholism and narcotic addiction, drug abuse, and drug depend-
ence facilities,". 
(3) Section 513 of such Act is amended by striking out "the Mental 
Retardation Facilities Construction Act, the Community Mental 
Health Centers Act,". 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 561 
(4) Section 1513(e)(l)(A)(i) of such Act is amended by striking out ", 9| Stat. 1608.^ 
the Community Mental Health Centers Act, the Mental Health 
Systems Act, sections 409 and 410 of the Drug Abuse Prevention, 
Treatment, and Rehabilitation Act, or the Comprehensive Alcohol 
Abuse and Alcoholism Prevention, Treatment, and Rehabilitation 
Act of 1970". 
(5) Section 1521(dX2)(A) of 
such Act is amended— 
(A) by striking out ", the Community Mental Health Centers 
Act," and inserting in lieu thereof "or"; and 
(B) by striking out", and the Drug Abuse Office and Treatment 
Act of 1972". 
(6) Section 1524(c)(6XA) of such Act is amended by striking out "the 
Community Mental Health Centers Act, section 409 or 410 of the 
Drug Abuse Office and Treatment Act of 1972, or the Comprehensive 
Alcohol Abuse and Alcoholism Prevention, Treatment, and Rehabili-
tation Act of 1970,". 
(h) The amendments made by this section sheill take effect October 1, 
1981. 
ONE-YEAR EXTENSION OF COMMUNITY HEALTH CENTERS AND PRIMARY 
CARE RESEARCH AND DEMONSTRATIONS 
SEC. 903. (a) The first sentence of section 330(g)(2) (42 U.S.C. 
254c(g)(2)) of 
the Public Health Service Act is amended by striking out 
"and" after "1980," and by striking out the period and inserting in 
lieu thereof the following: "and $280,000,000 for the fiscal year ending 
September 30,1982. For authorizations for appropriations for fiscal 
years 1983 and 1984, see section 1922.", 
Ante, p. 552. 
(b)(1) Section 340(g)(2) of the Public Health Service Act (42 U.S.C. 
256(g)(2)) is amended by striking out "and" after "1980," and by 
striking out the period and inserting in lieu thereof the following: 
"and $3,000,000 for the fiscal year ending September 30, 1982. No 
funds may be appropriated under this paragraph or paragraph (1) for 
a fiscal year beginning after September 30,1982.". 
(c) Effective October 1, 1982, section 340 of such Act is repealed. Repeal. 
42 u s e 300m. 
94 Stat. 3191. 
42 u s e 300m-3. 
Effective date. 
42 u s e 229d 
note. 
SERVICES TO MIGRANTS BY COMMUNITY HEALTH CENTERS 
SEC. 904. The Secretary of Health and Human Services shall review 
the performance of community health centers which have received 
grants under section 329 of the Public Health Service Act (relating to 42 use 254b. 
migrant health centers) to determine if the community health 
centers have provided services to migrants in a manner which is 
consistent with the needs of the migrants. In determining if the 
services have been provided in such a manner, the Secretary shall 
consider the hours of operation of a center, the bilingual capabilities 
of 
a center's staff, and the ability of 
the center's staff to detect, report, 
and treat adverse health effects resulting from exposure to pesticides. 
The Secretary shall report the results of the review conducted under 
this section to the Congress not later than six months after the date of 
the enactment of this section and shall include in the report actions 
taken by the Secretary to assure that community health centers 
receiving grants under such section 329 will provide services to 
migrants in a manner consistent with their needs. 
Report to 
eongress. 
95 STAT. 562 
PUBLIC LAW 97-35—AUG. 13, 1981 
CRITERIA FOR DETERMINING AREAS AND POPULATION GROUPS IN NEED 
OF SERVICES OF COMMUNITY HEALTH CENTERS 
SEC. 905. (a) Section 330(bX3) of the Public Health Service Act (42 
U.S.C. 254c(b)(3)) is amended by adding at the end the following: 
Ante, p. 535. 
"After the date of the enactment of part A of title XIX, the Secretary 
may not designate a medically underserved population or remove the 
designation of such a population unless the Secretary provides 
reasonable notice and opportunity for comment and consults with the 
chief executive officer of the State in which the population is located 
and appropriate local officials. The Secretary shall prescribe criteria 
for determining the specific shortages of personal health services of 
an area or population group. Such criteria shall include infant 
mortality in an area or population group, other factors indicative of 
the health status of a population group or residents of an area, the 
ability of the residents of an area or of a population group to pay for 
health services and their accessibility to them, and the availability of 
health professionals to residents of an area or to a population group.". 
G)) Section 330(e)(2) of such Act is amended by inserting before the 
second sentence the following: "Such an application shall also include 
a demonstration by the applicant that the area or a population group 
to be served by the applicant has a shortage of personal health 
services and that the center will be located so that it will provide 
services to the greatest number of persons residing in such area or 
included in such population group. Such a demonstration shall be 
made on the basis of the criteria prescribed by the Secretary under 
subsection (b)(3) or on any other criteria which the Secretary may 
prescribe to determine if the area or population group to be served by 
the applicant has a shortage of personal health services.". 
AUDITS OF GRANTS TO COMMUNITY HEALTH CENTERS 
SEC. 906. Section 330 of the Public Health Service Act (42 U.S.C. 
254c) is amended by adding at the end the following: 
"(hXD Each entity which receives a grant under subsection (d) shall 
provide for an independent annual financial audit of any books, 
accounts, financial records, files, and other papers and property 
which relate to the disposition or use of the funds received under such 
grant and such other funds received by or allocated to the project for 
which such grant was made. For purposes of assuring accurate, 
current, and complete disclosure of the disposition or use of the funds 
received, each such audit shall be conducted in accordance with 
generally accepted accounting principles. Each audit shall evaluate— 
"(A) the entity's implementation of the guidelines established 
by the Secretary respecting cost accounting, 
"(B) the processes used by the entity to meet the financial and 
program reporting requirements of the Secretary, and 
"(C) the billing and collection procedures of the entity and the 
relation of the procedures to its fee schedule and schedule of 
discounts and to the availability of health insurance and public 
programs to pay for the health services it provides. 
A report of each such audit shall be filed with the Secretary at such 
time and in such manner as the Secretary may require. 
Recordkeeping. 
"(2) Each entity which receives a grant under subsection (d) shall 
establish and maintain such records as the Secretary shall by 
regulation require to facilitate the audit required by paragraph (1). 
The Secretary may specify by regulation the form and manner in 
which such records shall be established and maintained. 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 563 
"(3) Each entity which is required to establish and maintain 
records or to provide for an audit under this subsection shall make 
such books, documents, papers, and records available to the Secretary 
or the Comptroller General of the United States, or any of their duly 
authorized representatives, for examination, copying, or mechanical 
reproduction on or off the premises of such entity upon a reasonable 
request therefor. The Secretary and the Comptroller General of the 
United States, or any of their duly authorized representatives, shall 
have the authority to conduct such examination, copying, and repro-
duction. 
"(4) The Secretary may, under appropriate circumstances, waive 
the application of all or part of the requirements of this subsection to 
a community health center.". 
Subtitle B—Developmental Disabilities 
EXTENSION OF PROGRAMS 
SEC. 911. (a) The first sentence of section 113(b)(2) of the Develop-
mental Disabilities Assistance and Bill of Rights Act (hereinafter in 
this subtitle referred to as the "Act") (42 U.S.C 6012(b)(2)) is amended 
by striking out "and" after "1980," and by inserting before the period 
a comma and the following: "$8,000,000 for the fiscal year ending 
September 30, 1982, $8,000,000 for the fiscal year ending September 
30, 1983, and $8,000,000 for the fiscal year ending September 30, 
1984". 
(b) Section 123(a) of the Act (42 U.S.C. 6033(a)) is amended by 
striking out "and" after "1980," and by inserting before the period a 
comma and the following: "$7,500,000 for the fiscal year ending 
September 30, 1982, $7,500,000 for the fiscal year ending September 
30, 1983, and $7,500,000 for the fiscal year ending September 30, 
1984". 
(c) Section 131 of the Act (42 U.S.C. 6061) is amended by striking out 
"and" after "1980," and by inserting before the period a comma and 
the following: "$43,180,000 for the fiscal year ending September 30, 
1982, $43,180,000 for the fiscal year ending September 30, 1983, and 
$43,180,000 for the 
fiscal 
year ending September 30,1984". 
EVALUATION SYSTEM 
SEC. 912. (a) Section 110 of the Act (42 U.S.C. 6009) is repealed. Repeal. 
SPECIAL PROJECT GRANTS 
SEC. 913. Section 145 of the Act (42 U.S.C. 6081) is amended to read 
as follows: 
" G R A N T AUTHORITY 
"SEC. 145. (a) The Secretary may make grants to public or nonprofit 
private entities for— 
"(1) demonstration projects— 
"(A) which are conducted in more than one State, 
"(B) which involve the participation of two or more Feder-
al departments or agencies, or 
"(C) which are otherwise of national significance, 
and which hold promise of expanding or otherwise improving 
services to persons with developmental disabilities (especially 
those who are disadvantaged or multihandicapped); and 
95 STAT. 564 
PUBLIC LAW 97-35—AUG. 13, 1981 
42 u s e 6012. 
42 u s e 6063. 
42 u s e 6067. 
Appropriation 
authorization. 
"(2) demonstration projects (including research, training, and 
evaluation in connection with such projects) which hold promise 
of expanding or otherwise improving protection and advocacy 
services relating to the State protection and advocacy system 
described in section 113. 
Projects for the evaluation and assessment of the quality of services 
provided persons with developmental disabilities which meet the 
requirements of subparagraphs (A), (B), and (C) of paragraph (1) may 
be included £is projects for which grants are authorized under such 
paragraph. 
"(b) No grant may be made under subsection (a) unless an applica-
tion therefor has been submitted to, and approved by, the Secretary. 
Such application shall be in such form, submitted in such manner, 
and contain such information as the Secretary shall by regulation 
prescribe. The Secretary may not approve such an application unless 
each State in which the applicant's project will be conducted has a 
State plan approved under section 133. The Secretary shall provide to 
the State Planning C!ouncil (established under section 137) for each 
State in which an applicant's project will be conducted an opportuni-
ty to review the application for such project and to submit its 
comments on the application. 
"(c) Pa3rments under grants under subsection (a) may be made in 
advance or by way of reimbursement, and at such intervals and on 
such conditions, as the Secretary finds necessary. The amount of any 
grant under subsection (a) shall be determined by the Secretary. 
"(d) For the purpose of grants under subsection (a), there are 
authorized to the appropriated $2,500,000 for the fiscal year ending 
September 30, 1982, $2,500,000 for the fiscal year ending September 
30, 1983, and $2,500,000 for the fiscal year ending September 30, 
1984.". 
Subtitle C—Health Services Research, Statistics, and 
Technology; Medical Libraries; and National Re-
search Service Awards 
42 u s e 201 note. 
REFERENCES IN SUBTITLE 
SEC. 916. Whenever in this subtitle an amendment or repeal is 
expressed in terms of an amendment to, or a repeal of, a section or 
other provision, the reference shall be considered to be made to a 
section or other provision of 
the Public Health Service Act. 
AUTHORIZATIONS FOR HEALTH SERVICES RESEARCH, STATISTICS, AND 
TECHNOLOGY 
SEC. 917. (a) The first sentence of section 308(i)(l) (42 U.S.C. 
242m(i)(l)) is amended by striking out "and" after "1980," and by 
inserting before the period a comma and the following: "$20,000,000 
for the fiscal year ending September 30, 1982, $22,000,000 for the 
fiscal year ending September 30, 1983, and $24,000,000 for the fiscal 
year ending September 30,1984". 
(b) Section 308(i)(2) is amended by striking out "and" after "1980," 
and by inserting before the period a comma and the following: 
"$39,000,000 for the fiscal year ending September 30, 1982, 
$39,000,000 for the fiscal year ending September 30, 1983, and 
$39,000,000 for the fiscal year ending September 30,1984". 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 565 
(cXD The first sentence of section 309(i) (42 U.S.C. 242n(i)) is 
amended by striking out "and" after "1980," and by inserting before 
the period a comma and the following: "$3,000,000 for the fiscal year 
ending September 30, 1982, $4,000,000 for the fiscal year ending 
September 30,1983, and $5,000,000 for the fiscal year ending Septem-
ber 30,1984". 
(2) The second sentence of such section is amended by striking out 
"the fiscal year ending September 30, 1981," and inserting in lieu 
thereof "for each of the fiscal years ending September 30, 1982, 
September 30,1983, and September 30,1984,". 
GENERAL AUTHORITIES 
SEC. 918. (a) Section 304(a)(3) (42 U.S.C. 242b(a)(3)) is amended— 
(1) by striking out "shall" and inserting in lieu thereof "may", 
and 
(2) by striking out "and" the first three places it occurs and 
inserting in lieu thereof "or". 
(b)(1) The first sentence of section 304(d)(1) is amended by striking 
out "and the National Academy of Sciences (acting through the 
Institute of Medicine and other appropriate units) shall, jointly and" 
and inserting in lieu thereof ", with the advice and assistance of the 
National Academy of Sciences (acting through the Institute of Medi-
cine and other appropriate units), shall,". 
(2) The second sentence of such section is amended by striking out 
"and the National Academy of Sciences (hereinafter in this subsec-
tion referred to as the 'Academy')". 
(3) Section 304(d)(3) is amended by striking out "and the Academy" 
each place it appears. 
(c) Section 304(d)(3) is amended by striking out "every two years" 
and inserting in lieu thereof "every three years". 
(d)(1) Subsections (b)(1) and (c)(1) of section 304 are each amended by 
striking out "Health, Education, and Welfare" and inserting in lieu 
thereof "Health and Human Services". 
(2) Subsection (d)(3) of such section is amended by striking out 
"Committee on Interstate and Foreign Commerce" and inserting in 
lieu thereof "Committee on Energy and Commerce". 
NATIONAL CENTER FOR HEALTH SERVICES RESEARCH 
SEC. 919. (a)(1) The first sentence of section 305(d)(1) (42 U.S.C. 
242c(d)(l)) is amended by striking out "health services, research, 
evaluations" and inserting in lieu thereof "health services research, 
evaluations, training, policy analysis,". 
(2)(A) The second sentence of such section is amended (i) by striking 
out "six of such centers" and inserting in lieu thereof "three of such 
centers", and (ii) by striking out "three national special emphasis 
centers" and all that follows through "health care delivery;" and 
inserting in lieu thereof "two national special emphasis centers,". 
(B) Section 308(i)(l) (42 U.S.C. 242m(i)(l)) (as amended by section 
917(a) of this Act) is further amended by adding at the end thereof the 
following new sentence: "Of the amounts appropriated under this 
paragraph for each of the fiscal years ending September 30, 1982, 
September 30, 1983, and September 30, 1984, not more than 
$1,500,000 may be used for grants and contracts for all the costs of 
planning, establishing, and operating centers under section 305(d)." 
95 STAT. 566 
PUBLIC LAW 97-35—AUG. 13, 1981 
42 use 242c. 
(3) Section 305(dX2)(BXiv) is amended by striking out "demonstra-
tions, and evaluations" and inserting in lieu thereof "evaluations, 
policy analysis, and demonstrations". 
(bXD Paragraph (4) of section 305(b) is amended to read as follows: 
"(4) the role of market forces in the health care system and the 
appropriate role they may play in restraining cost increases and 
improving the availability and quality of care.". 
42 use 242c 
(2) The amendment made by paragraph (1) shall apply with respect 
^°^- 
to grants made under section 305(b) of the Public Health Service Act 
for fiscal years beginning after September 30,1981, except that if an 
entity received a grant under paragraph (4) of such section, as in 
effect before the date of the enactment of this Act, for the fiscal year 
ending September 30, 1981, the Secretary may, until the fiscal year 
be^nning October 1,1983, make an additional grant or grants to such 
entity for the purposes prescribed by such paragraph as so in effect. 
(c) Section 305(b) is amended by adding after and below paragraph 
(4) the following: "No grant or contract shall be made under this 
subsection for the purpose of funding clinical research that is directly 
related to determining the cause of any disease or disorder or clinical 
research that is directly and principally designed to evaluate the 
efficacy of any therapeutic, diagnostic, or preventive health meas-
ure.". 
(d) Subsections (a) and (c) of section 305 are each amended by 
striking out "Health, Education, and Welfare" and inserting in lieu 
thereof "Health and Human Services". 
NATIONAL CENTER FOR HEALTH STATISTICS 
SEC. 920. (a) Section 306(eX3) (42 U.S.C. 242k(eX3)) is amended by 
inserting "and other activities" after "data collection". 
(b) The first sentence of section 306(1X2)(A) is amended by striking 
out "the Center" and inserting in lieu thereof "the Center and in 
cooperation with the Office of Federal Statistical Policy and Stand-
ards". 
(c) Section 306(1X2XD) is amended by striking out all after "subpara-
graph (A)" and inserting in lieu thereof a period. 
(dXD Subsections (a), (eX4), (j), (kX4)(C), (kX4XD), and (lX2XB)(v) of 
section 306 are each amended by striking out "Health, Education, 
and Welfare" and inserting in lieu thereof "Health and Human 
Services". 
(2) Subsection (c) of such section is amended by striking out 
"Committee on Interstate and Foreign Commerce" and inserting in 
lieu thereof "Committee on Energy and Commerce". 
INTERNATIONAL COOPERATION 
42 use 242/. 
SEC. 921. (a) Section 307(a) (42 U.S.C. 2421(a)) is amended (1) by 
striking out "and the" and inserting in lieu thereof ", health care 
technology, and the", and (2) by striking out "and 306" and inserting 
in lieu thereof "306, and 309". 
O
t
)
) Section 307(b) is amended— 
(1) in paragraph (5), by striking out "or health statistics" and 
inserting in lieu thereof ", health statistics, or health care 
technology", and 
(2) in paragraph (6), by striking out "and programs of biomedi-
cal research, health services research, and health statistical 
activities" and inserting in lieu thereof "or programs of biomedi-
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 567 
cal research, health services research, health statistical activi-
ties, or health care technology activities". 
GENERAL PROVISIONS 
SEC. 922. (a) Section 308(aX2) (42 U.S.C. 242m(a)(2)) is amended by 
striking out "September 1" and inserting in lieu thereof "December 
1". 
(b) Section 308(b)(2) is amended by striking out "$35,000" and 
inserting in lieu thereof "$50,000". 
(c) Section 308(dX2) is amended by inserting "or in the course of 
health care technology activities under section 309" after "305". 
NATIONAL CENTER FOR HEALTH CARE TECHNOLOGY 
SEC. 923. (a) Section 309(bXl) (42 U.S.C. 242n(bXl)) is amended by 
adding at the end thereof the following new sentence: "In carrying 
out this section, the Center shall not unreasonably inhibit the 
innovation of new technologies." 
(b) Section 309(bX5) is amended by striking out "may" and inserting 
in lieu thereof "shall" and by adding at the end thereof the following 
new sentence: "The making of such recommendations shall be a 
priority of the Center." 
(c) Section 309(e) is amended by adding at the end thereof the 
following new sentence: "In carrying out this section, the Secretary 
shall ensure that the Center does not duplicate the activities of other 
units of the Department of Health and Human Services or, to the 
extent practicable, the activities of other Federal departments and 
agencies. To ensure necessary coordination, all assessments, re-
search, evaluations, and demonstrations conducted by the Center 
shall take into consideration relevant studies and activities under-
taken by the National Institutes of Health, the Food and Drug 
Administration, the Center for Disease Control, the Alcohol, Drug 
Abuse, and Mental Health Administration, and other Federal de-
partments and agencies." 
(d) Sections 309(d) and 309(fXl)(B) are each amended by striking out 
"$35,000" and inserting in lieu thereof "$50,000". 
(e) Section 309(fKlXB) is amended by striking out "in excess of and 
inserting in lieu thereof "the direct costs of which will exceed". 
(f)(1) Subparagraph (D) of section 309(fKl) is amended by striking 
out "exemplary standards, norms, and criteria" and inserting in lieu 
thereof "information". 
(2) Subparagraph (E) of such section is amended by striking out 
"standards, norms, and criteria" and inserting in lieu thereof "infor-
mation". 
(g) Section 309(fK2XA) is amended by striking out "and the head of 
the Health Care Financing Administration (or the successor to such 
entity) who (or their designees) shall be ex officio members" and 
inserting in lieu thereof "the head of the Health Care Financing 
Administration (or the successor to such entity), and such other 
Federal officials as the Secretary may specify, who (or their desig-
nees) shall be nonvoting ex officio members". 
(h) The third sentence in the matter following section 309(f)(2XB) is 
amended by striking out "two" and inserting in lieu thereof "three". 
(iXD Clauses (1) and (2) of section 309(f)(6) are redesignated as 
clauses (A) and (B), respectively. 
89-194 O—82 
38:QL3 
95 STAT. 568 
PUBLIC LAW 97-35—AUG. 13, 1981 
42 use 242n. 
(2) Subsections (a) and (g) of section 309 are each amended by 
striking out "Health, Education, and Welfare" and inserting in lieu 
thereof "Health and Human Services". 
(j) Section 309(fK7) is amended by striking out "1981" and inserting 
in lieu thereof "1984". 
(k) Subsection (g) of section 309 is repealed and subsections (h) and 
(i) are redesignated as subsections (g) and (h), respectively. 
NATIONAL RESEARCH SERVICE AWARDS 
SEC. 924. (aXD Section 472(aXlXA) (42 U.S.C. 2891-l(aXlXA)) is 
amended— 
(A) by inserting "and" after the comma in clause (iii); 
(B) by striking out clauses (iv), (v), and (vi); 
(C) by redesignating clause (vii) as clause (iv); and 
(D) by striking out "and the research described in clause (vi)" 
in clause (iv) (as redesignated by subparagraph (C) of this 
paragraph). 
(2) Section 472(aX3) is amended to read as follows: 
"(3) In awarding National Research Service Awards under this 
section, the Secretary shall take account of the Nation's overall need 
for biomedical research personnel by giving special consideration to 
physicians who agree to undertake a minimum of two years of 
bioiTifidicdl. rGSfiS-rch 
(bXD Section 472(bXlXC) is amended by striking out "or 
(aXlXAXiv)". 
(2) Section 472(bX2) is amended by striking out "Health, Education, 
jand Welfare" and inserting in lieu thereof "Health and Human 
Services". 
(3) The first sentence of section 472(bX5) is amended by inserting a 
comma and "tuition, fees," after "stipends". 
(cXD Section 472(cXl) is am^ended to read as follows: 
"(cXD Each individual who is awarded a National Research Service 
Award (other than an individual who is a prebaccalaureate student 
who is awarded a National Research Service Award for research 
training) shall, in accordance with paragraph (3), engage in health 
research or teaching or any combination thereof which is in accord-
ance with the usual patterns of academic employment, for a period 
computed in accordance with paragraph (2).". 
(2) Section 472(cX2) is amended to read as follows: 
"(2) For each month for which an individual receives a National 
Research Service Award which is made for a period in excess of 
twelve months, such individual shall engage in one month of health 
research or teaching or any combination thereof which is in accord-
ance with the usual patterns of 
academic employment.". 
(3) The second sentence of section 472(cX3) is amended to read as 
follows: "The Secretary shall by regulation prescribe the type of 
research and teaching in which an individual may engage to comply 
with such requirement and such other requirements respecting 
research and teaching as the Secretary considers appropriate. . 
(d) The first sentence of section 472(d) is amended by striking out 
"and" after "1980," and by inserting before the period a comma and 
"$182,000,000 for the fiscal year ending September 30, 1982, and 
$195,000,000 for the 
fiscal 
year ending September 30,1983". 
(e) Section 473(c) (42 U.S.C. 2891-2(c)) is amended (1) by striking out 
"Interstate and Foreign Commerce" and inserting in lieu thereof 
"Energy and Commerce", and (2) by striking out Public Welfare" 
and inserting in lieu thereof "Human Resources". 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 569 
EXTENSION OF ASSISTANCE FOR LIBRARIES; MISCELLANEOUS 
SEC. 925. (a) Section 890(c) (42 U.S.C. 280b(c)) is amended by striking 
out "and" after "1980," and by inserting before the period a comma 
and the following: "and $7,500,000 for the fiscal year ending Septem-
ber 30,1982". 
(b) Section 434(d)(1) (42 U.S.C. 289c-l(d)(l)) is amended by inserting 94 Stat. 3184. 
"musculoskeletal and skin diseases," after "arthritis,". 
Subtitle D—Categorical Programs 
PREVENTIVE HEALTH SERVICE PROGRAMS 
SEC. 928. (a) Subsection (a) of section 317(a) of the Public Health 
Service Act (42 U.S.C. 247b) is amended to read as follows: 
"(a) The Secretary may make grants to States, and in consultation 
with State health authorities, to political subdivisions of States and to 
other public entities to assist them in meeting the costs of establish-
ing and maintaining preventive health service programs.". 
(b) Subsection (j) of such section (42 U.S.C. 247b(j)(l)(A)) is amended 
to read as follows: 
"(j)(l) For grants under subsection (a) for preventive health service 
programs to immunize children against immunizable diseases there 
are authorized to be appropriated $29,500,000 for the fiscal year 
ending September 30, 1982, $32,000,000 for the fiscal year ending 
September 30, 1983, and $34,500,000 for the fiscal year ending 
September 30,1984. 
"(2) For grants under subsection (a) for preventive health service 
programs for tuberculosis there are authorized to be appropriated 
$9,000,000 for the fiscal year ending September 30,1982, $10,000,000 
for the fiscal year ending September 30,1983, and $11,000,000 for the 
fiscal year ending September 30,1984.". 
PREVENTION AND CONTROL OF VENEREAL DISEASES 
SEC. 929. The first sentence of section 318(d)(1) of the Public Health 
Service Act (42 U.S.C. 247c(d)(l)) is amended by striking out "and" 
after "1980," and by inserting before the period a comma and the 
following: "$40,000,000 for the fiscal year ending September 30,1982, 
$46,500,000 for the fiscal year ending September 30, 1983, and 
$50,000,000 for the fiscal year ending September 30,1984". 
EXTENSION OF PROGRAM FOR MIGRANT HEALTH CENTERS 
SEC. 930. (a) Section 329(h) of the Public Health Service Act (42 
U.S.C. 247d(h)) is amended by striking out paragraphs (1), (2), and (3) 42 use 254b. 
and inserting in lieu thereof the following: 
"(h)(1) For the purposes of subsections (c), (d), and (e), there are 
authorized to be appropriated $43,000,000 for the fiscal year ending 
September 30,1982, $47,500,000 for the fiscal year ending September 
30, 1983, and $51,000,000 for the fiscal year ending September 30, 
1984. The Secretary may not obligate for grants and contracts under 
subsection (c)(1) in any fiscal year an amount which exceeds 2 per 
centum of the funds appropriated under this paragraph for that fiscal 
year, the Secretary may not obligate for grants under subsection 
(d)(1)(C) in any fiscal year an amount which exceeds 5 per centum of 
such funds, and the Secretary may not obligate for contracts under 
95 STAT. 570 
PUBLIC LAW 97-35—AUG. 13, 1981 
subsection (e) in any fiscal year an amount which exceeds 10 per 
centum of such funds.". 
42 use 254b. 
(b) Paragraph (4) of section 329(h) is redesignated as paragraph (2). 
FAMILY PLANNING PROGRAMS 
SEC. 931. (aXD Section 1001(c) of the Public Health Service Act (42 
U.S.C. 300(c)) is amended by striking out "and" after "1980," and by 
inserting before the period a comma and the following: "$126,510,000 
for the fiscal year ending September 30, 1982; $139,200,000 for the 
fiscal year ending September 30,1983; and $150,830,000 for the fiscal 
year ending September 30,1984". 
(2) Section 1003(b) of such Act (42 U.S.C. 300a-l(b)) is amended by 
striking out "and" after "1980," and by inserting before the period a 
comma and the following: "$2,920,000 for the fiscal year ending 
September 30, 1982; $3,200,000 for the fiscal year ending September 
30, 1983; and $3,500,000 for the fiscal year ending September 30, 
1984". 
(3) Section 1005(b) of Such Act (42 U.S.C. 300a-3(b)) is amended by 
striking out "and" £ifter "1980," and by inserting before the period a 
comma and the following: "$570,000 for the fiscal year ending 
September 30,1982; $600,000 for the fiscal year ending September 30, 
1983; and $670,000 for the fiscal year ending September 30, 1984". 
(b)(1) Section 1001(a) of such Act is amended by adding at the end 
the following: "To the extent practiced, entities which receive grants 
or contracts under this subsection shall encourage familiy participa-
tion in projects assisted under this subsection.". 
42 use 300a-2. 
(2) Section 1004 is amended by striking out "(a)" after "SEC. 1004." 
and by striking out subsection (b). 
^tudy. 
(c) The Secretary of Health and Human Services shall conduct a 
note 
study of the possible ways of State delivery of the services for which 
42 use 300. 
assistance is authorized by title X of the Public Health Service Act 
and the willingness and ability of the States to assume the adminis-
Report to 
tration of activities assisted under such title X. The Secretary shall 
eongress. 
report to the Congress on the results of such study 18 months after 
the date of the enactment of this Act. 
Subtitle E—Health Planning 
AUTHORIZATIONS 
SEC. 933. (a)(1) Section 1516(d)(1) of the Public Health Service Act 
(42 U.S.C. 3001-5(d)(l)) is amended bv inserting "and" after "1980," 
and by inserting a period after "1981' and striking out the remainder 
of such section. 
(2) Section 1525(c) of such Act (42 U.S.C. 300m-4(c)) is amended by 
inserting "and" after "1980," and by inserting a period after "1981^' 
and striking out the remainder of such section. 
(3) Section 1534(d) of such Act (42 U.S.C. 300n-3(d)) is amended by 
inserting "and" after "1980," and by inserting a period after "198r' 
and striking out the remainder of such section. 
(b) Part D of the Public Health Service Act is amended by adding at 
the end the following: 
"AUTHORIZATIONS FOR FISCAL YEAR 1982 
42 use 300n-6 
"SEC. 1537. For grants and contracts under sections 1516(a), 1525(a), 
and 1534(a) there is authorized to be appropriated $102,000,000 for 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 571 
fiscal year 1982. Of the amount appropriated under this section, not 
more than $65,000,000 may be used for grants under section 1516(a).". 
MINIMUM GRANT; WAIVER OF REQUIREMENTS 
SEC. 934. (a) Section 1516(cXl)(CXiv) of the Public Health Service 
Act is amended by striking out "$260,000" and inserting in lieu 42 use 300/-5. 
thereof "$100,000". 
(b) The Secretary of Health and Human Services may— 
42 use 3
0
0
Z
-
2 
(1) upon application waive the application of the requirements "
°
*
® 
of subsection (e), (g), or (h) of section 1513 of the Public Health 
Service Act, or any combination of such subsections, to a health 42 use 300/-2. 
systems agency if the Secretary determines that the Federal 
funds made available to the agency are not sufficient to enable it 
to meet such requirements or 
(2) by regulation waive the application of the requirements of 
subsection (e), (g), or (h) of section 1513 of the Public Health 
Service Act, or any combination of such subsections, to all health 
systems agencies if the Secretary determines that the Federal 
funds made available to all the agencies are not sufficient to 
enable them to meet such requirements. 
STATES WITHOUT HEALTH SYSTEMS AGENCIES 
SEC. 935. (aXD Section 1536 of the Public Health Service Act (42 
U.S.C. 300n-5) is amended— 
(1) by striking out subsection (a), 
(2) by amending the matter in subsection (b) preceding para-
graph (1) to read as follows: "Upon application of the chief 
executive officer of a State or the Commonwealth of Puerto Rico, 
the Virgin Islands, Guam, the Trust Territory of the Pacific 
Islands, the Northern Mariana Islands, or AmericEm Samoa, it 
shall, upon approval of the application, be considered to be a 
State for purposes of this title and", 
(3) by striking out "sections 1516 and 1640" and inserting in 
lieu thereof "section 1640", and 
(4) by adding after and below paragraph (4) the following: 
"An application made under this section for a fiscal year shall be 
made not later than November 1 in that fiscal year and shall contain 
the certification of the chief executive officer that the State is willing 
and able to meet the purposes of this title in such fiscal year without 
any health systems agency in the State.". 
(b) A State which— 
42 use 300Z-5 
(1) because of section 1536(b) of the Public Health Service Act '^"^ 
(as in effect on September 30, 1981) received a grant under 
section 1516 of 
such Act for fiscal year 1981, and 
(2) had an application under section 1536 of such Act (as 
amended by subsection (a)) approved, 
shall be eligible to receive a grant under section 1516 of such Act for 
fiscal year 1982. 
(c) If a State which on the date of the enactment of this Act has a 42 use 300/-5 
population of less than 600,000 and has only one health service area "
°
*
® 
has an application approved under this section, such State shall be 
eligible to receive a grant under section 1516 of the Public Health 
Service Act for fiscal year 1982. 
(d) The last sentence of section 1512(bX5) of the Public Health 
Service Act (42 U.S.C. 3001-l(b)(5)) is amended by inserting before the 
period the following: "or health insurance". 
95 STAT. 572 
PUBLIC LAW 97-35—AUG. 13, 1981 
42 u s e 300Z-1 
note. 
Health 
Maintenance 
Organization 
Amendments of 
1981. 
42 u s e 201 note. 
42 u s e 201 note. 
CERTIFICATE OF NEED REVIEW 
SEC. 936. (a) Section 1531 of 
the Public Health Service Act (42 U.S.C. 
300n) is amended— 
(1) by striking out "$75,000" each place it occurs in paragraph 
(5) and inserting in lieu thereof "$250,000"; 
(2) by striking out "$150,000" each place it occurs in paragraph 
(6) and inserting in lieu thereof "$600,000"; and 
(3) by striking out "$150,000" each place it occurs in paragraph 
(7) and inserting in lieu thereof "$400,000". 
QoXD Section 1521(d)(1)(B) of the Public Health Service Act (42 
U.S.C. 300m(d)(l)(BXii)) is amended— 
(A) by strUdng out "twelve months" the second time it appears 
in clause (i) and inserting in lieu thereof "twenty-four months", 
and 
(B) by striking out "twelve months" the second time it appears 
in clause (ii) and inserting in lieu thereof "twenty-four months". 
(2) The first sentence of section 1521(b)(2)(B) of such Act is amended 
to read as follows: "The period of an agreement described in subpara-
graph (A) shall not extend beyond the period set forth in subsection 
(d)(1)(B).". 
EFFECTIVE DATE 
SEC. 937. The amendments made by this subtitle shall take effect 
October 1,1981. 
Subtitle F—Health Maintenance Organizations 
CHAPTER 10—HEALTH MAINTENANCE ORGANIZATIONS 
SHORT TITLE; REFERENCE TO ACT 
SEC. 940. (a) This subtitle may be cited as the "Health Maintenance 
Organization Amendments of 1981". 
(b) 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 Public Health Service Act. 
42 u s e 300e-2, 
300e-3. 
42 u s e 242a, 
242b. 
42 u s e 300e-16. 
42 u s e 300e-7. 
EXTENSIONS 
SEC. 941. (a) Subsection (a) of section 1309 (42 U.S.C. 300e-8(a)) is 
amended to read as follows: 
"(a)(1) For grants and contracts under sections 1303 and 1304 there 
is authorized to be appropriated $20,000,000 for the fiscal years 1982, 
1983, and 1984, No funds appropriated under this paragraph may be 
expended or obligated for a grant or contract unless the entity 
received a grant or contract under section 303 or 304 during or before 
the fiscal year 1981. 
"(2) For grants under section 1317 there is authorized to be 
appropriated $1,000,000 for each of the fiscal years 1982, 1983, and 
1984.'^ 
O
t
>
) Subsection (b) of section 1309 is amended to read as follows: 
"(b) To maintain in the loan fund established under section 1308(e) 
for the purpose of making new loans a balance of at least $5,000,000 at 
the end of each fiscal year and to meet the obligations of the loan fund 
resulting from defaults on loans made from the fund and to meet the 
other obligations of the fund, there is authorized to be appropriated to 
note. 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 573 
the loan fund for fiscal years 1982,1983, and 1984, such sums as mav 
be necessary to assure such balance and meet such obligations.'. 
(c) Section 1304(j) (42 U.S.C. 300e-3(j)) is amended by striking out 
"1981" and inserting in lieu thereof "1984". 
REVISION OF REQUIREMENTS FOR HEALTH MAINTENANCE 
ORGANIZATIONS 
SEC. 942. (a)(1) Section 1301(b)(3) is amended (A) by striking out 42 use 300e. 
subparagraph (C), and (B) by redesignating subparagraphs (D) and (E) 
as subparagraphs (C) and (D), respectively. 
(2) Section 1301(b)(3)(A)(iv) is amended by striking out "subject to 
subparagraph (C),". 
(3)(A) Section 1310(b)(1) (42 U.S.C. 300e-9(b)(l)) is amended by 
striking out "provides basic health services" and inserting in lieu 
thereof "provides more than one-half of its basic health services 
which are provided by physicians". 
(B) Section 1310(b)(2) is amended by striking out "basic health 
services" and inserting in lieu thereof "its basic health services which 
are provided by physicians". 
(4) Section 1310(b)(2) (42 U.S.C. 300e-9(b)(2)) is amended by striking 
out "or (B)" and inserting in lieu thereof "(B) individual physicians 
and other health professionals under contract with the organization, 
or(C)". 
(5) The amendment made by paragraph (3)(A) shall apply with ^^ use 300e-9 
respect to the offering of a health maintenance organization in 
accordance with section 13100t>Xl) of the Public Health Service Act 
after four years after the date the organization becomes a qualified 
health maintenance organization for purposes of section 1310 of such 
Act if the health maintenance organization provides assurances 
satisfactory to the Secretary that upon the expiration of such four 
years it will provide more than one half of its basic health services 
which are provided by physicians through physicians or other health 
professionals who are members of the staff of the organization or a 
medical group (or groups). 
(b)(1) Section 1301(b)(3XB) is amended by striking out "(i)", by 
striking out clause (ii), and by redesignating subclauses (I) and (II) as 
clauses (i) and (ii), respectively. 
(2) Subparagraph (D) of section 1301(b)(3) is amended to read as 
follows: 
"(D) Contracts between a health maintenance organization and 
health professionals for the provision of basic and supplemental 
health services shall include such provisions as the Secretary may 
require, but only to the extent that such requirements are designed to 
insure the delivery of quality health care services and sound fiscal 
management.". 
(c)(1) The first sentence of section 1301(bX4) (42 U.S.C. 300e(bX4)) is 
amended by inserting before the period a comma and the following: 
"except that a health maintenance organization which has a service 
area located wholly in a nonmetropolitan area may make a basic 
health service avauable outside its service area if that basic health 
service is not a primary care or emergency health care service and if 
there is an insufficient number of providers of that basic health 
service within the service area who will provide such service to 
members of the health maintenance organization". 
(2) The first sentence of section 1301(b)(4) is amended by striking 
out "promptly as appropriate" and inserting in lieu thereof "with 
reasonable promptness". 
95 STAT. 574 
PUBLIC LAW 97-35—AUG. 13, 1981 
42 use 300e. 
(d)(1) Section 1301(c) is amended by striking out paragraphs (4), (9), 
and (10), by redesignating paragraphs (5) through (8) as paragraphs 
(4) through (7), by redesignating paragraph (11) as paragraph (9), and 
by adding after paragraph (7) (as so redesignated) the following new 
paragraph: 
"(8) adopt at least one of the following arrangements to protect 
its members from incurring liability for payment of any fees 
which are the legal obligation of such organization— 
"(A) a contractual arrangement with any hospital that is 
regularly used by the members of such organization prohib-
iting such hospital from holding any such member liable for 
pajmient of any fees which are the legal obligation of such 
organization; 
(B) insolvency insurance, acceptable to the Secretary; 
"(C) adequate financial reserve, acceptable to the Secre-
tary; and 
. (D) other arrangements, acceptable to the Secretary, to 
protect members, 
except that the requirements of this paragraph shall not apply to 
a health maintenance organization if applicable State law pro-
vides the members of such organization with protection from 
liability for payment of any fees which are the legal obligation of 
such organization; and". 
(2) Subsection (d) of section 1301 is repealed. 
(e) Section 1301(c)(2) (42 U.S.C. 300e(c)(2)) is amended— 
(1) by striking out "obtain insurance or make other arrange-
ments", 
(2) by inserting "obtain insurance or make other arrange-
ments'^^after "(A)^, "(B)", and "(C)", 
(3) by striking out "and (C)" and inserting in lieu thereof "(C)", 
and 
(4) by inserting before the semicolon a comma and the follow-
ing: "and (D) make arrangements with physicians or other 
health professionals, health care institutions, or any combina-
tion of such individuals or institutions to assume all or part of the 
financial risk on a prospective basis for the provision of basic 
health services by the physicians or other health professionals or 
through the institutions". 
(f) The last sentence of section 1302(1) (42 U.S.C. 300e-l(l)) is 
repealed. 
(g)(1) The first sentence of section 1302(2) (42 U.S.C. 300e-l(2)) is 
amended to read as follows: "The term 'supplemental health services' 
means any health service which is not included as a basic health 
service under paragraph (1) of this section.". 
(2) The second sentence of such section is amended by striking out 
"If a service of a physician described in the preceding sentence' and 
inserting in lieu thereof "If a health service provided by a physician". 
(3) The last sentence of such section is repealed. 
(h) Section 1302(4)(C) is amended by inserting before the semicolon 
at the end of clause (i) the following: , except that this clause does not 
apply before the end of the forty-eight month period beginning after 
the month in which the health maintenance oranization becomes a 
qualified health maintenance organization as defined in section 
42 use 300e-9. 
1310(d), or as authorized by the Secretary in accordance with regula-
tions that take into consideration the unusual circumstances of the 
group". 
(i) Section 1302(5)(B) is amended by striking out "feasible (1)" and 
inserting in lieu thereof "feasible," and by striking out "administra-
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 575 
tive staff and all that follows in such section and inserting in lieu 
thereof "administrative staff.". 
0) Section 1302(8) (42 U.S.C. 300e-l(8)) is amended to read as 
follows: 
"(8)(A) The term 'community rating system' means the systems, 
described in subparagraphs (B) and (C), of fixing rates of payments for 
health services. A health maintenance organization may fix its rates 
of payments under the system described in subparagraph (B) or (C) or 
under both such systems, but a health maintenance organization may 
use only one such system for fixing its rates of payments for any one 
group. 
"(B) A system of fixing rates of payment for health services may 
provide that the rates shall be fixed on a per-person or per-family 
basis and may authorize the rates to vary with the number of persons 
in a family, but, except as authorized in subparagraph (D), such rates 
must be equivalent for all individuals and for all families of similar 
composition. 
"(C) A system of fixing rates of pa5mient for health services may 
provide that the rates shall be fixed for individuals and families by 
groups. Except as authorized in subparagraph (D), such rates must be 
equivalent for all individuals in the same group and for all families of 
similar composition in the same group. If a health maintenance 
organization is to fix rates of payment for individuals and families by 
groups, it shall— 
"(i) classify all of the members of the organization into classes 
based on factors which the health maintenance organization 
determines predict the differences in the use of health services by 
the individuals or families in each class and which have not been 
disapproved by the Secretary, 
"(ii) determine its revenue requirements for providing services 
to the members of each class established under clause (i), and 
"(iii) fix the rates of payment for the individuals and families of 
a group on the basis of a composite of the organization's revenue 
requirements determined under clause (ii) for providing services 
to them as members of the classes established under clause (i). 
The Secretary shall review the factors used by each health mainte-
nance organization to establish classes under clause (i). If the Secre-
tary determines that any such factor may not reasonably be used to 
predict the use of the health services by individuals and families, the 
Secretary shall disapprove such factor for such purpose. 
"(D) The following differentials in rates of payments may be 
established under the systems described in subparagraphs (B) and (C): 
"(i) Nominal differentials in such rates may be established to 
reflect differences in marketing costs and the different adminis-
trative costs of collecting payments from the following categories 
of members: 
"(I) Individual members (including their families). 
"(II) Small groups of members (as determined under regu-
lations of the Secretary). 
"(Ill) Large groups of members (as determined under 
regulations of the Secretary). 
"(ii) Nominal differentials in such rates may be established to 
reflect the compositing of the rates of payment in a systematic 
manner to accommodate group purchasing practices of the 
various employers. 
"(iii) Differentials in such rates may be established for mem-
bers enrolled in a health maintenance organization pursuant to a 
contract with a governmental authority under section 1079 or 
95 STAT. 576 
PUBLIC LAW 97-35—AUG. 13, 1981 
1086 of title 10, United States Code, or under any other govern-
mental program (other than the health benefits program author-
5 use 8901 et 
ized by chapter 89 of title 5, United States Code) or any health 
*
^
^
" 
benefits program for employees of States, political subdivision of 
States, and other public entities.". 
INITIAL OPERATION COSTS 
SEC. 943. (a) Section 1805(a) (42 U.S.C. 300e-4) is amended— 
(1) by striking out "nonprofit" in paragraphs (1) and (2), and 
(2) by amending paragraph (3) to read as follows: 
"(3) guarantee to non-Federsd lenders payment of the principal 
of and the interest on loans made to private health maintenance 
organizations for the amounts referred to in paragraphs (1) and 
(2).". 
(b) Section 1305(bXl) is amended to read as follows: 
"(bXD Except as provided in paragraph (2), the aggregate amount of 
principal of loans made or guaranteed, or both, under subsection (a) 
for a health maintenance organization may not exceed $7,000,000. In 
any twelve-month period the amount disbursed to a health mainte-
nance organization under this section (either directly by the Secre-
tary, by an escrow agent under the terms of an escrow agreement, or 
by a lender under a guaranteed loan) may not exceed $3,000,000.". 
(c) Section 1305(d) is amended by striking out "1981" and inserting 
in lieu thereof "1986". 
(d) Subsection (e) of section 1307 (42 U.S.C. 300e-6) is repealed. 
AMBULATORY FACIUTIES 
SEC. 944. (a) Section 1305A(a) (42 U.S.C. 300e-4a(a)) is amended— 
(1) by striking out "nonprofit" in paragraph (1), and 
(2) by amending paragraph (2) to read as follows: 
"(2) guarantee to non-Federal lenders for their loans to private 
health maintenance organizations for projects described in para-
graph (1) the payment of principal and interest on such loans.", 
(b) Subsections (b) and (c) of section 1305A are redesignated as 
subsections (c) and (d), respectively, and the following is inserted after 
subsection (a): 
"(b) No loan may be made to a health maintenance organization 
and no loan to a health maintenance organization may be guaranteed 
under subsection (a) unless the application of the health maintenance 
organization for such loan or loan guarantee contains assurances 
satisfactory to the Secretary that— 
"(1) at the time the application is made the health mainte-
nance organization is 
fiscally 
sound; 
"(2) if the application is for a loan, the health maintenance 
organization is unable to secure a loan, at the rate of interest 
prevailing in the area in which the organization is located, from 
non-Federal lenders for the project with respect to which the 
application is submitted, or, if the application is for a loan 
guarantee, the health maintenance organization would be 
unable to secure a loan from such lenders for such project 
without the loan guarantee; and 
"(3) during the period of the loan or loan guarantee, the health 
maintenance organization will remain fiscally sound.". 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 577 
LOANS 
SEC. 945. Section 1308(bX2) (42 U.S.C. 300e-7(b)(2)) is amended— 
(1) by amending clause (D) to read as follows: "(D) on the date 
the loan is made, bear interest at a rate comparable to the rate of 
interest prevailing on such date with respect to marketable 
obligations of the United States of comparable maturities, ad-
justed to provide for appropriate administrative charges, and"; 
and 
(2) by adding at the end the following: "On the date disburse-
ments are made under a loan after the initial disbursement 
under the loan, the Secretary may change the rate of interest on 
the amount of the loan disbursed on that date to a rate which is 
comparable to the rate of interest prevailing on the date the 
subsequent disbursement is made with respect to marketable 
obligations of the United States of comparable maturities, ad-
justed to provide for appropriate administrative charges.". 
DUAL CHOICE 
SEC. 946. (a) Section 1310(d) (42 U.S.C. 300e-9(d)) is amended by 
adding at the end the following: "Every two years (or such longer 
period as the Secretary may by regulation prescribe) after the date a 
health maintenance organization becomes a qualified health mainte-
nance organization under this subsection, the health maintenance 
organization must demonstrate to the Secretary that it is qualified 
within the meaning of this subsection.". 
(b) Section 1310(f)(1) is amended by inserting before the semicolon a 
comma and the following: "except that such term includes nonappro-
priated fund instrumentalities of the Government of the United 
States". 
REPEAL OF SPECIAL CONSIDERATIONS 
SEC. 947. (a) Section 1303 (42 U.S.C. 300e-2) is amended by striking 
out subsection (i). 
(b) Section 1304 (42 U.S.C. 300e-3) is amended by striking out 
subsection (k). 
(c) Section 1305 (42 U.S.C. 300e-4) is amended by striking out 
subsection (e). 
FINANCIAL DISCLOSURE 
SEC. 948. (a) Subsection (a)(2) of section 1318 (42 U.S.C. 300e-17) is 
amended to read as follows: 
"(2) A copy of the report, if any, filed with the Health Care 
Financing Administration containing the information required 
to be reported under section 1124 of the Social Security Act by 42 use i320a-3. 
disclosing entities and the information required to be supplied 
under section 1902(aX38) of such Act.". 
42 use I396a. 
(b) Subsection (aX3XB) of such section is amended to read as follows: 
"(B) any furnishing for consideration of goods, services 
(including management services), or facilities between the 
health maintenance organization and a party in interest, but 
not including salaries paid to employees for services pro-
vided in the normal course of their employment and health 
services provided to members by hospitals and other provid-
ers and by staff, medical group (or groups), individual prac-
tice association (or associations), or any combination thereof: 
and". 
95 STAT. 578 
PUBLIC LAW 97-35—AUG. 13, 1981 
42 use 300e-i7. 
(Q) Subsection (b)(1) of such section is amended by striking out 
"employee" and inserting in lieu thereof "employee responsible for 
management or administration". 
(d) Subsection (b)(4) of such section is amended to read as follows: 
"(4) any spouse, child, or parent of an individual described in 
paragraph (1).". 
MISCELLANEOUS 
SEC. 949. (a) The third sentence of section 1312(b)(1) (42 U.S.C. 
300e-l 
1(b)(1)) is amended by inserting after "Secretary prescribes" 
the following: ", then after the Secretary provides the entity a 
reasonable opportunitv for reconsideration of his determination, 
including, at the entity s election, a fair hearing". 
Repeals. 
(b) Sections 1314 and 1316 (42 U.S.C. 300e-13,300e-15) are repealed, 
(c) Section 1527(bXl) (42 U.S.C. 300m-6(bXl)) is amended— 
(1) by striking out clause (i) in subparagraph (A) and 
by redesignating clauses (ii) and (iii) as clauses (i) and (ii), 
respectively, 
(2) by striking out "such enrolled individuals" in subparagraph 
(A) and inserting in lieu thereof "individuals enrolled in such 
organization or organizations", 
(3) by striking out "which has, in the service area of the 
organization or service areas of the organizations in the combina-
tion, an enrollment of at least 50,000 individuals" in subpara-
graph (BXii), 
(4) by striking out "such enrolled individuals" in subparagraph 
(BXiii) and inserting in lieu thereof "individuals enrolled in such 
organization or organizations", 
(5) by striking out "which has, in the service area or the 
organization or service areas of the organizations in the combina-
tion, an enrollment of at least 50,000 individuals" in subpara-
graph (CXi), and 
(6) by striking out "such enrolled individuals" in subparagraph 
(CXii) and inserting in lieu thereof "individuals enrolled in such 
organization or organizations". 
Effective date. 
(d) The amendments made by subsection (c) shall take effect 
42USC300m-6 
October 1,1982. 
note. 
Subtitle G—Adolescent Family Life 
SEC. 955. (a) The Public Health Service Act is amended by adding at 
the end thereof the following new title: 
"TITLE XX—ADOLESCENT FAMILY LIFE DEMONSTRATION 
PROJECTS 
"FINDINGS AND PURPOSES 
42 use 300z. 
"SEC. 2001. (a) The Congress finds that— 
"(1) in 1978, an estimated one million one hundred thousand 
teenagers became pregnant, more than five hundred thousand 
teenagers carried their babies to term, and over one-half of the 
babies born to such teenagers were born out of wedlock; 
"(2) adolescents aged seventeen and younger accounted for 
more than one-half of the out of wedlock births to teenagers; 
"(3) in a high proportion of cases, the pregnant adolescent is 
herself the product of an unmarried parenthood during adoles-
cence and is continuing the pattern in her own lifestyle; 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 579 
"(4) it is estimated that approximately 80 per centum of 
unmarried teenagers who carry their pregnancies to term live 
with their families before and during their pregnancy and 
remain with their families after the birth of the child; 
"(5) pregnancy and childbirth among unmarried adolescents, 
particularly young adolescents, often results in severe adverse 
health, social, and economic consequences, including: a higher 
percentage of pregnancy and childbirth complications; a higher 
incidence of low birth weight babies; a higher frequency of 
developmental disabilities; higher infant mortality and morbid-
ity; a decreased likelihood of completing schooling; a greater 
likelihood that an adolescent marriage will end in divorce; and 
higher risks of unemployment and welfare dependency; 
(6)(A) adoption is a positive option for unmarried pregnant 
adolescents who are unwilling or unable to care for their chil-
dren since adoption is a means of providing permanent families 
for such children from available approved couples who are 
unable or have difficulty in conceiving or carrying children of 
their own to term; and 
"(B) at present, only 4 per centum of unmarried pregnant 
adolescents who carry their babies to term enter into an adoption 
plan or arrange for their babies to be cared for by relatives or 
friends; 
"(7) an unmarried adolescent who becomes pregnant once is 
likely to experience recurrent pregnancies and childbearing, 
with increased risks; 
"(8XA) the problems of adolescent premarital sexual relations, 
pregnancy, and parenthood are multiple and complex and are 
frequently associated with or are a cause of other troublesome 
situations in the family; and 
"(B) such problems are best approached through a variety of 
integrated and essential services provided to adolescents and 
their families by other family members, religious and charitable 
organizations, voluntary associations, and other groups in the 
private sector as well as services provided by publicly sponsored 
initiatives; 
"(9) a wide array of educational, health, and supportive serv-
ices are not available to adolescents with such problems or to 
their families, or when available frequently are fragmented and 
thus are of limited effectiveness in discouraging adolescent 
premarital sexual relations and the consequences of such rela-
tions; 
"(10)(A) prevention of adolescent sexual activity and adoles-
cent pregnancy depends primarily upon developing strong family 
values and close family ties, and since the family is the basic 
social unit in which the values and attitudes of adolescents 
concerning sexuality and pregnancy are formed, programs de-
signed to deal with issues of sexuality and pregnancy will be 
successful to the extent that such programs encourage and 
sustain the role of the family in dealing with adolescent sexual 
activity and adolescent pregnancy; 
"(B) Federal policy therefore should encourage the develop-
ment of appropriate health, educational, and social services 
where such services are now lacking or inadequate, and the 
better coordination of existing services where they are available; 
and 
"(C) services encouraged by the Federal Government should 
promote the involvement of parents with their adolescent chil-
95 STAT. 580 
PUBLIC LAW 97-35—AUG. 13, 1981 
dren, and should emphasize the provision of support by other 
family members, religious and charitable organizations, volun-
tary associations, and other groups in the private sector in order 
to help adolescents and their families deal with complex issues of 
adolescent premarital sexual relations and the consequences of 
such relations; and 
"(11)(A) there has been limited research concerning the soci-
etal causes and consequences of adolescent pregnancy; 
"(B) there is limited knowledge concerning which means of 
intervention are effective in mediating or eliminating adolescent 
premarital sexual relations and adolescent pregnancy; and 
"(C) it is necessary to expand and strengthen such knowledge 
in order to develop an array of approaches to solving the 
problems of adolescent premarital sexual relations and adoles-
cent pregnancy in both urban and rural settings. 
"(b) Therefore, the purposes of this title are— 
"(1) to find effective means, within the context of the family, of 
reaching adolescents before they become sexually active in order 
to maximize the guidance and support available to adolescents 
from parents and other family members, and to promote self 
discipline and other prudent approaches to the problem of 
adolescent premarital sexual relations, including adolescent 
pregnancy; 
"(2) to promote adoption as an alternative for adolescent 
parents; 
"(3) to establish innovative, comprehensive, and integrated 
approaches to the delivery of care services for pregnant adoles-
cents, with primary emphasis on unmarried adolescents who are 
seventeen years of age or under, and for adolescent parents, 
which shall be based upon an assessment of existing programs 
and, where appropriate, upon efforts to establish better coordina-
tion, integration, and linkages among such existing programs in 
order to— 
"(A) enable pregnant adolescents to obtain proper care 
and assist pregnant adolescents and adolescent parents to 
become productive independent contributors to family and 
community life; and 
"(B) assist families of adolescents to understand and re-
solve the societal causes which are associated with adoles-
cent pregnancy; 
"(4) to encourage and support research projects and demon-
stration projects concerning the societal causes and conse-
quences of adolescent premarital sexual relations, contraceptive 
use, pregnancy, and child rearing; 
"(5) to support evaluative research to identify effective services 
which alleviate, eliminate, or resolve any negative consequences 
of adolescent premarital sexual relations and adolescent child-
bearing for the parents, the child, and their families; and 
"(6) to encourage and provide for the dissemination of results, 
findings, and information from programs and research projects 
relating to adolescent premarital sexual relations, pregnancy, 
and parenthood. 
"DEFINITIONS 
42 use 300Z-1. 
"SEC. 2002. (a) For the purposes of this title, the term— 
"(1) 'Secretary' means the Secretary of Health and Human 
Services; 
"(2) 'eligible person' means— 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 581 
"(A) with regard to the provision of care services, a 
pregnant adolescent, an adolescent parent, or the family of a 
pregnant adolescent or an adolescent parent; or 
"(B) with regard to the provision of prevention services 
and referral to such other services which may be appropri-
ate, a nonpregnant adolescent; 
"(3) 'eligible grant recipient' means a public or nonprofit 
private organization or agency which demonstrates, to the satis-
faction of the Secretary— 
"(A) in the case of an organization which will provide care 
services, the capability of providing all core services in a 
single setting or the capability of creating a network through 
which all core services would be provided; or 
"(B) in the case of an organization which will provide 
prevention services, the capability of providing such serv-
ices; 
"(4) 'necessary services' means services which may be provided 
by grantees which are— 
"(A) pregnancy testing and maternity counseling; 
"(B) adoption counseling and referral services which pres-
ent adoption as an option for pregnant adolescents, includ-
ing referral to licensed adoption agencies in the community 
if the eligible grant recipient is not a licensed adoption 
agency; 
"(C) primary and preventive health services including 
prenatal and postnatal care; 
"(D) nutrition information and counseling; 
"(E) referral for screening and treatment of venereal 
disease; 
"(F) referral to appropriate pediatric care; 
"(G) educational services relating to family life and prob-
lems associated with adolescent premarital sexual relations, 
including— 
"(i) information about adoption; 
"(ii) education on the responsibilities of sexuality and 
parenting; 
"(iii) the development of material to support the role 
of 
parents as the provider of 
sex education; and 
"(iv) assistance to parents, schools, youth agencies, 
and health providers to educate adolescents and prea-
dolescents concerning self-discipline and responsibility 
in human sexuality; 
"(H) appropriate educational and vocational services and 
referral to such services; 
"(I) referral to licensed residential care or maternity home 
services; and 
"(J) mental health services and referral to mental health 
services and to other appropriate physical health services; 
"(K) child care sufficient to enable the adolescent parent 
to continue education or to enter into employment; 
"(L) consumer education and homemaking; 
"(M) counseling for the immediate and extended family 
members of 
the eligible person; 
"(N) transportation; 
"(O) outreach services to families of adolescents to discour-
age sexual relations among unemancipated minors; 
"(P) family planning services; and 
95 STAT. 582 
PUBLIC LAW 97-35—AUG. 13, 1981 
"(Q) such other services consistent with the purposes of 
this title as the Secretary may approve in accordance with 
regulations promulgated by the Secretary; 
"(5) 'core services' means those services which shall be pro-
vided by a grantee, as determined by the Secretary by regulation; 
"(6) 'supplemental services' means those services which may 
be provided by a grantee, as determined by the Secretary by 
regulation; 
"(7) 'care services' means necessary services for the provision 
of care to pregnant adolescents and adolescent parents and 
includes all core services with respect to the provision of such 
care prescribed by the Secretary by regulation; 
"(8) 'prevention services' means necessary services to prevent 
adolescent sexual relations, including the services described in 
subparagraphs (A), (D), (E), (G), (H), (M), (N), (O), and (Q) of 
paragraph (4); 
"(9) 'adolescent' means an individual under the age of nine-
teen; and 
"(10) 'unemancipated minor' means a minor who is subject to 
the control, authority, and supervision of his or her parents or 
guardians, as determined under State law. 
"(b) Until such time as the Secretary promulgates regulations 
pursuant to the second sentence of this subsection, the Secretary 
shall use the regulations promulgated under title VI of the Health 
42 use 300a-2i. 
Services and Centers Amendments of 1978 which were in effect on 
the date of enactment of this title, to determine which necessary 
services are core services for purposes of this title. The Secretary may 
promulgate regulations to determine which necessary services are 
core services for purposes of this title based upon an evaluation of and 
information concerning which necessary services are essential to 
carry out the purposes of this title and taking into account (1) factors 
such as whether services are to be provided in urban or rural areas, 
the ethnic groups to be served, and the nature of the populations to be 
served, and (2) the results of the evaluations required under section 
2006(b). The Secretary may from time to time revise such regulations. 
"AUTHORITY TO MAKE GRANTS FOR DEMONSTRATION PROJECTS 
42 use 300Z-2. 
"SEC. 2008. (a) The Secretary may make grants to further the 
purposes of this title to eligible grant recipients which have submit-
ted an application which the Secretary finds meets the requirements 
of section 2006 for demonstration projects which the Secretary 
determines will help communities provide appropriate care and 
prevention services in easily accessible locations. Demonstration 
projects shall, as appropriate, provide, supplement, or improve the 
quality of such services. Demonstration projects shall use such 
methods as will strengthen the capacity of families to deal with the 
sexual behavior, pregnancy, or parenthood of adolescents and to 
make use of support systems such as other family members, friends, 
religious and charitable organizations, and voluntary associations. 
"(b) Grants under this title for demonstration projects may be for 
the provision of— 
"(1) care services; 
"(2) prevention services; or 
"(3) a combination of care services and prevention services. 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 583 
"USES OF GRANTS FOR DEMONSTRATION PROJECTS FOR SERVICES 
"SEC. 2004. (a) Except as provided in subsection (h), funds provided 42 use 300z-3. 
for demonstration projects for services under this title may be used by 
grantees only to— 
"(1) provide to eligible persons— 
"(A) care services; 
"(B) prevention services; or 
"(C) care and prevention services (in the case of a grantee 
who is providing a combination of care and prevention 
services); 
"(2) coordinate, integrate, and provide linkages among provid-
ers of care, prevention, and other services for eligible persons in 
furtherance of the purposes of this title; 
"(3) provide supplemental services where such services are not 
adequate or not available to eligible persons in the community 
and which are essential to the care of pregnant adolescents and 
to the prevention of adolescent premaritsd sexual relations and 
adolescent pregnancy; 
"(4) plan for the administration and coordination of pregnancy 
prevention services and programs of care for pregnant adoles-
cents and adolescent parents which will further the objectives of 
this title; and 
"(5) fulfill assurances required for grant approval by section 
2006. 
"(bXD No funds provided for a demonstration project for services 
under this title may be used for the provision of fgimily planning 
services (other than counseling and referral services) to adolescents 
unless appropriate family planning services are not otherwise availa-
ble in the community. 
"(2) Any grantee who receives funds for a demonstration project for 
services under this title and who, after determining under paragraph 
(1) that appropriate family planning services are not otherwise 
available in the community, provides family planning services (other 
than counseling and referral services) to adolescents may only use 
funds provided under this title for such family planning services if all 
funds received by such grantee from all other sources to support such 
family planning services are insufficient to support such family 
planning services. 
"(c) Grantees who receive funds for a demonstration project for 
services under this title shall charge fees for services pursuant to a 
fee schedule approved by the Secretary as a part of the application 
described in section 2006 which bases fees charged by the grantee on 
the income of the eligible person or the parents or legal guardians of 
the eligible person and takes into account the difficulty adolescents 
face in obtaining resources to pay for services. A grantee who receives 
funds for a demonstration project for services under this title may 
not, in any case, discriminate with regard to the provision of services 
to any individual because of that individual's inability to provide 
pa3mient for such services, except that in determining the ability of 
an unemancipated minor to provide payment for services, the income 
of the family of an unemancipated minor shall be considered in 
determining the ability of such minor to make such payments unless 
the parents or guardians of the unemancipated minor refuse to make 
such payments. 
-194 0—82 
39 : QL3 
95 STAT. 584 
PUBLIC LAW 97-35—AUG. 13, 1981 
"PRIORITIES, AMOUNTS, AND DURATION OF GRANTS FOR DEMONSTRATION 
PROJECTS FOR SERVICES 
42 use 300Z-4. 
"SEC. 2005. (a) In approving applications for grants for demonstra-
tion projects for services under this title, the Secretary shall give 
priority to applicants who— 
(1) serve an area where there is a high incidence of adolescent 
pregnancy; 
"(2) serve an area with a high proportion of low-income 
families and where the availability of programs of care for 
pregnant adolescents and adolescent parents is low; 
"(3) show evidence— 
"(A) in the case of an applicant who will provide care 
services, of having the ability to bring together a wide range 
of needed core services and, as appropriate, supplemental 
services in comprehensive single-site projects, or to establish 
a well-integrated network of such services (appropriate for 
the target population and geographic area to be served 
including the special needs of rural areas) for pregnant 
adolescents or adolescent parents; or 
"(B) in the case of an applicant who will provide preven-
tion services, of having the ability to provide prevention 
services for adolescents and their families which are appro-
priate for the target population and the geographic area to 
be served, including the special needs of rural areas; 
"(4) will utilize to the maximum extent feasible existing 
available programs and facilities such as neighborhood and 
primary health care centers, maternity homes which provide or 
can be equipped to provide services to pregnant adolescents, 
agencies serving families, youth, and children with established 
programs of service to pregnant adolescents and vulnerable 
families, licensed adoption agencies, children and youth centers, 
maternal and infant health centers, regional rural health facili-
ties, school and other educational programs, mental health 
programs, nutrition programs, recreation programs, and other 
ongoing pregnancy prevention services and programs of care for 
pregnant adolescents and adolescent parents; 
"(5) make use, to the maximum extent feasible, of other 
Federal, State, and local funds, programs, contributions, and 
other third-party reimbursements; 
"(6) can demonstrate a community commitment to the pro-
gram by making available to the demonstration project non-
Federal funds, personnel, and facilities; 
"(7) have involved the community to be served, including 
public and private agencies, adolescents, and families, in the 
planning and implementation of the demonstration project; and 
"(8) will demonstrate innovative and effective approaches in 
addressing the problems of adolescent premarital sexual rela-
tions, pregnancy, or parenthood, including approaches to provide 
pregnant adolescents with adequate information about adoption. 
"(b)(1) The amount of a grant for a demonstration project for 
services under this title shall be determined by the Secretary, based 
on factors such as the incidence of adolescent pregnancy in the 
geographic area to be served, and the adequacy of pregnancy preven-
tion services and programs of care for pregnant adolescents and 
adolescent parents in such area. 
"(2) In making grants for demonstration projects for services under 
this title, the Secretary shall consider the special needs of rural areas 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 585 
and, to the maximum extent practicable, shall distribute funds 
taking into consideration the relative number of adolescents in such 
areas in need of such services. 
"(c)(1) A grantee may not receive funds for a demonstration project 
for services under this title for a period in excess of 5 years. 
"(2)(A) Subject to paragraph (3), a grant for a demonstration project 
for services under this title may not exceed— 
"(i) 70 per centum of the costs of the project for the first and 
second years of the project; 
"(ii) 60 per centum of such costs for the third year of the 
project; 
"(iii) 50 per centum of such costs for the fourth year of the 
project; and 
"(iv) 40 per centum of such costs for the fifth year of the 
project. 
"(B) Non-Federal contributions required by subparagraph (A) may 
be in cash or in kind, fairly evaluated, including plant, equipment, or 
services. 
"(3) The Secretary may waive the limitation specified in paragraph 
(2)(A) for any year in accordance with criteria established by regula-
tion. 
"REQUIREMENTS FOR APPLICATIONS 
"SEC. 2006. (a) An application for a grant for a demonstration 42 use 300z-5. 
project for services under this title shall be in such form and contain 
such information as the Secretary may require, and shall include— 
"(1) an identification of the incidence of adolescent pregnancy 
and related problems; 
"(2) a description of the economic conditions and income levels 
in the geographic area to be served; 
"(3) a description of existing pregnancy prevention services 
and programs of care for pregnant adolescents and adolescent 
parents (including adoption services), and including where, how, 
by whom, and to which population groups such services are 
provided, and the extent to which they are coordinated in the 
geographic area to be served; 
"(4) a description of the major unmet needs for services for 
adolescents at risk of initial or recurrent pregnancies and an 
estimate of the number of adolescents not being served in the 
area; 
"(5)(A) in the case of an applicant who will provide care 
services, a description of how all core services will be provided in 
the demonstration project using funds under this title or will 
otherwise be provided by the grantee in the area to be served, the 
population to which such services will be provided, how such 
services will be coordinated, integrated, and linked with other 
related programs and services and the source or sources of 
funding of such core services in the public and private sectors; or 
"(B) in the case of an applicant who will provide prevention 
services, a description of the necessary services to be provided 
and how the applicant will provide such services; 
"(6) a description of the manner in which adolescents needing 
services other than the services provided directly by the appli-
cant will be identified and how access and appropriate referral to 
such other services (such as medicaid; licensed adoption agencies; 
maternity home services; public assistance; employment serv-
ices; child care services for adolescent parents; and other city, 
county, and State programs related to adolescent pregnancy) will 
95 STAT. 586 
PUBLIC LAW 97-35-AUG. 13, 1981 
be provided, including a description of a plan to coordinate such 
other services with the services supported under this title; 
"(7) a description of the applicants capacity to continue 
services as Federal funds decrease and in the absence of Federal 
assistance; 
"(8) a description of the results expected from the provision of 
services, and the procedures to be used for evaluating those 
results; 
"(9) a summary of the views of public agencies, providers of 
services, and the general public in the geographic area to be 
served, concerning the proposed use of funds provided for a 
demonstration project for services under this title and a descrip-
tion of procedures used to obtain those views, and, in the case of 
applicants who propose to coordinate services administered by a 
State, the written comments of the appropriate State officials 
responsible for such services; 
(10) assurances that the applicant will have an ongoing 
quality assurance program; 
"(11) assurances that, where appropriate, the applicant shall 
have a system for maintaining the confidentiality of patient 
records in accordance with regulations promulgated by the 
Secretary; 
"(12) assurances that the applicant will demonstrate its finan-
cial responsibility by the use of such accounting procedures and 
other requirements as may be prescribed by the Secretary; 
"(13) assurances that the applicant (A) has or will have a 
contractual or other arrangement with the agency of the State 
(in which the applicant provides services) that administers or 
supervises the administration of a State plan approved under 
42 use 1396. 
title XIX of the Social Security Act for the payment of all or a 
part of the applicant's costs in providing health services to 
persons who are eligible for medical assistance under such a 
State plan, or (B) has made or will make every reasonable effort 
to enter into such an arrangement; 
"(14) assurances that the applicant has made or will make and 
will continue to make every reasonable effort to collect appropri-
ate reimbursement for its costs in providing health services to 
persons who are entitled to benefits under title V of the Social 
42 use 701. 
Security Act, to medical assistance under a State plan approved 
under title XIX of such Act, or to £issistance for medical expenses 
under any other public assistance program or private health 
insurance program; 
"(15) assurances that the applicant has or will make and will 
continue to make every reasonable effort to collect appropriate 
reimbursement for its costs in providing services to persons 
entitled to services under parts B and E of title IV and title XX of 
94 Stat. 516 
the Social Security Act; 
94 st^? 50i" 
"(16)(A) a description of— 
42 use 670. 
"^^^ *^® schedule of fees to be used in the provision of 
42 use 1397. 
services, which shall comply with section 2004(c) and which 
shall be designed to cover all reasonable direct and indirect 
costs incurred by the applicant in providing services; and 
"(ii) a corresponding schedule of discounts to be applied to 
the payment of such fees, which shall comply with section 
2004(c) and which shall be adjusted on the basis of the ability 
of the eligible person to pay; 
"(B) assurances that the applicant has made and will continue 
to make every reasonable effort— 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 587 
"(i) to secure from eligible persons payment for services in 
accordance with such schedules; 
"(ii) to collect reimbursement for health or other services 
provided to persons who are entitled to have payment made 
on their behalf for such services under any Federal or other 
government program or private insurance program; and 
"(iii) to seek such reimbursement on the basis of the full 
amount of fees for services without application of any 
discount; and 
**(C) assurances that the applicant has submitted or will submit 
to the Secretary such reports as the Secretary may require to 
determine compliance with this paragraph; 
"(17) assurances that the applicant will make maximum use of 
funds available under title X of this Act; 
42 use 300. 
"(18) assurances that the acceptance by any individual of 
family planning services or family planning information (includ-
ing educational materials) provided through financial assistance 
under this title shall be voluntary and shall not be a prerequisite 
to eligibility for or receipt of any other service furnished by the 
applicant; 
"(19) assurances that fees collected by the applicant for serv-
ices rendered in accordance with this title shall be used by the 
applicant to further the purposes of this title; 
"(20) assurances that the applicant, if providing both preven-
tion and care services will not exclude or discriminate against 
any adolescent who receives prevention services and sub-
sequently requires care services as a pregnant adolescent; 
"(21) a description of how the applicant will, as appropriate in 
the provision of services— 
"(A) involve families of adolescents in a manner which will 
maximize the role of the family in the solution of problems 
relating to the parenthood or pregnancy of the adolescent; 
"(B) involve religious and charitable organizations, volun-
tary associations, and other groups in the private sector as 
well as services provided by publicly sponsored initiatives; 
"(22)(A) assurances that— 
"(i) except as provided in subparagraph (B) and subject to 
clause (ii), the applicant will notify the parents or guardians 
of any unemancipated minor requesting services from the 
applicant and, except as provided in subparagraph (C), will 
obtain the permission of such parents or guardians with 
respect to the provision of such services; and 
"(ii) in the case of a pregnant unemancipated minor 
requesting services from the applicant, the applicant will 
notify the parents or guardians of such minor under clause 
(i) within a reasonable period of time; 
"(B) assurances that the applicant will not notify or request the 
permission of the parents or guardian of any unemancipated 
minor without the consent of the minor— 
"(i) who solely is requesting from the applicant pregnancy 
testing or testing or treatment for venereal disease; 
"(ii) who is the victim of incest involving a parent; or 
"(iii) if an adult sibling of the minor or an adult aunt, 
uncle, or grandparent who is related to the minor by blood 
certifies to the grantee that notification of the parents or 
guardians of such minor would result in physical injury to 
such minor; and 
95 STAT. 588 
PUBLIC LAW 97-35-AUG. 13, 1981 
"(C) assurances that the applicant will not require, with 
respect to the provision of services, the permission of the parents 
or guardians of any pregnant unemancipated minor if such 
parents or guardians are attempting to compel such minor to 
have an abortion; 
"(23) assurances that primary emphasis for services supported 
under this title shall be given to adolescents seventeen and under 
who are not able to obtain needed assistance through other 
means; 
"(24) assurances that funds received under this title shall 
supplement and not supplant funds received from any other 
Federal, State, or local program or any private sources of funds; 
and 
"(25) a plan for the conduct of, and assurances that the 
applicant will conduct, evaluations of the effectiveness of the 
services supported under this title in accordance with subsection 
(b). 
"(b)(1) Each grantee which receives funds for a demonstration 
project for services under this title shall expend at least 1 per centum 
but not in excess of 5 per centum of the amounts received under this 
title for the conduct of evaluations of the services supported under 
this title. The Secretary may, for a particular grantee upon good 
cause shown, waive the provisions of the preceding sentence with 
respect to the amounts to be expended on evaluations, but may not 
waive the requirement that such evaluations be conducted. 
"(2) Evaluations required by paragraph (1) shall be conducted by an 
organization or entity which is independent of the grantee providing 
services supported under this title. To assist in conducting the 
evaluations required by paragraph (1), each grsmtee shall develop a 
working relationship with a college or university located in the 
grantee's State which will provide or assist in providing monitoring 
and evaluation of services supported under this title unless no college 
or university in the grantee s State is willing or has the capacity to 
provide or assist in providing such monitoring and assistance. 
"(3) The Secretary may provide technical assistance with respect to 
the conduct of evaluations required under this subsection to any 
grantee which is unable to develop a working relationship with a 
college or university in the applicant's State for the reasons described 
in paragraph (2). 
"(c) Each grantee which receives funds for a demonstration project 
for services under this title shall make such reports concerning its 
use of Federal funds as the Secretary may require. Reports shall 
include, at such times as are considered appropriate by the Secretary, 
the results of the evaluations of the services supported under this 
title. 
"(d)(1) A grantee shall periodically notify the Secretary of the exact 
number of instances in which a grantee does not notify the parents or 
guardians of a pregnant unemancipated minor under subsection 
(a)(22)(B)(iii). 
"(2) For purposes of subsection (a)(22)(B)(iii), the term "adult" 
means an adult as defined by State law. 
"(e) Each applicant shall provide the Governor of the State in 
which the applicant is located a copy of each application submitted to 
the Secretary for a grant for a demonstration project for services 
under this title. The Governor shall submit to the applicant com-
ments on any such application within the period of sixty days 
beginning on the day when the Governor receives such copy. The 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 589 
applicant shall include the comments of the Governor with such 
application. 
"(f) No application submitted for a grant for a demonstration 
project for care services under this title may be approved unless the 
Secretary is satisfied that core services shall be available through the 
applicant within a reasonable time after such grant is received. 
"COORDINATION OF FEDERAL AND STATE PROGRAMS 
"SEC. 2007. (a) The Secretary shall coordinate Federal policies and 42 use 300z-6. 
programs providing services relating to the prevention of adolescent 
sexual relations and initial and recurrent adolescent pregnancies and 
providing care services for pregnant adolescents. In achieving such 
coordination, the Secretary shall— 
"(1) require grantees who receive funds for demonstration 
projects for services under this title to report periodically to the 
Secretary concerning Federal, State, and local policies and pro-
grams that interfere with the delivery of and coordination of 
pregnancy prevention services and other programs of care for 
pregnant adolescents and adolescent parente; 
"(2) provide technical assistance to facilitate coordination by 
State and local recipients of Federal assistance; 
"(3) review all programs administered by the Department of 
Health and Human Services which provide prevention services 
or care services to determine if the policies of such programs are 
consistent with the policies of this title, consult with other 
departments and agencies of the Federal Government who ad-
minister programs that provide such services, and encourage 
such other departments and agencies to make recommendations, 
as appropriate, for legislation to modify such programs in order 
to facilitate the use of all Government programs which provide 
such services as a basis for delivery of more comprehensive 
prevention services and more comprehensive programs of care 
for pregnant adolescents and adolescent parents; 
"(4) g
p
L
v
e priority in the provision of funds, where appropriate, 
to applicants using single or coordinated grant applications for 
multiple programs; and 
"(5) give priority, where appropriate, to the provision of funds 
under Federal programs administered by the Secretary (other 
than the program established by this title) to projects providing 
comprehensive prevention services and comprehensive programs 
of care for pregnant adolescents and adolescent parents. 
"(b) Any recipient of a grant for a demonstration project for 
services under this title shall coordinate its activities with any other 
recipient of such a grant which is located in the same locality. 
"RESEARCH 
"SEC. 2008. (a)(1) The Secretary may make grants and enter into 42 use 300z-7. 
contracts with public agencies or private organizations or institutions 
of higher education to support the research and dissemination 
activities described in paragraphs (4), (5), and (6) of section 2001(b). 
"(2) The Secretary may make grants or enter into contracts under 
this section for a period of one year. A grant or contract under this 
section for a project may be renewed for four additional one-year 
periods, which need not be consecutive. 
"(3) A grant or contract for any one-year period under this section 
may not exceed $100,000 for the direct costs of conducting research or 
95 STAT. 590 
PUBLIC LAW 97-35—AUG. 13, 1981 
disemination activities under this section and may include such 
additional amounts for the indirect costs of conducting such activities 
as the Secretary determines appropriate. The Secretary may waive 
the preceding sentence with respect to a specific project if he 
determines that— 
"(A) exceptional circumstances warrant such waiver and that 
the project will have national impact; or 
"(B) additional amounts are necessary for the direct costs of 
conducting limited demonstration projects for the provision of 
necessary services in order to provide data for research carried 
out under this title. 
"(4) The amount of any grant or contract made under this section 
may remain available for obligation or expenditure after the close of 
the one-year period for which such grant or contract is made in order 
to assist the recipient in preparing the report required by subsection 
(f)(1). 
"(b)(1) Funds provided for research under this section may be used 
for descriptive or explanatory surveys, longitudinal studies, or limit-
ed demonstration projects for services that are for the purpose of 
increasing knowledge and understanding of the matters described in 
paragraphs (4) and (5) of section 2001(b). 
"(2) Funds provided under this section may not be used for the 
purchase or improvement of land, or the purchase, construction, or 
permanent improvement (other than minor remodeling) of any build-
ing or facility. 
(c) The Secretary may not make any grant or enter into any 
contract to support research or dissemination activities under this 
section unless— 
"(1) the Secretary has received an application for such grant or 
contract which is in such form and which contains such informa-
tion as the Secretary may by regulation require; 
"(2) the applicant has demonstrated that the applicant is 
capable of conducting one or more of the types of research or 
dissemination activities described in paragraph (4), (5), or (6) of 
section 2001(b); and 
"(3) in the case of an application for a research project, the 
panel established by subsection (e)(2) has determined that the 
project is of scientific merit. 
"(d) The Secretary shall, where appropriate, coordinate research 
and dissemination activities carried out under this section with 
research and dissemination activities carried out by the National 
Institutes of Health. 
"(e)(1) The Secretary shall establish a system for the review of 
applications for grants and contracts under this section. Such system 
shall be substantially similar to the system for scientific peer review 
of the National Institutes of Health and shall meet the requirements 
of paragraphs (2) and (3). 
(2) In establishing the system required by paragraph (1), the 
Secretary shall establish a panel to review applications under this 
section. Not more than 25 per centum of the members of the panel 
shall be physicians. The panel shall meet £is often as may be 
necessary to facilitate the expeditious review of applications under 
this section, but not less than once each year. The panel shall review 
each project for which an application is made under this section, 
evaluate the scientific merit of the project, determine whether the 
groject is of scientific merit, and make recommendations to the 
ecretary concerning whether the application for the project should 
be approved. 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 591 
"(3) The Secretary shall make grants under this section from 
among the projects which the panel established by paragraph (2) h£is 
determined to be of scientific merit and may only approve an 
application for a project if the panel has made such determination 
with respect to such a project. The Secretary shall make a determina-
tion with respect to an application within one month after receiving 
the determinations and recommendations of such panel with respect 
to the application. 
"(fKlXA) The recipient of a grant or contract for a research project 
under this section shall prepare and transmit to the Secretary a 
report describing the results and conclusions of such research. Except 
as provided in subparsigraph (B), such report shall be transmitted to 
the Secretary not later than eighteen months after the end of the 
year for which funds are provided under this section. The recipient 
may utilize reprints of articles published or accepted for publication 
in professional journals to supplement or replace such report if the 
research contained in such articles was supported under this section 
during the year for which the report is required. 
"(B) In the case of any research project for which assistance is 
provided under this section for two or more consecutive one-year 
periods, the recipient of such assistance shall prepare and transmit 
the report required by subparagraph (A) to the Secretary not later 
than twelve months atfter the end of each one-year period for which 
such funding is provided. 
"(2) Recipiente of grsints and contracts for dissemination under this 
section shall submit to the Secretary such reports as the Secretary 
determines appropriate. 
"(g) In carr3ring out functions relating to the conduct and support of 
research under this section, the Secretary shall not be subject to the 
provisions of chapter 35 of title 44, United States Code, except with 94 Stat 2812. 
respect to the collection of survey data which primarily will be used 
for the generation of national population estimates. 
44 u s e 3501 et 
seq. 
EVALUATION AND ADMINISTRATION 
"SEC. 2009. (a) Of the funds appropriated under this title, the 42 use 300z-8. 
Secretary shall reserve not less than 1 per centum and not more than 
3 per centum for the evaluation of activities carried out under this 
title. The Secretary shall submit to the appropriate committees of the Submittal to 
Congress a summary of each evaluation conducted under this section, congressional 
"(b) The officer or emplovee of the Department of Health and committees. 
Human Services designated by the Secretary to carry out the provi-
sions of this title shall report directly to the Assistant Secretary for 
Health with respect to the activities of such officer or employee in 
canying out such provisions. 
"AUTHORIZATION OF APPROPRIATIONS 
"SEC. 2010. (a) For the purpose of carrying out this title, there are 42 use 300z-9. 
authorized to be appropriated $30,000,000 for the fiscal year ending 
September 30,1982, $30,000,000 for the fiscal year ending September 
30, 1983, and $30,000,000 for the fiscal year ending September 30, 
1984. 
"(b) At least two-thirds of the amounts appropriated to carry out 
this title shall be used to make grants for demonstration projects for 
services. 
"(c) Not more than one-third of the amounts specified under 
subsection (b) for use for grants for demonstration projects for 
95 STAT. 592 
PUBLIC LAW 97-35—AUG. 13, 1981 
services shall be used for grants for demonstration projects for 
prevention services. 
"RESTRICTIONS 
42 use 300Z-10. 
"SEC. 2011. (a) Grants or parents may be made only to programs 
or projects which do not provide abortions or abortion counseling or 
referral, or which do not subcontract with or make any payment to 
any person who provides abortions or abortion counseling or referral, 
except that any such program or project may provide referral for 
abortion counseling to a pregnant adolescent if such adolescent and 
the parents or guardians of such adolescent request such referral; 
and grants may be made only to projects or programs which do not 
advocate, promote, or encourage abortion. 
"(b) The Secretary shall ascertain whether programs or projects 
comply with subsection (a) and take appropriate action if programs or 
projects do not comply with such subsection, including withholding of 
funds.". 
Repeals 
(b) Effective October 1,1981, titles VI, VII, and VIII of the Health 
42 use 300a-4i Services and Centers Amendments of 1978 are repealed. 
42 u s e 300a-2l' 
i^ote. 
Subtitle H—Alcohol and Drug Programs 
CHAPTER 1—ALCOHOL ABUSE AND ALCOHOLISM PREVEN-
TION, TREATMENT, AND REHABILITATION 
REFERENCE 
SEC. 960. Except as otherwise specifically provided, whenever in 
this subtitle an amendment or repeal is expressed in terms of an 
amendment to, or a repeal of, a section or other provision, the 
reference shall be considered to be made to a section or other 
provision of the Comprehensive Alcohol Abuse and Alcoholism Pre-
42 use 4541 
vention. Treatment, and Rehabilitation Act of 1970. 
note. 
ALCOHOL ABUSE AND ALCOHOLISM AMONG GOVERNMENT AND OTHER 
EMPLOYEES 
42 use 4561. 
SEC. 961. Section 201(bX2XB) is amended by striking out "single 
State agencies designated pursuant to section 303 of this Act" and 
inserting in Ueu thereof the State agencies responsible for the 
administration of alcohol abuse prevention, treatment, and rehabili-
tation activities". 
TECHNICAL ASSISTANCE 
42 use 4571. 
SEC. 962. (a) Section 301 is amended to read as follows: 
"TECHNICAL ASSISTANCE 
"SEC. 301. (a) On the request of any State, the Secretary, acting 
through the Institute, shaU, to the extent feasible, make available 
technical assistance for— 
"(1) developing and improving systems for data collection; 
"(2) program management, accountability, and evaluation; 
"(3) cert^cation, accreditation, or licensure of treatment facil-
ities and personnel; 
"(4) monitoring compliance by hospitals and other facilities 
42 use 4581. 
with the requirements of 
section 321; and 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 593 
"(5) eliminating exclusions in health insurance coverage of-
fered in the State which are based on alcoholism or alcohol 
abuse. 
"(b) Insofar as practicable, technical assistance provided under this 
section shall be provided in a manner which will improve coordina-
tion between activities supported under this Act and under the Drug 
Abuse Prevention, Treatment, and Rehabilitation Act.". 
21 use iioi 
(b) Sections 302,303, and 310 are repealed. 
Sep^eais. 
42 u s e 4572, 
GRANTS AND CONTRACTS 
4573, 4576. 
SEC. 963. (a) The section heading for section 311 is amended to read 42 use 4577. 
as follows: 
"GRANTS AND CONTRACTS FOR THE DEMONSTRATION OF NEW AND 
MORE EFFECTIVE ALCOHOL ABUSE AND ALCOHOLISM PREVENTION, 
TREATMENT, AND REHABIUTATION PROGRAMS". 
(b) Section 311(a) is amended— 
(1) by adding at the end of clause (1) "and with particular 
emphasis on developing new and more effective alcohol abuse 
and alcoholism prevention, treatment, and rehabilitation pro-
grams,"; 
(2) by inserting "and" after the comma the last place it appears 
in clause (2); 
(3) by striking out clauses (3) and (5) and by redesignating 
clause (4) as clause (3); and 
(4) by striking out the comma and "and" at the end of clause (3) 
(as redesignated by clause (2) of this subsection) and inserting in 
lieu thereof a period. 
(c)(1) Section 311(cX2XA) is amended— 
(A) by striking out "designated under section 303 of this Act, if 
such designation has been made" in the first sentence and 
inserting in lieu thereof "responsible for the administration of 
alcohol abuse and alcoholism prevention, treatment, and reha-
bilitation activities"; 
(B) by striking out "the" before "State comprehensive plan" in 
the third sentence and inserting in lieu thereof "any"; and 
(C) by striking out "under section 303" in the third sentence. 
(2) Section 311(cX3) is amended— 
(A) by inserting "and" after the semicolon in clause (B); 
(B) by striking out the semicolon and "and" at the end of clause 
(C) and inserting in lieu thereof a period; and 
(C) by striking out clause (D). 
(3) Section 311(cX4) is amended to read as follows: 
"(4) The Secretary shall encourage the submission of and give 
special consideration to applications under this section for programs 
and projects aimed at underserved populations such as racial and 
ethnic minorities. Native Americans, youth, the elderly, women, 
handicapped individuals, public inebriates, and families of alcohol-
ics.". 
(4) Section 311(c) is further amended— 
(A) by redesignating paragraph (5) as paragraph (6); 
(B) by inserting after paragraph (4) the following new para-
graph: 
"(5)(A) No grant may be made under this section to a State or to any 
entity within the government of a State unless the grant application 
has been duly authorized by the chief executive officer of such State. 
95 STAT. 594 
PUBLIC LAW 97-35—AUG. 13, 1981 
"(B) No grant or contract may be made under this section for a 
period in excess of five years. 
"(C)(i) The amount of any grant or contract under this section may 
not exceed 100 per centum of the cost of carrying out the grant or 
contract in the first fiscal year for which the grant or contract is 
made under this section, 80 per centum of such cost in the second 
fiscal year for which the grsuit or contract is made under this section, 
70 per centum of such cost in the third fiscal year for which the grant 
or contract is made under this section, and 60 per centum of such cost 
in each of the fourth and fifth fiscal years for which the grant or 
contract is made under this section. 
"(ii) For purposes of this subparagraph, no grant or contract shall 
be considered to have been made under this section for a fiscal year 
ending before September 30,1981."; and 
(C) by adding at the end thereof the following new paragraph: 
"(7) Nothing shall prevent the use of funds provided under this 
section for programs and projects aimed at the prevention, treat-
ment, or rehabilitation of drug abuse as well as alcohol abuse and 
alcoholism.". 
AUTHORIZATION OF APPROPRIATIONS; PROJECT GRANTS AND CONTRACTS 
42 use 4578. 
SEC. 964. (a) The first sentence of section 312 is amended— 
(A) by striking out "sections 310 and 311" and inserting in lieu 
thereof "section 311"; and 
(B) by striking out "and" after "1980," and by inserting before 
the period a comma and "and $15,000,000 for the fiscal year 
ending September 30,1982". 
O
b
) The second sentence of such section is amended by striking out 
"and" after the semicolon the first place it appears and by inserting 
before the period a semicolon and "and of the funds appropriated 
under this section for the fiscal year ending September 30, 1982, at 
least 25 per centum of the funds shall be obligated for such grants". 
ALCOHOL 
ABUSE 
RESEARCH 
AND 
RESEARCH 
CENTERS 
42 use 4588. 
SEC. 965. (a) Section 503 (42 U.S.C. 4587) is amended— 
(A) by inserting "(a)" after "503.", 
(B) by striking out "the purposes of sections 501 and 502" and 
inserting in lieu thereof "this title", 
(C) by striking out "and" after "1980,", and 
(D) by striking out the period and inserting in lieu thereof a 
comma and the following: "$25,000,000 for the fiscal year ending 
September 30,1982. Of the funds appropriated under this section 
for any fiscal year beginning after September 30,1981, not more 
than 35 per centum may be obligated for grants under section 
503.". 
42 use 4587. 
(b) Section 504(b) (42 U.S.C. 4588(b)) is amended by adding at the 
end the following: "The Secretary shall include in the grants made 
under this section for fiscal years beginning after September 30,1981, 
a grant to a designated Center for research on the effects of alcohol on 
the elderly.". 
42 use 4587, 
(c) Section 503 is inserted after section 504 of such Act and is 
redesignated as section 504 and the section 504 of such Act relating to 
National Alcohol Research Centers is redesignated as section 503. 
s y 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 595 
TECHNICAL AMENDMENTS 
SEC. 966. (a) The first sentence of section 101(a) is amended (1) by 42 use 4551. 
striking out "Health, Education, and Welfare" and inserting in lieu 
thereof "Health and Human Services", and (2) by striking out "and 
part C of the Community Mental Health Centers Act". 
(b) Section 102(1) is amended by striking out "and part C of the 42 use 4552. 
Community Mental Health Centers Act". 
(c) Section 103(b) is amended by striking out "Health, Education, 42 use 4553. 
and Welfare" and inserting in lieu thereof "Health and Human 
Services". 
(d) Section 201(bX4) is amended by striking out "Office and Treat- 42 use 4561. 
ment Act of 1972" and inserting in lieu thereof "Prevention, Treat-
ment, and Rehabilitation Act". 
(e) Section 201(e) is amended by striking out "Health, Education, 
and Welfare" and inserting in lieu thereof "Health and Human 
Services". 
(f)(1) The heading for title HI is amended to read as follows: 
"TITLE III—TECHNICAL ASSISTANCE AND FEDERAL 
GRANTS AND CONTRACTS" 
(2) The heading for part A of title III is amended to read as follows: 
"PART A—TECHNICAL ASSISTANCE". 
CHAPTER 2—DRUG ABUSE PREVENTION, TREATMENT, AND 
REHABILITATION 
REFERENCE 
SEC. 967. Except as otherwise specifically provided, whenever in 
this chapter an amendment or repeal is expressed in terms of an 
amendment to, or a repeal of, a section or other provision, the 
reference shall be considered to be made to a section or other 
provision of the Drug Abuse Prevention, Treatment, and Rehabilita-
tion Act. 
21 use 1101 
ADDITIONAL DRUG ABUSE PREVENTION FUNCTIONS 
"°** 
SEC. 968. (a) Section 406(a) is amended— 
2i use 1173. 
(1) by inserting "and" after the semicolon in clause (2); 
(2) by striking out the semicolon and "and" at the end of clause 
(3) and inserting in lieu thereof a period; and 
(3) by striking out clause (4). 
(b) The section heading for section 406 is amended by striking out 
"Health, Education, and Welfare" and inserting in lieu thereof 
"Health and Human Services". 
(c) The item relating to section 406 in the table of sections for title 
IV is amended by striking out "Health, Education, and Welfare" and 
inserting in lieu thereof 'liealth and Human Services". 
FORMULA GRANTS 
SEC. 969. (a) Section 409 is repealed. 
Repeal. 
O
b
) The table of sections for title IV is amended by striking out the ^^ ^ ^ ^^'^^ 
item relating to section 409. 
95 STAT. 596 
PUBLIC LAW 97-35—AUG. 13, 1981 
GRANTS AND CONTRACTS 
21 use 1177. 
SEC. 970. (aXD The section heading for section 410 is amended to 
read as follows: 
''§410. Grants and contracts for the demonstration of new and 
more effective prevention, treatment, and rehabilitation 
programs.". 
(2) The item relating to section 410 in the table of sections for title 
IV is amended to read as follows: 
"410. Grants and contracts for the demonstration of new and more effective preven-
tion, treatment, and rehabilitation programs.". 
(bXD The first sentence of section 410(a) is amended to read as 
follows: "The Secretary acting through the National Institute on 
Drug Abuse, may make grants to and enter into contracts with 
individuals and public and private nonprofit entities— 
"(1) to provide training seminars, educational programs, and 
technical assistance for the development, demonstration, and 
evaluation of drug abuse prevention, treatment, and rehabilita-
tion programs; and 
"(2) to conduct demonstration and evaluation projects, with a 
high priority on prevention and early intervention projects and 
on identifying new and more effective drug abuse prevention, 
treatment, and rehabilitation programs.". 
(2) Section 410(a) is further amended by adding at the end thereof 
the following new sentence: "Furthermore, nothing shall prevent the 
use of funds provided under this section for programs and projects 
aimed at the prevention, treatment, and rehabilitation of alcohol 
abuse and alcoholism as well as drug abuse.". 
Appropriation 
(c) Section 410(b) is amended by adding at the end thereof the 
authorization. 
following new Sentences: "For carrying out the purposes of this 
section, there are authorized to be appropriated $15,000,000 for the 
fiscal year ending September 30, 1982. Of the funds appropriated 
under the preceding sentence, at least 25 per centum of the funds 
shall be obligated for grants and contracts for primary prevention 
and intervention programs designed to discourage individuals, par-
ticularly individuals in high risk populations, from abusing drugs.". 
(d)(1)(A) The first sentence of section 410(cX2) is amended by 
striking out "designated or established under section 409" and 
inserting in lieu thereof "responsible for the administration of drug 
abuse prevention activities". 
(B) The third sentence of such section is amended— 
(i) by striking out "the" before "State comprehensive plan" 
and inserting in lieu thereof "any"; and 
(ii) by striking out "under section 409". 
(2) Section 410(cX3) is amended— 
(A) by inserting "and" after the semicolon in clause (B); 
(B) by striking out the semicolon and "and" at the end of clause 
(C) and inserting in lieu thereof a period; and 
(C) by striking out clause (D). 
(e) Section 410(d) is amended to read as follows: 
"(d) The Secretary shall encourage the submission of and give 
special consideration to applications under this section to programs 
and projects aimed at underserved populations such as racial and 
ethnic minorities, native Americans, youth, the elderly, women, 
handicapped individuals, and families of drug abusers.". 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 597 
(f) Section 410 is further amended by adding at the end thereof the 2i use 1177. 
following new subsection: 
"(g)(1) No grant may be made under this section to a State or to any 
entity within the government of a State unless the grant application 
has been duly authorized by the chief executive officer of such State. 
"(2) No grant or contract may be made under this section for a 
period in excess of five years, 
"(3)(A) The amount of any grant or contract under this section may 
not exceed 100 per centum of the cost of carrying out the grant or 
contract in the first fiscal year for which the grant or contract is 
made under this section, 80 per centum of such cost in the second 
fiscal year for which the grant or contract is made under this section, 
70 per centum of such cost in the third fiscal year for which the grant 
or contract is made under this section, and 60 per centum of such cost 
in each of the fourth and fifth fiscal years for which the grant or 
contract is made under this section. 
"(B) For purposes of this paragraph, no grant or contract shall be 
considered to have been made under this section for a fiscal year 
ending before September 30,1981.". 
RECORDS AND AUDIT 
SEC. 971. Section 411(a) is amended by striking out "409 or". 21 USC 1178. 
DRUG ABUSE RESEARCH 
SEC. 972. (a) Section 503 is amended— 
21 USC 1193. 
(1) by inserting "(a)" before "The Director shall"; 
(2) by striking out "and" after the semicolon in clause (3); 
(3) by striking out the period at the end of clause (4) and 
inserting in lieu thereof a semicolon and "and"; and 
(4) by inserting after clause (4) the following new clause: 
"(5) drug abuse prevention, treatment, and rehabilitation."; 
(5) by striking out "this section" in the last sentence and 
inserting in lieu thereof "this subsection"; and 
(6) by adding at the end the following: 
"(b) The Director may— 
"(1) make grants or enter into contracts with individuals and 
public and nonprofit entities for the purpose of determining the 
causes of drug abuse in a particular area, and 
"(2) make grants to and enter into contracts with individuals 
and public and private nonprofit entities for research respecting 
improved drug maintenance and detoxification techniques and 
programs. 
"(c) For the purposes of subsections (a) and (b), there are authorized Appropriation 
to be appropriated $45,000,000 for the fiscal year ending September authorization. 
30,1982.". 
(b) The heading for section 503 of such Act is amended by striking 
out "certain research and development" and inserting in lieu thereof 
"research". 
(c) The item relating to section 503 in the table of sections for title V 
of such Act is amended by striking out "certain research and 
development" and inserting in lieu thereof "research". 
95 STAT. 598 
PUBLIC LAW 97-35—AUG. 13, 1981 
21 use 1115. 
21 use 1162. 
21 use 1172. 
21 use 1175. 
21 use 1180. 
21 use 1191. 
TECHNICAL AMENDMENTS 
SEC. 973. (a) Section 205 is amended by striking out "Health, 
Education, and Welfare" and inserting in lieu thereof "Health and 
Human Services". 
(b) Section 302 is amended by striking out "Health, Education, and 
Welfare" and inserting in lieu thereof "Health and Human Serv-
ices". 
(cXl) Section 405 is amended by striking out "Health, Education, 
and Welfare" each place it appears and inserting in lieu thereof 
"Health and Human Services". 
(2) The section heading for section 405 is amended by striking out 
"Health, Education, and Welfare" and inserting in lieu thereof 
"Health and Human Services". 
(3) The item relating to section 405 in the table of sections for title 
IV is amended by striBng out "Health, Education, and Welfare" and 
inserting in lieu thereof 'llealth and Human Services". 
(d) Section 408(g) is amended by striking out "Health, Education, 
and Welfare" and inserting in lieu thereof "Health and Human 
Services". 
(e) Section 4130b)(2XB) is amended by striking out "single State 
agencies designated pursuant to section 409(e)(1) of this Act" and 
inserting in lieu thereof "the State agencies responsible for the 
administration of drug abuse prevention activities". 
(f) Section 501 is amended by striking out "Health, Education, and 
Welfare" and inserting in lieu thereof "Health and Human Serv-
ices". 
eonsumer-
Patient 
Radiation 
Health and 
Safety Act of 
1981. 
42 use 10001 
note. 
Subtitle I—Consumer-Patient Radiation Health and 
Safety Act of 1981 
SHORT TITLE 
SEC. 975. This subtitle may be cited as the "Consumer-Patient 
Radiation Health and Safety Act of 1981". 
STATEMENT OF FINDINGS 
42 use 10001. 
SEC. 976. The Congress finds that— 
(1) it is in the interest of public health and safety to minimize 
unnecessary exposure to potentially hazardous radiation due to 
medical and dental radiologic procedures; 
(2) it is in the interest of public health and safety to have a 
continuing supply of adequately educated persons and appropri-
ate accreditation and certification programs administered by 
State governments; 
(3) the protection of the public health and safety from unneces-
sary exposure to potentially hazardous radiation due to medical 
and dental radiologic procedures and the assurance of efficacious 
procedures are the responsibility of State and Federal govern-
ments; 
(4) persons who administer radiologic procedures, including 
procedures at Federal facilities, should be required to demon-
strate competence by reason of education, training, and experi-
ence; and 
(5) the administration of radiologic procedures and the effect 
on individuals of such procedures have a substantial and direct 
effect upon United States interstate commerce. 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 599 
STATEMENT OP PURPOSE 
SEC. 977. It is the purpose of this subtitle to— 
42 use 10002. 
(1) provide for the establishment of minimum standards by the 
Federal Government for the accreditation of education programs 
for persons who administer radiologic procedures and for the 
certification of 
such persons; and 
(2) insure that medical and dental radiologic procedures are 
consistent with rigorous safety precautions and standards. 
DEFINITIONS 
SEC. 978. Unless otherwise expressly provided, for purposes of this '^2 use 10003. 
subtitle, the term— 
(1) "radiation" means ionizing and nonionizing radiation in 
amounts beyond normed background levels from sources such as 
medical and dental radiologic procedures; 
(2) "radiologic procedure" means any procedure or article 
intended for use in— 
(A) the diagnosis of disease or other medical or dental 
conditions in humans (including diagnostic X-rays or nucle-
ar medicine procedures); or 
(B) the cure, mitigation, treatment, or prevention of dis-
ease in humans; 
that achieves its intended purpose through the emission of 
radiation; 
(3) "radiologic equipment" means any radiation electronic 
product which emits or detects radiation and which is used or 
intended for use to— 
(A) diagnose disease or other medical or dental conditions 
(including diagnostic X-ray equipment); or 
(B) cure, mitigate, treat, or prevent disease in humans; 
that achieves its intended purpose through the emission or 
detection of radiation; 
(4) "practitioner" means any licensed doctor of medicine, 
osteopathy, dentistry, podiatry, or chiropractic, who prescribes 
radiologic procedures for other persons; 
(5) "persons who administer radiologic procedures" means any 
person, other than a practitioner, who intentionally administers 
radiation to other persons for medical purposes, and includes 
medic£j radiologic technologists (including dental hygienists and 
assistants), radiation therapy technologists, and nuclear medi-
cine technologists; 
(6) "Secretary" means the Secretary of Health and Human 
Services; and 
(7) "State" means the several States, the District of Columbia, 
the Commonwealth of Puerto Rico, the Commonwealth of the 
Northern Mariana Islands, the Virgin Islands, Guam, American 
Samoa, and the Trust Territory of the Pacific Islands. 
PROMULGATION OF STANDARDS 
SEC. 979. (a) Within twelve months after the date of enactment of 
this Act, the Secretary, in consultation with the Radiation Policy 
Council, the Administrator of Veterans' Affairs, the Administrator of 
the Environmental Protection Agency, appropriate agencies of the 
States, and appropriate professional organizations, shall by regula-
tion promulgate minimum standards for the accreditation of educa-
Regulation. 
42 u s e 10004. 
89-194 O—82 
40:QL3 
95 STAT. 600 
PUBLIC LAW 97-35—AUG. 13, 1981 
tional programs to train individuals to perform radiologic proce-
dures. Such standards shall distinguish between programs for the 
education of (1) medical radiologic technologists (including radio-
graphers), (2) dental auxiliaries (including dental hygienists and 
assistants), (3) radiation therapy technologists, (4) nuclear medicine 
technologists, and (5) such dther kinds of health auxiliaries who 
administer radiologic procedures as the Secretary determines appro-
priate. Such standards shall not be applicable to educational pro-
grams for practitioners. 
Regulation. 
(b) Within twelve months after the date of enactment of this Act, 
the Secretary, in consultation with the Radiation Policy Council, the 
Administrator of Veterans' Affairs, the Administrator of the Envi-
ronmental Protection Agency, interested agencies of the States, and 
appropriate professional organizations, shall by regulation promul-
gate minimum standards for the certification of persons who admin-
ister radiologic procedures. Such standards shall distinguish between 
certification of (1) medical radiologic technologists (including radio-
graphers), (2) dental auxiliaries (including dental hygienists and 
assistants), (3) radiation therapy technologists, (4) nuclear medicine 
technologists, and (5) such other kinds of health auxiliaries who 
administer radiologic procedures as the Secretary determines appro-
priate. Such standards shall include minimum certification criteria 
for individuals with regard to accredited education, practical experi-
ence, successful passage of required examinations, and such other 
criteria as the Secretary shall deem necessary for the adequate 
qualification of individuals to administer radiologic procedures. Such 
standards shall not apply to practitioners. 
MODEL STATUTE 
42 use 10005. 
SEC. 980. In order to encourage the administration of accreditation 
and certification programs by the States, the Secretary shall prepare 
and transmit to the States a model statute for radiologic procedure 
safety. Such model statute shall provide that— 
(1) it shall be unlawful in a State for individuals to perform 
radiologic procedures unless such individuals are certified by the 
State to perform such procedures; and 
(2) any educational requirements for certification of individ-
uals to perform radiologic procedures shall be limited to educa-
tional programs accredited by the State. 
COMPUANCE 
42 use 10006. 
SEC. 981. (a) The Secretary shall take all actions consistent with law 
to effectuate the purposes of this subtitle. 
(b) A State may utilize an accreditation or certification program 
administered by a private entity if^ 
(1) such State delegates the administration of 
the State accredi-
tation or certification program to such private entity; 
(2) such program is approved by the State; and 
(3) such program is consistent with the minimum Federal 
standards promulgated under this subtitle for such program. 
(c) Absent compliance by the States with the provisions of this 
subtitle within three years after the date of enactment of this Act, the 
Secretary shall report to the Congress recommendations for legisla-
tive changes considered necessary to assure the States' compliance 
with this subtitle. 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 601 
(d) The Secretary shall be responsible for continued monitoring of 
compliance by the States with the applicable provisions of this 
subtitle and shall report to the Senate and the House of Representa-
tives by January 1, 1982, and January 1 of each succeeding year the 
status of the States' compliance with the purposes of this subtitle. 
(e) Notwithstanding any other provision of this section, in the case 
of a State which has, prior to the effective date of standards and 
guidelines promulgated pursuant to this subtitle, established stand-
ards for the accreditation of educational programs and certification 
of radiologic technologists, such State shall be deemed to be in 
compliance with the conditions of this section unless the Secretary 
determines, after notice and hearing, that such State standards do 
not meet the minimum standards prescribed by the Secretary or are 
inconsistent with the purposes of this subtitle. 
FEDERAL RADIATION GUIDELINES 
SEC. 982. The Secretary shall, in conjunction with the Radiation 
Policy Council, the Administrator of Veterans' Affairs, the Adminis-
trator of the Environmental Protection Agency, appropriate agencies 
of the States, and appropriate professional organizations, promulgate 
Federal radiation guidelines with respect to radiologic procedures. 
Such guidelines shall— 
(1) determine the level of radiation exposure due to radiologic 
procedures which is unnecessary and specify the techniques, 
procedures, and methods to minimize such unnecessary expo-
sure; 
(2) provide for the elimination of the need for retakes of 
diagnostic radiologic procedures; 
(3) provide for the elimination of unproductive screening 
programs; 
(4) provide for the optimum diagnostic information with mini-
mum radiologic exposure; and 
(5) include the therapeutic application of radiation to individ-
uals in the treatment of disease, including nuclear medicine 
applications. 
Report to 
Congress. 
42 u s e 10007. 
APPUCABILITY TO FEDERAL AGENCIES 
SEC. 983. (a) Except as provided in subsection (b), each department, 42 use 10008. 
agency, and instrumentality of the executive branch of the Federal 
Government shall comply with standards promulgated pursuant to 
this subtitle. 
(b)(1) The Administrator of Veterans' Affairs, through the Chief Regulations. 
Medical Director of the Veterans' Administration, shall, to the 
maximum extent feasible consistent with the responsibilities of such 
Administrator and Chief Medical Director under subtitle 38, United 
States Code, prescribe regulations making the standards promulgat- 38 use loi et 
ed pursuant to this subtitle applicable to the provision of radiologic ^^9 
procedures in facilities over which the Administrator has jurisdic-
tion. In prescribing and implementing regulations pursuant to this 
subsection, the Administrator shall consult with the Secretary in 
order to achieve the maximum possible coordination of the regula-
tions, standards, and guidelines, and the implementation thereof, 
which the Secretary and the Administrator prescribe under this 
subtitle. 
(2) Not later than 180 days after standards are promulgated by the Report to 
Secretary pursuant to this subtitle, the Administrator of Veterans' congressional 
committees. 
95 STAT. 602 
PUBLIC LAW 97-35—AUG. 13, 1981 
Affairs shall submit to the appropriate committees of Congress a full 
report with respect to the regulations (including guidelines, policies, 
and procedures thereunder) prescribed pursuant to paragraph (1) of 
this subsection. Such report shall include— 
(A) an explanation of any inconsistency between standards 
made applicable by such regulations and the standards promul-
gated by the Secretary pursuant to this subtitle; 
(B) an account of the extent, substance, and results of consulta-
tions with the Secretary respecting the prescription and imple-
mentation of regulations by the Administrator; and 
(C) such recommendations for legislation and administrative 
action as the Administrator determines are necessary and desir-
able. 
Publication in 
(3) The Administrator of Veterans' Affairs shall publish the report 
Register 
required by paragraph (2) in the Federal Register. 
Subtitle J—Orderly Closure, Transfer, and Financial 
Self-Sufficiency of Public Health Service Hospitals 
and Clinics 
FINDINGS AND PURPOSES 
42 use 248b 
SEC. 985. (a) Congress finds that— 
^°^^- 
(1) because of national budgetary considerations, it has become 
necessary to terminate Federal appropriations for Public Health 
Service hospitals and clinics, 
(2) with proper planning and coordination, some of these 
hospitals and clinics could be transferred to State, local, or 
private control or become financially self-sufficient and continue 
to provide effective and efficient health care to individuals in the 
areas in which they are located, 
(3) a precipitous closure of these hospitals and clinics will 
preclude the possibility of such orderly transfer to entities which 
are willing and able to take over operations at such facilities and 
will cause unnecessary and costly hardships on the patients and 
staffs at such facilities and on the communities in which the 
facilities are located, and 
(4) it is in the national interest, consistent with sound budg-
etary considerations, to assist in the orderly and prompt transfer 
of such operations to State, local, or private operation or in the 
achievement of financial self-sufficiency where feasible. 
(b) The purposes of this subtitle are— 
(1) to provide for the prompt and orderly closure by October 31, 
1981, of Public Health Service hospitals and clinics which cannot 
reasonably be transferred to State, local, or private operation or 
become financially self-sufficient and for the transfer or achieve-
ment of financial self-sufficiency by September 30,1982, of those 
hospitals and clinics which can be so transferred or which can 
achieve such financial self-sufficiency, and 
(2) to provide for transitional assistance for merchant seamen 
whose entitlement to receive free care through Public Health 
Service hospitals and clinics is repealed and who are hospitalized 
at the end of fiscal year 1981 and require continuing hospitaliza-
tion. 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 603 
ELIMINATION OP MERCHANT MARINE ENTITLEMENT TO HEALTH 
SERVICES 
SEC. 986. (a) Subsection (h) of section 2 and subsections (a) and (b) of 
section 322 of 
the Public Health Service Act are repealed. 
42 use 201, 249. 
(b)(1) Section 322(e) of 
such Act is amended— 
(A) by striking out "entitled to care and treatment under 
subsection (a) of this section and persons"; and 
(B) by striking out "subsection (c)" and inserting in lieu thereof 
"subsection (a) . 
(2) Subsections (c), (d), and (e) of section 322 of such Act are 
redesiffliated as subsections (a), (b), and (c), respectively. 
(3) llie section heading for section 322 of such Act is amended by 
striking out "SEAMEN" and inserting in lieu thereof "PERSONS UNDER 
QUARANTINE". 
(4) Section 332(aX2XC) of such Act is amended by striking out 42 use 254e. 
"seamen" and inserting in lieu thereof "persons under quarantine". 
(c) The amendments and repeals made by this section shall take Effective date. 
effect on October 1,1981. 
^^ use 249 note. 
PROPOSALS FOR TRANSFER OR FINANCIAL SELF-SUFFICIENCY OF PUBLIC 
HEALTH SERVICE HOSPITALS AND CLINICS 
SEC. 987. (a) The Secretary of Health and Human Services (herein- 42 use 248b. 
after in this subtitle referred to as the "Secretary") shall, in accord-
ance with this section and notwithstanding section 818 of Public Law 
93-155, provide for the closure, transfer, or financial self-sufficiency 42 use 248a. 
of all hospitals and other stations of the Public Health Service 
(hereinafter in this subtitle referred to as the "Service") not later 
than September 30,1982. 
(b) Not later than July 1, 1981, the Secretary shall notify each 
Service hospital and other station, and the chief executive officer of 
each State and of each locality in which such a hospital or other 
station is located, that the Secretary will accept proposals for the 
transfer of each such hospital and station from the Service to a public 
(including Federal) or nonprofit private entity or for the achievement 
of financial self-sufficiency of each such hospital and station not later 
than September 30,1982. No such proposal shall be considered by the 
Secretary if it is submitted later than September 1,1981. 
(c) The Secretary shall evaluate promptly each proposal submitted 
under subsection (b) with respect to a hospital or other station and 
determine, not later than September 30,1981, whether or not under 
such proposal the hospital or station— 
(1) will be maintained as a general health care facility provid-
ing a range of services to the population within its service area, 
(2) will continue to make services available to existing patient 
populations, and 
(3) has a reasonable expectation of financial viability and, in 
the case of a hospital or station that is not proposed to be 
transferred, of financial self-sufficiency. 
Paragraph (1) shall not apply in the case of a proposal for the 
transfer of a discrete, minor, freestanding part of 
a hospital or station 
to a local public entity for the purpose of continuing the provision of 
services to refugees. 
(d)(1) If the Secretary determines that a proposal for a hospital or 
other station does not meet the standards of subsection (c) or if there 
is no proposal submitted under subsection (b) with respect to a 
hospital or other station, the Secretary shall provide for the closure of 
the hospital or station by not later than October 31,1981. 
95 STAT. 604 
PUBLIC LAW 97-35—AUG. 13, 1981 
(2) If the Secretary determines that a proposal for a hospital or 
other station meets the standards of subsection (c), the Secretary 
shall take such steps, within the amounts available through appropri-
ations, as may be necessary and proper— 
(A) to operate (or participate or assist in the operation of) the 
hospital or station by the Service until the transfer is accom-
plished or financial self-sufficiency is achieved, 
(B) to bring the hospital or station into compliance with 
applicable licensure, accreditation, and local medical practice 
standards, and 
(C) to provide for such other legal, administrative, personnel, 
and financial arrangements (including allowing payments made 
with respect to services provided by the hospital or station to be 
made directly to that hospital or station) as may be necessary to 
effect a timely and orderly transfer of such hospital or station 
(including the land, building, and equipment thereof) from the 
Service, or for the financial self-sufficiency of the hospital or 
station, not later than September 30,1982. 
(e) There is established, within the Office of the Assistant Secretary 
for Health of the Department of Health and Human Services, an 
identifiable administrative unit which shall have direct responsibili-
ty and authority for overseeing the activities under this section. 
(f) For purposes of 
this section, a hospital or station cannot be found 
to be financially self-sufficient if the hospital or station is relsdng, in 
whole or in part, on direct appropriated funds for its continued 
operations. 
CONTINUED CARE FOR MERCHANT SEAMEN HOSPITAUZED IN PUBLIC 
HEALTH SERVICE HOSPITALS 
42 use 249 note. 
SEC. 988. (a) The Secretary shall provide, by contract or other 
arrangement with a Federal entity and without charge but subject to 
subsection (h), for the continuation of inpatient hospital services (and 
outpatient services related to the condition of hospitalization) to any 
individual who— 
(1) on September 30, 1981, is receiving inpatient hospital 
services at a Public Health Service hospital on the basis of the 
entitlement contained in section 322(a) of the Public Health 
Service Act (42 U.S.C. 249(a)), as such section was in effect on 
such date, for treatment of a condition, 
(2) requires continued hospitalization after such date for treat-
ment of that condition (or requires outpatient services related to 
such condition), and 
(3) the Secretary determines has no other source of inpatient 
hospital services available for continued treatment of that condi-
tion. 
(b) Services may not be provided under subsection (a) to an 
individual after the earlier o
f
— 
(1) September 30,1982, 
(2) the end of the first 60-day consecutive period (beginning 
after September 30,1981) during the entire period of which the 
individual is not an inpatient of 
a hospital. 
(c) Notwithstanding any other provision of law, the head of any 
Federal department or agency which provides, under other authority 
of law and through federal facilities, inpatient hospital services or 
outpatient services, or both, is authorized to provide inpatient hospi-
tal services (and related outpatient services) to individuals under 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 605 
contract or other arrangement with the Secretary pursuant to this 
section. 
Subtitle K—Office of the Secretary of Health and 
Human Services 
APPROPRIATIONS FOR IMMEDIATE OFFICE OF SECRETARY OF HEALTH 
AND HUMAN SERVICES 
SEC. 991. The appropriations for the immediate office of the 42USC350i 
Secretary of Health and Human Services and the Under Secretary of "
°
^
® 
Health and Human Services for the executive direction of the 
Department of Health and Human Services may not exceed 
$4,125,000 for fiscal year 1982, may not exceed $4,485,000 for fiscal 
year 1983, and may not exceed $4,875,000 for fiscal year 1984. Before 
the Secretary may request additional funds for the office of the 
Secretary or the Under Secretary or request the reprograming to 
such offices of appropriated fimds, the Secretary shall consult with 
the Committee on Energy and Commerce of the House of Representa-
tives. 
TITLE X—ENERGY AND ENERGY-
RELATED PROGRAMS 
Subtitle A—Department of Energy Authorization 
CHAPTER 1-CIVILIAN RESEARCH AND DEVELOPMENT 
AUTHORIZATION 
OPERATING EXPENSES 
SEC. 1001. Funds are hereby authorized to be appropriated in 42 use 7270 
accordance with section 660 of the Department of Energy Organiza- ^ 
tion Act for operating expenses for the civilian research and develop- ^^ use 7270. 
ment programs of the Department of Energy for the following 
appropriations accounts; 
(1) Greneral science and research activities, 
(A) for the fiscal year ending on September 30, 1982, 
$439,160,000; 
(B) for the fiscal year ending on September 30, 1983, 
$471,000,000; and 
(C) for the fiscal year ending on September 30, 1984, 
$500,000,000. 
(2) Energy supply, research and development activities, 
(A) for the fiscal year ending on September 30, 1982, 
$2,057,460,000; 
(B) for the fiscal year ending on September 30, 1983, 
$2,141,000,000 including programs authorized in section 
1007(a)(3XA);and 
(C) for the fiscal year ending on September 30, 1984, 
$2,258,000,000 including programs authorized in section 
1007(a)(3)(A). 
(3) Uranium supply and enrichment activities (advanced iso-
tope separation), for the fiscal year ending on September 30, 
1982, $80,292,000. 
95 STAT. 606 
PUBLIC LAW 97-35—AUG. 13, 1981 
(4) Geothermal resources development fund: geothermal loan 
guarantee and interest assistance program, 
(A) for the fiscal year ending on September 30, 1982, 
$200,000; 
(B) for the fiscal year ending on September 30, 1983, 
$200,000; and 
(C) for the fiscal year ending on September 30, 1984, 
$200,000. 
(5) Fossil energy research and development, including capital 
equipment not related to construction, 
(A) for the fiscal year ending on September 30, 1982, 
$460,800,000; 
(B) for the fiscal year ending on September 30, 1983, 
$430,800,000; and 
(C) for the fiscal year ending on September 30, 1984, 
$430,800,000. 
(6) Energy conservation research and development, including 
capital equipment not related to construction, 
(A) for the fiscal year ending on September 30, 1982, 
$149,444,000; 
(B) for the fiscal year ending on September 30, 1983, 
$154,000,000; and 
(C) for the fiscal year ending on September 30, 1984, 
$158,600,000. 
PLANT AND CAPITAL EQUIPMENT GENERALLY 
42 use 7270 
SEC. 1002. Funds are hereby authorized to be appropriated in 
^°^^- 
accordance with section 660 of the Department of Ener^ Orgginiza-
42 use 7270. 
tion Act for construction, including planning, construction, acquisi-
tion, or modification of facilities, including land acquisition; and 
acquisition and fabrication of captial equipment not related to 
construction of the Department of Energy for the following appropri-
ations accounts: 
(1) General science and research activities, 
(A) for the fiscal year ending on September 30, 1982, 
$128,300,000 including the amounts authorized to be appro-
priated in sections 1003 and 1004(aX3); 
(B) for the fiscal year ending on September 30, 1983, 
$137,000,000; and 
(C) for the fiscal year ending on September 30, 1984, 
$147,000,000. 
(2) Energy supply, research and development activities, 
(A) for the fiscal year ending on September 30, 1982, 
$370,132,000 including the amounts authorized to be appro-
priated in sections 1003 and 1004(aX2); 
(B) for the fiscal year ending on September 30, 1983, 
$354,000,000; and 
(C) for the fiscal year ending on September 30, 1984, 
$416,200,000. 
(3) Fossil energy construction, 
(A) for the fiscal year ending on September 30, 1982, 
$18,000,000 including the amounts authorized to be appro-
priated in sections 1003 and 1004(aXl); 
(B) for the fiscal year ending on September 30, 1983, 
$13,000,000; and 
(C) for the fiscal year ending on September 30, 1984, 
$6,000,000. 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 607 
PRIOR YEAR CONSTRUCTION 
SEC. 1003. (a) Of the amounts authorized to be appropriated for 42 use 7270 
fiscal year 1982 by sections 1001 and 1002, there are authorized to be "°*® 
appropriated in accordance with section 660 of the Department of 
Energy Organization Act for construction (including planning, con- 42 USC 7270. 
struction, acquisition, and modification of facilities, including land 
acquisition), and for acquisition and fabrication of capital equipment 
not related to construction, with respect to each prior year project 
listed in the budget documents submitted to the Congress in support 
of the fiscal year 1982 budget, amounts not to exceed the appropri-
ations amount requested for such project for fiscal year 1982 as set 
forth in such budget documents, except as otherwise provided (in the 
case of specific projects) under subsection (b). 
(b) The amounts otherwise authorized by subsection (a) to be 
appropriated for fiscal year 1982 or previously authorized are in-
creased or decreased as follows: 
(1) Fossil energy research and development: 
(A) in the case of acquisition and fabrication of capital 
equipment not related to construction, the amount so au-
thorized for fossil energy research and development is de-
creased by $800,000; 
(2) Energy supply research and development: 
(A) in the case of acquisition and fabrication of capital 
equipment not related to construction, the amount so au-
thorized for energy supply, research, and development activ-
ities is increased by $1,000,000; 
(B) in the case of Project 81-ES-l, OTEC 40MW Pilot 
Plant, the amount previously authorized is increased by 
$6,300,000, for a total project authorization of $36,300,000; 
(C) in the case of Project 81-T-314, Impurity Studies 
Experiment Modification (ISX-C), Oak Ridge, Tennessee, 
the amount previously authorized is increased by $3,500,000, 
for a total project authorization of $7,000,000; 
(D) in the case of Project 80-ES-19,250KW, Small Commu-
nity Solar Thermal Power Experiment, the amount previ-
ously authorized is increased by $4,000,000, for a total project 
authorization of $8,180,000; 
(E) in the case of Project 80-G-2, Second 50 MWe Demon-
stration Power Plant, Heber, Imperial Valley, California, 
the 
amount 
previously 
authorized 
is 
increased 
by 
$11,000,000, for a total project authorization of $19,000,000; 
(F) in the case of Project 78-6-f, Fuels and Materials 
Examination Facility, Hanford, Washington, the amount 
previously authorized is increased by $17,800,000, for a total 
project authorization of $176,800,000; and 
(G) in the case of Project 78-3-b, Mike McCormack Fusion 
Materials Irradiation Test Facility, Hanford, Washington, 
the 
amount 
previously 
authorized 
is 
increased 
by 
$14,000,000, for a total project authorization of $47,000,000. 
(3) Energy conservation: 
(A) in the CEise of acquisition and fabrication of capital 
equipment not related to construction, the amount so au-
thorized for energy conservation is increased by $326,000. 
(c) For purposes of this section, the terms "budget documents 
Definitions. 
submitted to the Congress in support of the fiscal year 1982 budget" 
and "budget documents" mean the Department of Energy Congres-
95 STAT. 608 
PUBLIC LAW 97-35—AUG. 13, 1981 
sional Budget Request, Fiscal Year 1982 (February 1981; DOE/ 
CR-0011-3). 
NEW CONSTRUCTION 
42 use 7270 
SEC. 1004. (a) Of the amounts appropriated for fiscal year 1982 
^°^^- 
pursuant to the authorization provided in section 1002, funds may be 
expended for new plant and capital equipment activities, including 
planning, construction, acquisition, or modification of facilities, in-
cluding land acquisition. The following new plant and capital equip-
ment activities are hereby authorized in an amount not to exceed the 
Federal share of the total estimated cost set forth for each project in 
budget documents submitted to the Congress in support of the fiscal 
year 1982 budget. Within such amounts the authorizations for the 
new plant and capital equipment activities for fiscal year 1982 are 
limited as follows: 
(1) Fossil energy construction: 
(A) Project 82-F-506, Surface Water Containment and 
Waste Water Treatment Facility, Pittsburgh Energy Tech-
nology Center, Bruceton, Pennsylvania, $1,000,000; and 
(B) Project 82-F-505, General plant projects for technology 
centers, six locations, $6,000,000; and 
(2) Energy supply research and development: 
(A) Nuclear fission activities: 
(i) Project 82-N-315, General plant projects, Richland, 
Washington, and other sites, $1,100,000; 
(ii) Project 82-N-310, Modification to reactors, various 
locations, $2,000,000; and 
(iii) Project 
82-N-312, General 
plant 
projects, 
$11,000,000. 
(B) Magnetic fusion activities: 
(i) Project GPP-82, General plant projects, Princeton, 
New Jersey, and Oak Ridge, Tennessee, $5,700,000. 
(C) Supporting research and technical analysis activities: 
(i) Project 82-E-322, High Temperature Materials 
Laboratory, Oak Ridge National Laboratory, Oak Ridge, 
Tennessee, $3,500,000; 
(ii) Project 82-E-321, Accelerator Improvements and 
Modifications, various locations, $300,000; 
(iii) Project 82-E-320, General plant projects, various 
locations, $300,000; 
(iv) Project 82-E-301, 300 area critical utilities up-
grading, Richland, Washington, $1,000,000; 
(v) Project 82-E-302, Security Facility, Argonne Na-
tional Laboratory, Argonne, Illinois, $1,500,000; 
(vi) Project 82-E-305, Traffic safety improvements, 
Richland, Washington, $3,800,000; 
(vii) Project 82-E-306, Railroad modifications, Idaho 
National Engineering Laboratory, Idaho, $2,000,000. 
(D) Environmental research and development activities: 
(i) Project 
82-GPP-l, 
General 
plant 
projects, 
$3,000,000; and 
(ii) Project 82-V-305, Modifications and additions to 
environmental research facilities, various locations, 
$1,000,000. 
(3) General science and research activities: 
(A) High energy physics activities: 
(i) Project 82-E-206, Tevatron II, Fermi National 
Accelerator Laboratory, Batavia, Illinois, $6,000,000; 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 609 
(ii) Project 82-E-205, Accelerator improvements and 
modifications, various locations, $7,000,000; and 
(iii) Project 82-E-204, General plant projects, various 
locations, $6,000,000; 
(B) Nuclear physics activities: 
(i) Project 82-E-223, Argonne Tandem-Linac Accel-
erator System (ATLAS), Argonne National Laboratory, 
Argonne, Illinois, $4,000,000; 
(ii) Project 82-EJ-221, Accelerator improvements and 
modifications, various locations $2,000,000; and 
(iii) Project 82-E-222, General plant projects, various 
locations, $2,800,000. 
Definitions. 
(b) For purposes of this section, the terms "budget documents 
submitted to the Congress in support of the fiscal year 1982 budget" 
and "budget documents" mean the Department of Energy C!ongres-
sional Budget Request, Fiscal Year 1982 (February 1981; DOE/ 
CR-0011-3). 
CHAPTER 2-CONSERVATION, INFORMATION, AND 
REGULATION 
AUTHORIZATIONS FOR FISCAL YEARS 1982, 1983, AND 1984 
SEC. 1005. Funds are hereby authorized to be appropriated in 42 use 7270 
accordance with section 660 of the Department of Energy Organiza- ^°^-
tion Act for operating expenses for— 
^
2 use 7270. 
(1) Energy conservation, 
(A) for the fiscal year ending on September 30, 1982, 
$363,056,000; 
(B) for the fiscal year ending on September 30, 1983, 
$387,400,000; and 
(C) for the fiscal year ending on September 30, 1984, 
$399,000,000. 
(2) Regulation and information activities— 
(A) for the fiscal year ending on September 30, 1982, 
including— 
(i) for economic regulation, $44,600,000; 
(ii) for the Federal Energy Regulatory Commission, 
$80,400,000; and 
(iii) for the Energy Information Administration, 
$84,986,000; 
(B) for the fiscal year ending on September 30, 1983, 
$265,000,000; and 
(C) for the fiscal year ending on September 30, 1984, 
$275,000,000. 
(3) Strategic Petroleum Reserve, to carry out part B of title I of 
the Energy Policy and Conservation Act, except acquisition, 
transportation, and injection of petroleum products for the 
Reserve and the carrying out of any drawdown and distribution 
of 
the Reserve— 
(A) for the fiscal year ending September 30, 1983, 
$366,319,000; and 
(B) for the fiscal year ending on September 30, 1984, 
$864,429,000. 
95 STAT. 610 
PUBLIC LAW 97-35—AUG. 13, 1981 
CHAPTER 3—POWER MARKETING ADMINISTRATIONS 
42 use 7270 
SEQ. 1006. Funds are hereby authorized to be appropriated in 
"°^®- 
accordance with section 660 of the Department of Energy Organiza-
42 use 7270. 
tion Act for the ci\dlian programs of the Department of Energy for 
the following appropriations accounts: 
(1) Alaska Power Administration operation and maintenance, 
(A) for the fiscal year ending on September 30, 1982, 
$3,538,000 of 
which $50,000 shall be reserved for an emergen-
cy fund to £issure continuous operations during unusual or 
emergency conditions; 
(B) for the fiscal year ending on September 30, 1983, 
$3,374,000; and 
(C) for the fiscal year ending on September 30, 1984, 
$3,374,000. 
(2) Southeastern Power Administration operation and mainte-
nance, 
(A) for the fiscal year ending on September 30, 1982, 
$7,237,000; 
(B) for the fiscal year ending on September 30, 1983, 
$11,848,000; and 
(C) for the fiscal year ending on September 30, 1984, 
$24,240,000. 
(3) Southwestern Power Administration operation mainte-
nance, 
(A) for the fiscal year ending on September 30, 1982, 
$20,239,000; 
(B) for the fiscal year ending on September 30, 1983, 
$38,119,000; and 
(C) for the fiscal year ending on September 30, 1984, 
$40,254,000. 
(4) Western Area Power Administration construction rehabili-
tation, operation and maintenance, 
(A) for the fiscal year ending on September 30, 1982, 
$210,774,000; 
(B) for the fiscal year ending on September 30, 1983, 
$226,400,000; and 
(C) for the fiscal year ending on September 30, 1984, 
$259,700,000. 
(5) Western Area Power Administration emergency fund, 
(A) for the fiscal year ending on September 30, 1982, 
$500,000; 
(B) for the fiscal year ending on September 30, 1983, 
$500,000; and 
(C) for the fiscal year ending on September 30, 1984, 
$500,000. 
CHAPTER 4—OTHER ACTIVITIES 
OPERATING EXPENSES 
42 use 7270 
SEC. 1007. (a) Funds are hereby authorized to be appropriated in 
^°^- 
accordance with section 660 of the Department of Energy Organiza-
tion Act for operating expenses— 
(1) uranium supply and enrichment activities, 
(A) other than advanced isotope separation, for the fiscal 
year ending on September 30,1982, for— 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 611 
(i) gaseous diffusion 
operations and 
support, 
$961,825,000; 
(ii) gas centrifuge operations and support, $5,200,000; 
(iii) uranium enrichment process development, 
$93,075,000; 
(iv) pro-am administration, $3,100,000; and 
(v) uranium resource assessment, $9,700,000; 
(B) including advanced isotope separation, for the fiscal 
year ending on September 30, 1983, $1,621,600,000; and 
(C) including advanced isotope separation, for the fiscal 
year ending on September 30,1984, $1,973,600,000. 
(2) Department administration, 
(A) for the fiscal year ending on September 30, 1982, 
$206,000,000; 
(B) for the fiscal year ending on September 30, 1983, 
$246,963,000, including plant and capital equipment; and 
(C) for the fiscal year ending on September 30, 1984, 
$246,963,000, including plant and capital equipment. 
(3) Energy supply research and development, 
(A) solar and hydropower for the fiscal year ending on 
September 30,1982, $11,700,000; and 
(B) commercial waste management, 
(i) other than programs authorized in section 
10()1(2)(A), for the fiscal year ending on September 30, 
1982, $67,370,000; 
(ii) for the fiscal year ending on September 30, 1983, 
$284,148,000; and 
(iii) for the fiscal year ending on September 30,1984, 
$300,000,000. 
(4) Energy conservation, including capital equipment not relat-
ed to construction, 
(A) for the fiscal year ending on September 30, 1982, 
$32,600,000; 
(B) for the fiscal year ending on September 30, 1983, 
$33,600,000; and 
(C) for the fiscal year ending on September 30, 1984, 
$34,600,000. 
(5) Energy production, demonstration, and distribution, 
(A) for the fiscal year ending on September 30, 1982, 
$230,963,000; 
(B) for the fiscal year ending on September 30, 1983, 
$377,195,000; and 
(C) for the fiscal year ending on September 30, 1984, 
$292,305,000. 
(h) Any State receiving financial assistance for energy extension 
service activities pursuant to the National Energy Extension Service 
Act shall be required to provide funds from non-Federal sources for 
such activities in an amount no less than 20 per centum of the 
amount allocated to such State under such Act during any fiscal year. 
PLANT AND CAPITAL EQUIPMENT GENERALLY 
SEC. 1008. Funds are hereby authorized to be appropriated in 42 use 7270 
accordance with section 660 of the Department of Ener^ Organiza- "°^ 
tion Act for construction, including planning, construction, acquis!- 42 use 7270. 
tion, or modification of facilities, including land acquisition; and 
acquisition and fabrication of capital equipment not related to 
95 STAT. 612 
PUBLIC LAW 97-35—AUG. 13, 1981 
construction of the Department of Energy for the following appropri-
ations accounts: 
(1) Uranium supply and enrichment activities, including 
research and development activities, 
(A) for the fiscal year ending on September 30, 1982, 
(i) $748,250,000 including the amounts authorized in 
sections 1009 and lOlO(aXl), and 
(ii) $200,000 for uranium resource assessment, capital 
equipment not related to construction; 
(B) for the fiscal year ending on September 30, 1983, 
$1,002,800,000; and 
(C) for the fiscal year ending on September 30, 1984, 
$981,500,000. 
(2) Department administration, 
(A) for the fiscal year ending on September 30, 1982, 
$40,963,000 including the amounts authorized in sections 
1009(a) and 1010(a)(2). 
(3) Energy supply research and development, commercial 
waste management, 
(A) for the fiscal year ending on September 30, 1982, 
$975,000. 
PRIOR YEAR CONSTRUCTION 
42 use 7270 
SEC. 1009. (a) Of the amounts authorized to be appropriated for 
"°*®- 
fiscal 
year 1982 by section 1008, there are authorized to be appropri-
ated in accordance with section 660 of the Department of Energy 
42 use 7270. 
Organization Act for construction (including planning, construction, 
acquisition, and modification of facilities, including land acquisition), 
and for acquisition £ind fabrication of capital equipment not related 
to construction, with respect to each prior year project listed in the 
budget documents submitted to the Congress in support of the fiscal 
year 1982 budget amounts not to exceed the appropriations amount 
requested for such project for fiscal year 1982 as set forth in such 
budget documents, except as otherwise provided (in the case of 
specific projects) under subsection (b). 
(b) The amounts authorized to be appropriated for fiscal year 1982 
with respect to the following projects are as follows: 
(1) Uranium supply and enrichment activities, 
(A) Project 80-UE-5, Motor and switchgear upgrading, 
gaseous diffusion plants, the amount previously authorized 
is increased by $6,600,000 for a total project authorization of 
$26,500,000; and 
(B) Project 76-8-g, Enriched uranium production facilities, 
Portsmouth, Ohio, the amount previously authorized is 
increased by $601,()00,000 for a total project authorization of 
$1,552,845,000. 
Definitions. 
(c) For purposes of this section, the terms "budget documents 
submitted to the Congress in support of the fiscal year 1982 budget" 
and "budget documents" mean the Department of Energy Congres-
sional Budget Request, Fiscal Year 1982 (February 1981; DOE/ 
CR-0011-3). 
NEW CONSTRUCTION 
42 use 7270 
SEC. 1010. (a) Of the amounts appropriated for fiscal year 1982 
" 
pursuant to the authorization provided in section 1008, funds may be 
expended for new plant and capital equipment activities, including 
planning, construction, acquisition, or modification of facilities, 
including land acquisition. The following new plant and capital 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 613 
equipment activities are hereby authorized in an amount not to 
exceed the Federal share of the total estimated cost set forth for each 
project in budget documents submitted to the Congress in support of 
the fiscal year 1982 budget. Within such amounts the authorizations 
for the new plant and capital equipment activities for fiscal year 1982 
are limited as follows: 
(1) Uranium supply and enrichment activities, 
(A) Project 82-R-410, General plant projects, various loca-
tions, including Grand Junction, Colorado, $17,600,000; 
(B) Project 82-R-411, UF6 cylinders and storage yards, 
gaseous diffusion plants, $11,000,000; 
(C) Project 82-R-412, Cooling tower modifications. Oak 
Ridge, Tennessee and Portsmouth, Ohio, gaseous diffusion 
plants, $8,000,000; 
(D) Project 82-R-413, Improved UF6 containment and 
gaseous diffusion plants, $7,100,000; 
(E) Project 82-R-414, Purge and cascade withdrawal modi-
fications, 
gaseous diffusion plant, Paducah, Kentucky, 
$9,000,000; 
(F) Project 82-R-415, Fire alarm system replacement, 
gaseous diffusion plants, $4,700,000; 
(G) Project 82-R-416, Environmental protection and 
safety modifications, Phase II, gaseous diffusion plants, 
$2,000,000; 
(H) Project 82-R-417, Air distribution system upgrading, 
gaseous diffusion plant, Paducah, Kentucky, $2,700,000; 
(I) Project 82-R-418, Advanced Centrifuge Test Facilities, 
Oak Ridge, Tennessee, $6,000,000; and 
(J) Project 82-N-402, General plant projects, various loca-
tions, $650,000. 
(2) Departmental administration, 
(A) Project 82-A-601, Modifications for energy manage-
ment, various locations, $14,100,000; 
(B) Project 82-A-602, Advanced Test Reactor (ATR) waste 
heat recovery, Idaho National Engineering Laboratory, 
Idaho, $4,900,000; 
(C) Project 82-A-603, High temperature water distribu-
tion system, Los Alamos Scientific Laboratory, New Mexico, 
$5,000,000; 
(D) Project 82-C-601, Plcmt engineering and design, var-
ious locations, $2,000,000; and 
(E) Capital equipment not related to construction for 
departmental administration activities, $5,563,000. 
0)) For purposes of this section, the terms "budget documents Definitions. 
submitted to the Congress in support of the fiscal year 1982 budget" 
and "budget documents" mean the Department of Energy Congres-
sional Budget Request, Fiscal Year 1982 (February 1981; DOE/ 
CR-0011-3). 
GENERAL REQUIREMENT 
SEC. 1011. (a) At the same time that the President submits his 
budget to the Congress for fiscal years 1983 and 1984 for the 
Department of Enermr as required by the Budget and Accounting 
Act, 1921, there shall be submitted, in addition to any other existing 31 use i. 
requirements, a tabular listing for the recommended level of program 
activity and subactivity funding the fiscal years 1983 and 1984 of 
civilian energy activities in the same format as is contained in the 
program tables relating to this title appearing in the statement of 
95 STAT. 614 
PUBLIC LAW 97-35—AUG. 13, 1981 
managers aocompanyiiig the conference report on the Omnibus 
Budget Reconciliation Act of 1981 (H.R. 3982; 97th Congress). 
(b) At the same time that the President submits his budget to the 
Congress those plant and capital amounts requested for that fiscal 
year, additional authorization requested for prior year projects, and 
any new construction requests shall also be submitted as a separate 
request for authorization of appropriations for civilian research and 
development activities. 
CHAPTER 5—UNITED STATES ENERGY TARGETS 
ENERGY TARGETS 
SEC. 1012. United States energy targets: 
ENERGY TARGETS 
[Quadrillion Btu's per year] 
1985 
1990 
1995 
2000 
Domestic production: 
OilandNGL 
18 
17 
18 
18 
Natural gas 
18 
18 
16 
15 
Coal 
21 
27 
82 
41 
Nuclear 
5 
7 
8 
9 
Hydro geothermal 
3 
4 
4 
4 
Renewables 
2 
3 
5 
6_ 
Subtotal 
67 
76 
83 
93 
Imports: 
OU 
18 
14 
11 
7 
Natural gas 
2 
3 
3 
2 
Coal 
-1.8 
-2.1 
-2.2 
-2.4 
Subtotal 
18 
15 
11 
7 
Total supply 
85 
90 
94 
100 
End-use consumption: 
Petroleum liquids 
32 
29 
28 
27 
Gas 
17 
18 
18 
18 
Direct coal 
5 
6 
6 
7 
Electricity 
9 
10 
11 
12 
Decentralized solar.— 
2 
3 
4 
5_ 
Subtotal 
64 
66 
67 
68 
Conversion losses.... 
21 
25 
28 
32 
Stock increase 
Total consumption 
85 
91 
94 
100 
Subtitle B—Powerplant and Industrial Fuel Use Act of 
1978 Provisions 
APPUCABIUTY OF FUEL USE RESTRICTIONS TO CERTAIN EXISTING 
ELECTRIC POWERPLANTS 
SEC. 1021. (a) Title m of the Powerplant and Industrial Fuel Use 
Act of 1978 is amended by striking out section 301 (42 U.S.C. 8341) and 
inserting in lieu thereof 
the following: 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 615 
"SEC. 301. EXISTING ELECTRIC POWERPLANTS. 
"(a) CERTIFICATION BY POWERPLANTS OF COAL CAPABILITY.—At any 
time, the owner or operator of an existing electric powerplant may 
certify to the Secretary, for purposes of subsection (b)— 
"(1) whether or not such powerplant has or previously had the 
technical capability to use coal or another alternate fuel as a 
primary energy source; 
"(2) whether or not such powerplant could have the technical 
capability to use coal or another alternate fuel as a primary 
energy source without having— 
"(A) substantial physical modification of the powerplant, 
or 
"(B) substantial reduction in the rated capacity of the 
powerplant; and 
"(3) whether or not it is financially feasible to use coal or 
another alternate fuel as a primary energy source in such a 
powerplant. 
"(b) AUTHORITY OF SECRETARY TO PROHIBIT WHERE COAL OR ALTER-
NATE FUEL CAPABILITY EXISTS.—The Secretary may prohibit, in 
accordance with section 303(a) or (b), the use of petroleum or natural 42 use 8343. 
gas, or both, as a primary energy source in any existing electric 
powerplant, if an affirmative certification under subsection (aXD, (2), 
and (3) is in effect with respect to such powerplant and if, after 
examining the basis for the certification, the Secretary concurs with 
the certification. 
"(c) AUTHORITY OF SECRETARY TO PROHIBIT EXCESSIVE USE IN 
MIXTURES.—At any time, the owner or operator of an existing electric 
powerplant may certify to the Secretary for purposes of this subsec-
tion whether or not it is technically and financially feasible to use a 
mixture of petroleum or natural gas and coal or another alternate 
fuel as a primary energy source in that powerplant. If an affirmative 
certification under this subsection is in effect with respect to such 
powerplant and if, after examining the basis for the certification, the 
Secretary concurs with the certification, the Secretary may prohibit, 
in accordance with section 303(a), the use of petroleum or natural gas, 
or both, in such powerplant in amounts in excess of the minimum 
amount necessary to maintain reliability of operation of the unit 
consistent with maintaining reasonable fuel efficiency of such 
mixture. 
"(d) AMENDMENT OF SUBSECTION (a) AND (C) CERTIFICATIONS.—The 
owner or operator of any such powerplant may at any time amend 
any certification under subsection (a) or (c) in order to take into 
account changes in relevant facts and circumstances; except that no 
such amendment to such a certification may be made after the date of 
any final prohibition under subsection (b) or (c) based on that 
certification.". 
(b) Section 711 of the Powerplant and Industrial Fuel Use Act of 
1978 (42 U.S.C. 8421) is amended by adding at the end thereof the 
following new subsection: 
"(c) NATURAL GAS USAGE BY ELECTRIC UTIUTIES.—(1) For purposes 
of section 404(b) and other emergency authorities, the Secretary shall 42 use 8374. 
obtain data necessary to determine— 
"(A) within 6 months after the date of the enactment of this 
subsection, the total quantities of natural gas used as a primary 
energy source by each electric utility during calendar year 1977, 
and 
9-194 O—82 
41 : QL3 
95 STAT. 616 
PUBLIC LAW 97-35—AUG. 13, 1981 
"(B) on a semiannual basis, the total quantities of natural gas 
used as a primary energy source during the previous 6-month 
period by each electric utility. 
Report to 
"(2) The Secretary shall include in each annual report to the 
4
2
* 
lfscr8482 
Congress under section 806 a summary of information received by the 
Secretary under this subsection.". 
VAUDITY OF ORDERS UNDER FORMER SECTION 301 OF THE POWERPLANT 
AND INDUSTRIAL FUEL USE ACT OF 1978 
42 use 8341 note 
SEC. 1022. (a) The amendments made by section 1021 to section 301 
Ante, p. 614. 
(b) and (c) of the Powerplant and Industrial Fuel Use Act of 1978 shall 
not apply to any electric powerplant for which a final order was 
issued pursuant to section 301 (b) or (c) of such Act before the date of 
the enactment of this Act. 
GD) Any electric powerplant issued a proposed order under section 
301 (b) or (c) of such Act which is pending on the date of the 
enactment of this Act may elect not to have the amendments made by 
section 1021 to such section 301 (b) or (c) apply with respect to that 
powerplant. Such an election shall be irrevocable and shall be made 
in such form and manner as the Secretary of Energy shall, within 45 
days after the date of the enactment of this Act, prescribe. Such an 
election shall be made not later than 60 days after the date on which 
the Secretary of Energy prescribes the form and manner of making 
such election. 
(c)(1) The amendments made by section 1021 shall not affect the 
validity of any final order issued under section 301 (b) or (c) of the 
Powerplant and Industrial Fuel Use Act of 1978 before the date of the 
enactment of this Act. 
(2) The validity of any proposed order issued under such section 301 
(b) or (c) shall not be affected in the case of powerplants covered by 
elections made under subsection (b). 
(3) The authority of the Secretary of Energy to amend, repeal, 
rescind, modify, or enforce any order referred to in paragraph (1) or 
(2), or rules applicable thereto, shall remain in effect notwithstanding 
any such amendments. 
ELECTRIC UTILITY CONSERVATION PLAN 
SEC. 1023. (a) The Powerplant and Industrial Fuel Use Act of 1978 is 
amended by inserting after section 807 the following new section: 
42 u s e 8484. 
"SEC. 808. ELECTRIC UTILITY CONSERVATION PLAN. 
"(a) APPLICABILITY.—An electric utility is subject to this subsection 
i
f
— 
"(1) the utility owns or operates any existing electric power-
plant in which natural gas was used as a primary energy source 
at any time during the 1-year period ending on the date of the 
enactment of this section, and 
"(2) the utility plans to use natural gas as a primary energy 
source in any electric powerplant. 
"(b) SUBMISSION AND APPROVAL OF PLAN.—The Secretary shall 
require each electric utility subject to this section to— 
"(1) submit, within 1 year after the date of the enactment of 
this section, and have approved by the Secretary, a conservation 
plan which meets the requirements of subsection (c); and 
"(2) implement such plan during the 5-year period beginning 
on the date of the initial approval of such plan. 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 617 
"(c) CONTENTS OF PLAN.—(1) Any conservation plan under this 
section shall set forth means determined by the utility to achieve 
conservation of electric energy not later than the 5th year after its 
initial approval at a level, measured on an annual basis, at least 
equal to 10 percent of the electric energy output of that utility during 
the most recent 4 calendar quarters ending prior to the date of the 
enactment of this section which is attributable to natural gas. 
"(2) The conservation plan shall include— 
"(A) all activities required for such utility by part 1 of title II of 
the National Energy Conservation Policy Act; 
^2 use 8211. 
"(B) an effective public information program for conservation; 
and 
"(C) such other measures as the utility may consider appro-
priate. 
"(3) Any such plan may set forth a program for the use of 
renewable energy sources (other than hydroelectric power). 
"(4) Any such plan shall contain procedures to permit the amounts 
expended by such utility in developing and implementing the plan to 
be recovered in a manner specified by the appropriate State regula-
tory authority (or by the utility in the case of a nonregulated utility), 
(d) PLAN APPROVAL.—(1) The Secretary shall, by order, approve or 
disapprove any conservation plan proposed under this subsection by 
an electric utility within 120 days after its submission. The Secretary 
shall approve any such proposed plan unless the Secretary finds that 
such plan does not meet the requirements of subsection (c) and states 
in writing the reasons therefor. 
"(2) In the event the Secretary disapproves under paragraph (1) the 
plaa originally submitted, the Secretary shall provide a reasonable 
period of time for resubmission. 
"(3) An electric utility may amend any approved plan, except that 
the plan as amended shall be subject to approval in accordance with 
paragraph (1).". 
(b) Section 712 of the Powerplant and Industrial Fuel Use Act of 
1978 (42 U.S.C. 8422) is amended by inserting "(a) GENERALLY.—" 
before "Any person" and by adding at the end thereof the following 
new subsection: 
"(b) REPORT ON IMPLEMENTATION OP SECTION 808 PLAN.—Any Ante, p. 6i6. 
electric utility required to submit a conservation plan under section 
808 shall annually submit to the Secretary a report identifying the 
steps taken during the preceding year to implement such plan.". 
(c) The table of contents for such Act is amended by adding at the 
end thereof the following item after the item relating to section 807: 
"Sec. 808. Electric utility conservation plan.". 
APPUCABILITY OF RESTRICTIONS RELATING TO NATURAL GAS OUTDOOR 
UGHTING 
SEC. 1024. (a) Section 402(bXl) of the Powerplant and Industrial 
Fuel Use Act of 1978 is amended— 
42 use 8372. 
(1) by inserting "(other than any outdoor lighting fixture which 
was installed before the date of the enactment of this Act for use 
in connection with a residence and for which natural gas was 
being provided on such date of enactment)" after "use in outdoor 
lighting", and 
(2) in subparagraph (C), by striking out the dash and all that 
follows through "residence," and inserting in lieu thereof "any 
municipal outdoor lighting fixture". 
95 STAT. 618 
PUBLIC LAW 97-35—AUG. 13, 1981 
42 use 8372. 
(b) Section 402 of such Act is amended by redesignating subsection 
(f) as subsection (g) and by inserting after subsection (e) the following 
new subsection: 
"(f)(1) For the purpose of discouraging the use of natural gas for 
outdoor lighting, each local distribution company which is subject to 
subsection (a) or (b) shall, in accordance with rules promulgated by 
the Secretary— 
"(A) establish a reasonable and simple method, as determined 
by each such company, by which the company shall periodically 
inform its customers about the amount of natural gas consumed 
by outdoor lighting and the annual cost of such gas for such 
lighting; and 
"(B) report to the Secretary the method established under 
subparagraph (A). 
A company may establish a method which provides for reporting such 
information on the basis of estimates where actual information is not 
readily available. 
"(2) The Secretary shall propose the rules referred to in paragraph 
(1) as promptly as possible after the date of the enactment of this 
subsection, and such rules shall take effect not later than the 
ninetieth day after they are proposed. In promulgating such rules, 
the Secretary shall, to the greatest extent feasible, consult with the 
appropriate regulatory authority of the States and the local distribu-
tion companies who will be subject to the rules.". 
Strategic 
Petroleum 
Reserve 
Amendments 
Act of 1981. 
42 u s e 6201 
note. 
Subtitle C—STRATEGIC PETROLEUM RESERVE 
SHORT TITLE 
SEC. 1031. This subtitle may be cited as the "Strategic Petroleum 
Reserve Amendments Act of 1981". 
42 u s e 6231 
note. 
FINDINGS 
SEC. 1032. The Congress finds that— 
(1) the Strategic Petroleum Reserve should be considered a 
national security asset; and 
(2) enlarging the capacity and filling of the Strategic Petro-
leum Reserve should be accelerated (to the extent technically 
and economically practicable) to take advantage of any increased 
availability of crude oil in the world market from time to time. 
RATE OF FILUNG THE STRATEGIC PETROLEUM RESERVE 
SEC. 1033. Section 160(c) of the Energy Policy and Conservation Act 
(42 U.S.C. 6240(c)) is amended to read as follows: 
"(cXD The President shall immediately seek to undertake, and 
thereafter continue (subject to paragraph (2)), crude oil acquisition, 
transportation, and injection activities at a level sufficient to assure 
that crude oil in storage in the Strategic Petroleum Reserve will be 
increased at an average annual rate of at least 300,000 barrels per 
day. 
"(2) TJie requirements in paragraph (1) shall cease to apply when 
the quantity of petroleum products stored within the Strategic 
Petroleum Reserve is at least 750,000,000 barrels.".' 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 619 
FINANCING OF THE STRATEGIC PETROLEUM RESERVE 
SEC. 1034. (a)(1) Part B of title I of the Energy Policy and Conserva-
tion Act (42 U.S.C. 6231-6246) is amended by adding at the end 
thereof the following: 
"SPR PETROLEUM ACCOUNT 
"SEC. 167. (a) The Secretary of the Treasury shall establish in the Establishment. 
Treasury of the United States an account to be known as the 'SPR ^^ use 6247. 
Petroleum Account' (hereinafter in this section referred to as the 
'Account'). 
"(b) Amounts in the Account may be obligated by the Secretary of 
Energy for the acquisition, transportation, and injection of petroleum 
products into the Strategic Petroleum Reserve, and the drawdown 
and delivery of petroleum products from the Reserve— 
"(1) in the case of fiscal year 1982, in an aggregate amount, not 
to exceed $3,900,000,000, as may be provided in advance in 
appropriation Acts; 
"(2) in the case of any fiscal year after fiscal year 1982, subject 
to section 660 of the Department of Energy Organization Act, in 42 use 7270. 
such aggregate amounts as may be appropriated in advance in 
appropriation Acts; and 
"(3) in the case of any fiscal year, notwithstanding section 660 
of the Department of Energy Organization Act, in an aggregate 
amount equal to the aggregate amount of the receipts to the 
United States from the sale of petroleum products in any 
drawdown and distribution of the Strategic Petroleum Reserve 
under section 161. 
42 use 6241. 
Funds available to the Secretary of Energy for obligation under this 
subsection may remain available without fiscal year limitation. 
"(c) The Secretary of the Treasury shall provide and deposit into 
the Account such sums as may be necessary to meet obligations of the 
Secretary of 
Energy under subsection (b). 
"(d) The Account, the deposits and withdrawals from the Account, 
and the transactions, receipts, obligations, outlays associated with 
such deposits and withdrawals (including petroleum product pur-
chases and related transactions), and receipts to the United States 
from the sale of petroleum products in any drawdown and distribu-
tion of the Strategic Petroleum Reserve under section 161— 
"(1) shall not be included in the totals of the budget of the 
United States Government and shall be exempt from any general 
limitation imposed by statute on expenditures and net lending 
(budget outlays) of the United States; and 
"(2) shall not be deemed to be budget authority, spending 
authority, budget outlays, or Federal revenues for purposes of 
title III of Public Law 93-344, as amended.". 
31 use 1321. 
(2) The table of contents for the Energy Policy and Conservation 
Act is amended by adding after the item relating to section 166 the 
following new item: 
"Sec. 167. SPR Petroleum Account.". 
(b) Section 166 of the Energy Policy and Conservation Act (42 U.S.C. 
6246) is amended by striking out "and" at the end of paragraph (2), by 
striking out the period at the end of paragraph (3) and inserting in 
lieu thereof "; and", and by adding at the end thereof the following 
new paragraph: 
95 STAT. 620 
PUBLIC LAW 97-35—AUG. 13, 1981 
"(4) for the fiscal year ending September 30,1982, not to exceed 
$260,000,000 to carry out the provisions of this part, except— 
"(A) acquisition, transportation, and injection of petro-
leum products for the Reserve, and 
"(B) the carrying out of any drawdown and distribution of 
the Reserve.". 
42 use 6247 
(c) The provisions of section 167(d) of such Act, as added by 
Ante p 619 
subsection (a) of this section, shall apply with respect to the outlays 
associated with unexpended balances of appropriationns made avail-
able and obligated as of the end of fiscal year 1981 for the acquisition, 
transportation, and injection of petrolem products for the Strategic 
Petroleum Reserve to the same extent and manner as such provisions 
apply with respect to withdrawals from the SPR Petroleum Account. 
QUARTERLY REPORTS 
SEC. 1035. (a) Section 166 of the Energy Policy and Conservation 
Act (42 U.S.C. 6245) is amended by inserting "(a)" before "The 
Secretary" and by adding at the end thereof the following new 
subsection: 
"Ot))(l) On or before the fifteenth day of the second calendar quarter 
which begins after the date of the enactment of this subsection and 
every calendar quarter thereafter, the Secretary shall report to the 
Congress on activities undertaken with respect to the Strategic 
Petroleum Reserve under the amendments made by the Strategic 
Petroleum Reserve Amendments Act of 1981, including— 
"(A) the amounts of petroleum products stored in the Reserve, 
under contract and in transit at the end of the previous calendar 
quarter; 
"(B) the projected fill rate for the Strategic Petroleum Reserve 
for the then current calendar quarter and the previous calendar 
quarter; 
"(C) the average price of the petroleum products acquired 
during the previous calendar quarter; 
"(D) existing and projected Strategic Petroleum Reserve stor-
age capacity and plans to accelerate the acquisition or construc-
tion of such capacity; 
"(E) an analysis of any existing or anticipated problems associ-
ated with acquisition, transportation, and storage of petroleum 
products in the Reserve and with the expansion of storage 
capacity for the Reserve; and 
"(F) the amount of funds obligated by the Secretary from the 
SPR Petroleum Account, as well as other funds available for the 
Reserve, during the previous calendar quarter and in total under 
the amendments made by such Act. 
"(2) The first report submitted under paragraph (1) shall include— 
"(A) a detailed statement on the planned use of the SPR 
Petroleum Account as well as other funds available for the 
Strategic Petroleum Reserve; 
"(B) a description of the current Strategic Petroleum Reserve 
Plan, including any proposed or anticipated amendments to the 
Plan; and 
"(C) detailed plans of the Secretary for acquisition or new 
construction of storage and related facilities.". 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 621 
STUDY ON ULTIMATE SIZE OF RESERVE 
SEC. 1037. Not later than 6 months after the date of the enactment 
of this Act, the Secretary of Energy shall conduct a study, and 
prepare and transmit a report thereon to the President and the 
Congress, on whether the final storage level set forth in the Strategic 
Petroleum Reserve Plan should be amended. Such report shall 
include an analysis of the costs and benefits to the Government (and 
the nation) which are associated with achieving— 
(1) the final storage level currently set forth in the plan, and 
(2) any other larger or smaller final storage level which might 
be appropriate. 
EFFECTIVE DATE 
SEC. 1038. The provisions of this title shall take effect on the date of 42 use 6240 
the enactment of this Act. 
^°^-
Subtitle D—Voluntary Building Energy Conservation 
Standards 
VOLUNTARY STANDARDS 
SEC. 1041. (a) The Energy Conservation Standards for New Build-
ings Act of 1976 is amended by striking out "performance standards" 42 use 680i 
each place it appears, except in section 306, and inserting in lieu 42^use 6835 
thereof "voluntary performance standards". 
(b) The Energy Conservation Standards for New Buildings Act of 
1976 is amended by striking out sections 305 and 307 (42 U.S.C. 6834 
and 6836). 
(c) Section 304(a) of the Energy Conservation Standards for New 
Buildings Act of 1976 (42 U.S.C. 6833(a)) is amended— 
(1) by adding at the end thereof the following new paragraph: 
"(4) Except in the case of Federal buildings as required under 
section 306, voluntary performance standards under this subsection 
shall be developed solely as guidelines for the purpose of providing 
technical assistance for the design and construction of energy effi-
cient buildings."; 
(2) by striking out "the effective date of final performance 
standards promulgated pursuant to this paragraph" where it 
appears in paragraphs (1) and (2) and inserting in lieu thereof 
"April 1,1984,"; and 
(3) by striking out ", and shall become effective within a 
reasonable time not to exceed 1 year after the date of promulga-
tion, as specified by the Secretary" where it appears in para-
graphs (1) and (2). 
(d) Section 306 of such Act (42 U.S.C. 6835) is amended by striking 
out "Upon the effective date of the final performance standards 
promulgated pursuant to such section," and inserting in lieu thereof 
"Not later than April 1,1984,". 
(e) Section 308 of such Act (42 U.S.C. 6837) is amended by striking 
out "meeting the requirements of this title" and inserting in lieu 
thereof "furthering the design and construction of energy efficient 
buildings". 
(f) The table of sections for such Act is amended by striking out the 
items relating to sections 305 and 307. 
15 u s e 719e 
note. 
94 Stat. 685. 
95 STAT. 622 
PUBLIC LAW 97-35—AUG. 13, 1981 
Subtitle E—Office of Federal Inspector for the Alaska 
Natural Gas Transportation System 
FUNDING UMITATION 
SEC. 1051. Notwithstanding any other provision of law, there shall 
not be appropriated for programs of the Office of Federal Inspector 
for the Alaska Natural Gas Transportation System in excess of 
$21,038,000 for the fiscal year ending September 30,1981; $36,568,000 
for the fiscal year ending September 30,1982; in excess of $45,532,000 
for the fiscal year ending September 30,1983, and $46,908,000 for the 
fiscal year ending September 30,1984. 
Subtitle F—Biomass Energy and Alcohol Fuels 
DEPARTMENT OP AGRICULTURE 
SEC. 1061. Section 204(a) of the Biomass Energy and Alcohol Fuels 
Act of 1980 (42 U.S.C. 8803(a)) is amended by striking out 
"$600,000,000" in paragraph (1) and inserting in lieu thereof 
"$460,000,000". 
DEPARTMENT OF ENERGY 
SEC. 1062. Section 204(a) of the Biomass Energy and Alcohol Fuels 
Act of 1980 (42 U.S.C. 8803(a)) is amended by striking out 
"$600,000,000" in paragraph (2) and inserting in lieu thereof 
"$460,000,000". 
CONFORMING AMENDMENT 
SEC. 1063. Section 204(a) of the Biomass Energy and Alcohol Fuels 
Act of 1980 (42 U.S.C. 8803(a)) is amended by striking out 
"$1,450,000,000" and inserting in lieu thereof "$1,170,000,000". 
Subtitle G'Solar Bank 
FISCAL YEAR 1982, 1983, AND 1984 AUTHORIZATIONS 
SEC. 1071. In lieu of the amounts authorized by subsections (a) and 
(b) of section 522 of the Solar Energy and Energy Conservation Act of 
1980 (12 U.S.C. 3620) to be appropriated for fiscal years 1982, 1983, 
and 1984, there is authorized to be appropriated for each such fiscal 
year not to exceed $50,000,000 to provide financial assistance under 
subtitle A of such Act for the purchase and installation of residential 
and commercial energy conserving improvements and of solar energy 
systems. Any funds appropriated pursuant to the preceding authori-
zation may remain available without fiscal year limitation. 
TITLE XI—TRANSPORTATION AND 
RELATED PROGRAMS 
Subtitle A—Aviation 
Fiscal Year 1981 
PART 1—FISCAL YEAR 1981 AIRPORT DEVELOPMENT 
Airport 
Development 
g^c. HQl. This part may be cited as the "Fiscal Year 1981 Airport 
Authorization 
Development Authorization Act". 
49 u s e 1701 
note. 
12 u s e 3620 
note. 
94 Stat. 737. 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 623 
SEC. 1102. (a) Section 14(aX3) of the Airport and Airway Develop-
ment Act of 1970 (49 U.S.C. 1714(a)(3)) is amended by striking out 
"and" after "1979," and by striking out the period at the end thereof 
and inserting in lieu thereof ", and $387,000,000 for fiscal year 1981.". 
(b) Section 14(aX4) of the Airport and Airway Development Act of 
1970 (49 U.S.C. 1714(aX4)) is amended by striking out "and" after 
"1979," and by striking out the period at the end thereof and 
inserting in lieu thereof ", and $63,000,000 for fiscal year 1981.". 
(c) In addition to the purposes otherwise authorized, amounts 49 use 1714 
authorized under sections 14(aX3) and 14(aX4) of the Airport and "°*®-
Airway Development Act of 1970 for fiscal year 1981 shall also be 
authorized for airport system planning, airport master planning, and 
airport noise compatibility planning, all in accordance with section 
13 of such Act, and for carrying out noise compatibility programs 49 use 1713. 
under section 104(c) of the Aviation Safety and Noise Abatement Act 
of 1979. The apportionment of such amounts under section 15 of the 49 use 2104. 
Airport and Airway Development Act of 1970 shall be made as soon 49 use 1715. 
as possible after the date of enactment of this part and for purposes of 
sections 14(b), 15, and 19 of the Airport and Airway Development Act 
of 1970 relating to authority to incur obligations and to enter into 49 use 1714, 
project grant agreements all the purposes set forth in the preceding ^^^^' ^^^^• 
sentence shall be deemed to be airport development within the 
meaning of such Act. The Secretary shall obligate from funds 
available for fiscal year 1981 under section 14(aX3) of the Airport and 
Airway Development Act of 1970 not less than $25,000,000 for 
carrying out noise compatibility programs under section 104(c) of the 
Aviation Safety and Noise Abatement Act of 1979. 
(d) Section 14(bX2) of the Airport and Airway Development Act of 
1970 (49 U.S.C. 1714(bX2)) is amended by striking out "1980" and 
inserting in lieu thereof "1981". 
(e) Section 15(aX3)(AXI) of the Airport and Airway Development 
Act of 1970 (49 U.S.C. 1715(aX3XAXI)) is amended by striking out 
"1980" and inserting in lieu thereof "1981". 
(f) Section 15(aX3XAXII) of the Airport and Airway Development 
Act of 1970 (49 U.S.C. 1715(a)(3)(A)(II)) is amended by striking out 
"1980" and inserting in lieu thereof "1981". 
(g) Section 15(aX3)(BXi) of the Airport and Airway Development Act 
of 1970 (49 U.S.C. 1715(a)(3)(B)(i)) is amended by striking out "1980" 
and inserting in lieu thereof "1981". 
(h) Section 15(aX4) of the Airport and Airway Development Act of 
1970 (49 U.S.C. 1715(aX4)) is amended by striking out "fiscal year 
1980" each place it appears and inserting in lieu thereof "each of the 
fiscal years 1980 and 1981". 
(i) Section 17(aX2)(A) of the Airport and Airway Development Act of 
1970 (49 U.S.C. 1717(aX2)(A)) is amended by striking out "fiscal year 
1980" and inserting in lieu thereof "fiscal years 1980 and 1981". 
(j) Notwithstanding any other provision of the Airport and Airway 49 use 1716 
Development Act of 1970, the Secretary of Transportation may "°*® 
approve an application under such Act before October 1, 1981, for a 
project which was begun after September 30, 1980, and before the 
date of the enactment of this part. If such an application is approved, 
costs incurred under such project after September 30, 1980, and 
before the date of approval of such project shall be allowable costs to 
the extent they would be allowable costs under the provisions of such 
Act of 1970 (other than provisions making costs allowable only if 
incurred after the execution of the grant agreement) if incurred after 
the date of such project approval. 
95 STAT. 624 
PUBLIC LAW 97-35—AUG. 13, 1981 
(k) Notwithstanding any other provision of law, the Secretary of 
Transportation shall obligate from funds available for fiscal year 
49 use 1701 
1981 under the Airport and Airway Development Act of 1970 
"°^- 
$15,000,000 for carrying out noise compatibility programs at Cannon 
International Airport in Reno, Nevada, in accordance with section 
49 use 2104. 
104(c) of the Aviation Safety and Noise Abatement Act of 1979. Such 
funds shall remain available until expended. Of the amount obligated 
for projects described in this subsection, only that portion of such 
amount which exceeds $10,000,000 and is less than or equal to 
$15,000,000 shall be counted as part of the $25,000,000 required to be 
obligated by the last sentence of subsection (c) of this section. 
SEC. 1103. (a) Section 208(f)(1) of the Airport and Airway Revenue 
49 use 1742. 
Act of 1970 is amended by striking out "1980" and inserting in lieu 
thereof "1981". 
(b) Subparagraph (A) of section 208(f)(1) of the Airport and Airway 
Revenue Act of 1970 is amended to read as follows: 
49 use 1701. 
"(A) incurred under title I of this Act or of the Airport and 
49 use 1701 
Airway Development Act Amendments of 1976 or of the 
^a^ior 91 ni 
Aviation Safety and Noise Abatement Act of 1979 or under 
note. 
the Fiscal Year 1981 Airport Development Authorization 
Ante, p. 622. 
Act (as such Acts were in effect on the date of enactment of 
the Fiscal Year 1981 Airport Development Authorization 
Act);". 
PART 2—ADDITIONAL PROVISIONS RELATING TO AIRPORT 
DEVELOPMENT 
SEC. 1104. If the Senate and the House of Representatives approve a 
conference report on the Airport and Airway Improvement Act of 
1981 which includes new budget authority for airport development, 
airport planning, airport noise compatibility planning, and carrying 
out noise compatibility programs which exceeds $450,000,000 for 
fiscal year 1981 or which exceeds an aggregate amount of 
$1,050,000,000 for fiscal years 1981 and 1982, then before the bill 
which is the subject of such conference report is enrolled, the 
Secretary of the Senate or the Clerk of the House of Representatives, 
as the case may be, is directed to include the following provision in 
the bill: "Notwithstanding any other provision of law, the total 
amount which may be obligated for airport development, airport 
planning, airport noise compatibility planning, and carrying out 
noise compatibility programs from amounts in the Airport and 
Airway Trust Fund which were not available for obligation during 
any previous fiscal year shall not exceed $450,000,000 for fiscal year 
1981 and shall not exceed an aggregate amount of $1,050,000,000 for 
fiscal years 1981 and 1982.". 
Subtitle B—Highways and Highway Safety 
23 use 1
0
4 note. 
SEC. 1106. (a) Notwithstanding any other provision of law, the total 
of all obligations for Federal-aid highways and highway safety 
construction programs for fiscal year 1982 shall not exceed 
$8,200,000,000. This limitation shall not apply to obligations for 
emergency relief under section 125 of title 23, United States Code, or 
projects covered under section 147 of the Surface Transportation 
23 use 1
4
4 note. Assistance Act of 1978. No obligation constraints shall be placed upon 
any ongoing emergency project carried out under section 125 of title 
23, United States Code, or section 147 of the Surface Transportation 
.^sistance Act of 1978. 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 625 
(b) Notwithstanding any other provision of law, the total of all 
obligations for Federal-aid highways and highway safety construc-
tion programs for fiscal year 1983 shall not exceed $8,800,000,000. 
This limitation shall not apply to obligations for emergency relief 
under section 125 of title 23, United States Code, or projects covered 
under section 147 of the Surface Trguisportation Assistance Act of 
1978. No obligation constraints shall be placed upon any ongoing 
emergency project carried out under section 125 of title 23, United 
States Code, or section 147 of the Surface Transportation Assistance 
Act of 1978. 
23 use 144 note. 
(c) For each of the fiscal years 1982 and 1983, the Secretary of 
Transportation shall distribute the limitation imposed by subsections 
(a) and (b) by allocation in the ratio which sums authorized to be 
appropriated for Federal-aid highways and highway safety construc-
tion which are apportioned to each State for each such fiscal year 
bears to the total of the sums authorized to be appropriated for 
Federal-aid highways and highway safety construction which are 
apportioned to all the States for each such nscal year. 
(d) During the periods October 1 through December 31, 1981, and 
October 1 through December 31, 1982, no State shall obligate more 
than 35 per centum of the amount distributed to such State under 
subsection (c), and the total of all State obligations during such jperiod 
shall not exceed 25 per centum of the total amount distributed to all 
States under such subsection. 
(e) Notwithstanding subsections (c) and (d), the Secretary shall— 
(1) provide all States with authority sufficient to prevent lapses 
of sums authorized to be appropriated for Federal-aid highways 
and highway safety construction which have been apportioned to 
a State, except in those instances in which a State indicates its 
intention to lapse sums apportioned under section 104(bX5XA) of 
title 23, United States Code; 
(2) after August 1, 1982, and after August 1, 1983, revise a 
distribution of the funds made available under subsection (c) if a 
State will not obligate the amount distributed during that fiscal 
year and redistribute sufficient amounts to those States able to 
obligate amounts in addition to those previously distributed 
during that fiscal year; and 
(3) not distribute amounts authorized for administrative ex-
penses and forest highways. 
SEC. 1107. (aXD There is hereby authorized to be appropriated for 23 use 402 note. 
carrying out section 402 of title 23, United States Code (relating to 
highway safety programs), by the National Highway Traffic Safety 
Adbministration, out of the Highway Trust Fund, $100,000,000 per 
fiscal year for each of the flsc^ years ending September 30, 1982, 
September 30,1983, and September 30,1984. 
(2) Out of the funds authorized to be appropriated under paragraph 
(1) of this subsection for each of the fiscal years ending September 30, 
1982, September 30, 1983, and September 30, 1984, not less than 
$20,000,000 per fiscal year shall be obligated under section 402 of title 
23, United States Code, for the purpose of enforcing the fifty-five 
miles per hour speed limit established by section 154 of such title. 23 use 154. 
(3) Each State shall expend each fiscal year not less than 2 per 
centum of the amount apportioned to it for such fiscal year of the 
sums authorized by paragraph (1) of this subsection, for programs to 
encourage the use of safety belte by drivers of, and passengers in, 
motor vehicles. 
(b) Notwithstanding any other provision of law, the total of all 
obligations for highway safety programs carried out by the National 
95 STAT. 626 
PUBLIC LAW 97-35—AUG. 13, 1981 
23 u s e 402 note. 
Rulemaking. 
Transmittal to 
Congress. 
92 Stat. 2727. 
Highway Traffic Safety Administration under section 402 of title 23, 
United States Code, shall not exceed $100,000,000, per fiscal year for 
each of the fiscal years ending September 30, 1982, September 30, 
1983, and September 30, 1984, and the total of all obligations for 
highway safety programs carried out by the Federal Highway Admin-
istration under section 402 of title 23, United States Code, shall not 
exceed $10,000,000, per fiscal year for each of such fiscal years. 
(c) Effective October 1,1982, subsection (h) of section 402 of title 23, 
United States Code, is repealed. 
(d) Section 402(j) of title 23, United States Code, is amended to read 
as follows: 
"(j) The Secretary of Transportation shall, not later than Septem-
ber 1,1981, begin a rulemaking process to determine those programs 
most effective in reducing accidents, injuries, and deaths. Such rule 
shall be promulgated taking into account consideration of the States 
having a major role in establishing these programs. Not later than 
April 1,1982, the Secretary shall promulgate a final rule establishing 
those programs determined most effective in reducing accidents, 
injuries, and deaths. Before such rule shall take effect, it shall be 
transmitted to Congress. If such rule is not transmitted by April 1, 
1982, it shall not take effect before October 1, 1983. If such rule is 
transmitted by April 1, 1982, it shall take effect October 1, 1982, 
unless before June 1, 1982, either House of Congress by resolution 
disapproves such rule. If such rule is disapproved by either House of 
Congress, the Secretary shall not apportion or obligate any amount 
authorized to carry out this section for the fiscal year ending 
September 30,1983, or any subsequent fiscal year, unless specifically 
authorized to do so by a statute enacted after the date of enactment of 
the Omnibus Budget Reconciliation Act of 1981. When a rule promul-
gated in accordance with this subsection takes effect, only those 
programs established by such rule as most effective in reducing 
accidents, injuries, and deaths shall be eligible to receive Federal 
financial assistance under this chapter.". 
(e) Section 402(b)(1) of title 23, United States Code, is amended by 
striking out subparagraph (D) and by redesignating subparagraphs 
(E), (F), and (G) (and any references thereto) as subparagraphs (D), (E), 
and (F), respectively. 
SEC. 1108. (a) Section 154(f) of title 23, United States Code, is 
amended to read as follows: 
"(f) If the data submitted by a State pursuant to subsection (e) of 
this section show that the percentage of motor vehicles exceeding 55 
miles per hour is greater than 50 percent, the Secretary shall reduce 
the State's apportionment of Federal-aid highway funds under each 
of sections 104(bXl), 104(b)(2), and 104(b)(6) of this title in an aggregate 
amount of up to 5 percent of the amount to be apportioned for the 
following fiscal year, in the case of fiscal years 1982 and 1983, and up 
to 10 percent, in the case of subsequent fiscal years.". 
(b) Subsection (i) of section 154 of title 23, United States Code, is 
hereby repealed. 
SEC. 1109. (a) Section 202 of the Highway Safety Act of 1978 is 
amended as follows: 
(1) Paragraph (1) is amended by striking out "per fiscal year for 
each of the fiscal years ending September 30, 1981, and Septem-
ber 30, 1982." and inserting in lieu thereof "for the fiscal year 
ending September 30,1981.'. 
(2) Paragraph (2) is amended by striking out "September 30, 
1981, and September 30,1982." and inserting in lieu thereof "and 
September 30, 1981, and $31,000,000 per fiscal year for each of 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 627 
the fiscal years ending September 30, 1982, September 30, 1983, 
and September 30,1984.". 
(3) Paragraph (3) is amended by striking out "September 30, 92 Stat. 2727. 
1981, and September 30,1982." and inserting in lieu thereof "and 
September 30, 1981, and $10,000,000 per fiscal year for each of 
the fiscal years ending September 30, 1982, September 30, 1983, 
and September 30,1984.". 
(4) Paragraph (4) is amended in the first sentence by striking 
out "September 30,1981, and September 30,1982." and inserting 
in lieu thereof "and September 30, 1981.". Paragraph (4) is 
amended in the second sentence by striking out "September 30, 
1981, and September 30,1982." and inserting in lieu thereof "and 
September 30,1981.". 
(5) Paragraph (5) is amended by striking out the period at the 
end thereof and inserting in lieu thereof ", and $13,000,000 per 
fiscal year for each of the fiscal years ending September 30,1983, 
and September 30,1984.". 
(6) Paragraph (9) is amended by striking out the period at the 
end thereof and inserting in lieu thereof and $1,500,000 for the 
fiscal year ending September 30, 1983. Section 406 of title 23, 
United States Code, is repealed effective upon the obligation and 
expenditure of all funds authorized to carry out such section.". 
(7) Paragraph (10) is amended by inserting "and" after "1980," 
and by striking out ", and $15,000,000 for the fiscal year ending 
September 30, 1982." and inserting in lieu thereof a period. 
(b)(1) Of the funds authorized to be appropriated by section 202(1) of 
the Highway Safety Act of 1978 for any fiscal year ending before 92 Stat. 2727. 
October 1,1981, which have not been obligated for expenditure before 
such date, $133,000,000 shall not be available for obligation, and shall 
no longer be authorized, on and after such date. 
(2) Of the funds authorized to be appropriated by section 202(3) of 
the Highway Safety Act of 1978 for any fiscal year ending before 
October 1,1981, which have not been obligated for expenditure before 
such date, $40,000,000 shall not be available for obligation, and shall 
no longer be authorized, on and after such date. 
(c) Section 206 of the Highway Safety Act of 1978 is amended by 9
2 Stat. 2731. 
inserting "and" after "1980," and by striking out "and September 30, 
1982,". 
Subtitle C—Public Mass Transportation 
SEC. 1111. (a) The Urban Mass Transportation Act of 1964 is 
amended as follows: 
(1) Section 
4(c)(3)(A) is 
amended 
by 
striking 
out 49 use 1603. 
"$1,600,000,000" and inserting in lieu thereof "$1,515,000,000". 
(2) Section 4(e) is amended by striking out "$120,000,000" and 
inserting in lieu thereof "$75,000,000". 
(3) Section 4(f) is amended by striking out "$105,000,000" and 
inserting in lieu thereof "$100,000,000". 
(4) Section 4(g) is amended by striking out the period at the end 
thereof and inserting in lieu thereof ", except that there are 
authorized to be appropriated not to exceed $600,000,000 for such 
projects for the fiscal year ending September 30,1982.". 
(5) Section 5(a)(1)(B) is amended by striking out "$900,000,000 4
9 use 1604. 
in each fiscal year for the fiscal years ending September 30,1981, 
and September 30, 1982." and inserting in lieu thereof 
"$900,000,000 for the fiscal year ending September 30,1981, and 
$850,000,000 for the fiscal year ending September 30, 1982.". 
95 STAT. 628 
PUBLIC LAW 97-35—AUG. 13, 1981 
49 use 1604. 
(6) Section 5(aX2XB) is amended by striking out "$250,000,000" 
the last place it appears and inserting in lieu thereof 
"$165,000,000". 
(7) Section 5(aX3)(B) is amended by striking out "$160,000,000" 
and inserting in lieu thereof "$90,000,000". 
(8) Section 5(aX4XB) is amended by striking out "$455,000,000" 
and inserting in lieu thereof "$375,000,000". 
4
9 use 1608 
(b) Notwithstanding an^ other provision of law, the total amount 
^°^- 
authorized to be appropriated for the fiscal year ending September 
49 use 1601 
30,1982, under the Urban Mass Transportation Act of 1964 shall not 
'^"t^ 
exceed $3,792,000,000. 
Subtitle D—Railroad Retirement and Related Matters 
SEC. 1116. (a) The last sentence of section 1(f)(1) of the Railroad 
45 use 231. 
Retirement Act of 1974 is amended to read as follows: "Ultimate 
fractions shall be taken at their actual value.". 
O
t
)
) Section l(o) of 
the Railroad Retirement Act of 1974 is amended— 
(1) by inserting "the National Transportation Safety Board," 
after "the National Mediation Board,"; and 
(2) by inserting after the first sentence the following: "For 
45 use 231a. 
purposes of section 2(b) and section 2(d) only, an individual shall 
be deemed also to have *a current connection with the railroad 
industry' if, after having completed twenty-five years of service, 
such individual involuntarily and without fault ceased rendering 
service as an employee unaer this Act and did not thereafter 
decline an offer of employment in the same class or craft as the 
individual's most recent employee service. For purposes of sec-
tion 2(d) only, an individual shall be deemed to have a 'current 
connection with the railroad industry' if a pension will have been 
payable to that individual under the Railroad Retirement Act of 
45 use prec. 231 
1937 or a retirement annuity based on service of not less than 10 
^°^- 
years (as computed in awarding the annuity) will have begun to 
accrue to that individual prior to 1948 under the Railroad 
Retirement Act of 1937.". 
SEC. 1117. (aXD Section 2(bXl) of the Railroad Retirement Act of 
45 use 231a. 
1974 is amended— 
(A) by striking out "(1) An individual" and inserting in lieu 
thereof "An individual"; 
(B) by striking out "in subdivision (2) of this subsection and"; 
(C) by striking out "and" at the end of paragraph (iii); 
(D) by inserting "emd" at the end of paragraph (iv); and 
(E) by inserting after paragraph (iv) the following new 
paragraph: 
"(v) has performed compensated service in at least one month 
prior to October 1,1981;" 
(2) Section 2(b) of the Railroad Retirement Act of 1974 is amended— 
(A) by striking out subdivision (2); and 
(B) by striking out subdivision (3); 
(b) Section 2(c) of 
the Railroad Retirement Act of 1974 is amended— 
(1) by inserting "or a divorced wife who would be entitled to an 
annuity under subdivison (4)" after "under subdivision (1)" in 
subdivision (2); 
(2) by striMng out "1/180" and inserting in lieu thereof 
"1/144'^ in subdivision (2); 
(3) b^ striking out "spouse" the second place it appears in 
subdivision (2) and adding in lieu thereof spouse or divorced 
wife"; and 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 629 
(4) by adding at the end thereof the following new subdivision 
(4): 
"(4) The 'divorced wife' (as defined in section 216(d) of the Social 
Securitv Act) of an individual, if— 
42 use 416. 
(i) such individual (A) is entitled to an annuity under subsec-
tion (a)(1) and (B) has attained the age 62; 
"(ii) such divorced wife (A) has attained the age of 65 and (B) is 
not married; and 
"(iii) such divorced wife would have been entitled to a benefit 
under section 202(b) of the Social Security Act as the divorced 42 use 402. 
wife of such individual if all of such individual's service as an 
employee after December 31,1936, had been included in the term 
'employment' as defined in that Act; 
shall, subject to the conditions set forth in subsections (e), (f), and (h), 
be entitled to a divorced wife's annuity, if she has filed an application 
therefor, in the amount provided under section 4 of this Act". 45use23ic. 
(c) Section 2(d) of the Railroad Retirement Act of 1974 is amended— 45 use 23ia. 
(1) by striking out "and" at the end of subdivision (IXiii); 
(2) by striking out the period at the end of subdivision (l)(iv) 
and inserting in lieu thereof "; and"; and 
(3) by adding at the end of subdivision (1) the following new 
paragraph: 
"(v) The widow (as defined in section 216(c) of the Social 
Security Act), who is married, or has been married after the 
death of the employee, the surviving divorced wife (as defined in 
section 216(d) of the Social Security Act), and a surviving di-
vorced mother (as defined in section 216(d) of the Social Security 
Act) if such widow, surviving divorced wife, or surviving divorced 
mother would have been entitled to a benefit under section 202(e) 
or 202(g) of the Social Security Act as the widow, surviving 
divorced wife, or surviving divorced mother of the employee if all 
of his service as an employee after December 31,1936, had been 
included in the term 'employment' as defined in that Act. For the 
purpose of this paragraph, the reference in sections 202(e)(3) and 
202(g)(3) of the Social Security Act to an individual entitled under 
section 202(f) of that Act shall include an individual entitled to 
an annuity under section 2(dXl)(i) of this Act and an individual 
entitled to an annuity under section 2(d)(l)(ii) of this Act, and the 
reference in section 202(e)(3) and section 202(g)(3) of the Social 
Security Act to an individual entitled under section 202(d) or 
section 202(h) of that Act shall include an individual entitled to 
an annuity under section 2(d)(l)(iii) or section 2(d)(l)(iv) of this 
Act, and the references in section 202(g)(3) of the Social Security 
Act to an individual entitled under section 202(a) or section 223(a) 
of that Act shall include an individual entitled to an annuity 
under section 2(a)(1) of this Act.". 
(d) Section 2(e)(5) of the Railroad Retirement Act of 1974 is 
amended by striking out "spouse" each place it appears and inserting 
in lieu thereof "spouse or divorced wife". 
(e)(1) Section 2(f)(2) of the Railroad Retirement Act of 1974 is 
amended by inserting "or divorced wife's" after "spouse's" each place 
(other than the second place) it appears. 
(2) Section 2(f) of such Act is amended by adding at the end thereof 
the following new subdivisions: 
"(3) Deductions shall not be made pursuant to subdivision (1) from 
that portion of an individual's annuity as is computed under section 
3(a) of this Act for any month in which the annuity of such individual 
is reduced pursuant to section 3(m) of this Act. This subdivision shall 45 use 23 lb. 
95 STAT. 630 
PUBLIC LAW 97-35—AUG. 13, 1981 
be disregarded in determining the applicability and amount of 
deductions in a spouse's annuity pursuant to subdivision (2) of this 
subsection. 
"(4) Deductions shall not be made pursuant to subdivision (2) from 
that portion of a spouse's annuity as is computed under section 4(a) of 
45 use 231c. 
this Act for any month in which the annuity of such spouse is reduced 
due to entitlement to a benefit under title II of the Social Security 
42 use 401. 
Act. 
"(5) If an annuity begins to accrue on other than the first day of a 
month, subdivisions (1) and (2) of this subsection shall not apply in the 
year the annuity begins to accrue if the annuitant has no earnings in 
excess of the monthly exempt amount in such year after the annuity 
beginning date.". 
45 use 231a. 
(f) Section 2(gX2) of the Railroad Retirement Act of 1974 is amended 
by striking out "is under the age of seventy-two and is" and inserting 
in lieu thereof "would be". 
(g) Section 2(h) of the Railroad Retirement Act of 1974 is 
amended— 
(1) by striking out "spouse" in subdivision (1) and inserting in 
lieu thereof "spouse or divorced wife", and 
(2) by striking out "spouse" the first place it appears in 
subdivision (3) and inserting in lieu thereof "spouse or divorced 
wife". 
SEC. 1118. (a) Subsection (b) of section 3 of the Railroad Retirement 
45 use 231b. 
Act of 1974 is amended to read as follows: 
"(b)(1) The amount of the annuity of an individual provided under 
subsection (a) shall be increased by an amount equal to seven-tenths 
of 1 per centum of the product which is obtained by multiplying such 
individual's 'y^^rs of service' by such individual's 'average monthly 
compensation' as determined under this subsection. The annuity 
amount payable to the individual under this subsection shall be 
reduced by 25 per centum of the annuity amount computed for such 
individual under subsection (hXD or (h)(2), and subsection (h)(5), of 
45 use 23lf. 
this section without regard to section 7(cXl) of this Act. An individ-
ual's 'average monthly compensation' for purposes of this subsection 
shall be the quotient obtained by dividing by 60 such individual's 
total compensation for the 60 months, consecutive or otherwise, 
during which such individual received that individual's highest 
monthly compensation, except that no part of any month's compensa-
tion in excess of the maximum amount creditable for any individual 
for such month under subsection 0) of this section shall be recognized. 
In determining the months of compensation to be used for purposes of 
this subsection, the total compensation reported for the individual 
under section 9 of this Act or credited to such individual under 
subsection (j) of this section for a year divided by the number of 
months of service credited to such individual under subsection (i) of 
this section with respect to such year shall be considered the monthly 
compensation of the individual for each month of service in any year 
for which records of the Board do not show the amount of compensa-
tion paid to the individual on a monthly basis. If the 'average 
monthly compensation' computed under this subsection is not a 
multiple of $1, it shall be rounded to the next lower multiple of $1. 
"(2) For purposes of subdivision (1) of this subsection, in determin-
ing 'average monthly compensation' for an individual who has not 
engaged in emplo3mient for an employer in the 60-month period 
preceding the month in which such individual's annuity began to 
accrue, and whose major emplojnnent during such 60-month period 
was for a United States department or agency named in section l(o) of 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 631 
this Act, the amount of compensation used with respect to each 
month used in making such determination shall be the product o
f
— 
"(i) the compensation credited to such individual for such 
month under paragraph (1) of this subsection; and 
"(ii) the quotient obtained by dividing— 
"(I) the average of total wages (as determined under 
section 215(b)(3XAXiiXI) of the Social Security Act) for the 42 use 415. 
second calendar year preceding the earliest of the year of the 
individual's death or the year in which an annuity begins to 
accrue to such individual (disregarding an annuity based on 
disability which is terminated because such individual has 
recovered from such disability if such individual engages in 
any regular emplo3mient after such termination); by 
"(11) the average of total wages (as determined under 
section 215(bX3XAXiiXII) of the Social Security Act) for the 
calendar year during which such month occurred, unless 
such month occurred prior to calendar year 1951, in which 
case, the average of total wages so determined for 1951. 
In no event shall 'average monthly compensation' determined for an 
individual under this subdivision exceed the maximum 'average 
monthly compensation' which can be determined under subdivision 
(1) of this subsection for any person retiring January 1 of the year in 
which such individual's annuity began to accrue.". 
(b) Subsections (c) and (d) of section 3 of the Railroad Retirement 
Act of 1974 are repealed. 
45 use 23ib. 
(cXD Section 3(fKl) is amended by striking out "subsections (b), (c), 
and (d)" each place it appears and inserting in lieu thereof "subsec-
tion (b)". 
(2) Section 3(f) of the Railroad Retirement Act of 1974 is amended 
by striking out of subdivision (1) all after "effective after the date on 
which such" and before "(A) 100 per; centum of his" and inserting in 
lieu thereof "individual's annuity under section 2(aXl) of this Act 
begins to accrue, exceed an amount equal to the sum of'. 
(d) Subsection (g) of 
section 3 of 
the Railroad Retirement Act of 1974 
is amended to read as follows: 
"(g) Effective with the month of June for any year after 1981, that 
portion of the annuity of an individual which is computed under 
subsection (b) of this section shall, if such individual's annuity under 
section 2(aXl) of this Act began to accrue on or before June 1 of such 45 use 23ia. 
year, be increased by 32.5 per centum of the percentage increase, if 
any (rounded to the nearest one-tenth of 1 per centum), obtained by 
comparing (A) the unadjusted Consumer Price Index for the calendar 
quarter ending March 31 of such year with (B) the higher of (i) such 
index for the calendar quarter ending March 31 of the year immedi-
ately preceding such year or (ii) such index for the calendar quarter 
ending March 31 of any preceding year after 1980. The unadjusted 
Consumer Price Index for any calendar quarter shall be the arithme-
tical mean of such index for the three months in such quarter.". 
(e) Section 3(h) of the Railroad Retirement Act of 1974 is 45USe23ib. 
amended— 
(1) by striking out "subsections (a) through (d)" each place it 
appears and inserting in lieu thereof "subsections (a) and (b)"; 
(2) by striking out all after "January 1,1975," in section 3(h)(5) 
and inserting in lieu thereof "to the earlier of the date on which 
the individual's annuity under section 2(aXl) of this Act began to 
accrue or January 1,1982.", and 
(3) by adding at the end thereof the following new subdivision: 
9-194 O—82 
42 : QL3 
95 STAT. 632 
PUBLIC LAW 97-35—AUG. 13, 1981 
"(6) No amount shall be payable to an individual under subdivision 
(3) or (4) of this subsection unless the entitlement of such individual to 
such amount had been determined prior to the date of the enactment 
of this subdivision.". 
45 use 231b. 
(f) Subsection (j) of section 3 of the Railroad Retirement Act of 1974 
is amended— 
(1) by striking out "the average compensation paid to an 
employee with respect to calendar months included in his 'years 
of service* " the first place it appears in the first sentence thereof 
and inserting in lieu thereof the following: "computed in the 
manner specified in section 3(b) of this Act"; and 
(2) by striking out "If the 'average monthly compensation' 
computed under this subsection is not a multiple of $1, it shall be 
rounded to the next lower multiple $1.". 
(g) Subsection (1) of section 3 of the Railroad Retirement Act of 1974 
is amended to read as follows: 
"(1)(1) Except as provided in subdivision (2) of this subsection, if an 
annunity awarded under section 2(a)(l)(iii) or under section 2(c)(2) of 
45 use 231a. 
this Act is increased or decreased either by a change in the law or by a 
recomputation, the reduction on account of age in the amount of such 
increase or decrease shall be computed as though such increased or 
decreased annunity amount had been in effect for and after the 
month in which the annuitant first became entitled to such annunity 
under section 2(a)(lXiii) or section 2(c)(2). 
"(2) The reduction required under section 2(a)(l)(iii) or section 
2(c)(2) may be applied separately to each of the annuity amounts 
computed under subsections (a), (b), and (h) of this section and 
subsections (a), (b), and (e) of 
section 4. For this purpose, in any case in 
which an annuity amount was computed for an individual under the 
45 use 231 et 
provisions of this Act or of Public Law 93-445 prior to October 1,1981, 
*
^
^ 
an annunity amount computed under subsections (a), (b), (c), (d) and 
45 use 231c. 
(h) of this section, subsection (a), (b), or (e) of section 4, and section 204 
45 use 231 note. QJ. section 206 of Public Law 93-445 shall be reduced by its proportion-
ate share of the reduction on account of age. For purposes of the 
preceding sentence, annuity amounts computed for an individual 
under subsections (b), (c), and (d) of section 3 prior to October 1981 
shall be considered as one annuity amount.". 
45 use 231b. 
(h)(1) Section 3(m) of the Railroad Retirement Act of 1974 is 
amended by inserting ", after any reduction pursuant to paragraph 
(iii) of section 2(aXl)," after "shalr'. 
(2) Section 3(m) of such Act is amended by inserting "(before any 
deductions on account of work)" after "monthly benefit', 
45 use 231c. 
SEC. 1119. (a) Section 4(a)(1) of the Railroad Retirement Act of 1974 
is amended by striking out "spouse" each place it appears and 
inserting in lieu thereof "spouse or divorced wife". 
(b) Section 4(b) of the Railroad Retirement Act of 1974 is amended— 
(1) by striking out "subsections Ot)), (c) and (d)" and inserting in 
lieu thereof "subsection (b)"; 
(2) by striking out "50" and inserting in lieu thereof "45"; 
(3) by striking out of the first sentence all after "was reduced 
by reason of the provisions of subsection (i)(2) of this section" and 
inserting in lieu thereof a period; 
(4) by striking out ", subject to the third proviso of this 
subsection"; and 
(5) by striking out the period at the end of the first sentence 
and by inserting in lieu thereof the following "(disregarding, for 
this purpose, any increase in such reduction which becomes 
effective after the later of the date such spouse's annuity under 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 633 
section 2(c) of this Act began to accrue or the date such spouse's 45 use 23ia. 
annuity under section 2(a)(1) of this Act began to accrue).". 
(c) Section 4(c) of the Railroad Retirement Act of 1974 is amended 45 use 23ic. 
by striking "wife's or husband's" and inserting in lieu thereof 
"monthly". 
(d) Section 4(e) of the Railroad Retirement Act of 1974 is amended— 
(1) by striking out all after "January 1,1975," in subdivision (4) 
and inserting in lieu thereof "to the earlier of the date on which 
the individual's annuity under section 2(a)(1) of this Act began to 
accrue or January 1,1982."; and 
(2) by adding at the end thereof the following new subdivision: 
"(5) No amount shall be payable to a person under subdivision 
(1), (2), or (3) of this subsection unless the entitlement of such 
person to such amount had been determined prior to the date of 
the enactment of 
this subdivision.". 
(e) Section 4(f) of 
such Act is amended— 
(1) by adding at the end of subdivision (1) "In the case of a 
widow or widower who is entitled to an annuity under section 
2(d) of this Act solely on the basis of railroad service which was 
performed prior to January 1,1937, the amount provided under 
this section with respect to any month shall not be less than the 
first amount appearing in column IV of the table appearing in 
section 215(a) of the Social Security Act as in effect on December 42 use 415. 
31, 1974, after reduction in accordance with the provisions of 
section 202(k) and 202(q) of that Act in the same manner as would 42 use 402. 
be applicable to a widow's insurance benefit or widower's insur-
ance benefit payable under section 202(e) or 202(f) of that Act."; 
and 
(2) by adding at the end thereof the following new subdivision: 
"(3) The annuity amount provided to a widow or widower under last 
sentence of subdivision (1) shall be increased by the same percentage 
or percentages as insurance benefits payable under section 202 of the 
Social Security Act are increased after the date on which such 
annuity begins to accrue,". 
(f) Section 4(f)(2) of the Railroad Retirement Act of 1974 is 45USe23ic. 
amended— 
(1) by striking out "and" at the end of paragraph (i); 
(2) striking out the period at the end of paragraph (ii) and 
inserting in lieu thereof ", and"; and 
(3) by adding at the end thereof the following new paragraph: 
"(iii) The provisions of paragraphs (i) and (ii) of this subdivision 
shall not apply to the annuity of a widow, surviving divorced 
wife, or surviving divorced mother who is entitled to such 
annuity on the basis of the provisions of section 2(d)(lXv) of this 
Act.". 
(g) Subsection (g) of section 4 of the Railroad Retirement Act of 1974 
is amended to read £is follows: 
"(g)(1) The amount of the annuity provided under subsection (f)(1) 
(other than the last sentence thereof) for a survivor of a deceased 
individual shall be increased by an amount equal to the appropriate 
one of the following percentages of that portion of the annuity 
computed under section 3(b) of this Act, before any reduction on Ante, p. 630. 
account of age, to which such deceased individual would have been 
entitled for the month such survivor's annuity under section 2(d) of 
this Act began to accrue if such individual were living (deeming for 
this purpose that if such individual died before becoming entitled to 
an annuity under section 2(a)(1) of this Act, such individual became 
95 STAT. 634 
PUBLIC LAW 97-35—AUG. 13, 1981 
45 use 231a. 
entitled to an annuity under subdivision (i) of such section 2(a)(1) in 
the month in which such individual died): 
"(i) In the case of a widow or widower, the increase shall be 
equal to 50 per centum of such portion of the deceased individ-
ual's annuity, but the amount of the annuity so determined shall 
be subject to reduction on account of age in the same manner as 
is applicable to the annuity amount determined for the widow or 
widower under subsection (f) and shall be subject to increase as 
provided in subdivision (4) of this subsection. 
"(ii) In the case of a parent, the increase shall be equal to 35 per 
centum of such portion of the deceased individual's annuity. 
"(iii) In the case of a child, the increase shall be equal to 15 per 
centum of such portion of the deceased individual's annuity. 
"(2) Whenever the total amount of the increases based on the 
deceased individual's portion of the annuity under section 3(b) of this 
Ante, p. 630. 
Act as determined under subdivision (1) of this subsection for all 
survivors of a deceased employee is— 
"(i) less than an amount equal to 35 per centum of such portion 
of the deceased individual's annuity, the total increase shall, 
before any deductions under section 2(g) of this Act, be increased 
proportionately until the total increase is equal to 35 per centum 
of such portion of the deceased individual's annuity; or 
"(ii) more than an amount equal to 80 per centum of such 
portion of the deceased individual's annuity, the total increase 
shall, before any deductions under section 2(g) of this Act and 
before any reduction on account of age, be reduced proportion-
ately until the total increase is equal to 80 per centum of such 
portion of the deceased individual's annuity. 
"(3) An annuity determined under this subsection for a month prior 
to the month in which application is filed, shall be reduced to any 
extent that may be necessary so that it will not render erroneous any 
annuity which, before the filing of such application, the Board has 
certified for payment for such prior month. 
"(4) If a widow or widower of a deceased employee is entitled to an 
annuity under section 2(aXl) of this Act and if either such widow or 
widower or such deceased employee will have completed 10 years of 
service prior to January 1, 1975, the amount of the annuity of such 
widow or widower under subdivisions (1) through (3) of this subsection 
shall be increased by an amount equal to the amount, if any, by which 
(A) the widow's or widower's insurance annuity to which such widow 
or widower would have been entitled, upon attaining age 65, under 
45 use 23id. 
section 5(a) of the Railroad Retirement Act of 1937 as in effect on 
December 31, 1974 (without regard to the proviso of that section or 
45 use 231b. 
the first proviso of section 3(e) of that Act) on the basis of the deceased 
employee's remuneration and service prior to January 1, 1975, 
increased by the same percentage, or percentages, as widow's and 
widower's insurance benefits under section 202 of the Social Security 
42 use 402. 
Act are increased during the period from January 1,1975, to the later 
of the date on which such widow's or widower's annuity under section 
2(a)(1) of this Act began to accrue or the date on which such widow's 
or widower's annuity under section 2(d)(1) of this Act began to accrue, 
exceeds (B) the total of the annuity amounts to which such widow or 
widower was entitled (after any reductions pursuant to subsection 
(i)(2) of this section but before any deductions on account of work) 
under the preceding provisions of this subsection, subsection (f) of this 
section, and the amount determined under subsection (h) of this 
section before the proviso, as of the later of the date on which such 
widow's or widower's annuity under section 2(a)(1) of this Act began 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 635 
to accrue or the date on which such widow's or widower's annuity 
under section 2(d)(1) of this Act began to accrue. If a widow or 45 use 23la. 
widower of a deceased employee is not entitled to an annuity under 
section 2(aXl) of this Act or to an old-age insurance benefit or a 
disability insurance benefit under the Social Security Act, the 42 use 1305. 
amount of the annuity to which such widow or widower is entitled 
under this subsection shall not be less than an amount which would 
cause the total of the annuity amounts to which such widow or 
widower is entitled (before any deductions on account of work) under 
this subsection and subsection (fXD of this section to equal the total of 
the annuity amounts to which such widow or widower was entitled 
(or would have been entitled except for the provisions of sections 2(e) 
and 2(f) of this Act) as a spouse under subsections (a), (b), and (eX3) of 
this section (after any reduction on account of age) in the month 
preceding the employee's death. If a widow or widower of a deceased 
employee is entitled to an annuity under section 2(aXl) of this Act or 
to an old-age insurance benefit or a disability insurance benefit under 
the Social Security Act, the amount of the annuity to which such 
widow or widower is entitled under this subsection shall not be less 
than an amount which would cause (A) the total of the annuity 
amounts to which such widow or widower is entitled (after any 
reductions pursuant to section 202(k) or 202(q) of the Social Security 
Act or subsection (iX2) of this section but before any deductions on 42 use 402. 
account of work) under this subsection and subsection (f) of this 
section to equal (BXi) the total of the annuity amounts, if any, to 
which such widow or widower was entitled (or would have oeen 
entitled except for the provisions of sections 2(e) and 2(f) of this Act) 
as a spouse under subsections (a), (b), and (e) of this section (after any 
reduction on account of age) in the month preceding the employee^ 
death less (ii), if such widow or widower is entitled to an old-age 
insurance benefit or a disability insurance benefit under the Social 
Security Act but was not entitled to such a benefit in the month 
preceding the employee's death, the amount by which the annuity 
amount payable under subsection (a) of this section to such widow or 
widower as a spouse in the month preceding the employee's death 
would have been reduced by reason of section 202(k) or 202(q) of the 
Social Security Act if such widow or widower had been entitled to an 
old-age insurance benefit or a disability insurance benefit under the 
Social Security Act in the month preceding the employee's death in 
an amount equal to the amount of such benefit at the time such 
benefit first began to accrue to such vCidow or widower. 
"(5) This subsection shall not apply to the annuity of a widow, 
surviving divorced wife, or surviving divorced mother who is entitled 
to such annuity on the basis of the provisions of section 2(d)(l)(v) of 
this Act. 
"(6) That portion of the annuity of a survivor of an individual 
determined under subdivisions (1) and (2) of this subsection shall be 
increased whenever, and by the same percentage or percentages as, 
the annuity of the individual would have been increased pursuant to 
section 3(g) of this Act if such individual were still living.". 
(h) Section 4(h) of the Railroad Retirement Act is amended— 45 use 23lc. 
(1) by inserting "(1)" after "(h)"; 
(2) by inserting after "during the period from January 1,1975, 
to" the following "January 1,1982 or, if earlier, to"; 
(3) by inserting after "202(k) and 202(q) of the Social Security 
Act" the first time it appears the following: "and subsection (iX2) 
of this section"; and 
(4) by adding at the end the following new subdivision: 
95 STAT. 636 
PUBLIC LAW 97-35—AUG. 13, 1981 
"(2) Subdivision (1) of this subsection shall not apply to the annuity 
of a widow, surviving divorced wife, or surviving divorced mother 
who is entitled to such annuity on the basis of the provisions of 
Ante, p. 629. 
section 2(dXlXv) of this Act. No amount shall be payable to a person 
under subdivision (1) of this subsection unless the entitlement of such 
person to such amount had been determined prior to the date of the 
enactment of this subdivision.". 
45 use 231c. 
(i) Section 4(i) of the Railroad Retirement Act of 1974 is amended— 
(1) by striking out "spouse" each place it appears in subdivision 
(1) and subdivision (2) and inserting in lieu thereof "spouse or 
divorced wife"; 
(2) bv inserting ", after a reduction pursuant to section 2(cX2)" 
after "shall" in subdivision (1); 
(3) by striking out "wife's or husband's" in subdivision (1); and 
(4) by inserting "(before any deduction on account of work)" 
after "insurance benefit" in subdivision (1). 
45 use 23id. 
SEC. 1120. (a) Section 5(a) of the Railroad Retirement Act of 1974 is 
amended— 
(1) by striking "and" at the end of 
paragraph (ii), 
(2) by striking out the period at the end of paragraph (iii) and 
inserting "; and in lieu thereof; and 
(3) by adding at the end thereof the following new pargigraphs: 
"(iv) in the case of an applicant otherwise entitled to an 
annuity under section 2(cX4) or 2(dXlXv) of this Act, not 
earlier than the month an annuity would begin to accrue to 
such individual under such section if section 202(jXl) and 
42 use 402. 
section 202(jX4) of the Social Security Act were applicable to 
this Act. 
"(v) an annuity amount provided by section 3(hXl) or 
3(h)(2) shall not be paid to an individual otherwise eligible 
therefor for any month before the month such individual 
would be entitled, upon filing an application therefor, to an 
old<age insurance benefit or a disability insurance benefit 
42 use 401. 
under title II of the Social Security Act and an annuity 
45 use 231b. 
amount provided by section 3(hX3) or section 3(hX4) shall not 
be paid to an individual otherwise eligible therefor for any 
month before the month such individual would be entitled, 
upon filing an application therefore, to an insurance benefit 
as a wife, husband, widow, or widower under title II of the 
Social Security Act; 
"(vi) an annuity amount provided by section 4(eXl) or 
4(e)(2) shall not be paid to a spouse otherwise eligible 
therefor for any month prior to the month such spouse would 
be entitled, upon filing an application therefor, to an old-age 
or disability insurance benefit under title II of the Social 
Security Act; and 
"(vii) an annuity amount provided by section 4(eX3) shall 
not be paid to a spouse otherwise eligible therefor for any 
month prior to the month such spouse would be entitled, 
upon filing an application therefor, to a wife's or husband's 
insurance benefit under title II of the Social Security Act.". 
45 use 23ld. 
(b) Section 5(b) of such Act is amended by inserting "title II of after 
"may be entitled under this Act or" in the second sentence thereof. 
(c) Section 5(cX3) of the Rsdlroad Retirement Act of 1974 is amended 
by adding at the end thereof the following new sentence: "The 
entitlement of the divorced wife of an individual to an annuity under 
section 2(c) shall end on the last day of the month preceding the 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 637 
month in which (A) the divorced wife or the individual dies or (B) the 
divorced wife remarries.". 
(d) Section 5(c) of such Act is amended by adding at the end thereof 45 use 23ld. 
the following new subdivision: 
"(9) No annuity shall accrue with respect to the calendar month in 
which an annuitant dies. In cases where an individual entitled to an 
annuity under this Act disappears, no annuity shall accrue to that 
individual with respect to any month until and unless such individual 
is shown, by evidence satisfactory to the Board, to have continued in 
life throughout such month, but— 
"(A) where an annuity would accrue for such month under 
section 2(aXl) to an individual who had a current connection with 45 use 23ia. 
the railroad industry at the time of such individual's disappear-
ance, and under section 2(c) to such individual's spouse, had such 
individual been shown to be alive during such month, such 
individual shall be deemed, for the purposes of benefits under 
section 2(d), to have died in the month in which such individual 
disappeared, and where an annuity would accrue for such month 
under section 2(aXl) to an individual who did not have a current 
connection with the railroad industry at the time of such individ-
ual's disappearance, and under section 2(c) to such individual's 
spouse, had such individual been shown to be alive during such 
month, such individual shall be deemed, for purposes of benefits 
payable under section 2(c), to be alive during such month unless 
the death of such individual has been established or the annuity 
of the spouse of such individual is otherwise terminated under 
subsection (c)(3) of this section, and 
"(B) if such individual is later determined to have been alive 
during any of such months, recovery of any benefits paid on the 
basis of such individual's compensation under section 2(d) for the 
months in which such individual was not known to be alive, 
minus the total of the amounts that would have been paid as a 
spouse's annuity during such months (treating the application 
for a widow's or widower's annuity as an application for a 
spouse's annuity), shall be made in accordance with section 10. 
For purposes of the payment of benefits under this Act, the death of 
an individual shall be presumed based on such individual's unex-
plained absence of not less than seven years, except that whenever 
the death of an individual is so established, such individual shall be 
deemed to have died in the month in which such individual 
QiS3.13T)6d.r6d 
SEC. 1121.'(a) Section 6(aX3) of the Railroad Retirement Act of 1974 45 use 23ie. 
is amended— 
(1) by striking out "spouse" and inserting "spouse or divorced 
wife" in lieu thereof; and 
(2) by striking out "spouse's" and inserting "spouse's or 
divorced wife's" in lieu thereof. 
(b) Section 6(bX2) of the Railroad Retirement Act of 1974 is 
amended by inserting "surviving divorced wife," after "widow," the 
first place it appears. 
(c) Section 6(c) of the Railroad Retirement Act of 1974 is amended— 
(1) by adding the following new sentence at the end of subdivi-
sion (1): "After a lump sum with respect to the death of an 
employee is paid pursuant to an election filed with the Board 
under the provisions of this subsection, no further benefits shall 
be paid under this Act or the Social Security Act on the basis of 42 use 1305. 
such employee's compensation £ind service under this Act, except 
that nothing in this Act or the Social Security Act shall operate 
95 STAT. 638 
PUBLIC LAW 97-35—AUG. 13, 1981 
to deprive a widow, widower, or parent making such election of 
42 use 401. 
any insurance benefit under title II of the Social Security Act to 
which such individual would have been entitled if the employee 
had not rendered service as an employee under this Act,"; 
(2) by inserting after "section 21 of the Railroad Retirement 
Act of 1937," in the first sentence of subdivision (2) thereof the 
following: "any supplemental annuity payments made to the 
employee under section 2(b) of this Act or section 3(j) of the 
Railroad Retirement Act of 1937,"; and 
(3) by striking out "spouse" the first place it appears in 
subdivision (2) and inserting in lieu thereof "spouse or divorced 
wife". 
45 use 23if. 
SEC. 1122. (a) Section 7(b) of the Railroad Retirement Act of 1974 is 
amended— 
(1) by striking out "wife" in subdivision (2)(B) and inserting in 
lieu thereof "wife or divorced wife"; and 
(2) by striking out "this Act and the" where it appears in the 
first sentence of subdivision (7) and inserting in lieu thereof "this 
Act, the Railroad Unemployment Insurance Act,". 
(bXD Section 7(d) of such Act is amended by striking out "; or" at 
the end of paragraph (i) of subdivision (2) and inserting in lieu 
thereof: "or (C) bears a relationship to an employee which, by reason 
45 use 231b. 
of section 3(f)(3) of this Act, has been, or would be, taken into account 
in calculating the amount of the annuity of such employee; or". 
(2) Section 7(dX2) of the Railroad Retirement Act of 1974 is 
amended by striking out "spouse" and inserting in lieu thereof 
"spouse or divorced wife". 
(c) Section 7(c) of the Railroad Retirement Act of 1974 is amended 
by striking out the period at the end of subdivision (1) and by 
inserting in lieu thereof the following: ", and payments of annuity 
45 use 231b, 
amounts made under sections 3(h), 4(e), and 4(h) of this Act and under 
??\%r 9
Q
1 . 
sections 204(aX3), 204(aX4), 206(3), and 207(3) of Public Law 93-445 
46 u&u zdi note, gj^^j ^ jjj^^g J.J.QJJJ ^jjg Q^gQ Benefits Payments Account. In any 
fiscal year, the total amounts paid under such sections shall not 
exceed the total sums appropriated to the Dual Benefits Pa5mients 
Regulations. 
Account for that fiscal ye£ir. The Board shall prescribe regulations for 
allocation of annuity amounts which would without regard to such 
regulations be payable under sections 3(h), 4(e), and 4(h) of this Act 
and sections 204(aX3), 204(aX4), 206(3), and 207(3) of Public Law 
93-445 so that the sums appropriated to the Dual Benefits Pajrments 
Account for a fiscal year so far as practicable, are expended in equal 
monthly installments throughout such fiscal year, and are distrib-
uted so that recipients are paid annuity amounts which bear the 
same ratio to the annuity amounts such recipients would have 
received but for such regulations as the ratio of the total sums 
appropriated to pay such annuity amounts bear to the total sums 
necessary to pay such annuity amounts without regard to such 
regulations. Nothwithstanding any other provision of law, the enti-
tlement of an individual to an annuity amount under section 3(h), 
4(e), or 4(h) of this Act or section 204(aX3), 204(aX4), 206(3), or 207(3) of 
Public Law 93-445 for any month in which the amount payable to 
such individual is allocated under the regulations prescribed by the 
Board under this subsection shall not exceed the amount so allocated 
for that month to such individual.". 
45 use 23ii. 
SEC. 1123. Section 10(a) of the Railroad Retirement Act of 1974 is 
amended by adding at the end thereof the following new sentence: 
"The Board shall have the authority to recover from any payment 
which would be made to an individual by the Board under section 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 639 
7(bX2) of this Act the amount of annuity pajrments made to such 45 use 23if. 
individual which are erroneous because of such individual's entitle-
ment to monthly insurance benefits under title II of the Social 
Securitv Act. . 
SEC. 1124. (a) Section 15(d) of the Railroad Retirement Act of 1974 is 45 USC 23ln. 
amended by striking out the first two sentences and inserting in lieu 
thereof the following: "There is hereby created an account in the 
Treasury of the United States to be known as the Dual Benefits 
Payments Account. There is hereby authorized to be appropriated to 
such account for each fiscal year beginning with the fiscal year 
ending September 30,1982, such sums as are necessary to pay during 
such fiscal year the amounts of annuities estimated by the Board to 
be paid under sections 3(h), 4(e), and 4(h) of this Act and under 
sections 204(aX3), 204(aX4), 206(3), and 207(3) of Public Law 93-445. 
Not more than 30 days prior to each fiscal year beginning with the 
fiscal year ending September 30, 1982, the Board may request the 
Secretary of the Treasury to transfer from the Railroad Retirement 
Account to the credit of the Dual Benefits Pa3mients Account any 
amount not exceeding one-twelfth of the amount which the Board has 
determined will be the amount of the appropriation to be made to the 
Dual Benefits Payments Account under the applicable Public Law 
making such appropriation for such fiscal year, and the Secretary of 
the Treasury shall make such transfer. Not more than 10 days after 
the funds appropriated to the Dual Benefits Payments Account for 
each such fiscal year are received into such Account, the Board shall 
request the Secretary of the Treasury to retransfer from the Dual 
Benefits Payments Account to the credit of the Railroad Retirement 
Account an amount equal to the amount transferred to the Dual 
Benefits Payments Account prior to such fiscal year under the 
preceding sentence, together with such additional amount deter-
mined by the Board to be equal to the loss of interest to the Railroad 
Retirement Account resulting from such transfer, and the Secretary 
of the Treasury shall make such retransfer.". 
(b) Section 15(e) of the Railroad Retirement Act of 1974 is amended 
by inserting ", the Dual Benefits Payments Account" after "Railroad 
Retirement Account" in the first sentence thereof. 
(c) Section 15(g) of the Railroad Retirement Act of 1974 is amended 
by striking out the period at the end of the first sentence and 
inserting in lieu thereof the following: ", and the Dual Benefits 
Payments Account.". 
SEC. 1125. Section 18(2) of the Railroad Retirement Act of 1974 is 45 use 23iq. 
amended by inserting "and section 216(i)" immediately after "203". 
SEC. 1126. (a) Not later than October 1, 1982, the President shall 
analyze options that will assure the long-term financial integrity of 
the railroad retirement system and report to the Congress the results 
of such analysis, together with recommendations with respect to such 
options and such comments as may have been submitted by repre-
sentatives of railroad labor and management. 
(b) The Railroad Retirement Act of 1974 is amended by adding at 
the end thereof the following: 
Report to 
eongress. 
45 USC 231n 
note. 
BENEFIT PRESERVATION 
"SEC. 22. (a) In any fiscal year in which the Board determines that 
general revenue borrowing authority available under this Act will be 
used to borrow an amount equal to or greater than fifty percent of the 
total amount available under such borrowing authority for that fiscal 
year, the Board shall, on or before April 1 of that year, report to the 
Report to 
President, 
Speaker of the 
House, and 
President of the 
Senate. 
45 u s e 231u. 
95 STAT. 640 
PUBLIC LAW 97-35—AUG. 13, 1981 
45 use 360. 
Publication in 
Federal 
Register. 
Recommen-
dations. 
Publication in 
Federal 
Register. 
42 use 1305. 
45 use 231b, 
231c. 
President, the Speaker of the House, and the President of the Senate, 
in writing— 
"(1) the aggregate amount it will need to borrow for that fiscal 
year and the aggregate amount it is authorized to borrow for that 
fiscal year; 
"(2) the first fiscal year during which benefits under this Act 
must be reduced, in the absence of any adjustments, because 
insufficient funds (including any general revenue borrowing 
authority under this Act) would preclude payment of full benefits 
(other than benefits payable from the Dual Benefits Payments 
Account) for every month in such fiscal year; 
"(3) the first fiscal year during which the Board would recom-
mend suspension of tne authority to borrow contained in section 
10(d) of the Railroad Unemplojrment Insurance Act, in order to 
prevent depletion of the Railroad Retirement Account; and 
"(4) the amount, if any, of adjustments (stated in terms of 
percentage of taxable payroll), and any other changes such as 
cash flow adjustments, necessary to preserve the financial sol-
vency of the Railroad Retirement Account, if such adjustments 
were effective at the beginning of the next succeeding fiscal year. 
The Board shall, not less than 20 nor more than 30 days after the 
submission of a written report under this subsection, publish such 
report in the Federal Register. 
(b) Not later than 180 days after the publication in the Federal 
Register of any Board report referred to in subsection (a) of this 
section which states an amount of adjustments (in terms of percent-
age of taxable payroll) necessary to preserve the financial solvency of 
the railroad retirement account— 
"(1) representatives of railroad employees and carriers shall, 
jointly or separately, submit to the President, the Speaker of the 
House, and the President of the Senate, funding proposals 
designed to preserve the finsincial solvency of the Railroad 
Retirement Account; and 
"(2) the President shall submit to the Speaker of the House and 
the President of the Senate such recommendations as he may 
deem appropriate with respect to the preservation of the Rail-
road Retirement Account, including a specific proposal to assure 
continuous payments of social security equivalent benefits by 
separating the social security equivalent benefits from industry 
pension equivalent benefits payable under this Act. 
"(c) Not later than 180 days after the submission of a written report 
under subsection (a) of this section which states the first fiscal year 
during which benefits under this Act must be reduced because 
insufficient funds would preclude payment of full benefits for every 
month of that year, the Board shall issue and publish in the Federal 
Register such regulations as may be necessary which shall be de-
signed to— 
"(1) provide a constant level of benefits at the maximum level 
possible for every month of that fiscal year; and 
"(2) provide tnat no individual shall receive less during that 
fiscal year than the amount otherwise payable if the employee's 
service as an employee after December 31, 1936, had been 
covered under the Social Security Act, minus the amount of any 
reduction required under section 3(m) or 4(i) of this Act. 
Unless otherwise provided by law enacted after the date of enactment 
of this section, or by a later report filed by the Board under subsection 
(a) of this section, regulations issued by the Board under this 
subsection shall apply beginning with the fiscal year designated by 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 641 
the Board in its written report under subsection (a) of this section. 
Any Board regulation which becomes effective under this subsection 
may be modified, rescinded, or superseded in the same manner and to 
the same extent £is in the case of any other Board regulation issued 
under authority of this Act.". 
SEC. 1127. (a) Section 15(b) of the Railroad Retirement Act of 1974 is 45 use 23ln. 
amended by inserting "(1)" after "Ot))" and by inserting at the end 
thereof the following new subdivision: 
"(2) In any month when the Board finds that the balance in the 
Railroad Retirement Account is insufficient to pay annuity amounts 
due to be paid during the following month, the Board shall report to 
the Secretary of the Treasury the additional amount of money 
necessary in order to make such annuity payments, and the Secre-
tary shall transfer to the credit of the Railroad Retirement Account 
such additional amount upon receiving such report from the Board. 
The total amount of money outstanding to the Railroad Retirement 
Account from the general fund at any time during any fiscal year 
shall not exceed the total amount of money the Board and the 
Trustees of the Social Security Trust Fund estimate will be trans-
ferred to the Railroad Retirement Account pursuant to section 7(c)(2) 
of this Act with respect to such fiscal year. Whenever the Board 45 USC 23lf. 
determines that the sums in the Railroad Retirement Account are 
sufficient to pay annuity amounts, the Board shall request the 
Secretary of the Treasury to retransfer to the general fund from the 
Railroad Retirement Account all or any part of the amount outstand-
ing, and the Secretary of the Treasury shall make such retransfer of 
the amount requested. Not later than 10 days after a transfer to the 
Railroad Retirement Account under section 7(cX2) of this Act, any 
amount of money outstanding to the Railroad Retirement Account 
from the general fund under this subdivision shall be retransferred in 
accordance with this subdivision. Any amount retransferred shall 
include an amount of interest computed at a rate determined in 
accordance with the following two sentences: The rate of interest 
payable with respect to an amount outstanding for any month shall 
be equal to the average investment yield for the most recent auction 
(before such month) of United States Treasury bills with maturities of 
52 weeks, deeming any amount outstanding at the beginning of a 
month to have been borrowed at the beginning of such month. For 
this purpose the amount of interest computed in accordance with the 
preceding sentence but not repaid by the end of such month shall be 
added to the amount outstanding at the beginning of the next 
month.". 
SEC. 1128. (a) Section 5(f) of the Railroad Unemployment Insurance 
Act is amended by striking out "fifteen" and by inserting in lieu 45 use 355. 
thereof "thirty". 
(b) Section 8(f) of the Railroad Unemployment Insurance Act is 45 use 358. 
amended by striking out "0.25" and inserting in lieu thereof: "0.5". 
SEC. 1129. (a) Except as otherwise provided in this section, the Effective dates. 
amendments made by this subtitle shall take effect October 1, 1981, 45 use 231 note. 
and shall apply only with respect to annuities awarded on or after 
that date. 
(bXD The amendment made by section 1116(a) of this Act shall take 
effect October 1,1981, except that the years of service of an individual 
shall not be considered less after enactment of this Act for any 
individual who files an application before April 1, 1982 than such 
individual had during the month of September 1981. 
95 STAT. 642 
PUBLIC LAW 97-35—AUG. 13, 1981 
(2) The amendments made by sections 1116(b)(1), 1118(c)(2), 
1119(b)(5), 1119(c), 1119(h)(3), 1119(i)(3), 1120(a), 1120(d), 1121(c)(1), 
1121(cX2), 1123, and 1125 of this Act shall take effect January 1,1975. 
(3) The first sentence added to section l(o) of the Railroad Retire-
45 use 231. 
ment Act of 1974 by section 1116(b)(2) shall take effect October 1, 
1981, and shall apply only with respect to individuals who did not die 
before that date and who ceased rendering service as an employee 
45 use 23it. 
under the Railroad Retirement Act of 1974 on or after Ocotber 1,1975 
or were on leave of absence or furlough on October 1, 1975. The 
second sentence added to section l(o) of the Railroad Retirement Act 
of 1974 by section 1116(b)(2) shall take effect October 1,1981. 
(c) The amendment made by section 1117(a) of this Act shall take 
effect October 1,1981, and shall apply only with respect to individuals 
whose supplemental annuity closing date under section 2(b) of the 
45 use 231a. 
Railroad Retirement Act of 1974 before the effective date of the 
amendment to such section by this Act did not occur before October 1, 
1981. 
(d) The amendments made by section 1119(b)(1) shall not apply with 
respect to annuities awarded on the basis of employee annuities 
awarded before October 1,1981. 
(e)(1) The amendments made by sections 1118(e)(3), 1119(d)(2), 
1119(h)(1), and 1119(hX4) of this Act shall take effect on the date of the 
enactment of this Act. 
(2) The amendment made by section 1118(d) of this Act shall apply 
with respect to annuity increases which become effective on or after 
the date described in the next sentence. The date referred to in the 
last preceding sentence is the later of October 1, 1981 and the date 
(after July 1,1981) on which there is an increase in the rate of any tax 
imposed under chapter 22 (relating to railroad retirement tax) of the 
26 use 3201 et 
Internal Revenue Code of 1954. For the purposes of the amendment 
*^9- 
made by section 1118(d), with respect to annuities awarded before 
October 1,1981, the annuity portions computed under subsections (b) 
45 use 231b. 
and (d) of section 3 of the Railroad Retirement Act of 1974 as in effect 
before October 1, 1981, shall be treated £is a portion of an annuity 
computed under section 3(b) of such Act as amended by this Act. 
(3) The amendment made by section 1118(a) of this Act shall take 
effect on the later of October 1,1981, and the date (after July 1,1981) 
on which there is an increase in the rate of any tax imposed under 
chapter 22 (relating to railroad retirement tax) of the Internal 
Revenue Code of 1954, and shall apply only with respect to annuities 
awarded on or after the date of that taking effect. 
Ante, p. 633. 
(f) Section 4(g) of the Railroad Retirement Act of 1974 as amended 
by this Act (except subdivisions (5) and (6) of such section 4(g)) shall 
take effect October 1, 1981, with respect to awards made on or after 
that date in cases in which the employee did not begin receiving an 
annuity under section 2(aXl) of the Railroad Retirement Act of 1974 
before October 1, 1981, and did not die before that date, and to all 
awards made on or after October 1,1986. In all other awards made on 
or after October 1, 1981, and before October 1, 1986, for purposes of 
determining the initial annuity amounts only, the provisions of 
section 4(g) of the Railroad Retirement Aqt of 1974, as in effect before 
amendment by this Act shall be applicable. Initial annuity amounts 
determined under the preceding sentence shall be increased only by 
the same percentage, or percentages, as an employee's annuity 
amount determined under section 3(b) of the Railroad Retirement 
Act of 1974 is increased under section 3(g) of the Railroad Retirement 
Act of 1974 on or after the date on which such initial annuity amount 
began to accrue. Annuity amounts determined under section 4(g) of 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 643 
the Railway Retirement Act of 1974 before amendment by this Act or 45 use 23ic. 
under section 207(2) of Public Law 93-445 shall be increased only by 45 use 23i note 
the same percentage, or percente^es, as an employee's annuity 
amount determined under section 3(b) of the Railroad Retirement 
Act of 1974 is increased under section 3(g) of the Railroad Retirement 45 use 23ib. 
Act of 1974 on or after October 1,1981. Section 4(gX5) and 4(gX6) of the 
Railroad Retirement Act of 1974, as amended by this Act, shall take 
effect on October 1,1981. 
(g) The amendments made by sections 1118(b), 1118(g), 1120(b), 
1122(aX2), 1122(bXl), 1122(c), 1124, 1126, and 1127 of this Act shall 
take effect October 1 1981. 
(h) The amendments made by sections 1117(eX2), 1117(f), 1118(hX2), 
and 1119(iX4) shall take effect January 1,1982. 
Subtitle E—Conrail 
Northeast Rall 
Service Act of 
1981 
SEC. 1131. This subtitle may be cited as the "Northeast Rail Service 45 use 1
1
0
1 
Act of 1981". 
note. 
TABLE OF C50NTENTS 
PART 1-GENERAL PROVISIONS 
Sec. 1132. Findings. 
Sec. 1133. Purpose. 
Sec. 1134. Goals. 
Sec. 1135. Definitions. 
PART 2-TRANSFER OF RAIL SERVICE RESPONSIBILITIES 
Subpart A—Transfer of Conrail Commuter Services 
Sec. 1136. End of Conrail obligation. 
Sec. 1137. Establishment of Anitrak Commuter. 
Sec. 1138. Prohibition of cross-subeidization. 
Sec. 1139. Authorization of appropriations. 
Subpart B—Additional Financing of Conrail 
Sec. 1140. Additional financing of Conrail. 
Sec. 1141. Oiiganization and structure of Conrail. 
Subpart C—Transfer of Freight Service Responsibilities 
Sec. 1142. Transfer of fre^ht service. 
PART 3-PROTECTION FOR CONRAIL EMPLOYEES 
Sec. 1143. Protection for Conrail Employees. 
Sec. 1144. Repeals. 
PART 4-TERMS OF LABOR ASSUMPTION 
Subpart A—Passenger Employees 
Sec. 1145. Transfer of passenger service employees. 
Subpart B—Freight Employees 
Sec. 1146. Labor transfer. 
PART 5-UNITED STATES RAILWAY ASSOCIATION 
Sec. 1147. Oi^anizationofUSRA. 
Sec. 1148. Functions of USRA. 
Sec. 1149. Access to information. 
95 STAT. 644 
PUBLIC LAW 97-35—AUG. 13, 1981 
Sec. 1150. United States Railway Association reports. 
Sec. 1151. USRA authorization. 
PART 6—MISCELLANEOUS PROVISIONS 
Sec. 1152. Judicial review. 
Sec. 1153. Transfer taxes and fees; recordation. 
Sec. 1154. Satisfaction of claims. 
Sec. 1155. Expedited supplemental transactions. 
Sec. 1156. Abandonments. 
Sec. 1157, Amendment to the Railway Labor Act. 
Sec. 1158. Concerted economic action. 
Sec. 1159. Construction and effect of certain provisions. 
Sec. 1160. Labor authorization. 
Sec. 1161. Light density rail service. 
Sec. 1162. Rehabilitation and improvement financing. 
Sec. 1163. Northeast Corridor cost dispute. 
Sec. 1164. Commission proceedings. 
Sec. 1165. Intercity passenger service employees. 
Sec. 1166. Trackage rights. 
Sec. 1167. Technical amendments. 
Sec. 1168. Applicability of other laws. 
Sec. 1169. Effective date. 
PART 1—GENERAL PROVISIONS 
FINDINGS 
45 use 1101. 
SEC. 1132. The Congress finds and declares that— 
(1) the processes set in motion by the Regional Rail Reorganiza-
45 use 701 note. 
tion Act of 1973 have failed to create a self-sustaining railroad 
system in the Northeast region of the United States and have 
cost United States taxpayers many billions of dollars over origi-
nal estimates; 
(2) current arrangements for the provision of rail freight and 
commuter service in the Northeast and Midwest regions of the 
United States are inadequate to meet the transportation needs of 
the public and the needs of national security; 
(3) although the Federal Government has provided billions of 
dollars in assistance for Conrail and its employees, the Federal 
interest in ensuring the 
flow 
of interstate commerce through rail 
service in the private sector has not been achieved, and the 
protection of interstate commerce requires Federal intervention 
to preserve essential rail service in the private sector; 
(4) the provisions for protection of employees of bankrupt 
railroads contained in the Regional Rail Reorganization Act of 
1973 have resulted in the payment of benefits far in excess of 
levels anticipated at the time of enactment, have imposed an 
excessive fiscal burden on the Federal taxpayer, and are now an 
obstacle to the establishment of improved rail service and contin-
ued rail emplo5rment in the Northeast region of the United 
States; and 
(5) since holding Conrail liable for employee protection pay-
ments would destroy its prospects of becoming a profitable 
carrier and further injure its employees, an alternative employee 
protection system must be developed and funded. 
PURPOSE 
45 use 1102. 
SEC. 1133. It is therefore declared to be the purpose of the Congress 
in this subtitle to provide for— 
(1) the removal by a date certain of the Federal Government's 
obligation to subsidize the freight operations of Conrail; 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 645 
(2) transfer of Conrail commuter service responsibilities to one 
or more entities whose principal purpose is the provision of 
commuter service; and 
(3) an orderly return of Conrail freight service to the private 
sector. 
GOALS 
SEC. 1134. It is the goal of this subtitle to provide Conrail the 42 use 1103. 
opportunity to become profitable through the achievement of the 
following objectives: 
(1) NoNAGREEMENT PERSONNEL.—(A) Employees who are not 
subject to collective bargaining agreements (hereafter in this 
section referred to as "nonagreement personnel") should forego 
wage increases and benefits in an amount proportionately equiv-
alent to the amount foregone by agreement employees pursuant 
to paragraph (4) of this section, adjusted annually to reflect 
inflation. 
(B) After May 1,1981, the number of nonagreement personnel 
should be reduced proportionately to any reduction in agreement 
employees (excluding reductions pursuant to the termination 
program under section 702 of the Regional Rail Reorganization 
Act of 1973). 
Post, p. Q62. 
(2) SuppuERS.—To facilitate the orderly movement of goods in 
interstate commerce, materials and services should continue to 
be available to Conrail, under normal business practices, includ-
ing the provision of credit and normal financing arrangements. 
(3) SHIPPERS.—Conrail should utilize the revenue opportunities 
available to it under the Staggers Rail Act of 1980 and subtitle IV 49 use lOiol 
of title 49, United States Code. 
"ote. 
(4) AGREEMENT EMPLOYEES.—(A) Conrail should enter into ^^„ 
^^ 
collective bargaining agreements with its employees which 
would reduce Conrail's costs in an amount equal to $200,000,000 
a year, beginning April 1, 1981, adjusted annually to reflect 
inflation. 
(B) Agreements under this subparagraph may provide for 
reductions in wage increases and for changes in fringe benefits 
common to agreement employees, including vacations and holi-
days. 
(C) The cost reductions required under this subparagraph in 
the first year of the agreement may be deferred, but the aggre-
gate cost reductions should be no less than an average of 
$200,000,000 per year for each of the first three one-year periods 
beginning April 1,1981. 
(D) The amount of cost reductions provided under this para-
graph shall be calculated by subtracting the cost of an agreement 
entered into under this paragraph from (i) the cost that would 
otherwise result from the application of the national agreement 
reached by railroad industry and its employees, or (ii) until such 
national agreement is reached, the cost which the IJnited States 
Railway Association estimates would result from the application 
of such a national agreement. 
DEPINrriONS 
SEC. 1135. (a) As used in this subtitle, unless the context otherwise 45 use 1104. 
requires, the term: 
seq. 
95 STAT. 646 
PUBLIC LAW 97-35—AUG. 13, 1981 
49 use 10101 et 
seq. 
45 use 702. 
(1) "Amtrak" means the National Railroad Passenger Corpora-
tion created under title III of the Rail Passenger Service Act (45 
U.S.C.541etseq.). 
(2) "Commission" means the Interstate Commerce Commis-
sion. 
(3) "Commuter authority" means any State, local, or regional 
authority, corporation, or other entity established for purposes of 
providing commuter service, and includes the Metropolitan 
Transportation Authority, the Connecticut Department of 
Transportation, the Maryland Department of Transportation, 
the Southeastern Pennsylvania Transportation Authority, the 
New Jersey Transit Corporation, the Massachusetts Bay Trans-
portation Authority, the Port Authority Trans-Hudson Corpora-
tion, any successor agencies, and any entity created by one or 
more such agencies for the purpose of operating, or contracting 
for the operation of, commuter service. 
(4) "Commuter service" means short-haul rail passenger serv-
ice operated in metropolitan and suburban areas, whether 
within or across the geographical boundaries of a State, usually 
characterized by reduced fare, multiple-ride, and commutation 
tickets, and by morning and evening peak period operations. 
(5) "Conrail" means the Consolidated Rail Corporation created 
under title III of the Regional Rail Reorganization Act of 1973 (45 
U.S.C.741etseq.). 
(6) "Rail carrier" means a common carrier engaged in inter-
state or foreign commerce by rail subject to subtitle IV of title 49, 
United States Code. 
(7) "Secretary" means the Secretary of Transportation. 
(8) "Special court" means the judicial panel established under 
section 209 of the Regional Rail Reorganization Act of 1973 (45 
U.S.C.719). 
(b) Section 102 of the Regional Rail Reorganization Act of 1973 is 
amended— 
(1) by inserting after paragraph (2) the following new para-
graphs: 
"(3) 'Commuter authority' means any State, local, or regional 
authority, corporation, or other entity established for purposes of 
providing commuter service, and includes the Metropolitan 
Transportation Authority, the Connecticut Department of 
Transportation, the Maryland Department of Transportation, 
the Southeastern Pennsylvania Transportation Authority, the 
New Jersey Transit Corporation, the Massachusetts Bay Trans-
portation Authority, the Port Authority Trans-Hudson Corpora-
tion, any successor agencies, and any entity created by one or 
more such agencies for the purpose of operating, or contracting 
for the operation of, commuter service; 
"(4) 'Commuter service' means short-haul rail passenger serv-
ice operated in metropolitan and suburban areas, whether 
within or across the geographical boundaries of a State, usually 
characterized by reduced fare, multiple-ride, and commutation 
tickets, and by morning and evening peak period operations;"; 
and 
(2) by redesignating paragraphs (3) through (19) as paragraphs 
(5) through (21), respectively. 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 647 
PART 2-TRANSFER OF RAIL SERVICE RESPONSIBILITIES 
Subpart A—Transfer of Conrail Commuter Services 
END OF CONRAIL OBLIGATION 
SEC. 1136. Notwithstanding any other provision of law or contract, 45 use 744a. 
Conrail shall be relieved of any legal obligation to operate commuter 
service on January 1,1983. 
ESTABUSHMENT OF AMTRAK COMMUTER 
SEC. 1137. The Rail Passenger Service Act (45 U.S.C. 501 et seq.) is 
amended by inserting immediately after title IV thereof the following 
new title: 
"TITLE V—AMTRAK COMMUTER SERVICES 
"SEC. 501. ESTABLISHMENT OF AMTRAK COMMUTER 
45 USC 581. 
"(a) There shall be established, no later than November 1,1981, a 
wholly-owned subsidiary of the Corporation to be known as the 
Amtrak Commuter Services Corporation (hereafter in this Act re-
ferred to as 'Amtrak Commuter'). 
"(bXD Amtrak Commuter shall not be an agency or instrumentali-
ty of the Federal Government. Amtrak Commuter shall be subject to 
the provisions of this Act and, to the extent not inconsistent with this 
Act, to the District of Columbia Business Corporation Act. 
DC. Code 29-90:i. 
"(2) Amtrak Commuter shall be a contract operator of commuter 
service on behalf of the commuter authorities that contract with 
Amtrak Commuter for the operation of commuter service under this 
title. Amtrak Commuter sh^l have no common carrier obligation to 
operate either passenger or freight service. 
"(cXD Amtrak Commuter shall not be subject to the jurisdiction of 
the Commission under chapter 105 of title 49, United States Code, but 4
9 use losoi et 
it shall (treated as a separate rail carrier) be subject to the same laws *
^
^
-
and regulations with respect to safety and with respect to the 
representation of its employees for purposes of collective bargaining, 
the handling of disputes between carriers and their employees, 
employee retirement, annuity, and unemployment systems, and 
other dealings with its employees as any rail carrier providing 
transportation subject to the jurisdiction of the Commission under 
such chapter 105. 
"(2) Amtrak Commuter shall not be subject to any State or other 
law relating to the transportation of passengers by railroad insofar as 
such law relates to rates, routes, or service, including any modifica-
tion or discontinuance thereof. 
"(3) Amtrak Commuter shall be exempt from the payment of taxes 
to the same extent as the Corporation is exempt under section 306(n) 
of this Act. 
Posi, p. 692. 
"(4) The provisions of section 10 of the Clayton Act (15 U.S.C. 20) 
shall not apply to transactions between Amtrak Commuter and the 
Corporation. 
"(d) The Board of Directors of the Corporation shall be the incorpo-
rators of Amtrak Commuter and shall take whatever steps are 
necessary to establish Amtrak Commuter, including filing articles of 
incorporation. 
-194 0—82 
43:QL3 
95 STAT. 648 
PUBLIC LAW 97-35—AUG. 13, 1981 
45 use 582. 
"SEC. 502. DIRECTORS AND OFFICERS. 
"(a)(1) Amtrak Commuter shall have a Board of Directors as 
follows: 
"(A) The President of Amtrak Commuter, ex officio. 
"(B) One member of the Board of Directors of the Corporation 
who was selected as a representative of commuter authorities 
contracting with Amtrak Commuter for the operation of com-
muter service. 
"(C) Two members selected by the Board of Directors of the 
Corporation. 
"(D) Two members from commuter authorities as follows: 
"(i) During the period prior to the commencement of the 
operation of commuter service by Amtrak Commuter, such 
members shall be selected by commuter authorities for 
which the Consolidated Rail Ck)rporation (hereafter in this 
title referred to as 'Conrail') operates commuter service 
45 use 701 note. 
under the Regional Rail Reorganization Act of 1973. 
"(ii) Beginning January 1, 1983, such members shall be 
selected by commuter authorities for which Amtrak Com-
muter operates commuter service pursuant to this title, 
except that if Amtrak Commuter operates commuter service 
for only one commuter authority, only one member shall be 
selected under this clause. 
"(2)(A) Except as otherwise provided in this section, members of the 
Board of Directors of Amtrak Commuter shall serve terms of two 
years, and any vacancy in the membership of the Board shall be filled 
in the same manner as in the case of the original selection. 
"(B) The Board shall elect one of its members annually to serve as 
Chairman. 
"(C) Each member of the Board shall receive compensation and 
45 use 543. 
reimbursement in accordeuice with section 303(aX5) of this Act. 
"(b) The provisions of section 303 (b) and (d) of this Act shall apply 
to Amtrak Commuter, except that references to the Corporation shall 
be read as though they referred to Amtrak Commuter. 
45 u s e 583. 
"SEC. 503. GENERAL POWERS OF AMTRAK COMMUTER. 
"(a)(1) Amtrak Commuter is authorized to own, manage, operate, or 
contract for the operation of commuter service; to conduct research 
and development related to its mission; and to acquire by construc-
tion, purchase, or gift, or to contract for the use of, physical facilities, 
equipment, and devices necessary to commuter service operations. 
"(2) Amtrak Commuter shall, to the extent consistent with this Act 
and with agreements with commuter authorities, directly operate 
and control all aspects of its commuter service. 
"(b) To carry out its functions and purposes, Amtrak Commuter 
shall have the usual powers conferred upon a stock corporation by 
D.e. Code 
the District of Columbia Business Corporation Act. 
29-901. 
"(c) Amtrak Commuter is authorized to issue common stock to the 
Corporation. 
45 use 584. 
"SEC. 504. COMMUTER SERVICE. 
"(a) Amtrak Commuter is authorized to operate commuter service 
under an agreement with a commuter authority. Effective January 1, 
1983, any commuter service operated by Amtrak Commuter under an 
agreement with a commuter authority shall be operated solely 
pursuant to the provisions of this section, 
"(bXD Amtrak Commuter shall operate commuter service which 
Conrail was obligated to provide on the effective date of this title 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 649 
under section 303(b)(2) or 304(e) of the Regional Rail Reorganization 
Act of 1973, and may operate any other commuter service, if the ^5 use 743, 744. 
commuter authority for which such service is to be operated offers to 
provide a commuter service operating payment which is designed to 
cover the difference between the revenue attributable to the oper-
ation of such service and the avoidable costs of operating such service 
(including the avoidable cost of any capital improvements necessary 
to operate such service) together with a reasonable return on the 
value. 
"(2) Any commuter authority making an offer under this subsec-
tion shall demonstrate that such commuter authority has acquired, 
leased, or otherwise obtained access to all rail properties necessary to 
provide such additional commuter service. 
"(3) Any additional manpower requirements shall be satisfied 
through existing seniority arrangements as agreed to in the imple-
menting agreement negotiated pursuant to section 508 of this Act. 
"(c) Any offer to provide a commuter service operating payment 
under subsection (b) of this section shall be made in accordance with 
regulations issued by the Rail Services Planning Office pursuant to 
section 205(d)(5)(A) and (6) of the Regional Rail Reorganization Act of 
1973. Such Office may revise and update such regulations as may be 45 use 715. 
necessary to carry out the provisions of this section. 
"(d)(1) Amtrak Commuter may discontinue commuter service pro-
vided under this section upon 60 days' notice i
f
— 
"(A) a commuter authority does not offer a commuter service 
operating payment in accordance with subsection (b) of this 
section; or 
''(B) an applicable commuter service operating payment is not 
paid when it is due. 
"(2) The necessary contents of the notice required under this 
subsection shall be determined pursuant to regulations issued by the 
Rail Services Planning Office. 
"(e) Notwithstanding any other provision of law, compensation to 
the Corporation or Amtrak Commuter for right-of-way related costs 
for service over the Northesist Corridor and other properties owned 
by the Corporation shall be determined in accordance with the 
methodology determined by the Commission or agreed upon by the 
parties pursuant to section 1163 of the Northeast Rgiil Service Act of 
1981. 
Post, p. 685. 
"(f) Amtrak Commuter shall not be subject to any lease or agree-
ment with a commuter authority under which financial support was 
being provided on January 2, 1974, for the continuation of rail 
passenger service, except that the Corporation and Conrail shall 
retain appropriate trackage rights (for passenger and freight oper-
ations respectively) over any rail properties owned or leased by such 
commuter agency. Compensation for such trackage rights shall be 
just and reasonable. 
"(g) Notwithstanding any other provision of this section, Amtrak 
Commuter is not obligated to provide commuter service if a commut-
er authority operates the service itself or contracts for the provision 
of such service by an operator other than Amtrak Commuter. In any 
such case, Amtrak Commuter shall, where appropriate, provide the 
commuter authority or such other operator with access to the rail 
properties needed to operate such service. 
"(h) Amtrak Commuter and the Corporation shall, to the maxi-
mum extent practicable, enter into agreements for purposes of 
avoiding duplication of employee functions and voluntarily establish-
ing a consolidated work force. 
95 STAT. 650 
PUBLIC LAW 97-35—AUG. 13, 1981 
45 u s e 585. 
"SEC. 505. NORTHEAST CORRIDOR COORDINATION. 
"(a) The Board of Directors of Amtrak Commuter shall develop and 
recommend to the Corporation— 
"(1) policies which ensure equitable access to the Northeast 
Corridor, taking into account the need for equitable access by 
commuter and intercity service and the requirements of section 
45 use 562. 
402(e) of this Act; and 
"(2) equitable policies for the Northeast Corridor with respect 
to dispatching, public information, maintenance of equipment 
and facilities, major capital facility investments, and harmoniza-
tion of equipment acquisitions, fares, tariffs, and schedules. 
"(b) The Board of Directors of Amtrak Commuter may recommend 
to the President and Board of Directors of the Corporation such 
actions as are necessary to resolve differences of opinions regarding 
operations (among or between the Corporation, Amtrak Commuter, 
other railroads, commuter authorities, and other State, local, and 
regional agencies responsible for the provision of commuter rail, 
rapid rail, or rail freight service), with respect to all matters except 
those conferred on the Commission in section 402(a) of this Act. 
Notification. 
"SEC. 506. PROPERTY TRANSFER 
"(a) Not later than April 1, 1982, each commuter authority shall 
notify Amtrak Commuter and Conrail whether it intends to operate 
its own commuter service or to contract with Amtrak Commuter for 
the operation of such service. 
"(bXD A commuter authority may initiate negotiations with Con-
rail for the transfer of commuter service operated by Conrail. 
"(2) Any transfer agreement between such a commuter authority 
and Conrail shall specify at least— 
"(A) the service responsibilities to be transferred; 
"(B) the rail properties to be conveyed; and 
"(C) a transfer date not later than January 1,1983. 
"(3) Any transfer agreement under this subsection shall be entered 
into not later than September 1,1982. 
"(c) Not later than September 1, 1982, Conrail and Amtrak Com-
muter shall agree on terms and conditions for the transfer to Amtrak 
Commuter of all of Conrail's commuter service in the Northeast 
Corridor, except for commuter service to be transferred directly to a 
commuter authority under an agreement entered into under subsec-
tion (b) of this section, and any rail properties used or useful for the 
operation of 
such commuter service. Such service and properties shall 
be transferred to Amtrak Commuter not later than January 1,1983. 
"(d) If, by September 1,1982, Conrail and Amtrak Commuter have 
not signed an agreement pursuant to subsection (c) of this section, the 
Secretary shall, within 30 days, determine which rail properties shall 
be transferred to Amtrak Commuter and the terms and conditions 
under which such rail properties and the Northeast Corridor com-
muter service of Conrail shall be transferred to Amtrak Commuter. 
Such transfer shall occur not later than January 1,1983. 
"(e) Following the transfer of commuter service and properties to 
Amtrak Commuter, and upon the request of any commuter authority 
for which the service is provided by Amtrak Commuter, Amtrak 
Commuter and such commuter authority shall agree upon terms and 
conditions for the transfer to the commuter authority of such service 
and any rail properties used or useful in the operation of such 
commuter service. 
"(f) If, within 90 days after a request for the transfer of commuter 
services is made by a commuter authority under subsection (e), 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 651 
Amtrak Commuter and such commuter authority do not sign an 
agreement pursuant to subsection (e) of this section, Amtrak Com-
muter or the commuter authority may appeal to the Secretary. Upon 
such appeal the Secretary shall determine which rail properties shall 
be transferred and the terms and conditions of such transfer. 
"(g) Consideration for inventory, including tools, spare parts, and 
fuel, transferred under this section shall be based on book value. The 
transfer of fixed facilities and rolling stock under this section shall be 
without consideration. 
"(h)(1) Notwithstanding any other provision of this Act, if an 
interest in rail properties is conveyed pursuant to this section, and if 
such conveyance is in accordance with the requirements of paragraph 
(2) of this subsection, the conveyance of such properties shall be 
deemed an assignment. Any such assignment shall relieve Conrail of 
liability for any breach which occurs after the date of such convey-
ance, except that Conrail shall remain liable for any breach, event of 
default, or violation of covenant which occurred (and any charges or 
obligations which accrued) prior to the date of such conveyance, 
regardless of whether the assignee thereof assumes such liabilities, 
charges, or obligations. If any such liabilities, charges, or obligations 
(accrued prior to the date of such conveyance) are paid by or on behalf 
of any person or entity other than Conrail, such person or entity shall 
have a claim to direct reimbursement from Conrail, together with 
interest on the amount so paid. 
"(2)(A) A conveyance referred to in paragraph (1) of this subsection 
may be effected only i
f
—
• 
"(i) the assignee to whom such conveyance is made assumes all 
of the obligations under any applicable conditional sale agree-
ment, equipment trust agreement, or lease with respect to such 
rail properties (including any obligations which accrued prior to 
the date on which such rail properties are conveyed); 
"(ii) such conveyance is made subject to such obligations; and 
"(iii) in the event of a conveyance of property to persons other 
than Class I or II railroads, such conveyance must be approved by 
any partv who is an owner, lessor, equipment trustee, or condi-
tional sale vendor to Conrail on any debt instrument imposing a 
lien or encumbrance on or otherwise affecting the title or 
interest in the rail properties to be conveyed, except that such 
approval may not be unreasonably withheld and may be with-
held only for lack of credit worthiness. 
As used in this subsection, the term 'rail properties' means assets or "Rail 
rights owned, leased, or otherwise controlled by Conrail, other than properties." 
real property, which are used or useful in rail transportation service, 
tion service. 
"(B) Subject to the provisions of this subsection, the provisions of 
this Act shall not affect the title and interests of any lessor, equip-
ment trust trustee, or conditional sale vendor under any conditional 
sale agreement, equipment trust agreement, or lease under section 
1168 of title 11, United States Code. An assignee to whom such a 
conveyance is made shall assume all liability under such conditional 
sale agreement, equipment trust agreement, or lease. Such an assign-
ment or conveyance to, and such an assumption of liability by such an 
assignee, shall not be deemed a breach, an event of default, or a 
violation of any covenant of any such conditional sale agreement, 
equipment trust agreement, or lease so assigned or conveyed, not-
withstanding any provision of any such, agreement or lease. 
"(i) Conrail shall retain rail properties which are used chiefly in 
freight service and appropriate trackage rights for freight operations 
95 STAT. 652 
PUBLIC LAW 97-35—AUG. 13, 1981 
45 u s e 701 note. 
45 u s e 587. 
.49 u s e 10101 et 
seq. 
45 u s e 744a 
note. 
over any rail properties which are transferred under this section. 
Any dispute regarding such rights may be submitted to the Commis-
sion for final and binding determination. 
"(j) Nothing contained in this title shall be construed to affect the 
rights, duties, or obligations of 
Conrail or its successor in title and any 
bi-state commuter authority under any agreement, lease, or contract 
subject to which property was conveyed to Conrail pursuant to the 
Regional Rail Reorganization Act of 1973. 
"SEC. 507. REGULATORY APPROVAL. 
"Transfers of properties and assumptions of 
service responsibilities 
pursuant to agreements negotiated under section 506, or pursuant to 
a determination made by the Secretary under section 506 (d) or (f), 
shall not be subject to judicial review or to the provisions of subtitle 
IV of title 49, United States Code.". 
PROHIBITION OF CROSS-SUBSIDIZATION 
SEC. 1138. Section 601 of the Rail Passenger Service Act (45 U.S.C. 
601) is amended by adding at the end thereof the following new 
subsection: 
"(c) None of the funds appropriated under this section for the 
payment of operating and capital expenses of intercity rail passenger 
service shall be used for the operation of commuter service by 
Amtrak Commuter.". 
AUTHORIZATION OF APPROPRIATIONS 
SEC. 1139. (a) Section 601 of the Rail Passenger Service Act (45 
U.S.C. 601), as amended by section 1138 of this subtitle, is further 
amended by adding at the end thereof the following new subsection: 
"(d) There are authorized to be appropriated to the Secretary not to 
exceed $20,000,000 for the fiscal year ending September 30,1982, to be 
allocated for commuter rail purposes to any commuter authority that 
was providing commuter service, operated by a railroad that entered 
reorganization after calendar year 1974, as of January 1, 1979.". 
(b) There are authorized to be appropriated to the Secretary in the 
fiscal year ending September 30, 1982, not to exceed $50,000,000, to 
facilitate the transfer of rail commuter services from Conrail to other 
operators. The Secretary shall by regulation prescribe standards for 
the obligation of such funds, and shall ensure that distribution of 
such funds is equitably made between Amtrak Commuter and the 
commuter authorities that operate commuter service. In providing 
for the distribution of such funds, the Secretary shall consider any 
particular adverse financial impact upon any commuter authority 
contracting with Amtrak Commuter that results from the termina-
tion of any lease or agreement between such commuter authority and 
Conrail. Amounts appropriated under this section are authorized to 
remain available until October 1,1986. 
Subpart B—Additional Financing of Conrail 
ADDITIONAL FINANCING OF CONRAIL 
SEC. 1140. (a) Title II of the Regional Rail Reorganization Act of 
1973 (45 U.S.C. 711 et seq.) is amended by adding at the end thereof 
the following new section: 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 653 
"ADDITIONAL PURCHASES OF SERIES A PREFERRED STOCK 
"SEC. 217. (a) FEDERAL INVESTMENT.—In addition to the authority 
45 use 727. 
provided under section 216 of this Act, the Association shall purchase 45 use 726. 
shares of Series A preferred stock and accounts receivable of the 
Corporation after the effective date of the Northeast Rail Service Act 
of 1981, in amounts not to exceed a total of $262,000,000. 
"GJ) ACCOUNTS RECEIVABLE.—(1) In any further purchase under this 
section or section 216 of this title the Association shall purchase 
accounts receivable of the Corporation attributable to the dispute 
over the right-of-way related costs described in section 1163 of the 
Northeast Rail Service Act of 1981 until the Commission resolves Post, p. 685. 
such dispute under such section, and accounts receivable of the 
Corporation attributable to delays in reimbursement from commuter 
authorities. 
"(2) From funds provided under this section or section 216 of this 
Act, the Association shall purchase Series A preferred stock of the 
Corporation, to the extent of losses on commuter service, in an 
amount not to exceed $15,000,000. 
"(c) STATES AND LOCALITIES.—The Corporation shall be exempt 
from liability for any State tax, except for any tax imposed by any 
political subdivision of a State, until the property of the Corporation 
is transferred by the Secretary under title IV of this Act. 
Post, p. 654. 
"(d) DEBENTURES.—The Association shall return debentures to the 
Corporation in an amount equal to the value of the properties 
conveyed by the Corporation to Amtrak Commuter and any commut-
er authority. 
"(e) RIGHTS RETAINED.—The Corporation shedl retain the right to 
collect and shall collect any accounts receivable attributable to delays 
in reimbursement from commuter authorities that are purchased by 
the Association under this section. No agency or instrumentality of 
the United States shall be required to collect such accounts. 
"(f) AUTHORIZATION OF APPROPRIATIONS.—There are authorized to 
be appropriated to the Association for purposes of purchasing securi-
ties and accounts receivable of the Corporation under this section not 
to exceed $262,000,000, such sums to remain available until the 
Secretary transfers the Corporation under title IV of this Act. All 
sums received on account of the holding or disposition of any such 
securities or accounts receivable shall be deposited in the general 
fund of the Tresisury.". 
(b) The table of contents of the Regional Rail Reorganization Act of 
1973 is amended by inserting immediately after the item relating to 
section 216 the following new item: 
"Sec. 217. Additional purchases of Series A preferred stock.". 
ORGANIZATION AND STRUCTURE OF CONRAIL 
SEC. 1141. (a) Section 301(d)(2) of the Regional Rail Reorganization 
Act of 1973 (45 U.S.C. 741(d)(2)) is amended— 
(1) by striking out "(other than resignations pursuant to this 
subsection)" in the second sentence; and 
(2) by striking out the third, fourth, and fifth sentences. 
(b) Section 301(e)(1) of the Regional Rail Reorganization Act of 1973 
(45 U.S.C. 741(e)(1)) is amended by striking out "In order to carry out 
the final system plan, the" and inserting in lieu thereof "The". 
(c) Section 301 of the Regional Rail Reorganization Act of 1973 (45 
U.S.C. 741) is amended by striking out subsection (j) and inserting in 
lieu thereof the following new subsection: 
95 STAT. 654 
PUBLIC LAW 97-35—AUG. 13, 1981 
"(j) SIGNAL SYSTEMS.—If, within two years after the effective date of 
this subsection, the Corporation applies for the permission of the 
Secretary to substitute manual block signal systems for automatic 
block signal systems on lines on which less than 20,000,000 gross tons 
of freight are carried annually, the Secretary shall approve or 
disapprove such application within 90 days of its submission,". 
Subpart C—Transfer of Freight Service Responsibilities 
TRANSFER OF FREIGHT SERVICE 
SEC. 1142. The Regional Rail Reorganization Act of 1973 is amend-
ed by inserting immediately after title III the following new title: 
"TITLE IV—TRANSFER OF FREIGHT SERVICE 
"INTEREST OF UNITED STATES 
45 use 761. 
"SEC. 401. (a) PLAN FOR SALE OF COMMON STOCK.—(1) As soon as 
practicable after the effective date of the Northeast Rail Service Act 
Ante, p. 643. 
of 1981, the Secretary shall engage the services of an investment 
banking firm or similar financial institution, which firm or institu-
tion shall arrange for the sale of the interest of the United States in 
the common stock of the Corporation under this section. 
Plan, submittal 
"(2) At any time after the effective date of the Northeast Rail 
to Congress. 
Service Act of 1981 the Secretary may submit to the Congress a plan 
for the sale, in block or by public offering, of the interest of the United 
States in the common stock of the Corporation. Such plan shall— 
"(A) ensure continued rail service; 
"(B) promote competitive bidding for such common stock; and 
"(C) maximize the return to the United States on its invest-
ment. 
"(3) Any plan submitted under paragraph (2) shall be deemed 
approved at the end of the 60-calendar-day period of continuous 
session of the Congress beginning on the date the plan was submitted, 
unless during such period both Houses of Congress pass a concurrent 
resolution the substance of which states that the Congress does not 
favor such plan. The Secretary shall implement any plan deemed 
approved under this paragraph. For purposes of this subsection— 
"(A) continuity of session of the Congress is broken only by an 
adjournment sine die; and 
"(B) the days on which either House is not in session because of 
adjournment of more than 3 days to a day certain are excluded in 
the computation of the 60-day period. 
"(b) CANCELLATION.—In making any sale under a plan submitted 
under subsection (a)(2), the Secretary may cancel some shares of the 
common stock of the Corporation and sell only the remaining shares. 
"(c) REPLACEMENT OF BOARD OF DIRECTORS.—When all common 
stock of the Corporation held by the United States (or any agent or 
instrumentality thereof) is sold under a plan submitted under subsec-
tion (a)(2) or canceled under subsection (b), the Corporation shall elect 
a new Board of Directors. Only holders of shares of common stock 
may vote in such election, and each such share shall entitle its holder 
to one vote. 
"(d) 
RAILROAD PURCHASERS.—Any railroad which purchases 
common stock of the Corporation shall vote such stock in the same 
proportion as all other common stock of the Corporation is voted 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 655 
unless the Commission determines that such railroad has purchased 
a controlling interest in the Corporation. 
"(e) STOCK OFFERING.—In making £iny sale under a plan submitted 
under subsection (a)(2), the Secretary shall first offer for sale, to any 
employees whose wages are reduced pursuant to any agreement 
entered into in accordance with the goal set forth in section 1134(4) of 
the Northeast Rail Service Act of 1981, stock in amounts equal to the Ante, p. 645. 
extent of such wage reduction. 
"DEBT AND PREFERRED STOCK 
"SEC. 402. (a) LIMITATION.—Prior to any sale of the common stock of 45 use 762. 
the Corporation under section 401, the interest of the United States 
in any debt or preferred stock of the Corporation held by the United 
States (or any agent or instrumentality thereof, including the Associ-
ation) shall be limited to any interest which attaches to such debt or 
preferred stock in the event of bankruptcy, or substantied sale, or 
liquidation of the assets of the Corporation. The Secretary shall 
substitute for the evidence of such debt or preferred stock held by the 
United States (or any such agent or instrumentality) contingency 
notes conforming to the limited terms set forth in this subsection. 
"(b) SUBSEQUENT ISSUE.—If the interest of the United States is 
limited under subsection (a) the Corporation may issue new debt or 
preferred stock subsequent to the issuance of the debt or preferred 
stock described in subsection (a) which shall have higher priority in 
the event of bankruptcy, liquidation, or abandonment of the assets of 
the Corporation than tne debt or preferred stock described in subsec-
tion (a). 
"PROFITABILITY DETERMINATIONS 
"SEC. 403. (a) FIRST DETERMINATION.—(1) On June 1, 1983, the 45 use 763. 
Board of Directors of the Association (hereafter in this title referred 
to as the 'USRA Board') shall make a determination whether the 
Corporation will be a profitable carrier. For the purpose of making 
such determination the USRA Board shall assume that the interest 
of the United States in any debt or preferred stock of the Corporation 
is limited as required under section 402 of 
this Act. 
"(2) As used in this subsection, 'profitable carrier' means a carrier "Profitable 
that generates sufficient revenues to meet its expenses, including earner. 
reasonable maintenance of necessary equipment and facilities, and 
will be able to borrow capital in the private market sufficient to meet 
all its capital needs. 
"(3XA) If the USRA Board determines under paragraph (1) of this 
subsection that the Corporation will be a profitable carrier, the 
Secretary shall continue to attempt to sell the interest of the United 
States in the common stock of the Corporation under section 401 of 
this Act. 
"(B) If the USRA Board determines under paragraph (1) of this 
subsection that the Corporation will not be a profitable carrier, the 
Secretary shall initiate discussions and negotiations under section 
405 of this Act for the transfer of the Corporation's freight rail 
properties and service responsibilities. 
"(b) SECOND DETERMINATION.J-(1) AS soon after November 1,1983, 
as the necessary information is available, if the USRA Board has 
determined under subsection (aX2) of this section that the Corpora-
tion will be a profitable carrier such Board shall make a determina-
tion as to whether the Corporation has been a profitable carrier 
earner. 
95 STAT. 656 
PUBLIC LAW 97-35—AUG. 13, 1981 
during the period beginning June 1, 1983, and ending October 31, 
1983. 
"Profitable 
"(2) As used in this subsection, 'profitable carrier* means a carrier 
that generates sufficient revenues to meet its expenses, including 
reasonable maintenance of necessary equipment and facilities, and 
would have been able to borrow capital in the private market 
sufficient to meet all its capital needs. For the purpose of making 
such determination the USRA Board shall assume that the interest 
of the United States in any debt or preferred stock of the Corporation 
has been limited as required under section 402 of this Act. 
"(3XA) If the USRA Board determines under paragraph (1) of this 
subsection that the Corporation has been a profitable carrier, the 
Secretary shall continue to attempt to sell the interest of the United 
States in the common stock of the Corporation under section 401 of 
this Act. 
"(B) If the USRA Board determines under paragraph (1) of this 
subsection that the Corporation has not been a profitable carrier, the 
Secretary shall initiate discussions and negotiations under section 
405 of this Act for the transfer of the Corporation's freight rail 
properties and service responsibilities. 
"FAILURE TO SELL AS ENTITY 
45 use 764. 
"SEC. 404. (a) NOTIFICATION.—After June 1,1984, the Secretary may 
notify the USRA Board that he has determined that he is unable to 
sell the interest of the United States in the common stock of the 
Corporation under section 401 of this Act. The USRA Board shall 
approve or disapprove such determination within 15 days after the 
date of such notification. 
"(b) USRA BOARD APPROVAL.—(1) If the USRA Board approves any 
determination of the Secretary of which it is notified under subsec-
tion (a)(2), the employees of the Corporation may, within 90 days after 
the date of the Secretary's determination was submitted to the USRA 
Board, submit to the Secretary a plan for the purchase of the common 
stock of the Corporation. 
"(2) The Secretary shall approve any plan submitted under para-
graph (1) of this subsection if, taking into account any consideration 
to be received by the Corporation from any sale of debt instruments 
or newly issued common stock as part of the purchase transaction, 
the Corporation's earnings and earnings prospects are sufficient to 
meet its operating and capital requirements and permit it adequate 
access to the private capital markets for any additional capital it may 
require, so that the Corporation will not require further Federal 
financial assistance. The Secretary shall consider whether the plan 
ensures continued rail service and maximizes the return to the 
United States on its investment. 
"(3) If the Secretary does not approve the plan submitted under 
paragraph (1) of this subsection the Secretary shall initiate discus-
sions and negotiations under section 405 of this Act for the transfer of 
the Corporation's freight rail properties and service responsibilities. 
"(c) USRA BOARD DISAPPROVAL.—(1) If the USRA Board disap-
proves any determination of the Secretary it is notified of under 
subsection (a), the Secretary shall continue to attempt to sell the 
interest of the United States in the common stock of the Corporation. 
"(2) The Secretary may notify the USRA Board that he has 
determined that he is unable to sell the interest of the United States 
in the common stock of the Corporation each 90 days thereafter, and 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 657 
such determination shall be subject to the approval or disapproval 
under the provisions of this section. 
"TRANSFER PLAN 
"SEC. 405. (a) INITIAL DISCUSSIONS.—If the Corporation is deter- 45 use 765. 
mined not to be a profitable carrier by the USRA Board under 
subsection (a) or (b) of section 403, or if any plan for the purchase of 
the common stock of the Corporation under section 404(b) is not 
approved by the Secretary, or if at any time the Corporation requires 
funding from the Federal Government in excess of amounts author-
ized on or before the effective date of the Northeast Rail Service Act 
of 1981, the Secretary, in consultation with the Corporation, shall Ante, p. 643. 
initiate discussions and n^otiations under section 5 of the Depart-
ment of Transportation Act (49 U.S.C. 1654) with potential purchas-
ers for the transfer of the Corporation's freight rail properties and 
service responsibilities, ^)ecifically including freight terminal oper-
ations in the Northeast Corridor. 
"(b) CONFERENCES.—As a part of the process set forth in subsection 
(a), the Secretary shall consult with railroads, representatives of 
employees of the Corporation and other railroads that may be 
affected, appropriate State and local government officials, shippers, 
consumer representatives, potential purchasers or operators other 
than railroads, and holders of purchase money equipment obliga-
tions. The Secretary shall hold conferences in developing plans for 
the sale of the Corporation and persons attending or represented at 
such conferences shall not be liable under the antitrust laws of the 
United States with respect to any discussion at such conference, or 
with respect to any agreements reached at such conferences, which 
are entered into with the approval of the Secretary. 
"(c) FREIGHT TRANSFER AGREEMENTS.—Any agreement for 
the 
transfer 
of 
the 
Corporation's 
rail 
properties 
and 
service 
responsibilities (hereafter in this title referred to as 'freight transfer 
agreements') shall specify the rail properties and the service respon-
sibilities to be transferred to the acquiring railroad and the price to 
be paid for rail properties transferred, and shall include such other 
terms as the Secretary, consulting with the Corporation, and the 
acquiring railroad consider appropriate. 
"(d) TERMINAL COMPANIES.—Not later than 1 year after the freight 
transfer agreements are implemented pursuant to section 408 of this 
title, the Secretary shall arrange for the formation by railroads of one 
or more terminal companies, to be operated as private corporations 
without Federal operating subsidy, to provide switching and terminal 
services in the Northeast Corridor without preference to the traffic of 
any railroad. Notwithstanding the provisions of the preceding sen-
tence, the Secretary shall not be required to arrange for the forma-
tion of such terminal companies if he certifies in writing to the 
Congress that individual acquiring railroads are capable of assuring 
adequate freight terminal operations in the Northeast Corridor. 
"(e) COMPETITION.—Discussion and negotiations for freight transfer 
agreements shall be conducted, to the maximum extent practicable, 
to assure the preservation and enhancement of rail competition in 
the Northeast. In the development of freight transfer agreements, 
rail lines which have heavy rail freight activity shall receive priority 
designation for competitive service. In determining such priority, the 
Secretary shall consider shipper input and other relevant data. 
"(f) REPORT.—The Secretary shall submit to the Congress every six 
months a report regarding his activities under this section. If the 
Secretary finds that he is unable to sell the interest of the United 
States in the common stock of the Corporation under section 401 of 
95 STAT. 658 
PUBLIC LAW 97-35—AUG. 13, 1981 
this Act, he shall concurrently notify the Congress and the USRA 
Board of such finding. 
"CONSOUDATION OF AGREEMENTS 
45 use 766. 
"SEC. 406. (a) GOALS.—The Secretary shall ensure that freight 
transfer agreements entered into under the authority of this title 
provide for the continuation of the optimum level of self-sustaining 
rail service consistent with the needs of the service area, the long-
term viability of acquiring railroads operating in the private sector, 
the preservation and enhancement of transportation competition, 
and the orderly disposition of equipment subject to railroad equip-
ment obligations and of rail properties subject to contractual obliga-
tions based on improvements directly financed by States, localities, 
and shippers. 
"(b) TRANSFER DATE.—All freight transfer agreements entered into 
under this title shall include as a term a common transfer date. 
"(c) CONSOLIDATION.—The Secretary shall consolidate, for purposes 
of approval and review, all freight transfer agreements and shall 
ensure that no less than 75 percent of the total rail service operated 
by the Corporation on the date of transfer shall be maintained under 
the aggregate of such agreements. If the Secretary acts to grant 
preliminary or final approval to the freight transfer agreements, the 
Secretary shall include in his determination a listing of those rail 
properties not specified in such agreements for transfer, and the 
likely disposition of such properties. 
"PUBLIC COMMENT AND CONGRESSIONAL NOTIFICATION 
Publication 
"SEC. 407. (a) ATTORNEY GENERAL.—If the Secretary grants prelimi-
m Federal 
nary approval to the freight transfer agreements, the Secretary shall 
45 USC^767 
publish a summary of the agreements in the Federal Register, 
requesting public comment. The period for comment shall be not less 
than 30 days. The Secretary shall, upon the expiration of such 30-day 
period, transmit the freight transfer agreements with any proposed 
modifications to the Attorney General. The Attorney General shall, 
within 10 days of receipt of such transmittal, advise the Secretary as 
to whether any freight transfer agreement or combination of agree-
ments would create or maintain a situation inconsistent with the 
antitrust laws of the United States, and the Secretary shall give due 
consideration to any such advice that may be rendered. The transmit-
tal to the Attorney General shall contain such information as the 
Attorney General may require in order to advise the Secretary as to 
whether the freight transfer agreements under consideration would 
create or maintain a situation inconsistent with such antitrust laws. 
"(b) COMMISSION.—The Secretary shall also transmit the freight 
transfer agreements with any proposed modifications to the Commis-
sion on the same date that the Secretary transmits them to the 
Attorney General. The Commission shall, within 10 days of receipt of 
such transmittal, advise the Secretary as to the effect of any freight 
transfer agreement or combination of agreements on the adequacy of 
public transportation and whether any freight transfer agreement or 
combination of agreements would have an adverse effect on other 
railroads or on competition among railroads. 
"(c) FINAL APPROVAL.—After consideration of comments received 
and any advice rendered by the Attorney General and the Commis-
sion, but no later than 90 days after the close of public comment 
under subsection (a), the Secretary may grant final approval to the 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 659 
freight transfer agreements. With the consent of the acquiring 
railroad, the Secretary may modify a freight transfer agreement 
prior to granting such final approval. 
"(d) CONGRESSIONAL REVIEW.—If the Secretary grants final ap-
proval to the freight transfer agreements, the Secretary shall, within 
10 days of such approval, transmit a copy of such agreements to each 
House of Congress, together with the Secretary's determination of 
final approval. The freight transfer agreements shall be deemed 
approved at the end of 60 calendar days of continuous session of the 
Congress, unless either the House of Representatives or the Senate or 
both passes a resolution during such period stating that they do not 
favor the freight treinsfer agreements. For purposes of this sub-
section— 
"(1) continuity of session of the Congress is broken only by an 
adiournment sine die; and 
(2) the days on which either House is not in session because of 
adjournment of more than 3 days to a day certain are excluded in 
the computation of the period described in this subsection. 
"PERFORMANCE UNDER AGREEMENTS; EFFECT 
"SEC. 408. (a) TRANSFER.—If neither House of Congress has acted to 45 use 768. 
disapprove the freight transfer agreements within 60 days, rail 
properties shall be conveyed and service responsibilities of the 
Corporation shall be transferred in accordance with the freight 
transfer agreements. Such conveyances and transfers shall not be 
subject to the provisions of subtitle IV of title 49, United States Code, 49 use loioi 
or, with respect to the issuance and sale of securities to the United ^
^ *^9-
States or the Corporation for the purpose of financing such transfers, 
to the registration and prospectus delivery requirements of the 
Securities Act of 1933, or to the laws of any State with respect to the 15 use 77a. 
issuance and sale of securities. 
"0)) RESPONSIBIUTIES.—On the date the common stock or the rail 
properties and service responsibilities of the Corporation are trans-
ferred under this title— 
"(1) the acquiring railroad shall be deemed a railroad subject to 
subtitle IV of title 49, United States Code, and shall be deemed 
qualified thereunder to provide the service responsibilities as-
sumed; and 
"(2) the Corporation shall discontinue and shall be relieved of 
any responsibility to operate rail service over any line of railroad 
conveyed under the freight transfer agreements and all other 
rail properties of the Corporation. 
"(c) REVIEW.—No transfer of the Corporation's stock or rail proper-
ties and freight service responsibilities under this title shall be 
subject to judicial review or to review by the (Commission. 
"(d) SALE DATE.—Unless the Corporation is found not profitable 
under section 403(a) or (b) of this title, the Secretary may not sell the 
rail properties and service responsibilities of the C!orporation until 
June 1,1984, except that if the Corporation requires further Federal 
financing before such date, such sale may be made before such date. 
"ASSIGNMENT 
"SEC. 409. LIABILITY.—(a) Notwithstanding any other provision of 45 use 769. 
this title, if an interest in rail properties is conveyed pursuant to 
section 408 of this Act, and if such conveyance is in accordance with 
the requirements of subsection (b) of this section, the conveyance of 
95 STAT. 660 
PUBLIC LAW 97-35—AUG. 13, 1981 
such properties shall be deemed an assignment. Any such assignment 
shall relieve the Corporation of liability for any breach which occurs 
after the date of such conveyance, except that the Corporation shall 
remain liable for any breach, event of default, or violation of 
covenant which occurred (and any charges or obligations which 
accrued) prior to the date of such conveyance, regardless of whether 
the assignee thereof assumes such liabilities, charges, or obligations. 
If any such liabilities, charges, or obligations (accrued prior to the 
date of such conveyance) are paid by or on behalf of any person or 
entity other than the Corporation, such person or entity shall have a 
claim to direct reimbursement from the Corporation, together with 
interest on the amount so paid. 
"(b) CONVEYANCE.—(1) A conveyance referred to in subsection (a) of 
this section may be effected only i
f
— 
"(A) the assignee to whom such conveyance is made assumes 
all of the obligations under any applicable conditional sale 
agreement, equipment trust agreement, or lease with respect to 
such rail properties (including any obligations which accrued 
prior to the date on which such rail properties are conveyed), 
"(B) such conveyance is made subject to such obligations, and 
"(C) in the event of a conveyance of property to persons other 
than Class I or II railroads, such conveyance must be approved by 
any party who is a owner, lessor, equipment trustee, or condi-
tional sale vendor to the Corporation on any debt instrument 
imposing a lien or encumbrance on or otherwise affecting the 
title or interest in the rail properties to be conveyed, provided 
that such approval may not be unreasonably withheld and may 
be withheld only for lack of credit worthiness. 
"Rail . „ 
As used in this paragraph, the term 'rail properties' means assets or 
properties. 
rights Owned, leased, or otherwise controlled by the Corporation, 
other than real property, which are used or useful in rail transporta-
tion service. 
"(2) Subject to the provisions of this subsection, the provisions of 
this title shall not affect the title and interests of any lessor, 
equipment trust trustee, or conditional sale vendor under any condi-
tional sale agreement, equipment trust agreement, or lease under 
section 1168 of title 11, United States Code. An assignee to whom such 
a conveyance is made shall assume all liability under such condi-
tional sale agreement, equipment trust agreement, or lease. Such an 
assignment or conveyance to, and such an assumption of liability by 
such an assignee, shall not be deemed a breach, an event of default, or 
a violation of any covenant of any such conditional sale agreement, 
equipment trust agreement, or lease so assigned or conveyed, not-
withstanding any provision of any such agreement or lease. 
"SUBSIDIARIES 
45 use 769a. 
"SEC. 410. The Corporation, by January 1,1982, shall identify those 
of its subsidiaries (other than the Conrail Equity Corporation) which 
did not operate at a profit during the preceding 12-month period, and 
shall, not later than 12 months after the date of enactment of this 
subtitle, seek to sell any subsidiary identified as not profitable unless 
the Association determines that the benefits of maintaining owner-
ship of such subsidiary outweigh the financial loss resulting from 
such ownership.". 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 661 
PART 3—PROTECTION FOR CONRAIL EMPLOYEES 
PROTECTION OF CONRAIL EMPLOYEES 
SEC. 1143. (a) The Regional Rail Reorganization Act of 1973 (45 
U.S.C. 701 et seq.) is amended by adding at the end thereof the 
following new title: 
"TITLE VII—PROTECTION OF EMPLOYEES 
"EMPLOYEE PROTECTION AGREEMENT 
"SEC. 701. (a) GENERAL.—(1) The Secretary of Labor and the 45 use 797. 
representatives of the various classes and crafts of employees of the 
Corporation shall, not later than 90 days after the effective date of 
this title, enter into an agreement providing protection for employees 
of the Corporation who were protected by the compensatory provi-
sions of title V of this Act immediately prior to the effective date of 45 use 771. 
the Northeast Rail Service Act of 1981 and who are, or may be, Ante, p. 643. 
deprived of employment by actions taken under this Act and the 
Northeast Rail Service Act of 1981. An employee shall be considered 
deprived of employment if unable to obtain a position with an 
acquiring railroad, or to obtain a position with the Corporation, the 
National Railroad Passenger Corporation, or a commuter authority 
through the normal exercise of seniority or, in the case of a non-
agreement employee, by written application. 
"(2) If the parties are unable to reach agreement under paragraph 
(1) within 90 days, the Secretary of Labor shall, within 30 days after 
the expiration of such 90-day period, prescribe the benefit schedule. 
"(b) USE OF FUNDS.—The agreement entered into under this section 
may provide for the use of funds made available under section 713 of 
this Act for the following purposes: 
"(1) Allowances to employees deprived of emplo3nnent. 
"(2) Moving expenses for employees who must make a change 
in residence. 
"(3) Retraining expenses for employees who are seeking em-
plo5nnent in new areas. 
"(4) Termination allowances for employees. 
"(5) Health and welfare insurance premiums. 
"(6) Such other purposes as may be agreed upon by the parties. 
"(c) APPLICABIUTY.—Any employee of the Corporation who is 
eligible for benefits under an agreement entered into under this 
section and who is transferred to the National Railroad Passenger 
Corporation, to the Amtrak Commuter Services Corporation, or to a 
commuter authority pursuant to title V of the Rail Passenger Service 
Act shall remain eligible for such benefits. 
Ante, p. 647. 
"(d) LIMITATION.—(1) The agreement of the parties and the benefit 
schedule prescribed by the Secretary under this section may not 
require the expenditure of funds in excess of the amount authorized 
to be appropriated under section 713 of this Act, or provide benefits 
for any individual employee in excess of $20,000. 
"(2) No individual shall become eligible for benefits under this 
section after the last day of the eighteen-month period beginning on 
the date of transfer under section 401 or 404 of this Act. 
Ante, pp. 654, 
656. 
95 STAT. 662 
PUBLIC LAW 97-35—AUG. 13, 1981 
"TERMINATION ALLOWANCE 
45 use 797a. 
"SEC. 702. (a) GENERAL.—The Corporation may terminate the 
employment of certain employees, in accordance with this section, 
upon the pa3rment of an allowance of $350 for each month of active 
service with the Corporation or with a rcdlroad in reorganization, but 
in no event may any such termination allowance exceed $25,000. 
"(b) EMPLOYMENT NEEDS.—Within 90 days after the effective date 
of this title, the Corporation shall determine, for each location, the 
number of employees that the Corporation intends to separate under 
subsection (a) of this section. 
"(c) NOTIFICATION AND SEPARATION PROCEDURE.-;-(1) Within 90 days 
after the effective date of this title, the (Corporation shall notify its 
employees of their rights and responsibilities under this section. 
(2) Within 90 days after the effective date of this title, the 
Corporation shall notify each train and engine service employee 
eligible to be separated under paragraph (3) that such employee may 
be entitled to receive a separation payment under this section if such 
employee files a written request to be separated. Such notice may be 
revised from time to time. 
"(3) If the number of employees who request to be separated 
pursuant to paragraph (2) of this subsection is greater, in engine 
service at any location, than the number of excess firemen at the 
location, and in train service at the location than the number of 
excess second and third brakemen, as det-ermined by the C!orporation, 
the CHorporation shall separate the employees described in paragraph 
(2) of this subsection in order of seniority beginning with the most 
senior employee, until the excess firemen and second and third 
brakemen positions at that location, as determined by the (Corpora-
tion, have been eliminated. 
"(d) DESIGNATED SEPARATIONS.—If the number of employees who 
are separated pursuant to subsection (cX3) is less at any location than 
the number of excess firemen in freight and commuter service and 
second and third brakemen in freight service at such location, as 
determined by the (Corporation, the Corporation may, after 210 days 
after the effective date of this title, designate for separation employ-
ees in engine service or train service respectively in inverse order of 
seniority, beginning with the most junior employee in active service 
at such location until the excess firemen in freight and commuter 
service and second and third brakemen in freight service, at that 
location have been eliminated. An employee designated under this 
subsection may choose (1) to furlough himself voluntarily, in which 
case the next most junior employee protected under the fireman 
manning or crew consist agreements or any other agreement or law, 
in the same craft or class at such location may be separated instead 
and receive the separation allowance, or (2) to exercise his seniority to 
another location, in which case the (Corporation may separate, under 
the provisions of this subsection, the next most junior protected 
employee in active service at the location to which seniority ulti-
mately is exercised. 
"(e) EFFECT ON POSITIONS.—(1) The (Corporation shall refrain from 
filling one fireman position in freight service, or in commuter service 
where applicable, for each employee in engine service separated in 
accordgmce with this section. 
"(2) The (Corporation may refrain from filling one brakeman 
position in excess of one conductor and one brakeman on one crew in 
freight service for each employee in train service who is separated in 
accordance with this section. 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 663 
"(3) Positions permitted to be not filled under this subsection shall 
be not filled in different types of freight service actually operated at 
or from the location in a sequence to be agreed upon between the 
Corporation and the general chairman representative of classes or 
crafts of employees having jurisdiction over the positions to be not 
filled. If no such agreement is reached, the Corporation may desig-
nate the position to be not filled. 
"(4) Notwithstanding paragraphs (1) and (2) of this subsection, the 
Corporation shall retain all rights it has under any provision of law 
or agreement to refrain from filling any position of employment. 
"(0 PROCEDURES.—The Corporation and representatives of the 
various classes and crafts of employees to be separated may agree on 
procedures to implement this section, but the absence of such 
agreement shall not interfere with implementation of the separa-
tions authorized by this section. 
"(g) COMMUTER EMPLOYEES.—The provisions of this section shall 
apply to the separation of firemen in commuter service, except that 
with respect to such employees the Corporation is required to make 
the separations authorized by this section. 
"PREFERENTIAL HIRING 
"SEC. 703. (a) GENERAL.—Any employee who is deprived of employ- 45 use 797b. 
ment shall have the first right of hire by any other railroad for a 
vacancy for which he is qualified in a class or craft (or in the case of a 
non-agreement employee, for a non-agreement vacancy) in which 
such employee was employed by the Corporation or a predecessor 
carrier for not less than one year, except where such a vacancy is 
covered by (1) an affirmative action plan, or a hiring plan designed to 
eliminate discrimination, that is required by Federal or State statute, 
regulation, or Executive order, or by the order of a Federal court or 
agency, or (2) a permissible voluntary affirmative action plan. For 
purposes of this section, a railroad shall not be considered to be hiring 
new employees when it recalls any of its own furloughed employees. 
"(b) STATUS.—The first right of hire afforded to employees under 
this section shall be coequal to the first right of hire afforded under 
section 8 of the Milwaukee Railroad Restructuring Act (45 U.S.C. 907) 
and section 105 of the Rock Island Transition and Employee Assist-
ance Act (45 U.S.C. 1004). 
94 Stat. 400. 
"CENTRAL REGISTER OF RAILROAD EMPLOYMENT 
"SEC. 704. (a) REGISTER.—(1) The Railroad Retirement Board (here- 45 use 797c. 
after in this section referred to as the 'Board') shall prepare and 
maintain a register of persons separated from railroad employment 
after at least one year of completed service with a railroad who have 
declared their current availability for employment in the railroad 
industry. The register shall be subdivided by class and craft of prior 
employment and shall be updated periodically to reflect current 
availabilitv. 
"(2) Each entry in the register shall include, or provide access to, 
basic information concerning the individual's experience and 
qualifications. 
"(3) The Board shall place at the top of the register those former 
railroad employees entitled to priority under applicable provisions of 
law, including this Act, 
"(b) CORPORATION EMPLOYEES,—As soon as is practicable after the 
effective date of this title, the Corporation shall provide to the Board 
9-194 0—82 
44 : QL3 
95 STAT. 664 
PUBLIC LAW 97-35—AUG. 13, 1981 
the names of its former employees who elect to appear on the register 
and who have not been offered employment with acquiring railroads. 
"(c) VACANCY NOTICES.—Each railroad shall timely file with the 
Board a notice of vacancy with respect to any position for which the 
railroad intends to accept applications from persons other than 
current employees of 
that carrier. 
"(d) PLACEMENT.—The Board shall, through distribution of copies 
of the central register (or portions thereof) to railroads and repre-
sentatives of classes or crafts of employees and through publication of 
emplojnnent information derived from vacancy notices filed with the 
Board, promote the placement of former railroad employees possess-
ing requisite skills and experience in appropriate positions with other 
railroads. 
"(e) EMPLOYMENT APPLICATIONS.—In addition to its responsibilities 
under subsections (a) through (d) of this section, the Board shall 
facilitate the filing of emplojntnent applications with respect to 
current vacancies in the industry by former railroad employees 
entitled to priority under applicable provisions of law, including this 
Act. 
"(f) EXPIRATION.—The provisions of this section shall cease to be 
effective on the expiration of the 3-year period beginning on the 
effective date of this title. 
"(g) RESOLUTION OF DISPUTES.—Any dispute, grievance, or claim 
arising under this section or section 703 of this Act shall be subject to 
resolution in accordance with the following procedures: 
"(1) Any employee with such a dispute, grievance, or claim 
may petition the Board to review and investigate the dispute, 
grievance, or claim. 
"(2) The Board shall investigate the dispute, grievance, or 
claim, and if it concludes that the employee s rights under this 
section or section 703 of this Act may have been violated, the 
dispute, grievance, or claim shall be subject to resolution in 
accordance with the procedures set forth in section 3 of the 
Railway Labor Act (45 U.S.C. 153). 
"(3) In the case of any violation of this section or section 703 of 
this Act, the Adjustment Board (or any division or delegate 
thereof) or any other board of adjustment created under section 3 
of the Railway Labor Act shall, where appropriate, award such 
relief, including back pay, as may be necessary to enforce the 
employee's rights. 
"ELECTION AND TREATMENT OF BENEFITS 
45 use 797d. 
"SEC. 705. (a) ELECTION.—(1) Any employee who accepts any bene-
fits under an agreement entered into under section 701 of this Act or 
a termination allowance under section 702 of this Act, shall, except as 
provided in paragraph (2) of this subsection, be deemed to waive any 
employee protection benefits otherwise available under any other 
provision of law or any contract or agreement in effect on the 
effective date of this title, except benefits under sections 703 and 704 
of this Act, and shall be deemed to waive any cause of action for any 
alleged loss of benefits resulting from the provisions of or the 
Ante, p. 643. 
amendments made by the Northeast Rail Service Act of 1981. 
"(2) Nothing in paragraph (1) of this subsection shall affect the 
right of any employee described in such paragraph to benefits under 
45 use 23it. 
the Railroad Retirement Act of 1974 or the Railroad Unemployment 
45 use 367. 
Insurance Act. 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 665 
"(b) TREATMENT OP BENEFITS.—Any benefits received by an em-
ployee under an agreement entered into pursuant to section 701 of 
this Act and any termination allowance received under section 702 of 
this Act shall be considered compensation solely for purposes o
f
— 
"(1) the Railroad Retirement Act of 1974 (45 U.S.C. 231 et seq.); 
and 
"(2) determining the compensation received by such employee 
in any base year under the Railroad Unemployment Insurance 
Act (45 U.S.C. 351 et seq.). 
"ASSIGNMENT OF WORK 
"SEC. 706. (a) GENERAL.—With respect to any craft or class of 45USC797e. 
employees not covered by a collective bargaining agreement that 
provides for a process substantially equivalent to that provided for in 
this section, the Corporation shall have the right to assign, allocate, 
reassign, reallocate, and consolidate work formerly performed on the 
rail properties acquired pursuant to the provisions of this Act from a 
railroad in reorganization to any location, facility, or position on its 
system if it does not remove such work from coverage of a collective 
bargaining agreement and does not infringe upon the existing classi-
fication of work rights of any craft or class of employees at the 
location or facility to which such work is assigned, allocated, reas-
signed, reallocated, or consolidated. Prior to the exercise of authority 
under this subsection, the Corporation shall negotiate an agreement 
with the representatives of the employees involved permitting such 
employees the right to follow their work. 
"(b) EXPIRATION.—The authority granted by this section shall apply 
only for as long as benefits are provided under this title with funds 
made available under section 713 of this Act. 
"CONTRACTING OUT 
"SEC. 707. All work in connection with the operation or services 45 use 797f. 
provided by the Corporation on the rail lines, properties, equipment, 
or facilities acquired pursuant to the provisions of this Act and the 
maintenance, repair, rehabilitation, or modernization of such lines, 
properties, equipment, or facilities which has been performed by 
practice or agreement in accordance with provisions of the existing 
contracts in effect with the representatives of the employees of the 
classes or crafts involved shall continue to be performed by the 
Corporation's employees, including employees on furlough. Should 
the Corporation lack a sufficient number of employees, including 
employees on furlough, and be unable to hire additional employees, to 
perform the work required, it shall be permitted to subcontract that 
part of such work which cannot be performed by its employees, 
including those on furlough, except where agreement by the repre-
sentatives of the employees of the classes or crafts involved is 
required by applicable collective-bargaining agreements. The term 
'unable to hire additional employees' as used in this section contem-
plates establishment and maintenance by the Corporation of an 
apprenticeship, training, or recruitment program to provide an 
adequate number of skilled employees to perform the work. 
"NEW COLLECTIVE-BARGAINING AGREEMENTS 
"SEC. 708. (a) AGREEMENT.—Not later than 60 days after the 45USC797g. 
effective date of any conveyance pursuant to the provisions of this 
95 STAT. 666 
PUBLIC LAW 97-35—AUG. 13, 1981 
Act, the representatives of the various classes or crafts of employees 
of a railroad in reorganization involved in a conveyance and repre-
sentatives of the Corporation shall commence negotiation of a new 
single collective bargaining agreement for each class and craft of 
employees covering the rate of pay, rules, and working conditions of 
employees who are the employees of the Corporation. Such collective 
bargaining agreement shall include appropriate provisions concern-
ing rates of pay, rules, and working conditions, but shall not, before 
April 1, 1984, include any provisions for job stabilization which may 
exceed or conflict with those established herein. Negotiations with 
respect to such single collective bargaining agreement, and any 
successor thereto, shall be conducted systemwide. 
"(b) PROCEDURE.—(1) Any procedure for finally determining the 
components of the first single collective bargaining agreement for 
any class or craft, agreed upon before the effective date of this title, 
shall be completed no later than 45 days after such effective date. 
Such agreed upon procedure shall be deemed to satisfy the require-
45 use 157,158. ments of sections 7 and 8 of the Railway Labor Act. The National 
Mediation Board shall appoint any person as provided for by such 
agreements. 
"(2) Nothing in this section shall be construed to require the parties 
to enter into a new single collective bargaining agreement if the 
agreement between the parties in effect immediately prior to the 
94 Stat. 1956. 
effective date of this title complied with section 504(d) of this Act as in 
45 use 774. 
effect immediately prior to such date. 
"(c) RAILWAY LABOR ACT NOTICES.—Employees of the Corporation 
45 use 156. 
may not serve notices under section 6 of the Railway Labor Act for 
the purpose of negotiating job stabilization or other protective agree-
ments with the Corporation until after April 1,1984. 
"EMPLOYEE AND PERSONAL INJURY CLAIMS 
45use797h. 
"SEC. 709. (a) LiABiUTY F
O
R E
M
P
L
O
Y
E
E CLAIMS.—In all cases of 
claims, prior to April 1, 1976, by employees, arising under the 
collective bargaining agreements of the railroads in reorganization in 
the Region, and subject to section 3 of the Railway Labor Act (45 
U.S.C. 153), the Corporation, the National Railroad Passenger Corpo-
ration, or an acquiring carrier, as the case may be, shall assume 
responsibility for the processing of Einy such claims, and payment of 
those which are sustained or settled on or subsequent to the date of 
45 use 743. 
conveyance, under section 303(bXl) of this Act, and shall be entitled 
to direct reimbursement from the Association pursuant to section 
45 use 721. 
211(h) of this Act, to the extent that such claims are determined by 
the Association to be the obligation of a railroad in reorganization in 
the Region. Any liability of an estate of a railroad in reorganization to 
its employees which is assumed, processed, and paid pursuant to this 
subsection by the Corporation, the National Railroad Passenger 
Corporation, or an acquiring carrier shall remain the preconveyance 
obligation of the estate of such railroad for purposes of section 
211^X1) of this Act. The Corporation, the National Railroad Passen-
ger Corporation, an acquiring carrier, or the Association, as the case 
may be, shall be entitled to a direct claim as a current expense of 
administration, in accordance with the provisions of section 211(h) of 
this Act (other than paragraph (4XA) thereof), for reimbursement 
(including costs and expenses of processing such claims) from the 
estate of the railroad in reorganization on whose behalf such obliga-
tions are discharged or paid. In those cases in which claims for 
employees were susteined or settled prior to such date of conveyance. 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 667 
it shall be the obligation of the employees to seek satisfaction against 
the estate of the railroads in reorganization which were their former 
employers. 
"(b) ASSUMPTION OF PERSONAL INJURY CLAIMS.—All cases or claims 
by employees or their personal representatives for personal injuries 
or death against a railroad in reorganization in the Region arising 
prior to the date of conveyance of rail properties, pursuant to section 
303 of this Act, shall be assumed by the Corporation or an acquiring 45 use 743. 
railroad, as the case may be. The Corporation or the acquiring 
railroad shall process and pay any such claims that are sustained or 
settled, and shall be entitled to direct reimbursement from the 
Association pursuant to section 211(h) of this Act, to the extent that 45 use 721. 
such claims are determined by the Association or its successor 
authority to be the obligation of such railroad. Any liability of an 
estate of a railroad in reorganization which is assumed, processed, 
and paid, pursuant to this subsection, by the Corporation or an 
acquiring railroad shall remain the preconveyance obligation of the 
estate of 
such railroad for purposes of 
section 211(hXl) of this Act. The 
Corporation, an acquiring railroad, or the Association, as the case 
may be, shall be entitled to a direct claim as a current expense of 
administration, in accordance with the provisions of section 211(h) of 
this Act (other than paragraph (4XA) thereof), for reimbursement 
(including costs and expenses of processing such claims) from the 
estate of the railroad in reorganization on whose behalf such obliga-
tions were discharged or paid. 
"UMITATIONS ON UABILITY 
"SEC. 710. (a) FEDERAL GOVERNMENT.—The liability of the United 45 use 797i. 
States under an agreement entered into or benefit schedule pre-
scribed under section 701 of this Act or for payment of a termination 
allowance under section 702 of this Act shall be limited to amounts 
appropriated under section 713 of this Act. 
"(b) THE CORPORATION.—(1) The Corporation, Amtrak Commuter, 
and commuter authorities shall incur no liability under an agree-
ment entered into or benefit schedule prescribed under section 701 of 
this Act or for the payment of a termination allowance under section 
702 of this Act. 
"(2) Notwithstanding any other provision of 
law, until April 1,1984, 
the Corporation shall have no liability for employee protection in the 
event of a sale of any asset to a purchaser, and such purchaser shall 
assume the liability for the application of employee protection 
conditions imposed by the Commission for all employees adversely 
affected by such sale. 
"PREEMPTION 
"SEC. 711. NO State may adopt or continue in force any law, rule, 45 use 797j. 
regulation, order, or standard requiring the Corporation, the Na-
tional Railroad Passenger Corporation, or the Amtrak Commuter 
Services Corporation to employ any specified number of persons to 
perform any particular task, function, or operation, or requiring the 
Corporation to pay protective benefits to employees, and no State in 
the Region may adopt or continue in force any such law, rule, 
regulation, order, or standard with respect to any railroad in the 
Region. 
95 STAT. 668 
PUBLIC LAW 97-35—AUG. 13, 1981 
"FACTFINDING PANEL 
45 use 797k. 
"SEC. 712. (a) PURPOSE.—The Corporation shall enter into collective 
bargaining agreements with its employees which provide for the 
establishment of one or more advisory factfinding panels, chaired by 
a neutral expert in industrial relations, for purposes of recommend-
ing changes in operating practices and procedures which result in 
greater productivity to the maximum extent practicable. 
"(b) NATIONAL MEDIATION BOARD.—The National Mediation Board 
shall appoint public members to any panel established by an agree-
ment entered into under this subparagraph, and shall perform such 
functions contained in the agreement as are consistent with the 
45 use 151. 
duties of such Board under the Railway Labor Act. 
"(c) OTHER FUNCTIONS.—The factfinding panel may, before making 
its report to the parties, provide mediation, conciliation, and other 
assistance to the parties. 
"AUTHORIZATION OF APPROPRIATIONS 
45 use 797/. 
"SEC. 713. There are authorized to be appropriated to carry out the 
provisions of this title not to exceed $385,000,000. Of the amounts 
authorized to be appropriated under this section, not more than 
$115,000,000 shall be available solely for termination allowances 
under section 702 of this Act. Any amounts not expended for 
termination allowances under section 702 shall be available for 
purposes of section 701 of this Act. In addition to funds authorized 
under this section, any funds appropriated under section 5090)X1) of 
the Railroad Revitalization and Regulatory Reform Act of 1976 (45 
94 Stat. 1945. 
u.S.C. 829(b)(1)) for use under section 216(b)(3) of the Regional Rail 
94 Stat. 1946. 
Reorganization Act of 1973 shall be available to the Association, and 
45 use 726. 
^jjg Association shall make available to the Corporation as a grant 
such funds to accomplish the purposes of this title. Amounts appro-
priated under this section are authorized to remain available until 
expended. 
"ARBITRATION 
45 use 797m. 
"SEC. 714. Any dispute or controversy with respect to the interpre-
tation, application, or enforcement of the provisions of this title, 
except sections 703,704,708, and 713, or section 1144 of the Northeast 
Post, p. 669. 
Rail Service Act of 1981, and except those matters subject to judicial 
Post, p. 676. 
review under section 1152 of the Northeast Rail Service Act of 1981, 
which have not been resolved within 90 days, may be submitted by 
either party to an Adjustment Board for a final and binding decision 
45 use 153. 
thereon as provided in section 3 of the Railway Labor Act, in which 
event the burden of proof on all issues so presented shall be on the 
Corporation, or the Association, where appropriate.". 
(b) The table of contents of the Regional Rail Reorganization Act of 
1973 is amended by adding at the end thereof the following new 
items: 
"TITLE VII-PROTECTION OF EMPLOYEES 
"Sec. 701. Employee protection agreement. 
"Sec. 702. Termination allowance. 
"Sec. 703. Preferential hiring. 
"Sec. 704. Central register of railroad employment. 
"Sec. 705. Election and treatment of benefits. 
"Sec. 706. Assignment of work. 
"Sec. 707. Contracting out. 
"Sec. 708. New collective bargaining agreements. 
"Sec. 709. Employee and personal injury claims. 
"Sec. 710. Limitations on liability. 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 669 
"Sec. 711. Preemption. 
"Sec. 712. Factfinding panel. 
"Sec. 713. Authorization of appropriations. 
"Sec. 714. Arbitration.". 
REPEALS 
SEC. 1144. (aXD Title V of the Regional Rail Reorganization Act of 
1973 (45 U.S.C. 771 et seq.), and the items in the table of contents of 
such Act relating to such title V, are repealed. 
(2) Notwithstanding the repeal made by paragraph (1) of this 45USC771 
subsection— 
"ote. 
(A) benefits accrued as of the effective date of thii^ subsection as 
a result of events that occurred wholly prior to October 1, 1981, 
shall be disbursed except as provided in paragraph (3); and 
(B) any dispute or controversy regarding such benefits shall be 
determined under the terms of the law in effect on the date the 
claim arose. 
(3) Benefits shall not be disbursed under paragraph (2XA) unless 
the employee has filed a claim for such benefits within 90 days after 
the date of repeal; except that, with respect to a claim which is the 
subject of or is based upon any arbitration decision issued after the 
date of repeal, such 90-day period shall not commence until such 
arbitration decision is issued to the employee and the employee's 
representative; and no benefits shall be disbursed unless appropri-
ations for such purposes are or become available. 
(4) The provisions of this subsection shall take effect on the first day Effective date. 
of the first month beginning after the date of enactment of this 
subtitle. 
0)) Section 11 of the Milwaukee Railroad Restructuring Act (45 
U.S.C. 910) and section 107 of the Rock Island Transition and 
Employee Assistance Act (45 U.S.C. 1006) (relating to maintenance of 94 Stat. 402. 
certain employee lists) are repealed. 
PART 4—TERMS OF LABOR ASSUMPTION 
Subpart A—Passenger Employees 
TRANSFER OF PASSENGER SERVICE EMPLOYEES 
SEC. 1145. Title V of the Rail Passenger Service Act, as added by ^"te, p. 647. 
this subtitle, is amended by adding at the end thereof the following 
new sections: 
"SEC. 508. TRANSFER OF EMPLOYEES. 
45 USC 588. 
"(a) Not later than May 1,1982, Conrail, commuter authorities that 
intend to operate commuter service, and representatives of the 
various crafts or classes of employees of Conrail to be transferred to 
the commuter authorities shall enter into negotiations for an imple-
menting agreement in accordance with subsection (c) of this section. 
"(b) Not later than May 1, 1982, Conrail, Amtrak Commuter, and 
representatives of the various crafts or classes of employees of 
Conrail to be transferred to Amtrak Commuter shall enter into 
negotiations for an implementing agreement in accordance with 
subsection (c) of this section. 
"(c) Such negotiations shall— 
"(1) determine the number of employees to be transferred to 
Amtrak Commuter or a commuter authority; 
"(2) identify the specific employees of Conrail to whom Amtrak 
Commuter or a commuter authority offers employment; 
95 STAT. 670 
PUBLIC LAW 97-35—AUG. 13, 1981 
"(3) determine the procedure by which such employees may 
elect to accept employment with Amtrak Commuter or a com-
muter authority; 
"(4) determine the procedure for acceptance of such employees 
into employment with Amtrak Commuter or a commuter author-
ity; 
"(5) determine the procedure for determining the seniority of 
such employees in their respective crafts or classes in Amtrak 
Commuter or with a commuter authority which shall, to the 
extent possible, preserve their prior seniority rights; 
"(6) ensure that all such employees are transferred to Amtrak 
Commuter or a commuter authority no later than January 1, 
1983; and 
"(7) ensure the retention of prior seniority on Conrail of 
employees transferring to Amtrak Commuter or a commuter 
authority and determine the extent and manner in which such 
employees shall be permitted to exercise such seniority in order 
to (A) provide employees transferred to Amtrak Commuter or a 
commuter authority at least one opportunity every six-month 
period to exercise previous freight seniority rights, (B) maximize 
employment opportunities for employees on furlough, (C) main-
tain the ability to recall experienced employees, (D) ensure that 
under no circumstances are seniority rights exercised in any 
manner which results in any disruption of service or a position 
being filled which would otherwise not be filled under the terms 
of any crew consist, fireman manning, or other similar agree-
ment, and (E) ensure that Conrail has the right to furlough one 
employee in the same craft or class for each employee who 
returns from Amtrak Commuter or a commuter authority by 
exercising seniority. 
"(d)(1) If agreements with respect to the matters being negotiated 
pursuant to this section are not reached by August 1,1982, the parties 
to the negotiations shall, within an additional 5 days, select a neutral 
referee. If the parties are unable to agree upon the selection of such a 
referee, the National Mediation Board shall immediately appoint a 
referee. 
"(2) The referee shall commence hearings on the matters being 
negotiated pursuant to this section not later than 5 days after the 
date he is selected or appointed, and shall render a decision within 20 
days after the date of commencement of such hearings. All parties 
may participate in the hearings, but the referee shall have the only 
vote. 
"(3) The referee shall resolve and decide all matters in dispute with 
respect to the negotiation of the implementing agreement or agree-
ments. The referee's decision shall be final and binding to the same 
extent as an award of an adjustment board under section 3 of the 
45 use 153. 
Railway Labor Act, and shall constitute the implementing agreement 
or agreements between the parties. The National Mediation Board 
shall fix and pay the compensation of such referees. 
"(e) If Amtrak Commuter transfers commuter service and proper-
Ante, p. 650. 
ties to a commuter authority under section 506 of this title, Amtrak 
Commuter, the commuter authority, and representatives of the 
various crafts or classes of employees to be transferred to the 
commuter authority shall enter into an implementing agreement in 
accordance with subsection (c) of this section. If no agreement is 
reached by the date service and properties are transferred, the 
dispute shall be resolved by a neutral referee in accordance with 
subsection (d) of this section. 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 671 
"(£) Any employee of Conrail who is not offered employment with 
Amtrak Commuter or a commuter authority under agreements 
entered into under this section shall be provided employee protection 
under section 701 of the Regional Rail Reorganization Act of 1973 to Ante, p. 661. 
the same extent as if such employee had remained in the employ of 
Conrail. 
"SEC. 509. FACTFINDING PANEL. 
45 USC 589. 
"(a) Amtrak Commuter or a commuter authority and the repre-
sentatives of the various classes and crafts of employees to be 
transferred to Amtrak Commuter or such commuter authority shall, 
by May 1, 1982, establish a factfinding panel, chaired by a neutral 
expert in industrial relations, for purposes of recommending changes 
in operating practices and procedures which would result in greater 
productivity to the maximum extent practicable. 
"(b) The National Mediation Board shall appoint public members 
to the panel established under subsection (a) of this section. 
"(c) The factfinding panel shall, by July 1,1982, submit a report to 
the parties setting forth its recommendations for changes in operat-
ing practices and procedures. 
(d) The factfinding panel may provide mediation, conciliation, and 
other assistance to the parties. 
"SEC. 510. COLLECTIVE BARGAINING AGREEMENT FOR AMTRAK COMMUT- 45 USC 590. 
ER OR COMMUTER AUTHORITIES. 
"(a)(1) Not later than September 1,1982, the commuter authorities 
that intend to operate commuter service and the representatives of 
the various classes or crafts of employees to be transferred to such 
commuter authorities under agreements entered into under section 
508 of this Act shall enter into new collective bargaining agreements 
with respect to rates of pay, rules, and working conditions. 
"(2) Not later than September 1, 1982, Amtrak Commuter and the 
representatives of the various classes or crafts of employees to be 
transferred to Amtrak Commuter under agreements entered into 
under section 508 of this Act shall enter into new collective bargain-
ing agreements with respect to rates of pay, rules, and working 
conditions. 
"(b) If the parties have not reached an agreement by the date 
specified in subsection (a) of this section, any party to the dispute or 
the Governor of any State through which the service that is the 
subject of the dispute is operated may, within 15 days after such date, 
request the President to establish an emergency board pursuant to 
subsection (c) of this section. 
"(c) Within 15 days after the request under subsection (b) of this 
section, of a party or a Governor, the President shall create an 
emergency board. Such board shall conduct a public hearing on the 
dispute at which each party shall appear and provide testimony, and 
shall, within 30 days after the date of its creation, report on the 
dispute. 
(d) If no settlement in the dispute is reached within 10 days after 
the report of the emergency board, such board shall require the 
parties to the dispute to submit, within 5 days, final offers to the 
board for settlement of 
the dispute. 
"(e) Within 15 days after the submission of final offers, the 
emergency board shall submit a report to the President setting forth 
its selection of 
the most reasonable offer. 
"(f) If the emergency board selects a final offer submitted by a 
carrier and the employees of such carrier engage in any work 
95 STAT. 672 
PUBLIC LAW 97-35—AUG. 13, 1981 
stoppage arising out of the dispute, such employees shall not be 
eligible during the period of such work stoppage for benefits under 
45 use 367. 
the Railroad Unemployment Insurance Act. 
"(g) If the emergency board selects a final offer submitted by the 
employees and the carrier refuses to accept such offer, the carrier 
shsdl not participate in any benefits of any agreement between 
carriers which is designed to provide benefits to such carriers during 
a work stoppage. 
"(h) The provisions set forth in this section shall be the exclusive 
means for resolving any dispute relating to entering into an initisd 
collective bargaining agreement between Amtrak Commuter or a 
commuter authority, as the case may be, and representatives of the 
various classes or creifts of employees to be transferred to Amtrak 
Commuter or such commuter authority.". 
Subpart B—Freight Employees 
LABOR TRANSFER 
SEC. 1146. (a) Title IV of the Regional Rail Reorganization Act of 
Ante, p. 654. 
1973, as added by this subtitle, is amended by adding at the end 
thereof the following new sections: 
"LABOR TRANSFER AGREEMENTS 
45 use 769b. 
"SEC. 411. (a) IMPLEMENTING AGREEMENT.—Within 30 days after 
the date any freight transfer agreement is entered into under this 
title, any Class I or Class II railroad purchasing rail properties under 
such agreement, including any entity that attains such status on the 
transfer date, and the representatives of the various crafts or classes 
of employees of the Corporation to be transferred to such railroad or 
other entity shall commence implementing agreement negotiations. 
Such negotiations shall— 
"(1) determine the number of employees to be transferred to 
such railroad; 
"(2) identify the specific employees of the Corporation to whom 
such railroad or other entity offers employment; 
"(3) determine the procedure by which such employees may 
elect to accept emplo3n3ient with such railroad or other entity; 
"(4) determine the procedure for acceptance of such employees 
into emplojmient with such railroad or other entity; 
"(5) determine the procedure for determining the seniority of 
such employees in their respective crafts or classes in the system 
of such railroad or other entity, which shall, to the extent 
possible, preserve their prior freight service seniority rights; and 
"(6) ensure that all such employees are transferred to such 
railroad or other entity no later than 120 days after the date the 
transfer agreement is entered into under this title. 
"(b) DECISION OF REFEREE.—(1) If no agreement with respect to the 
matters being negotiated pursuant to subsection (a) is reached within 
30 days after the date such negotiations are commenced, the parties 
to the negotiations shall, within an additional 10 days, select a 
neutral referee. If the parties are unable to agree upon the selection 
of such a referee, the National Mediation Boeird shall promptly 
appoint a referee. 
(2) The referee shall commence hearings on the matters being 
negotiated pursuant to subsection (a) within 10 days after the date he 
is selected or appointed, and shall render a decision within 30 days 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 673 
after the date of commencement of such hearings. All parties may 
participate in the hearings, but the referee shall have the only vote. 
"(3) The referee shall resolve and decide all matters in dispute with 
respect to the negotiation of the implementing agreement or agree-
ments. The referee's decision shall be final and binding to the same 
extent as an award of an adjustment board under section 3 of the 
Railway Labor Act, and shall constitute the implementing agreement 45 use 153. 
or agreements between the parties. The National Mediation Board 
shall fix and pay the compensation of such referees. 
"LABOR CONDITIONS 
"SEC. 412. (a) NEW YORK DOCK.—Employees of 
the C!orporation who 45 use 769c. 
are transferred under this title shall be entitled to the labor protec-
tion benefits set forth in New York Dock Railway-C!ontrol-Brooklyn 
Eastern Terminal, 360 ICC 60 (1979), except as provided in subsection 
(b) of 
this section. 
"(b) ALTERNATIVES.—(1) If the entity to which such employees are 
transferred was a railroad under the provisions of subtitle IV of title 
49, United States Code, prior to the date of transfer, and the parties 49 use loioi 
are unable to reach a collective bargaining agreement under proce- ^
* *
^
^
" 
dures referred to in subsection (a), the collective bargaining agree-
ment in effect between such railroad and its employees shall govern. 
"(2) If the entity to which such employees are transferred was not a 
railroad under the provisions of subtitle IV of title 49, United States 
Code, prior to the date of transfer, and the parties are unable to reach 
a collective bargaining agreement under procedures referred to in 
subsection (a), the collective bargaining agreement in effect between 
the Corporation and its employees prior to the date of transfer shall 
govern. 
"(c) CLASS III EXEMPTION.—The provisions of this section shall not 
apply to any Class III carrier.". 
(b) The table of contents of the Regional Rail Reorganization Act of 
1973 is amended by striking out the items relating to title IV and 
inserting in lieu thereof the following new items: 
"TITLE IV—TRANSFER OF FREIGHT SERVICE 
"Sec. 401. Interest of United States. 
"Sec. 402. Debt and preferred stock. 
"Sec. 403. Profitability determinations. 
"Sec. 404. Failure to sell as entity. 
"Sec. 405. Transfer plan. 
"Sec. 406. Consolidation of agreements. 
"Sec. 407. Public comment and congressional notification. 
"Sec. 408. Performance under agreements; effect. 
"Sec. 409. Assignment. 
"Sec. 410. Subsidiaries. 
"Sec. 411. Labor transfer agreements. 
"Sec. 412. Labor conditions.". 
PART 5—UNITED STATES RAILWAY ASSOCIATION 
ORGANIZATION OF USRA 
SEC. 1147. Section 201 of the Regional Rail Reorganization Act of 
1973 (45 U.S.C. 711) is amended by striking out subsections (d) 
through (i), by redesignating subsections 0') and (k) as subsections (g) 
and (h), respectively, and by inserting after subsection (c) the follow-
ing new subsections: 
95 STAT. 674 
PUBLIC LAW 97-35—AUG. 13, 1981 
"(d) BOARD OF DIRECTORS.—(1) The Board of Directors of the 
Association shall consist of five individuals, as follows: 
"(A) The Chairman, who shall be the individual serving as 
Chairman on the effective date of this subsection, until the 
expiration of his term of office or his resignation, or his replace-
ment, who shall be selected by the outgoing Chairman and the 
other members of the Board. 
"(B) The Secretary of Transportation. 
"(C) The Comptroller General of the United States. 
"(D) The Chairman of the Commission. 
"(E) The Chairman of the Board of Directors of the 
Corporation. 
"(2) The Chairman may not have any employment or other direct 
financial relationship with any railroad. The Chairman shall receive 
$300 per diem when engaged in the actual performance of his duties 
plus reimbursement for travel, subsistence, and other necessary 
expenses incurred in the performance of such duties. 
(e) TERM OF OFFICE.—The term of office of the Chairman of the 
Board of Directors of the Association shall expire on December 31, 
1983. The Chairman may be reappointed and the term of the 
Chairman shall be 3 years. 
"(f) QUORUM.—Three members of the Board of Directors, or their 
representatives, shall constitute a quorum for the transaction of any 
function of the Association. 
"(g) The Board of Directors shall, on the effective date of this 
subsection, assume the functions previously performed by the Fi-
nance Committee. 
"(h) The members of the Board of Directors may send representa-
tives to meetings of such Board, and such representatives may 
exercise full powers of the members.". 
FUNCTIONS OF USRA 
SEC. 1148. (a) Section 202 of the Regional Rail Reorganization Act of 
1973 (45 U.S.C. 712) is amended— 
(1) by striking out subsections (a) and (b) and inserting in lieu 
thereof the following new subsection: 
"(a) GENERAL.—The Association is authorized to— 
"(1) monitor the financial performance of the Corporation; 
"(2) review whether the goals and requirements of this Act are 
met; 
"(3) purchase or otherwise acquire or receive, and hold and 
dispose of securities (whether debt or equity) of the Corporation 
45 use 726. 
under sections 216 and 217 of this Act and exercise all of the 
Ante, p. 653. 
rights, privileges, and powers of a holder of any such securities; 
"(4) purchase accounts receivable of the Corporation in accord-
ance with section 217 of this Act; and 
"(5) appoint and fix the compensation of such personnel as the 
Association considers necessary and appropriate."; and 
(2) by redesignating subsections (c) through (j) as subsections (b) 
through (i), respectively. 
(b) The section heading of section 202 of the Regional Rail Reorga-
nization Act of 1973 is amended by striking out "GENERAL POWERS 
AND DUTIES" and inserting in lieu thereof "FUNCTIONS". 
(c) The item relating to section 202 in the table of contents of the 
Regional Rail Reorganization Act of 1973 is amended to read as 
follows: 
"Sec. 202. Functions of the Association.". 
741. 
Ante, p. 654. 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 675 
ACCESS TO INFORMATION 
SEC. 1149. Section 203 of the Regional Rail Reorganization Act of 
1973 (45 U.S.C. 713) is amended to read as follows: 
"ACCESS TO INFORMATION 
"SEC. 203. The Corporation shall make available to the Association 
such information as the Association determines necessary for the 
Association to carry out its functions under this Act. The Association 
shall request from other parties which are affected by this Act 
information which will enable the Association to fulfill its functions 
under this Act.", 
UNITED STATES RAILWAY ASSOCIATION REPORTS 
SEC. 1150. (a) Title II of the Regional Rail Reorganization Act of 
1973, as amended by this subtitle, is amended further by adding at Ante, p. 652. 
the end thereof the following new sections: 
" U N I T E D STATES RAILWAY ASSOCIATION REPORTS 
"SEC. 218. (a) PROGRESS AND EVALUATION.—(1) The Association 45 use 728. 
shall prepare and submit to Congress periodic reports on the progress 
of the Secretary in carrying out the provisions of titles II, III, and IV 
of this Act 
45 use 711, 
"(2) Reports submitted under paragraph (1) of this subsection shall 
also include an evaluation of the performance of the Corporation in 
order to keep the Congress informed as to matters which may affect 
the quality of rail service in the Northeast and which may affect the 
security of Federal funds invested in the Corporation. 
"(b) TRANSFER AGREEMENTS.—(1) The Association shall prepare 
and submit to Congress a final report on the transfer agreements 
which the Secretary is required to transmit to Congress under section 
407 of the Regional Rail Reorganization Act of 1973. Such report shall Ante, p. 658. 
be submitted on the same date as the Secretary's transmittal of such 
agreements to Congress. 
"(2) The report submitted under paragraph (1) of this subsection 
shall include an evaluation of the effect of the transfer agreements on 
rail service in the Northeast, railroad employees, the economy of the 
Region, other railroads in the Northeast and elsewhere, and any 
other matter which the Association considers appropriate. Such 
report shall also include recommendations with respect to approval, 
disapproval, or modification of the transfer agreements. 
"ADVISORY BOARD 
"SEC. 219. Members of the Board of Directors of the Association 45 use 729. 
serving on the day before the effective date of the Northeast Rail 
Service Act of 1981, shall serve as an Advisory Board to the Associ- Ante, p. 643. 
ation. A member of the Advisory Board who is not otherwise an 
employee of the Federal Government shall receive reimbursement 
for travel, subsistence, and other necessary expenses incurred in the 
performance of such duties. The Chairman of the Association shall 
serve as Chairman of the Advisory Board. Any vacancy on the 
Advisory Board shall be filled by the Association with a representa-
tive from the group which had a representative in the vacant 
position.". 
95 STAT. 676 
PUBLIC LAW 97-35—AUG. 13, 1981 
(b) The table of contents of the Regional Rail Reorganization Act of 
1973, as amended by section 1140(b) of this subtitle, is amended 
further by inserting immediately ajfter the item relating to section 
217 the following new items: 
"Sec. 218. United States Railway Association reports. 
"Sec. 219. Advisory Board.". 
USRA AUTHORIZATION 
SEC. 1151. Section 214(c) of the Regional Rail Reorganization Act of 
94 Stat. 1965. 
1973 (45 U.S.C. 724(c)) is amended to read as follows: 
"(c) ASSOCIATION.—There are authorized to be appropriated to the 
Association for purposes of carrying out its administrative expenses 
under this Act not to exceed $13,000,000 for the fiscal year ending 
September 30, 1982, and not to exceed $4,000,000 for the fiscal year 
ending September 30,1983. Sums appropriated under this subsection 
are authorized to remain available until expended.". 
PART 6—MISCELLANEOUS PROVISIONS 
JUDICIAL REVIEW 
45 use 1105. 
SEC. 1152. (a) Notwithstanding any other provision of law, the 
special court shall have original and exclusive jurisdiction over any 
civil action— 
(1) for injunctive, declaratory, or other relief relating to the 
enforcement, operation, execution, or interpretation of any pro-
vision of or amendment made by this subtitle, or administrative 
action taken thereunder to the extent such action is subject to 
judicial review; 
(2) challenging the constitutionality of any provision of or 
amendment made by this subtitle; 
(3) to obtain, inspect, copy, or review any document in the 
possession or control of the Secretary, Conrail, the United States 
Railway Association, or Amtrak that would be discoverable in 
litigation under any provision of or amendment made by this 
subtitle; or 
(4) seeking judgment upon any claim against the United States 
founded upon the Constitution and resulting from the operation 
of any provision of or amendment made by this subtitle. 
(b) A judgment of the special court in any action referred to in this 
section shall be reviewable only upon petition for a writ of certiorari 
to the Supreme Court of the United States, except that any order or 
judgment enjoining the enforcement, or declaring or determining the 
unconstitutionality or invalidity, of any provision of this subtitle 
shall be reviewable by direct appeal to the Supreme Court of the 
United States. Such review is exclusive and any petition or appeal 
shall be filed not more than 20 days after entry of such order or 
judgment. 
(c) Administrative action under the provisions of or amendments 
made by this subtitle which is subject to review shall be upheld unless 
such action is found to be unlawful under standards established for 
review of informal agency action under paragraphs (2) (A), (B), (C), 
and (D) of section 706, title 5, United States Code. The requirements of 
this subtitle shall constitute the exclusive procedures required by law 
for such administrative action. 
(d) If the volume of civil actions under subsection (a) of this section 
so requires, the United States Railway Association shall apply to the 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 677 
judicial panel on multi-district litigation authorized by section 1407 of 
title 28, United States Code, for the assignment of additional judges to 
the special court. Within 30 days after the date of such application, 
the panel shall assign to the special court such additional judges as 
may be necessary to exercise the jurisdiction described in subsection 
(a) of this section. 
TRANSFER TAXES AND FEES; RECORDATION 
SEC. 1153. (aXD AH transfers or conveyances of any interest in rail 45 U
S
C 1106. 
property (whether real, personal, or mixed) which are made under 
any provision of or amendment made by this subtitle shall be exempt 
from any taxes, imposts, or levies now or hereby imposed, by the 
United States or by any State or any political subdivision of a State, 
on or in connection with such transfers or conveyances or on the 
recording of deeds, bills of sale, liens, encumbrances, easements, or 
other instruments evidencing, effectuating, or incident to any such 
transfers or conveyances, whether imposed on the transferor or on 
the transferee. Such transferors and transferees shall be entitled to 
record any such deeds, bills of sale, liens, encumberances, easements, 
or other instruments, and to record the release or removal of any pre-
existing liens or encumbrances of record with respect to properties so 
transferred or conveyed, upon payment of any appropriate and 
generally applicable charges to compensate for the cost of the service 
performed. 
(2) This section shall not apply to Federal income tax laws. 
(b) Transfer of designated real property (including any interest in 
real property) authorized by the amendments made by part 2 of this 
subtitle shall have the same effect for purposes of rights and prior-
ities with respect to such property as recordation on the transfer date 
of appropriate deeds, or other appropriate instruments, in offices 
appointed under State law for such recordation, except that acquiring 
rail carriers and other entities shall proffer such deeds or other 
instruments for recordation within 36 months after the transfer date 
as a condition of preserving such rights and priorities beyond the 
expiration of that period. Conrail shall cooperate in effecting the 
timely preparation, execution, and proffering for recordation of such 
deeds and other instruments. 
SATISFACTION OF CLAIMS 
SEC. 1154. No distribution of the assets of Conrail shall be made 45 U
S
C 1107. 
with respect to any claims of the United States, including the 
securities issued pursuant to section 216 of the Regional Rail Reorga-
nization Act of 1973 (45 U.S.C. 726), until all other valid claims, 
including loss, damage, overcharge claims, and lease claims, against 
Conrail have been satisfied, or provision has been made for satisfying 
such claims. 
EXPEDITED SUPPLEMENTAL TRANSACTIONS 
SEC. 1155. (a) Section 305(f) of the Regional Rail Reorganization Act 
of 1973 (45 U.S.C. 745(f)) is amended— 
(1) by striking out paragraph (2) and inserting in lieu thereof 
the following: 
"(2XA) Within 10 days after the effective date of the Northeast Rail 
Service Act of 1981, the Secretary shall initiate discussions and -^nte, p. 643. 
negotiations for the transfer of some or all of the Corporation's rail 
95 STAT. 678 
PUBLIC LAW 97-35-AUG. 13, 1981 
properties and freight service obligations in the States of Connecticut 
and Rhode Island to one or more parties under a plan which provides 
for continued rail freight service on all lines operated by the Corpora-
Ante, p. 643. 
tion on the effective date of the Northeast Rail Service Act of 1981 for 
at least four years. 
"(B) Within 120 days after the effective date of the Northeast Rail 
Service Act of 1981, the Secretary shall petition the special court for 
an order to transfer all of the Corporation's rail properties and 
freight service obligations in the States of Connecticut and Rhode 
Island to one or more railroads in the Region— 
"(i) which have under subparagraph (A) of this paragraph 
completed negotiations and submitted to the Secretary a pro-
posal to assume all of the freight operations and freight service 
obligations of the Corporation in such States on a financially self-
sustaining basis for a period of at least four years; or 
"(ii) which have developed a proposal to assume all of the 
freight operations and freight service obligations of the Corpora-
tion in such States under an agreement by and between the 
Corporation and such railroad or railroads; or 
"(iii) which have, prior to May 1,1981, submitted a proposal to 
the Secretary for such a transfer. 
For the purpose of this section, an order to transfer may include the 
Corporation if the Corporation agrees to maintain service over lines 
retained by the Corporation for four years. 
"(C) To permit efficient and effective rail operations consistent 
with the public interest, as a part of any transfer under paragraph 
(2)(B) of this subsection, the Secretary shall promote the transfer of 
additional non-mainline Corporation properties in adjoining States 
that connect with properties that are the subject of such transfer. 
"(D) The special court shall determine a fair and equitable price for 
the rail properties to be transferred under this subsection, and shall, 
unless the parties otherwise agree, establish divisions of joint rates 
for through routes over such properties which are fair and equitable 
to the parties. The special court shall establish a method to ensure 
that such divisions are promptly paid. 
"(E) Notwithstanding any other provision of law or agreement in 
effect on May 1,1981, the special court shall require that the railroad 
or railroads to which properties are to be transferred under this 
subsection assume all charges payable by the Corporation to Amtrak 
for the carriage of property by rail over those portions of the 
Northeast Corridor in Connecticut and Rhode Island. If the Corpora-
tion operates any rail freight service over those portions of the 
Northeast Corridor in Connecticut and Rhode Island after the date of 
such transfer, the Corporation shall pay Amtrak any compensation 
that may be separately agreed upon by the Corporation and Amtrak, 
and the railroad or railroads to which properties are transferred 
under this subsection shall not be obligated to pay any compensation 
owed by the Corporation to Amtrak for such post-transfer operations 
by the Corporation."; and 
45 use 745. 
(2) by striking out paragraph (4) and inserting in lieu thereof 
the following new paragraph: 
"(4XA) Any employee who was protected by the compensatory 
45 use 771. 
provisions of title V of this Act immediately prior to the effective date 
of the Northeast Rail Service Act of 1981, and who is deprived of 
employment as a result of the transfer of rail properties under this 
Ante, p. 661. 
subsection shall be eligible for benefits under section 701 of this Act. 
"Employee 
"(B) As used in this paragraph, 'employee deprived of employment' 
deprived of 
means any employee who is unable to secure employment through 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 679 
the normal exercise of seniority rights, but does not include any 
employee who refuses an offer of employment with a railroad 
acquiring properties under this subsection.". 
(b) Section 305(d) of the Regional Rail Reorganization Act of 1973 
(45 U.S.C. 745(d)) is amended by striking out paragraph (7). 
(c) Section 305 of the Regional Rail Reorganization Act of 1973 (45 
U.S.C. 745), as amended by this section, is further amended by adding 
after subsection (f) the following new subsection: 
"(g)(1) Within 20 days after the effective date of the Northeast Rail 
Service Act of 1981, the Secretary shall initiate discussions and Ante, p. 643. 
negotiations for the expedited transfer of all properties and freight 
service obligations of tne Corporation with respect to the following 
lines: Canaan, Connecticut, to Pittsfield, Massachusetts; North 
Adams Junction, Massachusetts, to North Adams, Massachusetts; 
Hazardville, Connecticut, to Springfield, Massachusetts; Westfield, 
Massachusetts, to Easthampton, Massachusetts; Westfield, Meissa-
chusetts, to Holyoke, Massachusetts. 
"(2) Within 120 days after the effective date of the Northeast Rail 
Service Act of 1981, the Secretary shall transfer, provided a qualified 
purchaser offers to purchase, the Corporation's properties and freight 
service obligations described in paragraph (1) of this subsection to 
another railroad or railroads in the Region which are determined by 
the Secretary to be qualified. A qualified purchaser is defined as a 
railroad financially self-sustaining which guarantees continuous 
service for at least four years. 
"(3) The Secretary shall determine a fair and equitable price for the 
rail properties to be transferred under this subsection, and shall, 
unless the parties otherwise agree, establish divisions of joint rates 
for through routes over such properties which are fair and equitable 
to the parties. 
"(4) The Secretary shall determine fair and equitable terms for the 
provision of such trackage rights, on segments of the Corporation's 
lines not to exceed 5 miles per line transferred, to acquiring carriers 
as may be necessary to operate such transferred lines in an efficient 
manner.". 
ABANDONMENTS 
SEC. 1156. (a) Title III of the Regional Rail Reorganization Act of 
1973 is amended by adding at the end thereof the following new 
section: 
"ABANDONMENTS 
"SEC. 308. (a) GENERAL.—The Corporation may, in accordance with 45 use 748. 
this section, file with the Commission an application for a certificate 
of abandonment for any line which is part of the system of the 
Corporation. Any such application shall be governed by this section 
and shall not, except as specifically provided in this section, be 
subject to the provisions of chapter 109 of title 49, United States Code. 
"Ot)) APPUCATIONS FOR ABANDONMENT.—Any application for aban-
donment that is filed by the Corporation under this section before 
December 1,1981, shall be granted by the Commission within 90 days 
after the date such application is filed unless, within such 90-day 
period, an offer of financial assistance is made in accordance with 
subsection (d) of this section with respect to the line to be abandoned. 
"(c) NOTICE OF INSUFFICIENT REVENUES.—(1) The Corporation may, 
prior to November 1, 1983, file with the Commission a notice of 
insufficient revenues for any line which is part of the system of the 
Corporation. 
-194 O—82 
45:QL3 
Register. 
95 STAT. 680 
PUBLIC LAW 97-35—AUG. 13, 1981 
"(2) At any time after the 90-day period beginning with the filing of 
a notice of insufficient revenues for a line, the Corporation may file 
an application for abandonment for such line. An application for 
abandonment that is filed by the Corporation under this subsection 
for a line for which a notice of insufficient revenues was filed under 
paragraph (1) shall be granted by the Commission within 90 days 
after the date such application is filed unless, within such 90-day 
period, an offer of financial assistance is made in accordance with 
subsection (d) of this section with respect to such line. 
"(d) OFFERS OF FINANCIAL ASSISTANCE.—(1) The provisions of sec-
tion 10905 (d)-(f) of title 49, United States Code (including the timing 
requirements of subsection (d) thereof), shall apply to any offer of 
financial assistance under subsection (b) or (c) of this section. 
"(2) The Corporation shall provide any person that intends to make 
an offer of financial assistance under subsection O
t
>
) or (c) of this 
section with such information as the Commission may require. 
Publication in 
"(e) LIQUIDATION.—(1) If any application for abandonment is 
R^fffJt^r 
granted under subsection (b) of this section, the Commission shall, £is 
soon as practicable, appraise the net liquidation value of the line to be 
abandoned, and shall publish notice of such appraisal in the Federal 
Register. 
"(2) Appraisals made under paragraph (1) shall not be appealable. 
"(3)(A) If, within 120 days after the date on which an appraisal is 
published in the Federal Register under paragraph (1), the Corpora-
tion receives a bona fide offer for the sale, for 75 percent of the 
amount at which the liquidation value of such line was appraised by 
the Commission, of the line to be abandoned, the Corporation shall 
sell such line and the Commission shall, unless the parties otherwise 
agree, establish an equitable division of 
joint rates for through routes 
over such lines. 
"(B) If the Corporation receives no bona fide offer under subpara-
graph (A), within such 120-day period, the Corporation may abandon 
or dispose of the line as it chooses, except that the Corporation may 
not dismantle bridges, or other structures (not including rail, signals, 
and other rail facilities) for 120 days thereafter. The Secretary may 
require that bridges or other structures (not including rail, signals, 
and other rail facilities), not be dismantled for an additional 8 months 
if he assumes all liability of any sort related to such property. 
"(4) If the purchaser under paragraph (3)(A) of this subsection of 
any line of the Corporation abandons such line within five years after 
such purchase, the proceeds of any track liquidations shall be paid 
into the general fund of the Treasury of the United States. 
"(f) EMPLOYEE PROTECTION.—The provisions of section 10903(b)(2) of 
title 49, United States Code, shall not apply to any abandonment 
granted under this section. Any employee who was protected by the 
45 use 771. 
compensatory provisions of title V of this Act immediately prior to 
Ante, p. 643. 
the effective date of the Northeast Rail Service Act of 1981, who is 
deprived of employment by such an abandonment shall be eligible for 
employee protection under section 701 of this Act.". 
(b) The table of contents of the Regional Rail Reorganization Act of 
1973, as amended by this subtitle, is further amended by inserting 
immediately after the item relating to section 307 the following new 
item: 
"Sec. 308. Abandonments." 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 681 
AMENDMENT TO THE RAILWAY LABOR ACT 
SEC. 1157. The Railway Labor Act is amended by inserting immedi-
ately after section 9 the following new section: 
"SPECIAL PROCEDURE FOR COMMUTER SERVICE 
"SEC. 9A. (a) Except as provided in section 510(h) of the Rail 45 USC I59a. 
Passenger Service Act, the provisions of this section shall apply to any Ante, p. 671. 
dispute subject to this Act between a publicly funded and publicly 
operated carrier providing rail commuter service (including the 
Amtrak Commuter Services Corporation) and its employees. 
"(b) If a dispute between the parties described in subsection (a) is 
not adjusted under the foregoing provisions of this Act and the 
President does not, under section 10 of this Act, create an emergency 45 USC 160. 
board to investigate and report on such dispute, then any party to the 
dispute or the Governor of any State through which the service that 
is the subject of the dispute is operated may request the President to 
establish such an emergency board. 
"(cXD Upon the request of a party or a Governor under subsection 
O
t
>
)
, the President shall create an emergency board to investigate and 
report on the dispute in accordance with section 10 of this Act. For 
purposes of this subsection, the period during which no change, 
except by agreement, shall be made by the parties in the conditions 
out of which the dispute arose shall be 120 days from the date of the 
creation of such emergency board. 
"(2) If the President, in his discretion, creates a board to investigate 
and report on a dispute between the parties described in subsection 
(A), the provisions of this section shall apply to the same extent as if 
such board had been created pursuant to paragraph (1) of this 
subsection. 
"(d) Within 60 days after the creation of an emergency board under 
this section, if there has been no settlement between the parties, the 
National Mediation Board shall conduct a public hearing on the 
dispute at which each party shall appear and provide testimony 
setting forth the reasons it has not accepted the recommendations of 
the emergency board for settlement of the dispute. 
"(e) If no settlement in the dispute is reached at the end of the 120-
day period beginning on the date of the creation of the emergency 
board, any party to the dispute or the Governor of any State through 
which the service that is the subject of the dispute is operated may 
request the President to establish another emergency board, in which 
case the President shall establish such emergency board. 
"(f) Within 30 days after creation of a board under subsection (e), 
the parties to the dispute shall submit to the board final offers for 
settlement of the dispute. 
"(g) Within 30 days after the submission of final offers under 
subsection (f), the emergency board shall submit a report to the 
President setting forth its selection of the most reasonable offer. 
"(h) From the time a request to establish a board is made under 
subsection (e) until 60 days after such board makes its report under 
subsection (g), no change, except by agreement, shall be made by the 
parties in the conditions out of which the dispute arose. 
"(i) If the emergency board selects the final offer submitted by the 
carrier and, after the expiration of the 60-day period described in 
subsection (h), the employees of such carrier engage in any work 
stoppage arising out of the dispute, such employees shall not be 
95 STAT. 682 
PUBLIC LAW 97-35—AUG. 13, 1981 
45 use 1108. 
45 use 151. 
eligible during the period of such work stoppage for benefits under 
the Railroad Unemployment Insurance Act. 
"(j) If the emergency boeird selects the final offer submitted by the 
employees and, after the expiration of the 60-day period described in 
subsection (h), the carrier refuses to accept the final offer submitted 
by the employees and the employees of such carrier engage in any 
work stoppage arising out of the dispute, the carrier shall not 
participate in any benefits of any agreement between carriers which 
is designed to provide benefits to such carriers during a work 
stoppage.". 
CONCERTED ECONOMIC ACTION 
SEC. 1158. (a) Any person engaging in concerted economic action 
over disputes with Amtrak Commuter or any commuter authority 
shall not be entitled to engage in any strike against, or otherwise to 
induce any employee of, Conrail, where an effect thereof is to 
interfere with rail freight service provided by Conrail. 
(b) Any person engaging in concerted economic action over disputes 
arising out of freight operations provided by Conrail shall not be 
entitled to engage in any strike against, or otherwise to induce any 
employee of, Amtrak Commuter or any commuter authority, where 
an effect thereof is to interfere with rail passenger service. 
(c) Any concerted action in violation of this section shall be deemed 
to be a violation of the Railway Labor Act. 
45 u s e 1109. 
49 u s e 10701 et 
seq. 
45 u s e 771 note. 
45 u s e 771. 
CONSTRUCTION AND EFFECT OF CERTAIN PROVISIONS 
SEC. 1159. Any cost reductions resulting from the provisions of or 
the amendments made by this subtitle shall not be used to limit the 
maximum level of any rate charged by Conrail for the provision of 
rail service, to limit the amount of any increase in any such rate 
(including rates maintained jointly by Conrail and other rail carri-
ers), or to limit a surcharge or cancellation otherwise lawful under 
chapter 107 of title 49, United States Code. 
LABOR AUTHORIZATION 
SEC. 1160. There are authorized to be appropriated to the Secretary 
of Transportation for the fiscal year ending September 30, 1982, not 
to exceed $25,000,000 for the payment of allowances, expenses, and 
costs that protected employees are entitled to receive under any 
provision of title V of the Regional Rail Reorganization Act of 1973 as 
in effect on the day before the effective date of this subtitle. 
UGHT DENSITY RAIL SERVICE 
45 use 1110. 
SEC. 1161. (a) At any time after the effective date of this subsection, 
the Secretary may enter negotiations for the transfer o
f
— 
(1) any rail lines of Conrail which are the subject of an 
abandonment proceeding pending before the Commission other 
than an abandonment proceeding subject to section 308 of the 
Ante, p. 679. 
Regional Rail Reorganization Act of 1973; and 
(2) any rail lines of Conrail which are designated in Category I 
under Commission regulation. The Secretary may transfer any 
such lines in accordance with the terms of an agreement entered 
into by the Secretary under this subsection. 
(bXD All reasonable expenses which are incurred in negotiations 
for the purchase of rail properties by a railroad which subsequently 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 683 
purchases such properties in accordance with the provisions of this 
section shall be credited against the total purchase price for such 
properties if such purchaser entered into such negotiations in good 
faith within six months after the effective date of this section. 
(2) Expenses for labor protection, for a maximum of a twelve-month 
period, incurred by a purchaser of rail properties in accordance with 
the provisions of this section as a result of protective conditions 
imposed pursuant to section 412 of the Regional Rail Reorganization 
Act of 1973 shall be credited against the total purchase price for such Ante, p. 673. 
properties if such purchaser entered into such negotiations in good 
faith within six months after the effective date of this section. 
(c) As a part of each transfer negotiation authorized and directed by 
section 405 of the Regional Rail Reorganization Act of 1973, the Ante, p. 657. 
Secretary shall promote the inclusion of those additional Conrail 
lines that connect with, and only with, the line or lines that are the 
subject of particular transfer negotiations (hereinafter in this section 
referred to as "associated branch lines"), and which are financially 
viable. 
(d) In the event that a transfer agreement granted final approval by 
the Secretary under section 1142 of this subtitle does not provide for 
the continuation of rail service on an associated branch line, or other 
Conrail line not designated for transfer, that an affected State, 
shipper, or connecting railroad (other than a Class I or II railroad) 
concludes is essential, that State, shipper, or connecting railroad, or 
any combination of such States, shippers, or railroads, may immedi-
ately enter negotiations with the Secretary for the transfer of 
identified associated branch lines or other Conrail line not designated 
for transfer without rail-common carrier status under the require-
ments of subtitle IV of title 49, United States Code, to an entity 
designated by the State, shipper, railroad, or combination thereof, for 
continued operation free of the common carrier obligations and other 
requirements, except those provided for in subsection (f), of subtitle 
IV of title 49, United States Code. Conrail shall convey an associated 
branch line or other Conrail line not designated for transfer in 
accordance with the terms of an agreement entered into by the 
Secretary under this subsection. 
(e) The Secretary may transfer lines in accordance with the 
provisions of this section for nominal consideration, if justified by the 
public benefit associated with continued rail service. 
(f) The Commission shall establish fair and equitable divisions of 
revenues on joint rates until a final order is issued. 
49 u s e 10101 et 
seq. 
REHABILITATION AND IMPROVEMENT FINANCING 
SEC. 1162. (a) Section 505(bX2) of the Railroad Revitalization and 
Regulatory Reform Act of 1976 (45 U.S.C. 825(b)(2)) is amended— 
(1) in the third sentence, by striking "When making" and all 
that follows through "available for railroad financing, and" and 
inserting in lieu thereof the following: "When making such a 
determination, the Secretary shall evaluate and consider in the 
following order of priority (A) the availability of funds from other 
sources at a cost which is reasonable under principles of prudent 
railroad financial management in light of the railroad's pro-
jected rate of return for the project to be financed and the 
railroad's rate of return on total capital (represented by the ratio 
which such carrier's net income, including interest on a long-
term debt, bore to the sum of average shareholder's equity, long-
term debt, and accumulated deferred income tax for fiscal year 
95 STAT. 684 
PUBLIC LAW 97-35—AUG. 13, 1981 
1975) as determined in accordance with the uniform system of 
accounts promulgated by the Commission, (B) the interest of the 
public in supplementing such other funds as may be available in 
order to increase the total amount of funds available for railroad 
financing, and"; and 
(2) by adding at the end thereof the following: "The Secretary 
shall assign the highest priorities to those meritorious applica-
tions of carriers operating under section 77 of the Bankruptcy 
Act unable to generate such funds in the private sector and to 
those meritorious applications for funds to provide for the 
restructuring of rail freight facilities and systems which handle 
more than two million rail cars annually, which are located in 
more than one State, and which are separated by the Mississippi 
River.". 
(b) Section 501(8) of the Railroad Revitalization and Regulatory 
Reform Act of 1976 (45 U.S.C. 821(8)) is amended to read as follows: 
"(8) 'restructuring' means (A) any activity (including a consoli-
dation, coordination, merger or abandonment) which (i) involves 
rehabilitation, or improvement of a facility or the transfer of a 
facility, and (ii) improves the long-term profitability of any 
railroad freight system through the achievement of higher aver-
age traffic densities or improved asset utilization; or (B) the 
transfer from the Corporation to any railroad or financially 
responsible person (as defined in section 10910(a)(1) of title 49, 
United States Code) for common carrier rail service of ownership 
or operating rights on any rail line owned or operated by the 
Corporation where the Secretary determines that such acquisi-
tion will provide needed transportation benefits, and that such 
line will not require further Federal subsidy;". 
(c) Section 505(aXl) of the Rgiilroad Revitalization and Regulatory 
Reform Act of 1976 (45 U.S.C. 825(aXl)) is amended by inserting 
immediately after "railroad" the following: "(or any financially 
responsible person, as defined in section 10910(a)(1) of title 49, United 
States Code, who acquires from the Corporation for common carrier 
rail service any rail line owned by the Corporation on the effective 
Ante, p. 643. 
date of the Northeast Rail Service Act of 1981)". 
(d) Section 505(b)(2) of the Railroad Revitalization and Regulatory 
Reform Act of 1976 (45 U.S.C. 825(b)(2)) is amended by amending 
clause (C) to read as follows: "(C) the public benefits, including any 
significant railroad restructuring, to be realized from the project to 
be financed in relation to the public costs of such financing and 
whether the proposed project will return public benefits sufficient to 
justify such public costs or, where the application relates to a rail line 
owned or operated by the Corporation immediately prior to its 
acquisition by a railroad or financially responsible person (as defined 
in section 10910(a)(1) of title 49, United States Code) for common 
carrier rail service, whether the financial assistance applied for 
under this section will further the public interest in transferring rail 
lines from the Corporation to the private sector, and avoid the need 
for any further Federal subsidy.". 
(e) Section 509(b) of the Railroad Revitalization and Regulatory 
Reform Act of 1976 (45 U.S.C. 829(b)) is amended by redesignating 
paragraph (3) as paragraph (4) and by inserting after paragraph (2) 
the following: 
"(3) Not more than 50 percent of the funds received by the 
Secretary from amounts appropriated under subsection (a) of this 
section shall be reserved to provide rehabilitation and improvement 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 685 
assistance for facilities transferred from the Corporation after the 
effective date of the Northeast Rail Service Act of 1981.". 
^«'^' P 643. 
(f) Section 509(b)(4) of the Railroad Revitalization and Regulatory 
Reform Act of 1976, as redesignated by subsection (e) of this section, is 45 use 829. 
amended by striking "and (2)" and inserting in lieu thereof ", (2) and 
(3)". 
NORTHEAST CORRIDOR COST DISPUTE 
SEC. 1163. (a)(1) Within 120 days after the effective date of this 45 use nil. 
subtitle, the Commission shall determine an appropriate costing 
methodology for compensation to Amtrak for the right-of-way related 
costs for the operation of commuter rail passenger service over the 
Northeast Corridor and other properties owned by Amtrak, unless 
Conrail, Amtrak, and affected commuter authorities have otherwise 
agreed on such a methodology by that date. In making its determina-
tion, the Commission shall consider all relevant factors, including the 
standards of sections 205(d) and 304(c) of the Regional Rail Reorgani-
zation Act of 1973, section 701(a)(6) of the Railroad Revitalization and 45 use 715, 744. 
Regulatory Reform Act of 1976, and section 402(a) of the Rail 45 use 851. 
Passenger Service Act. 
45 use 562. 
(2) Within 120 days after the effective date of this subtitle, the 
Commission shall determine a fair and equitable costing methodology 
for compensation to Amtrak by Conrail for the right-of-way related 
costs for the operation of rail freight service over the Northeast 
Corridor, unless Conrail and Amtrak have otherwise agreed on such 
a methodology by that date. In making its determination, the Com-
mission shall take into consideration the industry-wide average 
compensation for freight trackage rights and any additional costs 
associated with high-speed service provided over the Northeast 
Corridor. 
(b) Any determination by the Commission under this section shall 
be effective on the date of such determination, and any agreement of 
the parties under this section shall be effective on the date specified 
in such agreement. Any such determination or agreement shall not 
apply to any compensation paid to Amtrak prior to the date of such 
determination or the date so specified, as the case may be, for the 
right-of-way related costs described in subsection (a) of this section. 
(c) Nothing in this section shall preclude parties from entering into 
an agreement, after the determination of the Commission or their 
initial agreement under this section, with respect to the right-of-way 
related costs described in subsection (a) of this section. 
(d) Any determination by the Commission under this section shall 
be final and shall not be reviewable in any court. 
COMMISSION PROCEEDINGS 
SEC. 1164. (a) Notwithstanding any other provision of subtitle IV of 45 use 1112. 
title 49, United States Code, in any proceeding before the Commission 
under section 11344 or 11345 of such subtitle involving a railroad in 
the Region, as defined in section 102 of the Regional Rail Reorganiza-
tion Act of 1973, which was in a bankruptcy proceeding under section 45 use 702. 
77 of the Bankruptcy Act on November 4,1979, the Commission shall, 
with or without a hearing, issue a final decision within a period not to 
exceed 180 days after receipt of an application under either such 
section. 
(b) Notwithstanding any other provision of subtitle IV of title 49, 
United States Code, in any proceeding before the Commission under 49 use lOioi et 
seq. 
95 STAT. 686 
PUBLIC LAW 97-35—AUG. 13, 1981 
section 11344 or 11345 of such subtitle involving a profitable railroad 
in the Region, as defined in section 102 of the Regional Rail Reorgani-
45 use 702,721. zation Act of 1973, which received a loan under section 211(a) of such 
Act, the Commission shall, with or without a hearing, issue a final 
decision within a period not to exceed 180 days after receipt of an 
application under either such section. 
(c)(1) If the Secretary determines under subsection (b) that there is 
an agreement between a profitable railroad in the Region (as defined 
in section 102 of the Regional Rail Reorganization Act of 1973) which 
received a loan under section 211(a) of such Act and a prospective 
purchaser for the sale of such railroad, the Secretary shall limit the 
interest of the United States in any debt of such a railroad to an 
interest which attaches to such debt in the event of bankruptcy, 
substantial sale, or liquidation of the assets of the railroad. The 
Secretary shall substitute for the evidence of such debt contingency 
notes conforming to the limited terms set forth in this subsection. 
(2) If the interest of the United States is limited under paragraph 
(1), any new debt issued by such a railroad subsequent to the issuance 
of the debt described in paragraph (1) shall have higher priority in the 
event of bankruptcy, liquidation, or abandonment of the assets of 
Conrail than the debt described in such paragraph. 
INTERCITY PASSENGER SERVICE EMPLOYEES 
45 use 1113. 
SEC. 1165. After January 1, 1983, Conrail shall be relieved of the 
responsibility to provide crews for intercity passenger service on the 
Northeast Corridor. Amtrak, Amtrak Commuter, and Conrail, and 
the employees with seniority in both freight and passenger service 
shall commence negotiations not later than 120 days after the date of 
the enactment for the right of such employees to move from one 
service to the other once each six-month period. Such agreement 
shall ensure that Conrail, Amtrak, and Amtrak Commuter have the 
right to furlough one employee in the same class or craft for each 
employee who returns through the exercise of seniority rights. If 
agreement is not reached within 360 days, such matter shall be 
submitted to binding arbitration. 
TRACKAGE RIGHTS 
45 use 1114. 
SEC. 1166. At any time after the effective date of this subtitle, the 
Commission may approve, under the provisions of existing law, the 
grant of trackage rights to any terminal railroad operating primarily 
in the city of Philadelphia over the individual lines of Conrail located 
in the city and port of Philadelphia. 
TECHNICAL AMENDMENTS 
SEC. 1167. (a) Section 303(c) of the Regional Rail Reorganization Act 
of 1973 (45 U.S.C. 743(c)) is amended by striking the following 
wherever they appear: "securities,"; "securities and"; "at least one 
share of series B preferred stock and"; "other securities of the 
Corporation or"; and "securities or". 
45 use 1115. 
(b) For the purpose of computing the amount for which certificates 
of value shall be redeemable under section 306 of the Regional Rail 
Reorganization Act of 1973 (45 U.S.C. 746), the series B preferred 
stock and the common stock conveyed to the Secretary under section 
1154 of this subtitle shall be deemed to be without fair market value 
unless in a proceeding brought under section 1152(a)(4) of this subtitle 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 687 
the special court shall have determined that such securities had a 
value and shall have entered a judgment against the United States 
for that value. In such an event, the securities shall for purposes of 
section 306 of the Regional Rail Reorganization Act of 1973 (45 U.S.C. 
746) be deemed to have that value found by the special court. 
(cXD The clerk of the special court shall convey to the Secretary 
within 10 days after the effective date of this subtitle the series B 
preferred stock and the common stock of Conrail which are then on 
deposit with the special court pursuant to section 303 of the Regional 
Rail Reorganization Act of 1973 (45 U.S.C. 743). 
(2) The Secretary is authorized to hold and to exercise all rights 
that pertain to the Conrail securities conveyed under paragraph (1) of 
this subsection, and any other securities of Conrail that have been or 
may be conveyed to the Secretary under any agreement or pursuant 
to the terms of part 5 of this subtitle or the terms of any other law. ^"^e, p. 673. 
APPLICABILITY OF OTHER LAWS 
SEC. 1168. (a) The provisions of the chapters 5 and 7 of title 5 of the 45 use 1116. 
United States Code (popularly known as the Administrative Proce- 51JSC 500 et seq., 
dure Act and including provisions popularly known as the Govern- 
^
* *^^' 
ment in the Sunshine Act), the Federal Advisory Committee Act, 5 use app. 
section 102(2)(C) of the National Environmental Policy Act of 1969, 42 use 4332. 
the National Historic Preservation Act of 1966, and section 4(f) of the 1
6 use 470 note. 
Department of Transportation Act of 1966 are inapplicable to actions 49 use 1653. 
taken in negotiating, approving, or implementing service transfers 
under title IV of the Regional Rail Reorganization Act of 1973. Ante, p. 654. 
(b) The operation of trains by Conrail shall not be subject to the 
requirement of any State or local law which specifies the minimum 
number of crew members who must be employed in connection with 
the operation of 
such trains. 
EFFECTIVE DATE 
SEC. 1169. Except as otherwise provided, the provisions of and the 45 use iioi 
amendments made by this subtitle shall take effect on the date of the ^°^^-
enactment of this subtitle. 
Subtitle F—Amtrak 
Amtrak 
Improvement 
SHORT TITLE 
Act of 1981. 
SEC. 1170. This subtitle may be cited as the "Amtrak Improvement 45 use 50i note. 
Act of 1981". 
FINDINGS 
SEC. 1171. Section 101 of the Rail Passenger Service Act (45 U.S.C. 
501) is amended to read as follows: 
"(a) The Congress finds that the public convenience and necessity 
require that the National Railroad Passenger Corporation provide, to 
the extent that the Corporation's budget allows, modern, cost-effi-
cient, and energy-efficient intercity railroad pasenger service be-
tween crowded urban areas and in other parts of the country; that 
rail passenger service can help in alleviating the overcrowding of 
airways, airports, and highways; and that to the maximum extent 
feasible travelers in America should have the freedom to choose the 
mode of transportation most convenient to their needs. 
95 STAT. 688 
PUBLIC LAW 97-35—AUG. 13, 1981 
"(b) The Congress further finds that a greater degree of cooperation 
is necessary among railroads, the Corporation, State, regional, and 
local governments and the private sector, labor organizations, and 
suppliers of services and equipment to the Col-poration in order to 
achieve the level of performance sufficient to justify expenditure of 
public funds. 
"(c) The Congress further finds that— 
"(1) mcdern, efficient commuter rail passenger service is 
important to the viability and well-being of major urban areas 
and to the national goals of energy conservation and self-
sufficiency; 
"(2) Amtrak, as a passenger service entity, should be available 
to operate commuter service through its subsidiarjr Amtrak 
Commuter under contract with commuter agencies which do not 
choose to operate such service themselves as a part of the 
governmental functions of the State; 
"(8) the Northeast Corridor is a valuable national resource 
used by intercity passenger, commuter passenger, and freight 
services; and 
"(4) greater coordination between intercity and commuter 
passenger services are required.". 
ADDITIONAL GOALS FOR AMTRAK 
SEC. 1172. Section 102 of the Rail Passenger Service Act (45 U.S.C. 
45 use 501a. 
501) is amended— 
(1) by striking out paragraphs (1) and (3) and redesignating 
paragraphs (2), (4), (5), and (6) as paragraphs (8) through (11), 
respectively; 
(2) by inserting immediately before paragraph (8), as so redesig-
nated, the following new paragraphs: 
"(1) Exercise of the Corporation's best business judgment in 
taking actions to minimize Federal subsidies, including increas-
ing fares, increasing revenues from the carriage of mail and 
express, reducing losses on food service, improving its contracts 
with operating railroads, reducing management costs, and in-
creasing employee productivity. 
"(2) Encouragement of State, regional, and local governments 
and the private sector to share the costs of operating rail 
passenger service, including the costs of operating stations and 
other facilities, in order to minimize Federal subsidies. 
"(3) Improvement of the number of passenger miles generated 
systemwide per dollar of Federal funding by at least 30 percent 
within the two-year period beginning on the effective date of the 
Amtrak Improvement Act of 1981. 
"(4) Elimination of the deficit associated with food and bever-
age services by September 30,1982. 
"(5) Implementation of strategies to achieve immediately 
maximum productivity and efficiency consistent with safe and 
efficient service. 
"(6) Operation of Amtrak trains, to the maximum extent 
feasible, to all station stops within 15 minutes of the time 
established in public timetables for such operation. 
"(7) Development of service on rail corridors, subsidized by 
States or private parties, or both."; 
\ 
(3) in paragraph (8), as redesignated, by striking out "55" and 
\ 
inserting in lieu thereof "60"; and 
(4) by adding at the end thereof the following new paragraphs: 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 689 
"(12) Implementation of policies ensuring equitable access to 
the Northeast Corridor by both intercity and commuter services. 
"(13) Coordination among the various users of the Northeast 
Corridor, particularly intercity and commuter passenger 
services. 
"(14) Amtrak's maximization of the use of its resources, includ-
ing the most cost-effective use of employees, facilities, and real 
estate. Amtrak is encouraged to enter into agreements with the 
private sector and undertake initiatives which are consistent 
with good business judgment and designed to maximize its 
1 revenues and minimize Federal subsidies. . 
DEFINITIONS 
SEC. 1173. Section 103 of the Rail Passenger Service Act (45 U.S.C. 
502) is amended— 
(1) by redesignating paragraphs (2) through (6) as paragraphs 
(3) through (7), respectively, and by redesignating paragraphs (7) 
through (14) as paragraphs (10) through (17), respectively; 
(2) by inserting immediately after paragraph (1) the following 
new paragraph: 
"(2) 'Amtrak Commuter* means the Amtrak Commuter Serv-
ices Corporation created under title V of this Act.". 
(3) by inserting immediately after paragraph (7), as redesig-
nated, the following new paragraphs: 
"(8) 'Commuter authority' means any State, local, or regional 
authority, corporation, or other entity established for purposes of 
providing commuter service, and includes the Metropolitan 
Transportation Authority, the Connecticut Department of 
Transportation, the Maryland Department of Transportation, 
the Southeastern Pennsylvania Transportation Authority, the 
New Jersey Transit Corporation, the Massachusetts Bay Trans-
pNortation Authority, the Port Authority Trans-Hudson Corpora-
tion, any successor agencies, and any entity created by one or 
more such agencies for the purpose of operating, or contracting 
for the operation of, commuter service. 
"(9) 'Commuter service' means short-haul rail passenger serv-
ice operated in metropolitan and suburban areas, whether 
within or across the geographical boundaries of a State, usually 
characterized by reduced fare, multiple-ride, and commutation 
tickets and by morning and evening peak period operations."; 
and 
(4) in paragraph (11), as redesignated, by striking out "com-
muter and other and all that follows through "operations" and 
inserting in lieu thereof "commuter service". 
CHANGES IN BOARD OF DIRECTORS 
SEC. 1174. (a) Section 303(a) of the Rail Passenger Service Act (45 
U.S.C. 543(a)) is amended— 
(1) by striking out paragraphs (1) through (4) and inserting in 
lieu thereof the following new paragraphs: 
"(1) The Corporation shall have a board of directors consisting of 
nine individuals who are citizens of the United States, as follows: 
"(A) The Secretary of Transportation, ex officio. The Secretary 
of Transportation may be represented at meetings of the Board 
by his deputy, the Administrator of the Federal Railroad Ad-
95 STAT. 690 
PUBLIC LAW 97-35—AUG. 13, 1981 
ministration or the General Counsel of the Department of 
Transportation. 
"(B) The President of 
the Corporation. 
"(C) Three members appointed by the President, by and with 
the advice and consent of the Senate, on the following basis: 
"(i) One to be selected from a list of three qualified 
individuals recommended by the Railway Labor Executives 
Association. 
"(ii) One to be selected from among the Governors of 
States with an interest in rail transportation. Such Governor 
may select an individual to represent him at meetings of the 
Board. 
"(iii) One to be selected as a representative of business 
with an interest in rail transportation. 
"(D) Two members selected by commuter authorities, on the 
following basis: 
"(i) Until January 1, 1983, the two members under this 
subparagraph shall be selected by the President from a list of 
names consisting of one individual nominated by each com-
muter authority for which the Consolidated Rail Corpora-
tion operates commuter service under the Regional Rail 
45 use 701 note. 
Reorganization Act of 1973. Such members shall serve until 
December 31, 1982, or until their successors are appointed 
pursuant to subparagraph (ii). 
"(ii) After January 1, 1983, the two members under this 
subparagraph shall be selected by the President from a list of 
names consisting of one individual nominated by each com-
muter authority for which Amtrak Commuter operates 
Ante, p. 647. 
commuter service under title V of this Act and one individ-
ual nominated by each commuter authority in the Region (as 
defined in section 102 of the Regional Rail Reorganization 
45 use 702. 
Act of 1973) which operates its own service or contracts with 
an operator other than Amtrak Commuter, except that— 
"(I) if Amtrak Commuter operates commuter service 
for one or more commuter authorities, at least one of the 
members selected under this clause shall be an individ-
ual nominated by such a commuter authority; and 
"(II) if Amtrak Commuter does not operate commuter 
service for any commuter authority, five names shall be 
submitted to the President by commuter authorities 
providing service over rail properties owned by Amtrak, 
and the President shall select two members from such 
list. 
"(E) Two members selected annually by the preferred stock-
holders of the Corporation, which members shall be selected as 
soon as practicable after the first issuance of preferred stock by 
the Corporation. 
"(2)(A) Members appointed by the President under paragraph (IXC) 
shall serve for terms of four years or until their successors have been 
appointed and qualified, except that any member appointed by the 
President under such subparagraph to fill a vacancy shall be ap-
pointed only for the unexpired term of the member he is appointed to 
succeed. Not more than two of the members appointed under such 
subparagraph shall be registered as members of the same political 
party. 
"(B) Members selected under paragraph (IXD) shall serve for terms 
of two years or until their successors have been appointed. 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 691 
"(3) Except as provided in paragraph (2)(A) of this subsection, any 
vacancy in the membership of the board shall be filled in the same 
manner as in the case of the original selection. 
"(4) The President of the Corporation shall serve as chairman of the 
board of directors."; 
(2) by striking out paragraph (6) and redesignating paragraphs 
(7) through (9) £is paragraphs (6) through (8), respectively; and 
(3) in paragraph (7), as redesignated by paragraph (2) of this 
subsection, by striking out "election" and inserting in lieu 
thereof "selection"; by striking out "four" and inserting in lieu 
thereof "two"; and by striking out "seven" and inserting in lieu 
thereof "four". 
(b) The term of office of any member of the board of directors of the ^^ U
S
C 543 note. 
National Railroad Passenger Corporation serving on such board 
immediately before the effective date of this subtitle pursuant to 
section 303(aXlXB), (C), or (D) of the Rail Passenger Service Act shall 45 U
S
C 543. 
be deemed to have expired on such effective date, except that— 
(1) such members shall continue to serve for a period not to 
exceed 90 days during which time the President shall appoint 
members of the board in accordance with section 303(a)(1) of such 
Act, as amended by this section; and 
(2) if any position on such board remains vacant after the 
expiration of such 90-day period, the President of Amtrak may 
designate any citizen of the United States to serve in such 
position until the President fills such position by appointment in 
accordance with such section 303(aXl). 
FINANCING OF THE CORPORATION 
SEC. 1175. Section 304 of the Rail Passenger Service Act (45 U.S.C. 
544) is amended— 
(1) in subsection (a), by striking out "each of which shall carry 
voting rights and" and inserting in lieu thereof "which shall ; 
(2) in subsection (a), by striking out the second sentence; 
(3) by amending subsection (c) to read as follows: 
"(cXl) Not later than February 1, 1982, and in consideration of 
receiving further Federal financial assistance, the Corporation shall 
issue to the Secretary a sufficient number of shares of preferred stock 
to equal, to the nearest whole share, the amount of funds appropri-
ated by Congress for capital acquisitions or improvements, or for 
operating and capital expenses, under the authority of subsections 
(aX2), (bXlXB), and (bXlXO of section 601 of this Act between October 45 use 601. 
30,1970, and September 30,1981. 
"(2) Commencing on October 1, 1981, and in consideration of 
receiving further Federal financial assistance, the C!orporation shall 
issue to the Secretary within 30 days after the close of each quarter of 
the fiscal year of the United States Government additional preferred 
stock equal, to the nearest whole share, to the amount of funds paid to 
the Corporation under section 601 of this Act during such quarter."; 
and 
(4) by striking out subsections (d) through (f) and inserting in 
lieu thereof the following: 
"(d) The Corporation is authorized to issue, in addition to the stock 
authorized by subsection (a) of this section, nonvoting securities, 
bonds, debentures, notes, and other certificates of indebtedness as it 
may determine, except that no obligation with a liquidation interest 
superior to any preferred stock issued to the Secretary or secured by a 
lien on property of the Corporation shall be incurred without the 
95 STAT. 692 
PUBLIC LAW 97-35—AUG. 13, 1981 
consent of the Secretary so long as any preferred stock issued to the 
Secretary is outstanding. 
"(e)(1) The requirement of section 45(b) of the District of Columbia 
Business Corporation Act (D.C. Code, sec. 29-920(b)) as to the percent-
age of stock a stockholder is required to hold in order to have the 
rights of inspection and copying set forth in such section shall not be 
applicable in the case of holders of the stock of the Corporation, and 
they may exercise such rights without regard to the percentage of 
stock they hold. 
"(2) Preferred stock issued under the authority of this section shall 
not be subject to the annual fee prescribed under section 29-936(e) of 
the District of Columbia Code, or to any other form of taxation unless 
otherwise specifically prescribed by Congress.". 
CHARGE FOR CUSTOMS AND IMMIGRATION SERVICE 
SEC. 1176. Section 305(i) of 
the Rail Passenger Service Act (45 U.S.C. 
545) is amended by adding at the end thereof the following new 
sentence: "The Corporation shall not be obligated to pay any amount 
to any agency of the Federal Government for the cost of customs 
inspection or immigration procedures in connection with the provi-
sion of services by the Corporation.". 
FOOD AND BEVERAGE SERVICE 
SEC. 1177. (a) Section 305 of the Rail Passenger Service Act (45 
U.S.C. 545) is amended by adding at the end thereof the following new 
subsection: 
"(n) The Corporation shall implement policies which will eliminate 
the deficit in its on-board food and beverage operations no later than 
September 30, 1982. Beginning October 1, 1982, food and beverage 
services shall be provided on-board Amtrak trains only if the rev-
enues from such service are equal to or greater than the total costs of 
such services as computed on an annual basis.". 
(b) Section 405(e) of the Rail Passenger Service Act (45 U.S.C. 565(e)) 
is amended— 
(1) by striking out "The Corporation" and inserting in lieu 
thereof "(1) Except as provided in paragraph (2) of this subsec-
tion, the Corporation"; and 
(2) by adding at the end thereof the following new paragraph: 
"(2) The provisions of this subsection shall not applv to food 
and beverage services provided on-board Amtrak trains.'. 
APPUCABIUTY 
SEC. 1178. Section 306 of the Rail Passenger Service Act (45 U.S.C. 
546) is amended by adding at the end thereof the following new 
subsection: 
"(n) The Corporation shall not be required to pay any additional 
taxes as a consequence of its expenditure of funds to acquire or 
improve real property, equipment, facilities, or right-of-way materi-
als or structures used directly or indirectly in the provision of rail 
passenger service. For purposes of this subsection, 'additional taxes' 
means taxes or fees (1) on the acquisition, improvement, or ownership 
of personal property by the Corporation; and (2) on real property 
other than taxes or fees on the acquisition of real property or on the 
value of real property which is not attributable to improvements 
made by the Corporation.". 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 693 
SANCTIONS 
SEC. 1179. Section 307(a) of the Rail Passenger Service Act (45 
U.S.C. 547(a)) is amended by adding at the end thereof the following: 
"Any discontinuance of routes, trains, or services or reduction in 
frequency of service, which is made by the C!orporation shall not be 
reviewable in any court except on petition of the Attorney General of 
the United States.". 
EUMINATION OP UNNECESSARY REPORTS 
SEC. 1180. (a) Section 308(aXl) of the Rail Passenger Service Act (45 
U.S.C. 548(a)(1)) is amended by striking out subparagraph (C). 
(b) Section 308(c) of the Rail Passenger Service Act (45 U.S.C. 548(c)) 
is amended— 
(1) by striking out "and the Commission"; and 
(2) by striking out "reports (or, in their discretion, a joint 
report) and inserting in lieu thereof "a report". 
FACILITY AND SERVICE AGREEMENTS 
SEC. 1181. The first sentence of section 402(a) of the Rail Passenger 
Service Act is amended by inserting ", which terms shall include a 45 use 562. 
penalty for untimely performance" before the period. 
STATE 
SUPPORTED 
SERVICES 
SEC. 1182. (a) Section 403 of the Rail Passenger Service Act (45 
U.S.C. 563) is amended to read as follows: 
"SEC. 403. SERVICE. 
"(a) Except as otherwise provided in this Act, after the effective 
date of the Amtrak Improvement Act of 1981, all route additions shall 
be in accordance with the Route and Service Criteria. 
"(bXlXA) Any State or group of States, any regional or local agency, 
or any other person may submit an application to the Corporation 
requesting the institution of rail passenger service or the retention of 
a route, train, or service, or some portion of such route, train, or 
service, which the Corporation intends to discontinue under section 
407 of this Act. 
"(B) Each application by a State, agency, or person for rail passen-
ger service under this subsection shall contain— 
"(i) adequate assurances by such State, agency, or person that 
it has sufficient resources to meet its share of the cost of such 
service for the period such service is to be provided; 
"(ii) a market analysis acceptable to the Corporation to ensure 
that there is adequate demand to warrant such service; and 
"(iii) a statement by such State, agency, or person that it agrees 
to pay in each year of operation of such service at least— 
"(I) 45 percent in the first year of operation; and 
"(II) 65 percent in each year of operation thereafter; 
of the short-term avoidable losses of operating such service and 
50 percent of 
the associated capital costs. 
"(2XA) The Corporation shall review each application submitted by 
a State, agency, or person for the institution or retention of service 
under this subsection to determine whether— 
"(i) the application complies with the requirements of para-
graph (1)(B) of 
this subsection; and 
95 STAT. 694 
PUBLIC LAW 97-35—AUG. 13, 1981 
"(ii) there is a reasonable probability that the service requested 
can be provided with the resources available to the Corporation. 
"(B) Any application submitted by a group of States shall be 
considered in the same manner as an application submitted by a 
single State, and not on the basis of whether each State that is a party 
to such application meets the requirements of paragraph (1)(B) of this 
subsection. 
"(3)(A) The Corporation may enter into an agreement with such 
State, agency, or person for the institution or retention of such 
service, in accordance with the funding formula set forth in para-
graph (IXB) of this subsection, if the Corporation determines 
that such service can be provided with resources available to the 
Corporation. 
"(B) An agreement entered into pursuant to this subsection may by 
mutual agreement be renewed for one or more additional terms ot not 
more than 2 years. 
"(C) If more than one application is made for service and all 
applications are consistent with the requirements of this subsection, 
but all the services applied for cannot be provided with the available 
resources of the Corporation, the board of directors shall decide in its 
discretion which application or applications best serve the public 
interest and can be provided with the available resources of the 
Corporation. 
"(4)(A) Any funds provided by the Corporation under an agreement 
with a State, an agency or a person pursuant to this subsection which 
are allocated for associated capital costs and which are not expended 
during the fiscal year for which they are provided shall remain 
available until expended. 
"(B) The board of directors shall, after consultation with the 
appropriate officials of each State that contributes to the operation of 
service under this subsection, establish the basis for determining the 
short-term avoidable loss and associated capital costs of service 
operated under this subsection and the total revenues from such 
service. In addition, the Corporation shall provide appropriate State 
officials with the basis for determining such loss, costs, and revenues 
for each route on which service is operated under this subsection. 
"(5XA) Prior to instituting any fare increase that applies to service 
provided under this subsection and that represents an increase of 
more than 5 percent over a 6-month period, the Corporation shall 
consult with and obtain the views of the appropriate officials of each 
State to be affected by such fare increase. The Corporation shall 
provide the officials of each such State with an explanation of the 
circumstances warranting the proposed fare increase (such as the 
unique costs of or demand for the services involved). 
"(B) A proposed fare increase described in subparagraph (A) shall 
take effect 90 days after the date the Corporation first consults with 
the affected States pursuant to such subparagraph. Within thirty 
days of the initial consultation, the affected State may submit 
proposals to the Corporation for reducing costs and increasing rev-
enues in connection with service provided under this subsection. 
Following such thirty-day period, the Corporation, after taking into 
consideration such proposals as may be submitted by a State, shall 
decide whether to implement the proposed fare increase in whole or 
in part. 
(C) Notwithstanding the provision of subparagraph (B) of this 
paragraph, the Corporation may increase fares pursuant to this 
paragraph during the first month of a fiscal year if the authorization 
for appropriations or the appropriations for the benefit of the 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 695 
C!orporation for such fiscal year are not enacted at least 90 days prior 
to the beginning of such fiscal year, and the Corporation may 
increase fares pursuant to this paragraph during the 30 days follow-
ing enactment of any appropriation for the benefit of the Corporation 
or rescission thereof. Notice of fare increases pursuant to the preced-
ing sentence shall be given by the Corporation to any affected State 
as soon as possible following the decision to effect such fare increase. 
"(6) At least 2 but not more than 5 percent of all revenues 
generated by each particular route operated under the authority of 
this subsection shall be dedicated to advertising and promotion of 
such service on a local level.". 
(b) The amendments made by subsection (a) of this section shall '^^ ^SC 563 note, 
apply to any agreement entered into under section 403(b) of the Rail 
Passenger Service Act after October 1,1981, and to any renewal after >i"*«. P- 693. 
October 1, 1983, of any agreement entered into under such section 
403(b) prior to October 1,1981. 
OPERATION WITHIN AVAILABLE RESOURCES 
SEC. 1183. (a) Section 404(c)(3) of the Rail Passenger Service Act (45 
U.S.C. 564(c)(3)) is amended— 
(1) by inserting "(A)" immediately after "(3)"; and 
(2) by adding at the end thereof the following new subpara-
graph: 
"(B) Beginning on the effective date of the Amtrak Improvement 
Act of 1981, if the Corporation determines that an amendment to the Ante, p. 687. 
Route and Service Criteria is necessary or appropriate, it shall 
submit a draft of such amendment to the Congress. Such amendment 
shall take effect at the end of the first period of 60 calendar days of 
continuous session of the Congress after the date of its submission, 
unless either the Senate or the House of Representatives adopts a 
resolution during such period stating that it does not approve such 
amendment.". 
(b) Section 404(c)(4) of the Rail Passenger Service Act (45 U.S.C. 
564(c)(4)) is amended to read as follows: 
*X4)(A) The Corporation's annual total costs shall not exceed the 
funds, including grants made under section 601 of this Act, contribu- 45 U
S
C 601. 
tions provided by States, regional and local agencies and other 
persons, and revenues, available to the Corporation within the then-
current fiscal year. Commencing in fiscal year 1982, the Corporation 
shall recover an amount sufficient that the ratio of its revenues, 
including contributions from States, agencies, and other persons, to 
costs, excluding capital costs, shall be at least 50 percent. 
"(B) The Corporation shall conduct an annual review of each route Annual review. 
in the basic system to determine if such route is projected to meet the 
criteria set forth in paragraph (1) or paragraph (2) of subsection (d), 
whichever is applicable to such route, as adjusted to reflect constant 
1979 dollars. If the Corporation determines on the basis of such 
review that such route wUl not meet the criteria set forth in the 
appropriate paragraph, the Corporation shall discontinue, modify, or 
adjust the operation of rail passenger service over such route so that 
the criteria will be met. 
"(C) The annual review conducted by the Corporation under 
subparagraph (B) shall include an evaluation of the potential market 
demand for, and the cost of providing service on routes or portions 
thereof, and the potential market demand for, and cost of providing 
service on, alternative routings. The Corporation shall transmit the 
results of the annual review to each House of the Congress and to the 
Secretary of Transportation. 
9-194 0—82 
46:QL3 
95 STAT. 696 
PUBLIC LAW 97-35—AUG. 13, 1981 
"(DXi) No later than 80 days after the beginning of each fiscal year, 
the Corporation shall evaluate the financial requirements for operat-
ing the basic system and its progress in achieving the system-wide 
performance standards prescribed in this Act during such fiscal year. 
If the Corporation determines that the funds to be available for such 
fiscal year are insufficient to meet the projected operating costs, or if 
the Corporation projects that the system cannot meet the perform-
ance standards of this Act, the Corporation shall, in accordance with 
this subparagraph, take such action as may be necessary to reduce 
such costs and improve performance. 
"(ii) Any action taken by the Corporation to reduce costs or improve 
performance pursuant to this subparagraph shall be designed to 
continue the maximum level of service practicable, and may 
include— 
"(I) changes in frequency of service; 
"(II) increases in fares; 
"(III) reductions in the costs of sleeper car service on certain 
routes; 
"(IV) reductions in the costs of dining car service on certain 
routes; 
"(V) increases in the passenger capacity of cars used on certain 
routes; and 
"(VI) restructuring or adjustment of the route system or 
discontinuance of service over routes, considering short-term 
avoidable loss and the number of passengers served by trains on 
such routes. 
"(E) The Corporation shall, prior to October 1,1983, reduce its costs 
of management by not less than 10 percent of the administrative 
costs incurred during the period of twelve calendar months prior to 
June 1,1981. 
Notice. 
"(FXi) Notice of any discontinuance of service pursuant to this 
Ante, p.693. 
paragraph or section 403(b) of this Act shall be posted at least 14 days 
before such discontinuance in all stations served by the train to be 
discontinued. 
"(ii) Notice of any discontinuance of service pursuant to this 
paragraph or section 403(b) of this Act shall be given in such a 
manner as the Corporation determines will afford an opportunity for 
any State or group of States, or any regional or local agency or other 
person, to agree to share the cost of such route, train, or service, or 
some portion of such route, train, or service. Such notice shall be 
given at least 90 days prior to such discontinuance. 
"(iii) Notwithstanding the provisions of clause (ii), the Corporation 
may discontinue service pursuant to this paragraph or section 403(b) 
of this Act during the first month of a fiscal year if the authorization 
for appropriations or the appropriations for the benefit of the 
Corporation for such fiscal year are not enacted at least 90 days prior 
to the beginning of such fiscal year, and the Corporation may. 
discontinue service pursuant to this paragraph or section 403(b) of 
this Act during the 30 days following enactment of any appropriation 
for the benefit of the Corporation or rescission thereof. Notice of 
discontinuance of service pursuant to the preceding sentence shall be 
given by the Corporation to any affected State or regional or local 
transportetion authority as soon as possible following the decision to 
effect such discontinuance.". 
(c) Section 404(cX5) of the Rail Passenger Service Act (45 U.S.C. 
564(cX5)) is amended by striking out "and" at the end of subpara-
graph (A), by striking out the period at the end of subparagraph (B) 
PUBLIC LAW 97-35~AUG. 13, 1981 
95 STAT. 697 
and inserting in lieu thereof a semicolon, and by adding at the end 
thereof the following new subparagraph: 
"(C) modification or adjustment of service under paragraph 
(4XB) of this subsection, and discontinuance, modification, or 
adjustment under paragraph (4XD) of this subsection.", 
(d) Section 404(e) of the Rail Passenger Service Act (45 U.S.C. 564(e)) 
is repealed. 
(e) Section 403(d) of the Rail Passenger Service Act (45 U.S.C. 
563(d)) is amended to read as follows: 
"(d) Beginning October 1, 1981, the Corporation shall continue to 
operate rail passenger service operated under this subsection prior to 
the effective date of the Amtrak Improvement Act of 1981 if such 
service meets the criteria set forth in section 404(dX2XB) of this Act, 
after taking into account projected fare increases and any State or 
local contributions to such service. Any service continued under this 
subsection shall be funded in accordance with the method of funding 
in effect on the day prior to the effective date of the Amtrak 
Improvement Act of 1981.". 
Ante, p. 687. 
EXTENSION OF COMPENSATION FOR PASS RIDERS 
SEC. 1184. The third sentence of section 405(f) of the Rail Passenger 
Service Act (45 U.S.C. 565) is amended by striking out ", during the 
2-year period beginning on the effective date of the Amtrak Reorgani-
zation Act of 1979,". 
45 use 501 note. 
AUTHORIZATION OF APPROPRIATIONS 
SEC. 1185. (a) Section 601(b) of the Rail Passenger Service Act (45 
U.S.C. 601(b)) is amended— 
(1) by striking out paragraph (3); and 
(2) by redesignating paragraph (2) as paragraph (3) and insert-
ing after paragraph (1) the following new paragraph: 
"(2) There are authorized to be appropriated to the Secretary for 
the benefit of 
the Corporation— 
"(A) not to exceed $735,000,000 for the fiscal year ending 
September 30,1982, of which not more than $24,000,000 shall be 
used for the payment of operating and capital expenses of rail 
passenger service provided pursuant to section 403(b) of this Act; 
and 
"(B) not to exceed $788,000,000 for the fiscal year ending 
September 30,1983, of which not more than $26,000,000 shall be 
used for the payment of operating and capital expenses of rail 
passenger service provided pursuant to section 403(b) of this 
Act."; 
(3) in paragraph (3), as redesignated, by striking out "(A)" and 
by striking out ", and (B) guidelines established by the Secre-
tary"; and 
(4) by adding at the end thereof the following new paragraph: 
"(4) Of the amounts appropriated under this subsection for fiscal 
year 1982, the Corporation may not spend for on-board food and 
beverage services an amount greater than 50 percent of the amount 
by which the costs of such services in fiscal year 1981 exceeded the 
revenues from such services in such fiscal year.". 
(b) Section 601(bXl) of the Rail Passenger Service Act (45 U.S.C. 
601(bXl)) is amended by striking out subparagraphs (B) through (E). 
95 STAT. 698 
PUBLIC LAW 97-35—AUG. 13, 1981 
Recommenda-
tions, submittal to 
Congress. 
LOAN GUARANTEES 
SEC. 1186. (a) Section 602(d) of the Rail Passenger Service Act (45 
U.S;C. 602(d)) is amended— 
(1) by striking out "$900,000,000" each place it appears and 
Inserting in lieu thereof "$930,000,000"; and 
(2) by striking out the last sentence. 
(b) Section 602 of the Rail Passenger Service Act (45 U.S.C. 602) is 
amended by adding at the end thereof the following new subsections: 
"(j) During the period beginning October 1, 1981, and ending 
September 30,1983, the interest due to the Federal Financing Bank 
from the Corporation on debt of the Corporation held by the Federal 
Government shall be deferred. During such period the interest so 
deferred shall be added to the principal of the debt owed to the 
Federal Government. The deferral of payment under this subsection 
shall not constitute a default under any note or obligation of the 
Corporation. Notwithstanding the deferral of interest provided for 
under this subsection, the Secretary shall guarantee loans to the 
Corporation to meet commitments under previously approved capital 
programs and to repay existing notes and equipment obligations. 
"(k) Before February 1,1982, the Department of Transportation, in 
consultation with the General Accounting Office, the Corporation, 
and the Department of the Treasury, shsdl submit to the Congress 
legislative recommendations for how best to relieve Amtrak of its 
debt to the Federal Government.". 
Report to 
Congress. 
45 u s e 651 note. 
Study; report to 
Congress. 
RAIL CORRIDOR DEVELOPMENT AND OTHER STUDIES 
SEC. 1187. (a) Not later than June 1, 1982, the National Railroad 
Passenger Corporation shall transmit to the Congress a report 
containing its recommendations for the development of rail corridors. 
Such report shall contedn— 
(1) an identification of those rail corridors which the Corpora-
tion would propose to develop, taking into consideration factors 
such as (A) the projected cost-effectiveness, energy efficiency, and 
ridership of rail corridors recommended for development, (B) the 
need to preserve regional balance in rail passenger service, (C) 
the share of intercity passengers which would be attracted by rail 
corridor service, and (D) the willingness of private sector inter-
ests or State and local governments, or both, to contribute to the 
development of rail corridors; 
(2) a timetable for the development of rail corridors, including 
schedules for (A) the negotiation of agreements with the rail 
carriers, private interests, and State and local governments, (B) 
the acquisition of equipment, (C) the improvement of fixed 
facilities, and (D) the implementation of service; and 
(3) a financial plan, including recommendations for reductions 
in the cost of existing service, during the timetable proposed 
pursuant to paragraph (2) of this subsection. 
(b) The National Railroad Passenger Corporation, representatives 
of labor, and the American Association of Railroads shall, within six 
months after the effective date of this subtitle, conduct a study and 
submit a joint report to the Congress regarding their efforts to 
achieve greater efficiencies in management and labor practices. Such 
report shall include a description of efforts by such corporation 
toward efficiencies in the management of such corporation, recom-
mendations for further efficiencies, and any other appropriate legis-
lative recommendations. 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 699 
(c) Within three months after the effective date of this subtitle, the 
National Railroad Passenger Corporation shall submit to the Con-
gress a report on actual and potential problems for such Corporation 
in entering into agreements regarding direct employment of rail 
passenger operating personnel. Such report shall include legislative 
recommendations, if such corporation determines that such recom-
mendations are appropriate. 
Report to 
Congress. 
TECHNICAL AND CONFORMING AMENDMENTS 
SEC. 1188. (a) Section 301 of the Rail Passenger Service Act (45 
U.S.C. 531) is amended by inserting "and commuter" immediately 45 use 541. 
after "intercity" each place it appears. 
(b) Section 305(a) of the Rail Passenger Service Act (45 U.S.C. 
535(a)) is amended by inserting "and commuter" immediately after 
45 USC 545. 
"intercity" each place it appears. 
(c) Section 402(eXl) of the Rail Passenger Service Act (45 U.S.C. 
562(e)(1)) is amended by inserting "or commuter" immediately after 
"intercity". 
(d) Section 405 of the Rail Passenger Service Act (45 U.S.C. 565) is 
amended by adding at the end thereof the following new subsection: 
"(g) The provisions of subsections (a), (b), and (c) of this section shall 
not apply to Amtrak commuter.". 
(e) Section 702 of the Railroad Revitalization and Regulatory Repeal. 
Reform Act of 1976 (45 U.S.C. 852), and the item relating to such 
section in the table of contents of such Act, are repealed. 
EFFECTIVE DATE 
SEC. 1189. Except as otherwise provided, the provisions of and 45 USC 501 note. 
amendments made by this subtitle shall take effect on October 1, 
1981. 
Subtitle G—Miscellaneous 
CHAPTER 1—LOCAL RAIL ASSISTANCE 
AUTHORIZATION OF APPROPRIATIONS 
SEC. 1191. Section 5(p) of the Department of Transportation Act (49 
U.S.C. 1654(p)) is amended by striking out "without fiscal year 
limitation. Of the foregoing sums, not to exceed $5,000,000 shall be 
made available for planning grants during each of the 3 fiscal years 
ending June 30, 1976; September 30, 1977; and September 30, 1978" 
and inserting in lieu thereof the following: "of which $40,000,000 
shall be made available for the fiscal year ending September 30,1982, 
$44,000,000 shall be made available for the fiscal year ending Septem-
ber 30, 1983 and $48,000,000 shall be made available for the fiscal 
year ending September 30,1984.". 
RAIL FREIGHT ASSISTANCE 
SEC. 1192. (a) Section 5(f) of the Department of Transportation Act 
(49 U.S.C. 1654(f)) is amended by striking out paragraph (1) and 
redesignating paragraphs (2), (3), (4), and (5) as paragraphs (1), (2), (3), 
and (4), respectively. 
(b) The first sentence of section 5(g) of the Department of Transpor-
tation Act (49 U.S.C. 1654(g)) is amended by striking out "80 per 
95 STAT. 700 
PUBLIC LAW 97-35—AUG. 13, 1981 
centum, except that" and all that follows in that sentence and 
inserting in lieu thereof "70 per centum.". 
(c) Section 5(h) of the Department of Transportation Act (49 U.S.C. 
1654(h)) is amended— 
(1) in paragraph (1) by striking out "1979" and inserting in lieu 
thereof^'1981"; 
(2) in paragraph (2) by striking out "October 1, 1979" and 
inserting in lieu thereof "October 1,1981"; 
(3) in paragraph (2XB) by striking out "(including" and all that 
follows through "under this section)" both places it appears; and 
(4) by amending paragraph (3) to read as follows: 
"(3XA) The Interstate Commerce Commission shall, no later than 
July 1 of the year preceding the fiscal year funds are made available 
under this section, provide the Secretary with the sum of the rail 
mileage in each State that meets the description set forth in subpara-
Notification. 
graphs (A) and (B) of paragraph (2). The Secretary shall, no later than 
the first day of each fiscal year, notify each SUAe of the funds to 
which such State is entitled under this subsection during such fiscal 
year. 
"(BXi) Entitlement funds shall remain available to a State for the 
first 6 months after the end of the fiscal year for which funds have 
been made available for use under this section. 
"(ii) Any funds which have not been applied for under this section 
shall be made available to the Secretary for use during the remainder 
of the current fiscal year for rail service assistance projects meeting 
Notification. 
the requirements of this section. The Secretary shall, no later than 30 
days after the end of the first six months of a fiscal year, notify each 
State with respect to any funds still available for rail service 
assistance projects under this section. 
"(C) In considering applications for rail service assistance to be 
provided with funds described in subparagraph (BXii), the Secretary 
shall consider the following: 
"(i) The percentage of lines filed with the Interstate Commerce 
Commission for abandonment or potential abandonment within 
aStete. 
"(ii) The likelihood of future abandonments within a State. 
"(iii) The ratio of benefits to costs (which are included in the 
State rail plan) for a proposed project. 
"(iv) The likelihood that the line will continue operating with 
rail freight assistence. 
"(v) The impact of rail bankrupteies, rail restructuring, and 
rail mergers on the Stete appl3dng for assistence.". 
(d) Section 5(i) of the Department of Transportetion Act (49 U.S.C. 
1654(i)) is amended to read as follows: 
"(i) On the first day of the fiscal year, each Stete shall be entitled to 
$100,000 of the fund available for expenditure under subsection (q) of 
this section during the fiscal year to meet the cost of establishing, 
implementing, revising, and updating the State rail plan required by 
subsection (j) of this section. Each Stete must apply tor such funds on 
or before the first day of the fiscal year. Any funds which have not 
been applied for under this subsection shall be made available to the 
Secretery under subsection (hX3XB) of this section.". 
(e) Section 5(k) of the Department of Transportation Act (49 U.S.C. 
1654(k)) is amended— 
(1) by striking out paragraph (1) and redesignating paragraphs 
(2), (3), (4), and (5) as paragraphs (1), (2), (3), and (4), respectively; 
(2) in paragraph (1), as redesignated, by striking out "para-
graph (2)" and inserting in lieu thereof "paragraph (1)', by 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 701 
striking out"; or" at the end of subparagraph (B) and inserting in 
lieu thereof a period, and by striking out subparagraph (C); 
(3) in paragraph (2), as redesignated, by striking out "para-
graphs (3) and (5)" and inserting in lieu thereof "paragraphs (2) 
and (4)"; 
(4) in paragraph (3), as redesignated, by striking out "para-
graph (4)" and inserting in lieu thereof "paragraph (3)"; and 
(5) by striking out the period at the end of paragraph (2), as 
redesignated, and at the end of paragraph (3XB), as redesignated, 
and inserting in lieu thereof the following: "unless such a project 
has been receiving assistance under this subsection but did not 
receive all the funds to which the State was entitled at the 
beginning of the fiscal year ending September 30,1981, in which 
case such project shall continue to be eligible until September 30, 
1982.". 
(f) Section 5(1) of the Department of Transportation Act (49 U.S.C. 
1654(1)) is amended by adding at the end thereof the following new 
sentence: "Upon receipt of an application for rail freight assistance, 
the Secretary shall consider the application and notify the State 
submitting such an application as to its approval or disapproval 
within 45 days. If the Secretary fails to consider and notify the State 
applying for rail freight assistance under subsection (k) within 45 
days, then the project shall be considered approved and the State 
shedl receive the Federal share up to the amount to which it is 
entitled.". 
(g) Section 5(n) of the Department of Transportation Act (49 U.S.C. 
1654(n)) is amended to read as follows: 
"(n) As used in this section, the term 'State' means any State in 
which a rail carrier providing trsmsportation subject to the jurisdic-
tion of the Interstate Commerce Commission under chapter 105 of 
title 49, United States Code, maintains any line of railroad.'. 
(h) Section 5(o) of the Department of Transportation Act (49 U.S.C. 
1654(o)) is amended by striking out "paragraph (3)" each place it 
appears and inserting in lieu thereof "paragraph (2)", and by adding 
at the end thereof the following new paragraph: 
"(5) The State, to the maximum extent possible, shall encour-
age the participation of shippers, railroads, and local communi-
ties in providing the State share of rail freight assistemce funds.". 
(i) Section 5 of the Department of Transportation Act (49 U.S.C. 
1654) is amended by redesignating subsection (p) as subsection (q) and 
by inserting after subsection (o) the following new subsection: 
"(p) Each State shall retain a contingent interest (redeemable 
preference shares) for the Federal share of funds in any line receiving 
rail freight assistance under this section and may exercise the right 
to collect its share of the funds used for such a line, if an application 
for abandonment of such line is filed under chapter 109 of title 49, 
United States Code, or if such line is sold or disposed of in any way 49 U
S
C 10901 et 
after it has received Federcd assistance.". 
*
^
^
-
CHAPTER 2—NORTHEAST CORRIDOR 
NORTHEAST CORRIDOR 
SEC. 1193. Section 704(a) of the Railroad Revitalization and Regula-
tory Reform Act of 1976 is amended— 
45 USC 854. 
(1) by inserting before the first sentence thereof the following 
new sentence: "The Secretary shall complete the Northeast 
95 STAT. 702 
PUBLIC LAW 97-35—AUG. 13, 1981 
Corridor improvement project in accordance with the goals of 
this Act to the extent of funds authorized under this Act."; and 
(2) by adding after paragraph (4) the following new sentence: 
"Of the funds authorized to be appropriated under this section, 
not more than $200,000,000 is authorized to be appropriated to 
the Secretary for the fiscal year ending September 30,1982; and 
not more than $185,000,000 is authorized to be appropriated to 
the Secretary for the fiscal year ending September 30, 1983.". 
CHAPTER 3—DEPARTMENT OF TRANSPORTATION 
AUTHORIZATION OF APPROPRIATIONS 
SEC. 1194. (a) The Department of Transportation Act is amended by 
inserting at the end thereof the following new section: 
"AUTHORIZATION OP APPROPRIATIONS 
49 use 1660. 
"SEC. 17. There are authorized to be appropriated— 
"(IXA) for necessary expenses of the Secretary of Transporta-
tion, including not to exceed $27,000 for allocation within the 
Department of official reception and representation expenses as 
the Secretary may determine, not to exceed $35,193,204 per fisceil 
year for each of the fiscal years ending September 30, 1982, 
September 30,1983, and September 30,1984; and 
(B) for necessary expenses for conducting transportation 
planning, research, and development activities, including the 
collection of national transportation statistics to remain availa-
ble until expended, $10,486,615 per fiscal year for each of the 
fiscal years ending September 30,1982, September 30,1983, and 
September 30,1984; 
(2) for necessary expenses for railroad research and develop-
ment, not to exceed $40,000,000 for the fiscal year ending Septem-
ber 30,1982, to remain available until expended; and 
"(3) for necessary expenses of the Minority Business Resource 
Center not otherwise provided for, not to exceed $10,000,000 for 
each of 
the fiscal years ending September 30,1982, September 30, 
1983, and September 30,1984. 
The Secret£uy may not utilize any appropriated funds for the Office 
of the Secretary other than those which are authorized for that 
purpose by this section.". 
CHAPTER 4—RAILROAD SAFETY 
AUTHORIZATION OF APPROPRIATIONS 
94 Stat. 1811. 
SEC. 1195. Section 214(a) of the Federal Railroad Safety Act of 1970 
45 use 444. 
ig amended by striking out "$40,000,000" and inserting in lieu thereof 
"$27,650,000'\ 
CHAPTER 5—INTERSTATE COMMERCE COMMISSION 
INTERSTATE COMMERCE COMMISSION 
49 use 10301 
SEC. 1196. Notwithstanding any other provision of law, the total 
"o^- 
amount authorized to be appropriated for necessary expenses of the 
Interstate Commerce Commission shall not exceed $79,000,000 for the 
fiscal year ending September 30,1982; $80,400,000 for the fiscal year 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 703 
ending September 30,1983; and $80,400,000 for the fiscal year ending 
September 30,1984. 
CHAPTER 6—TRANSPORTATION RESEARCH 
TRANSPORTATION RESEARCH AND SPECIAL PROGRAMS 
SEC. 1197. Notwithstanding any other provision of law, the total 49 use 1653 
amount authorized to be appropriated to the Department of Trans- "°*®-
portation for expenses necessary to discharge the functions of the 
Research and Special Programs Administration shall not exceed 
$30,047,000 for the fiscal year ending September 30,1982; $32,300,000 
for the fiscal year ending September 30,1983; and $33,300,000 for the 
fiscal year ending September 30,1984. 
STATEMENT OF MANAGERS 
SEC. 1199A. The managers on the part of the Senate and the House 
of Representatives are authorized to have printed in the Congres-
sional Record at any time prior to midnight on August 4, 1981, a 
statement in explanation of the provisions of this title relating to 
matters within the jurisdiction of the Senate Committee on Com-
merce, Science, and Transportation and the House Committee on 
Energy and Commerce. Such statement shall be considered to have 
been filed at the same time and along with the conference report on 
the Omnibus Budget Reconciliation Act of 1981 (H.R. 3982); and shall 
be considered for all purposes to constitute the statement on the part 
of the managers with respect to such provisions. 
TITLE XII—CONSUMER PRODUCT SAFETY 
AND COMMUNICATIONS 
Subtitle A—Consumer Product Safety 
c
o
n
s
u
m
e
r 
•
^ 
Product Safety 
Amendments of 
SHORT TITLE; REFERENCE TO ACT 
1981. 
SEC. 1201. (a) This subtitle may be cited as the "Consumer Product is use 205i 
Safety Amendments of 1981". 
"°*® 
(b) Except as otherwise specifically provided, whenever in this 
subtitle an amendment or repeal is expressed in terms of an amend-
ment 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 
Consumer Product Safety Act. 
15 USC 2051 
note. 
CONSUMER PRODUCT SAFETY STANDARDS 
SEC. 1202. Section 7 is amended to read as follows: 
is use 2056. 
"CONSUMER PRODUCT SAFETY STANDARDS 
"SEC. 7. (a) The Commission may promulgate consumer product 
safety standards in accordance with the provisions of section 9. A Post, p. 704. 
consumer product safety standard shall consist of one or more of any 
of the following t3^es of requirements: 
"(1) Requirements expressed in terms of performance require-
ments. 
95 STAT. 704 
PUBLIC LAW 97-35—AUG. 13, 1981 
"(2) Requirements that a consumer product be marked with or 
accompanied by clear and adequate warnings or instructions, or 
requirements respecting the form of warnings or instructions. 
Any requirement of such a standard shall be reasonably necessary to 
prevent or reduce an unreasonable risk of injury associated with such 
product. 
"(b) The Commission shall rely upon voluntary consumer product 
safety standards rather than promulgate a consumer product safety 
standard prescribing requirements described in subsection (a) when-
ever compliance with such voluntary standards would eliminate or 
adequately reduce the risk of injury addressed and it is likely that 
there will be substantial compliance with such voluntary standards. 
"(c) If any person participates with the Commission in the develop-
ment of a consumer product safety standard, the Commission may 
agree to contribute to the person's cost with respect to such participa-
tion, in any case in which the Commission determines that such 
contribution is likely to result in a more satisfactory standard than 
would be developed without such contribution, and that the person is 
fineincially responsible. Regulations of the Commission shall set forth 
the items of cost in which it may participate, and shall exclude any 
contribution to the acquisition of land or buildings. Payments under 
agreements entered into under this subsection may be made without 
regard to section 3648 of the Revised Statutes of the United States (31 
U.S.C. 529).". 
ADMINISTRATIVE PROCEDURE 
15 use 2058. 
SEC. 1203. (a) Section 9 is amended to read as follows: 
"PROCEDURE FOR CONSUMER PRODUCT SAFETY RULES 
Publication in 
"SEC. 9. (a) A proceeding for the development of a consumer 
Federal 
product safety rule shall be commenced by the publication in the 
^ 
^' 
Federal Register of an advance notice of proposed rulemaking which 
shall— 
"(1) identify the product and the nature of the risk of injury 
associated with the product; 
"(2) include a summary of each of the regulatory alternatives 
under consideration by the Commission (including voluntary 
consumer product safety steindards); 
"(3) include information with respect to any existing standard 
known to the Commission which may be relevant to the proceed-
ings, together with a summary of the recisons why the Commis-
sion believes preliminarily that such standard does not eliminate 
or adequately reduce the risk of injury identified in paragraph 
(1); 
(4) invite interested persons to submit to the Commission, 
within such period as the Commission shall specify in the notice 
(which period shall not be less than 30 days or more than 60 days 
after the date of publication of the notice), comments with 
respect to the risk of injury identified by the Commission, the 
regulatory alternatives being considered, and other possible 
alternatives for addressing the risk; 
"(5) invite any person (other than the Commission) to submit to 
the Commission, within such period as the Commission shall 
specify in the notice (which period shall not be less than 30 days 
after the date of publication of the notice), an existing standard 
or a portion of a standard as a proposed consumer product safety 
standard; and 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 705 
"(6) invite any person (other than the Commission) to submit to 
the Commission, within such period as the Commission shall 
specify in the notice (which period shall not be less than 30 days 
after the date of publication of the notice), a statement of 
intention to modify or develop a voluntary consumer product 
safety standard to address the risk of injury identified in para-
graph (1) together with a description of a plan to modify or 
develop the standard. 
The Commission shall transmit such notice within 10 calendar days 
to the Committee on Commerce, Science, and Transportation of the 
Senate and the Committee on Energy and Commerce of the House of 
Representatives. 
(bXD If the Commission determines that any standard submitted 
to it in response to an invitation in a notice published under 
subsection (aX5) if promulgated (in whole, in part, or in combination 
with any other standard submitted to the Commission or any part of 
such a standard) as a consumer product safety standard, would 
eliminate or adequately reduce the risk of injury identified in the 
notice under subsection (aXD, the Commission may publish such 
standard, in whole, in part, or in such combination and with nonma-
terial modifications, as a proposed consumer product safety rule. 
"(2) If the Commission determines that— 
"(A) compliance with any standard submitted to it in response 
to an invitation in a notice published under subsection (aX6) is 
likely to result in the elimination^n* adequate reduction of the 
risk of injury identified in the notice, and 
"(B) it is likely that there will be substantial compliance with 
such standard, 
the Commission shall terminate any proceeding to promulgate a 
consumer product safety rule respecting such risk of injury and shall 
publish in the Federal Kegister a notice which includes the determi-
nation of the Commission and which notifies the public that the 
Commission will rely on the voluntary_standard to eliminate or 
reduce the risk of injury. 
"(c) No consumer product safety rule may be proposed by the 
Commission unless, not less than 60 days after publication of the 
notice required in subsection (a), the Commission publishes in the 
Federal Register the text of the proposed rule, including any alterna-
tives, which the Commission proposes to promulgate, together with a 
preliminary regulatory analysis containing— 
"(1) a preliminary description of the potential benefits and 
potential costs of the proposed rule, including any benefits or 
costs that cannot be quantified in monetary terms, and an 
identification of those likely to receive the benefits and bear the 
costs; 
"(2) a discussion of the reasons any standard or portion of a 
standard submitted to the Commission under subsection (a)(5) 
was not published by the Commission as the proposed rule or 
part of the proposed rule; 
"(3) a discussion of the reasons for the Commission's prelimi-
nary determination that efforts proposed under subsection (aX6) 
and assisted by the Commission as required by section 6(aX3) 
would not, within a reasonable period of time, be likely to result 
in the development of a voluntary consumer product safety 
standard that would eliminate or adequately reduce the risk of 
injury addressed by the proposed rule; and 
"(4) a description of any reasonable alternatives to the pro-
posed rule, together with a summary description of their poten-
Transmittal to 
congressional 
committees. 
Publication in 
Federal 
Register. 
Publication 
in Federal 
Register. 
Post, p. 720. 
95 STAT. 706 
PUBLIC LAW 97-35—AUG. 13, 1981 
Transmittal 
to congressional 
committees. 
Publication 
in Federal 
Register. 
tial costs and benefits, and a brief explanation of why such 
alternatives should not be published as a proposed rule. 
The Commission shall transmit such notice within 10 calendar days 
to the Committee on Commerce, Science, and Transportation of the 
Senate and the Committee on Energy and Commerce of the House of 
Representatives. 
"(dXD Within 60 days after the publication under subsection (c) of a 
proposed consumer product safety rule respecting a risk of injury 
associated with a consumer product, the Commission shall— 
"(A) promulgate a consumer product safety rule respecting the 
risk of injury associated with such product, if it makes the 
findings required under subsection (f), or 
"(B) withdraw the applicable notice of proposed rulemaking if 
it determines that such rule is not (i) reasonably necessary to 
eliminate or reduce an unreasonable risk of injury associated 
with the product, or (ii) in the public interest; 
except that the Commission may extend such 60-day period for good 
cause shown (if it publishes its reasons therefor in the Federal 
Register). 
"(2) Consumer product safety rules shall be promulgated in accord-
ance with section 553 of title 5, United States Code, except that the 
Commission shall give interested persons an opportunity for the oral 
presentation of data, views, or arguments, in addition to an opportu-
nity to make written submissions. A transcript shall be kept of any 
oral presentation. 
"(e) A consumer product safety rule shall express in the rule itself 
the risk of injury which the standard is designed to eliminate or 
reduce. In promulgating such a rule the Commission shall consider 
relevant available product data including the results of research, 
development, testing, and investigation activities conducted gen-
erally and pursuant to this Act. In the promulgation of such a rule 
the Commission shall also consider and take into account the special 
needs of elderly and handicapped persons to determine the extent to 
which such persons may be adversely affected by such rule. 
"(f)(1) Prior to promulgating a consumer product safe^ rule, the 
Commission shall consider, and shall make appropriate findings for 
inclusion in such rule with respect to— 
"(A) the degree and nature of the risk of injury the rule is 
designed to eliminate or reduce; 
"(B) the approximate number of consumer products, or types 
or classes thereof, subject to such rule; 
"(C) the need of the public for the consumer products subject to 
such rule, and the probable effect of such rule upon the utility, 
cost, or availability of such products to meet such need; and 
"(D) any means of achieving the objective of the order while 
minimizing adverse effects on competition or disruption or dislo-
cation of manufacturing and other commercial practices consist-
ent with the public health and safety. 
"(2) The Commission shall not promulgate a consumer product 
safety rule unless it has prepared, on the basis of the findings of the 
Commission under paragraph (1) and on other information before the 
Commission, a final regulatory analysis of the rule containing the 
following information: 
"(A) A description of the potential benefits and potential costs 
of the rule, including costs and benefits that cannot be quantified 
in monetary terms, and the identification of those likely to 
receive the benefits and bear the costs. 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 707 
"(B) A description of any alternatives to the final rule which 
were considered by the Commission, together with a summary 
description of their potential benefits and costs and a brief 
explanation of the reasons why these alternatives were not 
chosen. 
"(C) A summary of any significant issues raised by the com-
ments submitted during the public comment period in response 
to the preliminary regulatory analysis, and a summary of the 
assessment by the Commission of such issues. 
The Commission shall publish its final regulatory analysis with the 
rule. 
"(3) The Commission shall not promulgate a consumer product 
safety rule unless it finds (and includes such finding in the rule)— 
"(A) that the rule (including its effective date) is reasonably 
necessary to eliminate or reduce an unreasonable risk of injury 
associated with such product; 
"(B) that the promulgation of the rule is in the public interest; 
"(C) in the case of a rule declaring the product a banned 
hazardous product, that no feasible consumer product safety 
standard under this Act would adequately protect the public 
from the unreasonable risk of injury associated with such 
product; 
"(D) in the case of a rule which relates to a risk of injury with 
respect to which persons who would be subject to such rule have 
adopted and implemented a voluntary consumer product safety 
standard, that— 
"(i) compliance with such voluntary consumer product 
safety standard is not likely to result in the elimination or 
adequate reduction of such risk of injury; or 
"(ii) it is unlikely that there will be substantial compliance 
with such voluntary consumer product safety standard; 
"(E) that the benefits expected from the rule bear a reasonable 
relationship to its costs; and 
"(F) that the rule imposes the least burdensome requirement 
which prevents or adequately reduces the risk of injury for which 
the rule is being promulgated. 
"(4)(A) Any preliminary or final regulatory analysis prepared 
under subsection (c) or (f)(2) shall not be subject to independent 
judicial review, except that when an action for judicial review of a 
rule is instituted, the contents of any such regulatory analysis shall 
constitute part of the whole rulemaking record of agency action in 
connection with such review. 
"(B) The provisions of subparagraph (A) shall not be construed to 
alter the substantive or procedural standards otherwise applicable to 
judicial review of any action by the Commission. 
"(g)(1) Each consumer product safety rule shall specify the date 
such rule is to take effect not exceeding 180 days from the date 
promulgated, unless the Commission finds, for good cause shown, 
that a later effective date is in the public interest and publishes its 
reasons for such finding. The effective date of a consumer product 
safety standard under this Act shall be set at a date at least 30 days 
after the date of promulgation unless the Commission for good cause 
shown determines that an earlier effective date is in the public 
interest. In no case may the effective date be set at a date which is 
earlier than the date of promulgation. A consumer product safety 
standard shall be applicable only to consumer products manufac-
tured after the effective date. 
95 STAT. 708 
PUBLIC LAW 97-35—AUG. 13, 1981 
"Stockpiling; 
Ante, p. 703. 
15 u s e 2057. 
Publication 
in Federal 
Register. 
15 u s e 2060. 
Publication 
in Federal 
Register. 
15 u s e 1261. 
"(2) The Commission may by rule prohibit a manufacturer of a 
consumer product from stockpiling any product to which a consumer 
product safety rule applies, so as to prevent such manufacturer from 
circumventing the purpose of such consumer product safety rule. For 
purposes of this paragraph, the term 'stockpiling' means manufactur-
ing or importing a product between the date of promulgation of such 
consumer product safety rule and its effective date at a rate which is 
significantly greater (as determined under the rule under this para-
graph) than the rate at which such product was produced or imported 
during a base period (prescribed in the rule under this paragraph) 
ending before the date of promulgation of the consumer product 
safety rule. 
"(h) The Commission may by rule amend or revoke any consumer 
product safety rule. Such amendment or revocation shall specify the 
date on which it is to take effect which shall not exceed 180 days from 
the date the amendment or revocation is published unless the 
Commission finds for good cause shown that a later effective date is in 
the public interest and publishes its reasons for such finding. Where 
an amendment involves a material change in a consumer product 
safety rule, sections 7 and 8, and subsections (a) through (g) of this 
section shall apply. In order to revoke a consumer product safety rule, 
the Commission shall publish a proposal to revoke such rule in the 
Federal Register, and allow oral and written presentations in accord-
ance with subsection (dX2) of this section. It may revoke such rule 
only if it determines that the rule is not reasonably necessary to 
eliminate or reduce an unreasonable risk of injury associated with 
the product. Section 11 shall apply to any amendment of a consumer 
product safety rule which involves a material change and to any 
revocation of a consumer product safety rule, in the same manner 
and to the same extent as such section applies to the Commission's 
action in promulgating such a rule.". 
Ob)(l) Section 3 of the Federal Hazardous Substances Act (15 U.S.C. 
1262) is amended by adding at the end the following new subsections: 
"(f) A proceeding for the promulgation of a regulation under 
section 2(q)(l) classifying an article or substance as a banned hazard-
ous substance or a regulation under subsection (e) of this section shall 
be commenced by the publication in the Federal Register of an 
advance notice of proposed rulemaking which shall— 
"(1) identify the article or substance and the nature of the risk 
of injury associated with the article or substance; 
"(2) include a summary of each of the regulatory alternatives 
under consideration by the Commission (including voluntary 
standards); 
"(3) include information with respect to any existing standard 
known to the Commission which may be relevant to the proceed-
ings, together with a summary of the reasons why the Commis-
sion believes preliminarily that such standard does not eliminate 
or adequately reduce the risk of injury identified in paragraph 
(1); 
"(4) invite interested persons to submit to the Commission, 
within such period as the Commission shall specify in the notice 
(which period shall not be less than 30 days or more than 60 days 
after the date of publication of the notice), comments with 
respect to the risk of injury identified by the Commission, the 
regulatory alternatives being considered, and other possible 
alternatives for addressing the risk; 
"(5) invite any person (other than the Commission) to submit to 
the Commission, within such period as the Commission shall 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 709 
specify in the notice (which period shall not be less than 30 days 
after the date of publication of the notice), an existing standard 
or a portion of a standard as a proposed regulation under section 
2(q)(l) or subsection (e) of this section; and 
'(6) invite any person (other than the Commission) to submit to 
the Commission, within such period as the Commission shall 
specify in the notice (which period shall not be less than 30 days 
after the date of publication of the notice), a statement of 
intention to modify or develop a voluntary standard to address 
the risk of injury identified in paragrapn (1) together with a 
description of a plan to modify or develop the standard. 
The Commission shall transmit such notice within 10 calendar days 
to the Committee on Commerce, Science, and Transportation of the 
Senate and the Committee on Energy and Commerce of the House of 
Representatives. 
(gXl) If the Commission determines that any standard submitted 
to it in response to an invitation in a notice published under 
subsection (f)(5) if promulgated (in whole, in part, or in combination 
with any other standard submitted to the Commission or any part of 
such a standard) as a regulation under section 2(^X1) or subsection (e) 
of this section, as the case may be, would elimmate or adequately 
reduce the risk of injury identified in the notice provided under 
subsection (fKD, the Commission may publish such standard, in 
whole, in part, or in such combination and with nonmaterial modifi-
cations, as a proposed regulation under such section or subsection. 
"(2) If the Commission determines that— 
"(A) compliance with any standard submitted to it in response 
to an invitation in a notice published under subsection (iD(6) is 
likely to result in the elimination or adequate reduction of the 
risk of injury identified in the notice, and 
"(B) it is likely that there will be substantial compliance with 
such standard, 
the Commission shall terminate any proceeding to promulgate a 
regulation under section 2(qXl) or subsection (e) of this section, 
respecting such risk of injury and shall publish in the Federal 
Register a notice which includes the determination of the Commis-
sion and which notifies the public that the Commission will rely on 
the voluntary standard to eliminate or reduce the risk of iniury. 
"(h) No regulation under section 2(qXl) classifying an article or 
substance as a banned hazardous substance and no regulation under 
subsection (e) of this section may be proposed by the Commission 
unless, not less than 60 days after publication of the notice required 
in subsection (f), the Commission publishes in the Federal Register 
the text of the proposed rule, including any alternatives, which the 
Commission proposes to promulgate, together with a preliminary 
regulatory analysis containing— 
"(1) a preliminary description of the potential benefits and 
potential costs of the proposed regulation, including any benefits 
or costs that cannot be quantified in monetary terms, and an 
identification of those likely to receive the benefits and bear the 
costs; 
"(2) a discussion of the reasons any standard or portion of a 
standard submitted to the Commission under subsection (f)(5) 
was not published by the Commission as the proposed regulation 
or part of 
the proposed regulation; 
(3) a discussion of the reasons for the Commission's prelimi-
nary determination that efforts proposed under subsection (fK6) 
and assisted by the Commission as required by section 5(aX3) of 
15 u s e 1261. 
Transmittal 
to congressional 
committees. 
Publication 
in Federal 
Register. 
Publication 
in Federal 
Register. 
95 STAT. 710 
PUBLIC LAW 97-35—AUG. 13, 1981 
Post, p. 720. 
the Consumer Product Safety Act would not, within a reasonable 
period of time, be likely to result in the development of a 
voluntary standard that would eliminate or adequately reduce 
the risk of injury identified in the notice provided under subsec-
tion (f)(1); and 
"(4) a description of any reasonable alternatives to the pro-
posed regulation, together with a summary description of their 
potential costs and benefits, and a brief explanation of why such 
alternatives should not be published as a proposed regulation. 
Transmittal 
The Commission shall transmit such notice within 10 calendar days 
comSIer"^ 
^ *^® Committee on Commerce, Science, and Transportation of the 
Senate and the Committee on Energy and Commerce of the House of 
Representatives. 
"(iXD The Commission shall not promulgate a regulation under 
15 use 1261. 
section 2(q)(l) classif3ring an article or substance as a banned hazard-
ous substance or a regulation under subsection (e) of this section 
unless it has prepared a final regulatory analysis of the regulation 
containing the following information: 
"(A) A description of the potential benefits and potential costs 
of the regulation, including costs and benefits that cannot be 
quantified in monetary terms, and the identification of those 
likely to receive the benefits and bear the costs. 
"(B) A description of any alternatives to the final regulation 
which were considered by the Commission, together with a 
summary description of their potential benefits and costs and a 
brief explanation of the reasons why these alternatives were not 
chosen. 
"(C) A summary of any significant issues raised by the com-
ments submitted during the public comment period in response 
to the preliminary regulatory analysis, and a summary of the 
assessment by the Commission of such issues. 
The Commission shall publish its final regulatory analysis with the 
regulation. 
"(2) The Commission shall not promulgate a regulation under 
section 2(q)(l) classifying an article or substance as a banned hazard-
ous substance or a regulation under subsection (e) of this section 
unless it finds (and includes such finding in the regulation)— 
"(A) in the case of a regulation which relates to a risk of injury 
with respect to which persons who would be subject to sucn 
regulation have adopted and implemented a voluntary standard, 
t h a t -
'll) compliance with such voluntary standard is not likely 
to result in the elimination or adequate reduction of such 
risk of injury; or 
"(ii) it is unlikely that there will be substantial compliance 
with such voluntary standard; 
"(B) that the benefits expected from the regulation bear a 
reasonable relationship to its costs; and 
"(C) that the regulation imposes the least burdensome require-
ment which prevents or adequately reduces the risk of injury for 
which the regulation is being promulgated. 
"(8)(A) Any regulatory analysis prepared under subsection (h) or 
paragraph (1) shall not be subject to independent judicial review, 
except that when an action for judicial review of a regulation is 
instituted, the contents of any such regulatory analysis shall consti-
tute part of the whole rulemaking record of agency action in connec-
tion with such review. 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 711 
"(B) The provisions of subparagraph (A) shall not be construed to 
alter the substantive or procedural standards otherwise applicable to 
judicial review of any action by the Commission.". 
(2) Section 4 of the Flammable Fabrics Act (15 U.S.C. 1193) is 
amended by adding at the end the following new subsections: 
"(g) A proceeding for the promulgation of a regulation under this 
section for a fabric, related material, or product shall be commenced 
by the publication in the Federal Register of an advance notice of 
proposed rulemaking which shall— 
"(1) identify the fabric, related material, or product and the 
nature of the risk of injury associated with the fabric, related 
material, or product; 
"(2) include a summary of each of the regulatory alternatives 
under consideration by the Commission (including voluntary 
standards); 
"(3) include information with respect to any existing standard 
known to the Commission which may be relevant to the proceed-
ings, together with a summary of the reasons why the Commis-
sion believes preliminarily that such standard does not eliminate 
or adequately reduce the risk of injury identified in paragraph 
(1); 
"(4) invite interested persons to submit to the Commission, 
within such period as the Commission shall specify in the notice 
(which period shall not be less than 30 days or more than 60 days 
after the date of publication of the notice), comments with 
respect to the risk of injury identified by the Commission, the 
regulatory alternatives being considered, and other possible 
alternatives for addressing the risk; 
"(5) invite any person (other than the Commission) to submit to 
the Commission, within such period as the Commission shall 
specify in the notice (which period shall not be less than 30 days 
after the date of publication of the notice), an existing standard 
or a portion of a standard as a proposed regulation. 
"(6) invite any person (other than the Commission) to submit to 
the Commission, within such period as the Commission shall 
specify in the notice (which period shall not be less than 30 days 
after the date of publication of the notice), a statement of 
intention to modify or develop a voluntary standard to address 
the risk of injury identified in paragraph (1) together with a 
description of a plan to modify or develop the standard. 
The Commission shall transmit such notice within 10 calendar days 
to the Committee on Commerce, Science, and Transportation of the 
Senate and the Committee on Energy and Commerce of the House of 
Representatives. 
(h)(1) If the Commission determines that any standard submitted 
to it in response to an invitation in a notice published under 
subsection (g)(5) if promulgated (in whole, in part, or in combination 
with any other standard submitted to the Commission or any part of 
such a standard) as a regulation, would eliminate or adequately 
reduce the risk of injury identified in the notice provided under 
subsection (gXD, the Commission may publish such standard, in 
whole, in part, or in such combination and with nonmaterial modifi-
cations, as a proposed regulation under this section. 
"(2) If the Commission determines that— 
"(A) compliance with any standard submitted to it in response 
to an invitation in a notice published under subsection (g)(6) is 
likely to result in the elimination or adequate reduction of the 
risk of injury identified in the notice, and 
Publication 
in Federal 
Register. 
Transmittal 
to congressional 
committees. 
89-194 O—82 
47:QL3 
95 STAT. 712 
PUBLIC LAW 97-35—AUG. 13, 1981 
Publication 
in Federal 
Register. 
Publication 
in Federal 
Register. 
Post, p. 720. 
Transmittal 
to congressional 
committees. 
"(B) it is likely that there will be substantial compliance with 
such standard, 
the Commission shall terminate any proceeding to promulgate a 
regulation respecting such risk of injury and shall publish in the 
Federal Register a notice which includes the determination of the 
Commission and which notifies the public that the Commission will 
rely on the voluntary standard to eliminate or reduce the risk of 
injury. 
"(i) No regulation may be proposed by the Commission under this 
section unless, not less than 60 days alter publication of the notice 
required in subsection (g), the Commission publishes in the Federal 
Register the text of the proposed rule, including any alternatives, 
which the Commission proposes to promulgate, together with a 
preliminary regulatory analysis containing— 
"(1) a preliminary description of the i)otential benefits and 
potential costs of the proposed regulation, including any benefits 
or costs that cannot oe quantified in monetary terms, and an 
identification of those likely to receive the benefits and bear the 
costs; 
"(2) a discussion of the reasons any standard or portion of a 
standard submitted to the Commission under subsection (g)(5) 
was not published by the Commission as the proposed regulation 
or part of the proposed regulation; 
"(3) a discussion of the reasons for the Commission's prelimi-
n£iry determination that efforts proposed under subsection (gX6) 
and assisted by the Commission as required by section 5(aX3) of 
the Consumer Product Safety Act would not, within a reasonable 
period of time, be likely to result in the development of a 
voluntary standard that would eliminate or adequately reduce 
the risk of injury identified in the notice provided under subsec-
tion (gXD; and 
"(4) a description of any reasonable alternatives to the pro-
posed regulation, together with a summary description of their 
potential costs and benefits, and a brief explanation of whv such 
alternatives should not be published as a proposed regulation. 
The Commission shall transmit such notice within 10 calendar days 
to the Committee on Commerce, Science, and Transportation of the 
Senate and the Committee on Energy and Commerce of the House of 
Representatives. 
"(jXD The Commission shgdl not promulgate a regulation under 
this section unless it heis prepared a final regulatory analysis of the 
regulation containing the following information: 
"(A) A description of the potential benefits and potential costs 
of the regulation, including costs and benefits that cannot be 
quantified in monetary terms, and the identification of those 
likely to receive the benefits and bear the costs. 
"(B) A description of any alternatives to the final regulation 
which were considered by the Commission, together with a 
summary description of their potential benefits and costs and a 
brief explanation of the reasons why these alternatives were not 
chosen. 
"(C) A summary of any significemt issues raised by the com-
ments submitted during the public comment period in response 
to the preliminary regulatory analysis, and a summary of the 
assessment by the Commission of such issues. 
The Commission shall publish its final regulatory analysis with the 
regulation. 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 713 
"(2) The Commission shall not promulgate a regulation under this 
section unless it finds (and includes such finding in the regulation)— 
"(A) in the case of a regulation which relates to a risk of injury 
with respect to which persons who would be subject to such 
regulation have adopted and implemented a voluntary standard, 
that-
'll) compliance with such voluntary standard is not likely 
to result in the elimination or adequate reduction of such 
risk of injury; or 
"(ii) it is imlikely that there will be substantial compliance 
with such voluntary standard; 
"(B) that the benefits expected from the regulation bear a 
reasonable relationship to its costs; and 
"(C) that the regulation imposes the least burdensome require-
ment which prevents or adequately reduces the risk of injury for 
which the regulation is being promulgated. 
"(3XA) Any regulatory analysis prepared under subsection (i) or 
paragraph (1) shall not be subject to independent judicial review, 
except that when an action for judicial review of a regulation is 
instituted, the contents of any such regulatory analysis shall consti-
tute part of the whole rulemaking record of agency action in connec-
tion with such review. 
"(B) The provisions of subparagraph (A) shall not be construed to 
alter the substantive or procedural standards otherwise applicable to 
judicial review of any action by the Commission.". 
(c) Section 8 (15 U.S.C. 2057) is amended by striking out "propose 
and". 
PUBLIC DISCLOSURE OF INFORMATION 
SEC. 1204. Section 6 (15 U.S.C. 2055) is amended to read as follows: 
"PUBLIC DISCLOSURE OF INFORMATION 
"SEC. 6. (aXD Nothing contained in this Act shall be construed to 
require the release of any information described by subsection (b) of 
section 552 of title 5, United States CJode, or which is otherwise 
protected by law from disclosure to the public. 
"(2) AU information reported to or otherwise obtained by the 
Commission or its representative under this Act which information 
contains or relates to a trade secret or other matter referred to in 
section 1905 of title 18, United States Code, or subject to section 
552(bX4) of title 5, United States Code, shall be considered confiden-
tial and shall not be disclosed. 
"(3) The Commission shall, prior to the disclosure of any informa-
tion which will permit the public to ascertain readily the identity of a 
manufacturer or private labeler of a consumer product, offer such 
manufacturer or private labeler an opportunity to mark such infor-
mation as confidential and therefore barred from disclosure under 
paragraph (2). 
"(4) Mi. information that a manufacturer or private labeler has 
marked to be confidential and bsured from disclosure under para-
graph (2), either at the time of submission or pursuant to paragraph 
(3), shall not be disclosed, except in accordance with the procedures 
established in paragraphs (5) and (6). 
"(5) If title Commission determines that a document marked as 
confidential by a manufacturer or private labeler to be barred from 
disclosure under paragraph (2) may be disclosed because it is not 
confidential information as provided in paragraph (2), the Commis-
95 STAT. 714 
PUBLIC LAW 97-35—AUG. 13, 1981 
sion shall notify such person in writing that the Commission intends 
to disclose such document at a date not less than 10 days after the 
date of receipt of notification. 
"(6) Any person receiving such notification may, if he believes such 
disclosure is barred by paragraph (2), before the date set for release of 
the document, bring an action in the district court of the United 
States in the district in which the complainant resides, or has his 
principal place of business, or in which the documents are located, or 
in the United States District Court for the District of Columbia to 
restrain disclosure of the document. Any person receiving such 
notification may file with the appropriate district court or court of 
appeals of the United States, as appropriate, an application for a stay 
of disclosure. The documents shall not be disclosed until the court has 
ruled on the application for a stay. 
"(7) Nothing in this Act shall authorize the withholding of informa-
tion by the Commission or any officer or employee under its control 
from the duly authorized committees or subcommittees of the Con-
gress, and the provisions of pareigraphs (2) through (6) shall not apply 
to such disclosures, except that the Commission shall immediately 
notify the manufacturer or private labeler of any such request for 
information designated as confidential by the manufacturer or pri-
vate labeler. 
"(8) The provisions of paragraphs (2) through (6) shall not prohibit 
the disclosure of information to other officers or employees concerned 
with carr3dng out this Act or when relevant in any administrative 
proceeding under this Act, or in judicial proceedings to which the 
Commission is a party. Any disclosure of relevant information in 
Commission administrative proceedings, or in judicial proceedings to 
which the Commission is a party, shall be governed by the rules of the 
Commission (including in camera review rules for confidential mate-
rial) for such proceedings or by court rules or orders, except that the 
rules of the Commission shall not be amended in a manner inconsist-
ent with the purposes of this section. 
"(bXD Except as provided by paragraph (2) of this subsection, not 
less than 30 days prior to its public disclosure of any information 
obtained under this Act, or to be disclosed to the public in connection 
therewith (unless the Commission finds that the public health and 
safety requires a lesser period of notice and publishes such a finding 
in the Federal Register), the Commission shall, to the extent practica-
ble, notify and provide a summary of the information to, each 
manufacturer or private labeler of any consumer product to which 
such information pertains, if the manner in which such consumer 
product is to be designated or described in such information will 
permit the public to ascertain readily the identity of such manufac-
turer or private labeler, and shall provide such manufacturer or 
private labeler with a recisonable opportunity to submit comments to 
the Commission in regard to such information. The Commission shall 
take reasonable steps to assure, prior to its public disclosure thereof, 
that information from which the identity of such manufacturer or 
private labeler may be readily ascertained is accurate, and that such 
disclosure is fair in the circumstances and reasonably related to 
effectuating the purposes of this Act. In disclosing any information 
under this subsection, the Commission may, and upon the request of 
the manufacturer or private labeler shall, include with the disclosure 
any comments or other information or a summary thereof submitted 
by such manufacturer or private labeler to the extent permitted by 
and subject to the requirements of this section. 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 715 
"(2) If the Commission determines that a document claimed to be 
inaccurate by a manufacturer or private labeler under paragraph (1) 
should be disclosed because the Commission believes it has complied 
with paragraph (1), the Commission shall notify the manufacturer or 
private labeler that the Commission intends to disclose such docu-
ment at a date not less than 10 days after the date of the receipt of 
notification. The Commission laay provide a lesser period of notice of 
intent to disclose if the Commission finds that the public health and 
safety requires a lesser period of notice and publishes such finding in 
the Federal Register. 
"(3) Prior to the date set for release of the document, the manufac-
turer or private labeler receiving the notice described in paragraph 
(2) may bring an action in the district court of the United States in the 
district in which the complainant resides, or has his principal place of 
business, or in which the documents are located or in the United 
States District Court for the District of Columbia to enjoin disclosure 
of the document. The district court may enjoin such disclosure if the 
Commission has failed to take the reasonable steps prescribed in 
paragraph (1). 
"(4) Paragraphs (1) through (3) of this subsection shall not apply to 
the public disclosure of (A) information about any consumer product 
with respect to which product the Commission has filed an action 
under section 12 (relating to imminently hazardous products), or 15 use 2061. 
which the Commission has reasonable cause to believe is in violation 
of section 19 (relating to prohibited acts); or (B) information in the i^ use 2068. 
course of or concerning a rulemaking proceeding (which shall com-
mence upon the publication of an advance notice of proposed rule-
making or a notice of proposed rulemaking), an adjudicatory proceed-
ing (which shall commence upon the issuance of a complaint) or other 
administrative or judicial proceeding under this Act. 
"(5) In addition to the requirements of paragraph (1), the Commis-
sion shall not disclose to the public information submitted pursuant 
to section 15(b) respecting a consumer product unless— 
15 use 2064. 
"(A) the Commission has issued a complaint under section 15 
(c) or (d) alleging that such product presents a substantial 
product hazard; 
"(B) in lieu of proceeding against such product under section 15 
(c) or (d), the Commission has accepted in writing a remedial 
settlement agreement dealing with such product; or 
"(C) the person who submitted the information under section 
15(b) agrees to its public disclosure. 
The provisions of this paragraph shall not apply to the public 
disclosure of information with respect to a consumer product which is 
the subject of an action brought under section 12, or which the 
Commission has reasonable cause to believe is in violation of section 
19(a), or information in the course of or concerning a judicial 
proceeding. 
"(6) Where the Commission initiates the public disclosure of infor-
mation that reflects on the safety of a consumer product or class of 
consumer products, whether or not such information would enable 
the public to ascertain readily the identity of a manufacturer or 
private labeler, the Commission shall establish procedures designed 
to ensure that such information is accurate and not misleading. 
"(7) If the Commission finds that, in the administration of this Act, 
it has made public disclosure of inaccurate or misleading information 
which reflects adversely upon the safety of any consumer product or 
class of consumer products, or the practices of any manufacturer, 
private labeler, distributor, or retailer of consumer products, it shall. 
95 STAT. 716 
PUBLIC LAW 97-35—AUG. 13, 1981 
in a manner equivalent to that in which such disclosure was made, 
take reasonable steps to publish a retraction of such inaccurate or 
misleading information. 
"(8) If, after the commencement of a rulemaking or the initiation of 
an adjudicatory proceeding, the C!ommission decides to terminate the 
proceeding before taking final action, the Commission shall, in a 
manner equivalent to that in which such commencement or initi-
ation was publicized, take reasonable steps to make known the 
decision to terminate. 
"(c) The Commission shall communicate to each manufacturer of a 
consumer product, insofar as may be practicable, information as to 
any significant risk of injury associated with such product. 
"(d)(1) For purposes of this section, the term 'Act' means the 
Consumer Product Safety Act, the Flammable Fabrics Act, the 
Poison Prevention Packaging Act, and the Federal Hsizardous Sub-
stances Act. 
"(2) The provisions of this section shall apply whenever informa-
tion is to be disclosed by the Commission, any member of the 
Commission, or any employee, agent, or representative of the Com-
mission in an official capacity.". 
ADVISORY COUNCILS 
Repeals. 
SEC. 1205. (aXD Section 28 (15 U.S.C. 2077) is repealed. 
(2) Subsection (d) of section 12 (15 U.S.C. 2061) is repealed and 
subsections (e) and (f) are redesignated as subsections (d) and (e), 
respectively. 
(b) Section 17 of the Flammable Fabrics Act (15 U.S.C. 1204) is 
repealed. 
(c) Section 6 of the Poison Prevention Packaging Act of 1970 (15 
7 use 135 
U.S.C. 1475) is repealed and sections 7, 8, and 9 of such Act are 
353 362 
redesignated as sections 6,7, and 8, respectively. 
15 u s e 1261, 
1475, 1476, 
CHRONIC HAZARDS 
1471 note. 
SEC. 1206. (a) The following section is inserted after section 27: 
"CHRONIC HAZARD ADVISORY PANEL 
15 use 2077. 
"SEC. 28. (a) The Commission shall appoint Chronic Hazard Advi-
sory Panels (hereinafter referred to as the Panel or Panels) to advise 
Post, p. 717. 
the Commission in accordance with the provisions of section 31(b) 
respecting the chronic hazards of cancer, birth defects, and gene 
mutations associated with consumer products. 
"(b) Each Panel shall consist of 7 members appointed by the 
Commission from a list of nominees who shall be nominated by the 
President of the National Academy of Sciences from scientists— 
"(1) who are not officers or employees of the United States, and 
who do not receive compensation from or have any substantial 
financial interest in any manufacturer, distributor, or retailer of 
a consumer product; and 
"(2) who have demonstrated the ability to critically assess 
^ 
chronic hazards and risks to human health presented by the 
exposure of humans to toxic substances or as demonstrated by 
the exposure of 
animals to such substances. 
The President of the National Academy of Sciences shall nominate 
for each Panel a number of individuals equal to three times the 
number of members to be appointed to the Panel. 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 717 
"(c) The Chairman and Vice Chairman of the Panel shall be elected 
from among the members and shall serve for the duration of the 
Panel. 
"(d) Decisions of the Panel shall be made by a majority of the Panel. 
"(e) The Commission shall provide each Panel with such adminis-
trative support services as it may require to carry out its duties under 
section 31. 
"(f) A member of a Panel appointed under subsection (a) shall be 
paid at a rate not to exceed the daily equivalent of the annual rate of 
basic pay in effect for grade GS-18 of the General Schedule for each 
day (including traveltime) during which the member is engaged in 
the actual performance of the duties of the Panel. 
"(g) Each Panel shall request information and disclose information 
to the public, as provided in subsection (h), only through the 
Commission. 
"(h)(1) Notwithstanding any statutonr restriction on the authority 
of agsncies and departments of the Federal Government to share 
information, such agencies and departments shall provide the Panel 
with such information and data as each Panel, through the Commis-
sion, may request to carry out its duties under section 31. Each Panel 
may request information, through the Commission, from States, 
industry and other private sources as it may require to carry out its 
responsibilities. 
(2) Section 6 shall apply to the disclosure of information by the ^^te, p. 713. 
Panel but shall not apply to the disclosure of information to the 
Panel.". 
(b) Section 31 (15 U.S.C. 2080) is amended by inserting "(a)" after 
,"SEC. 31." and by adding at the end the following: 
"(b)(1) The Commission may not issue an advance notice of pro-
posed rulemaking for— 
"(A) a consumer product safety rule, 
"(B) a rule under section 27(e), or 
15 USC 2076. 
"(C) a regulation under section 2(q)(l) of the Federal Hazardous 
Substances Act, 
15 use 1261. 
relating to a risk of cancer, birth defects, or gene mutations from a 
consumer product unless a Chronic Hazard Advisory Panel, estab-
lished under section 28, has, in accordance with paragraph (2), Ante, p. 716. 
submitted a report to the Commission with respect to whether a 
substance contained in such product is a carcinogen, mutagen, or 
teratogen. 
"(2)(A) Before the Commission issues an advance notice of proposed 
rulemaking for— 
"(i) a consumer product safety rule, 
"(ii) a rule under section 27(e), or 
"(iii) a regulation under section 2(q)(l) of the Federal Hazard-
ous Substances Act, 
relating to a risk of cancer, birth defects, or gene mutations from a 
consumer product, the Commission shall request the Panel to review 
the scientific data and other relevant information relating to such 
risk to determine if any substance in the product is a carcinogen, 
mutagen, or a teratogen and to report its determination to the 
Commission. 
"(B) When the Commission appoints a Panel, the Panel shall 
convene within 30 days after the date the final appointment is made 
to the Panel. The Panel shall report its determination to the Commis-
sion not later than 120 days after the date the Panel is convened or, if 
the Panel requests additional time, within a time period specified by 
the Commission. If the determination reported to the Commission 
95 STAT. 718 
PUBLIC LAW 97-35—AUG. 13, 1981 
states that a substance in a product is a carcinogen, mutagen, or a 
teratogen, the Panel shall include in its report an estimate, if such an 
estimate is feasible, of the probable harm to human health that will 
result from exposure to the substance. 
Ante, p. 716. 
"(C) A Panel appointed under section 28 shall terminate when it 
has submitted its report unless the Commission extends the existence 
of the Panel. 
5 use app. 
"(D) The Federal Advisory Committee Act shall not apply with 
respect to any Panel established under this section. 
"(c) Each Panel's report shall contain a complete statement of the 
basis for the Panel's determination. The Commission shall consider 
the report of the Panel and incorporate such report into the advance 
notice of proposed rulemaking and final rule.". 
CONGRESSIONAL VETO 
SEC. 1207. (a) The Consumer Product Safety Act is amended by 
adding at the end the following new section: 
"CONGRESSIONAL VETO OF CONSUMER PRODUCT SAFETY RULES 
15 use 2083. 
"SEC. 36. (a) The Commission shall transmit to the Secretary of the 
Senate and the Clerk of the House of Representatives a copy of any 
consumer product safety rule promulgated by the Commission under 
Ante, p. 704. 
section 9. 
"(b) Any rule specified in subsection (a) shall not take effect if— 
"(1) within the 90 calendar days of continuous session of the 
Congress which occur after the date of the promulgation of such 
rule, both Houses of the Congress adopt a concurrent resolution, 
the matter after the resolving clause of which is as follows (with 
the blank spaces appropriately filled): 'That the Congress disap-
proves the consumer product safety rule which was promulgated 
by the Consumer Product Safety Commission with respect to 
and which was transmitted to the Congress on 
and disapproves the rule for the following reasons: 
.'; or 
"(2) within the 60 calendar days of continuous session of the 
Congress which occur after the date of the promulgation of such 
rule, one House of the Congress adopts such concurrent resolu-
tion and transmits such resolution to the other House and such 
resolution is not disapproved by such other House within the 30 
calendar days of continuous session of the Congress which occur 
after the date of such transmittal. 
"(c) Congressional inaction on, or rejection of, a concurrent resolu-
tion of disapproval under this section shall not be construed as an 
expression of approval of the rule involved, and shall not be con-
strued to create any presumption of validity with respect to such rule. 
"(d) For purposes of this section— 
"(1) continuity of session is broken only by an adjournment of 
the Congress sine die; and 
"(2) the days on which either House is not in session because of 
an adjournment of more than 3 days to a day certain are 
excluded in the computation of the periods of continuous session 
of the Congress specified in subsection (b).". 
(b) Subsection (1) of section 27 (15 U.S.C. 2076) is repealed. 
(c) The Federal Hazardous Substances Act is amended by adding at 
the end the following new section: 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 719 
"CONGRESSIONAL VETO OF REGULATIONS 
"SEC. 21. (a) The Consumer Product Safety Commission shall 15USC1276. 
transmit to the Secretary of the Senate and the Clerk of the House of 
Representatives a copy of any regulation promulgated by the Com-
mission under section 2(qXl) or subsection (e) of section 3. 
15 use 1261, 
"(b) Any regulation specified in subsection (a) shall not take effect ^^^^ 
if— 
"(1) within the ninety calendar days of continuous session of 
the Congress which occur after the date of the promulgation of 
such regulation, both Houses of the Congress adopt a concurrent 
resolution, the matter after the resolving clause of which is as 
follows (with the blank spaces appropriately filled): 'That the 
Congress disapproves the regulation which was promulgated 
under the Federal Hazardous Substances Act by the Consumer 
Product Safety Commission with respect to 
and which 
was transmitted to the Congress on 
and disapproves the 
regulation for the following reasons: 
.'; or 
(2) within the sixty calendar days of continuous session of the 
Congress which occur after the date of the promulgation of such 
regulation, one House of the Congress adopts such concurrent 
resolution and transmits such resolution to the other House and 
such resolution is not disapproved by such other House within 
the thirty calendar days of continuous session of the Congress 
which occur after the date of such transmittal. 
"(c) Congressional inaction on, or rejection of, a concurrent resolu-
tion of disapproval under this section shall not be construed as an 
expression of approval of the regulation involved, and shall not be 
construed to create any presumption of validity with respect to such 
regulation. 
(d) For purposes of this section— 
"(1) continuity of session is broken only by an adjournment of 
the Congress sine die; and 
"(2) the days on which either House is not in session because of 
an adjournment of more than three days to a day certain are 
excluded in the computation of the periods of continuous session 
of the Congress specified in subsection (b).". 
(d) The Flammable Fabrics Act is amended by adding at the end the 
following new section: 
Ante, p. 716. 
"CONGRESSIONAL VETO OF FLAMMABIUTY REGULATIONS 
"SEC. 17. (a) The Consumer Product Safety Commission shall 15 use 1204. 
transmit to the Secretary of the Senate and the Clerk of the House of 
Representatives a copy of any flammability regulation promulgated 
by the Commission under section 4. 
15 use 1193. 
"(b) Any regulation specified in subsection (a) shall not take effect 
if— 
"(1) within the ninety calendar days of continuous session of 
the Congress which occur after the date of the promulgation of 
such regulation, both Houses of the Congress adopt a concurrent 
resolution, the matter after the resolving clause of which is as 
follows (with the blank spaces appropriately filled): 'That the 
Congress disapproves the flammability regulation which was 
promulgated under the Flammable Fabrics Act by the Consumer 
Product Safety Commission with respect to 
and which 
w£is transmitted to the Congress on 
and disapproves the 
regulation for the following reasons: 
.'; or 
95 STAT. 720 
PUBLIC LAW 97-35—AUG. 13, 1981 
"(2) within the sixty calendar days of continuous session of the 
Congress which occur after the date of the promulgation of such 
regulation, one House of the Congress adopts such concurrent 
resolution and transmits such resolution to the other House and 
such resolution is not disapproved by such other House within 
the thirty calendar days of continuous session of the Congress 
which occur after the date of such transmittal. 
"(c) Congressional inaction on, or rejection of, a concurrent resolu-
tion of disapproval under this section shall not be construed as an 
expression of approval of the regulation involved, and shall not be 
construed to create any presumption of validity with respect to such 
regulation. 
(d) For purposes of this section— 
"(1) continuity of session is broken only by an adjournment of 
the Congress sine die; and 
"(2) the days on which either House is not in session because of 
an adjournment of more than three days to a day certain are 
excluded in the computation of the periods of continuous session 
of 
the Congress specified in subsection (b).". 
REPORTS 
SEC. 1208. (a) Section 27(bXl) (15 U.S.C. 2076(bXl)) is amended by 
inserting "to carry out a specific regulatory or enforcement function 
of the (Commission" after *7nay prescribe". 
(b) Section 27(b) is amended by adding after and below paragraph 
(9) the following: "An order issued under paragraph (1) shall contain 
a complete statement of the reason the Commission requires the 
report or answers specified in the order to carry out a specific 
regulatory or enforcement function of the (Commission. Such an order 
shall be designed to place the least burden on the person subject to 
the order as is practicable taking into account the purpose for which 
the order was issued.". 
VOLUNTARY STANDARDS 
SEC. 1209. (a) Section 5(a) (15 U.S.C. 2054(a)) is amended by— 
(1) striking "and" after paragraph (1); 
(2) striking the period sdfter paragraph (2) and inserting in lieu 
thereof a semicolon; and 
(3) adding at the end thereof the following: 
"(3) following publication of an advance notice of proposed 
rulemaking or a notice of proposed rulemaking for a product 
safety rule under any rulemaking authority administered by the 
(Commission, assist public and private organizations or groups of 
manufacturers, administratively and technically, in the develop-
ment of safety standards addressing the risk of injury identified 
in such notice; and 
"(4) to the extent practicable and appropriate (taking into 
account the resources and priorities of the Commission), assist 
public and private organizations or groups of manufacturers, 
administratively and technically, in the development of product 
safety standards and test methods.". 
(b) Section 50t)) (15 U.S.C. 20540t>)) is amended by amending para-
graph (3) to read as follows: 
"(3) offer training in product safety investigation and test 
methods.". 
(c) Section 27(j) (15 U.S.C. 2076(j)) is amended— 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 721 
(1) by striking "and" at the end of paragraph (9); 
(2) by redesignating paragraph (10) as paragraph (11); and 
(3) by inserting immediately after paragraph (9) the following: 
"(10) with respect to voluntary consumer product safety stand-
ards for which the Commission has participated in the develop-
ment through monitoring or offering of assistance and with 
respect to voluntary consumer product safety standards relating 
to risks of injury that are the subject of regulatory action by the 
Commission, a description o
f
— 
"(A) the number of 
such standards adopted; 
"(B) the nature and number of the products which are the 
subject of such standards; 
"(C) the effectiveness of such standards in reducing poten-
tial harm from consumer products; 
"(D) the degree to which staff members of the Commission 
participate in the development of such standards; 
"(E) the amount of resources of the Commission devoted to 
encouraging development of such standards; and 
"(F) such other information as the Commission determines 
appropriate or necessary to inform the Congress on the 
current status of the voluntary consumer product safety 
standard program; and". 
PETITIONS TO COMMISSION 
SEC. 1210. Section 10 (15 U.S.C. 2059) is repealed. 
Repeal. 
MISCELLANEOUS 
SEC. 1211. (a) The first sentence of section 24 (15 U.S.C. 2073) is 
eunended by inserting "(including any individual or nonprofit, busi-
ness, or other entity) after "interested person". 
0)) Section 13 (15 U.S.C. 2062) is repealed. 
Repeal. 
(cXD Section 20 is amended by— 
(A) redesignating subsections (b) and (c) as subsections (c) and 
(d), respectively; and 
(B) by insertmg after subsection (a) the following: 
"(b) In determining the amount of any penalty to be sought upon 
commencing an action seeking to assess a penalty for a violation of 
section 19(a), the Commission shall consider the nature of the product 15 U
S
C 2068. 
defect, the severity of the risk of injury, the occurrence or absence of 
injury, the number of defective products distributed, and the appro-
priateness of such penalty in relation to the size of the business of the 
person charged.". 
(2) The second sentence of section 20(c) (as so redesignated by 
subsection (aXD of this section) (15 U.S.C. 2069) is amended to read as 
follows: "In determining the amount of such penalty or whether it 
should be remitted or mitigated and in what simount, the Commission 
shall consider the appropriateness of such penalty to the size of the 
business of the person charged, the nature of the product defect, the 
severity of the risk of iiyury, the occurrence or absence of injury, and 
the number of 
defective products distributed.". 
(d) Section 27 (15 U.S.C. 2076) is amended by striking out subsection 
(m). 
(e) The last sentence of section 14(a) of the Flammable Fabrics Act 
(15 U.S.C. 1201(a)) is repealed. 
(fKD Section 15 of the Federal Hazardous Substances Act (15 U.S.C. 
1274) is amended to read as follows: 
95 STAT. 722 
PUBLIC LAW 97-35—AUG. 13, 1981 
"NOTICE AND REPAIR, REPLACEMENT, OR REFUND 
"SEC. 15. (a) If any article or substance sold in commerce is defined 
as a banned hazardous substance (whether or not it was such at the 
time of its sale) and the Commission determines (after affording 
interested persons, including consumers and consumer organizations, 
an opportunity for a hearing) that notification is required to ade-
quately protect the public from such article or substance, the Com-
mission may order the manufacturer or any distributor or deader of 
the article or substance to take any one or more of the following 
actions: 
"(1) To give public notice that the article or substance is a 
banned hazardous substance. 
"(2) To mail such notice to each person who is a manufacturer, 
distributor, or dealer of such article or substance. 
"(3) To mail such notice to every person to whom the person 
giving the notice knows such article or substance was delivered 
or sold. 
An order under this subsection shall speciiy the form and content of 
any notice required to be given under the order. 
(b) If any article or substance sold in commerce is defined as a 
banned hazardous substance (whether or not it was such at the time 
of its sale) and the Commission determines (after affording interested 
persons, including consumers and consumer organizations, an oppor-
tunity for a hearing) that action under this subsection is in the public 
interest, the Consumer Product Safety Commission may order the 
manufacturer, distributor, or dealer to take whichever of the follow-
ing actions the person to whom the order is directed elects: 
"(1) If repairs to or changes in the article or substance may be 
made so that it will not be a banned hazardous substance, to 
make such repairs or changes. 
"(2) To replace such article or substance with a like or equiva-
lent article or substance which is not a banned hazardous 
substance. 
"(3) To refund the purchase price of the article or substance 
(less a reasonable allowance for use, if the article or substance 
has been in the possession of the consumer for one year or 
more— 
"(A) at the time of public notice under subsection (a), or 
"(B) at the time the consumer receives actual notice that 
the article or substance is a banned hazardous substance, 
whichever first occurs). 
An order under this subsection may also require the peison to whom 
it applies to submit a plan, satisfactory to the Commission, for taking 
the action which such person has elected to take. The Commission 
shall specify in the order the persons to whom refunds must be made 
if the person to whom the order is directed elects to take the action 
described in paragraph (3). If an order under this subsection is 
directed to more than one person, the Commission shall specify which 
person has the election under this subsection. An order under this 
subsection may prohibit the person to whom it applies from manufac-
turing for sale, oflfering for sale, distributing in commerce, or import-
ing into the customs territory of the United States (as defined in 
1
9 use 1202 
general headnote 2 to the Tariff Schedules of the United States), or 
^°^- 
from doing any combination of such actions, with respect to the 
article or substance with respect to which the order was issued. 
"(cXD No charge shall be made to any person (other than a 
manufacturer, distributor, or dealer) who avails himself of any 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 723 
remedy provided under an order issued under subsection (b), and the 
person subject to the order shall reimburse each person (other than a 
manufacturer, distributor, or dealer) who is entitled to such a remedy 
for any reasonable and foreseeable expenses incurred by such person 
in availing himself of such remedy. 
"(2) An order issued under subsection (a) or (b) with respect to an 
article or substance may require any person who is a manufacturer, 
distributor, or dealer of the article or substance to reimburse any 
other person who is a manufacturer,' distributor, or dealer of such 
article or substance for such other person's expenses in connection 
with carrying out the order, if the Commission determines such 
reimbursement to be in the public interest. 
"(d) An order under subsection (a) or (b) may be issued only after an 
opportunity for a hearing in accordance with section 554 of title 5, 
United States Code, except that, if the Commission determines that 
any person who wishes to participate in such hearing is a part of a 
class of participants who share an identity of interest, the Commis-
sion may limit such person's participation in such hearing to partici-
pation through a single representative designated by such class (or by 
the Commission if such class fails to designate such a 
representative).". 
(2) Section 4 of the Federal Hazardous Substances Act (15 U.S.C. 
1263) is amended by adding at the end the following: 
"(j) The failure to comply with an order issued under section 15.". ^"^te, p. 722. 
(g) The table of contents is amended by striking out the items 
relating to sections 13 and 28, and inserting in lieu thereof the 
following: 
"Sec. 13. Repealed." 
and 
"Sec. 28. Chronic hazards advisory panel.", 
respectively. 
(hXD Section 11(c) (15 U.S.C. 2060(c)) is amended by striking out 
"section 9(c)" and inserting in lieu thereof "sections 9(f)(1) and 
9(f)(3)". (2) Section 11(a) is amended by striking out "9(aX2)" and 
inserting in lieu thereof "9(d)(2)". 
(3)(A) Section 11 is amended by adding at the end thereof the 
following: 
"(f) For purposes of this section and sections 23(a) and 24, a 
reasonable attorney's fee is a fee (1) which is based upon (A) the 
actual time expended by an attorney in providing advice and other 
legal services in connection with representing a person in an action 
brought under this section, and (B) such reasonable expenses as may 
be incurred by the attorney in the provision of such services, and (2) 
which is computed at the rate prevailing for the provision of similar 
services with respect to actions brought in the court which is 
awarding such fee.". 
(B) Section 23(a) (15 U.S.C. 2072(a)) is amended by striking out 
"10(e)(4)" and inserting in lieu thereof "11(f)". 
(C) Section 24 (15 U.S.C. 2074) is amended by striking out "10(e)(4)" 15 use 2073. 
and inserting in lieu thereof "11(f)". 
(4) Section 15(g)(1) (15 U.S.C. 2064(g)(1)) is amended by inserting ", 
Science and Transportation" immediately after "on Commerce", and 
by striking out "section 12(e)(1)" and inserting in lieu thereof "section 
12(c)(1)". 
95 STAT. 724 
PUBLIC LAW 97-35—AUG. 13, 1981 
15 u s e 2051 
note. 
Study 
and report. 
LAWN MOWER STANDARD 
SEC. 1212. (a) Not later than 90 days after the date of the enactment 
of this Act, the Consumer Product Safety Commission shall amend its 
consumer product safety standard for walk-behind power lawn 
mowers to provide that a manually started rotary t3rpe lawn mower 
which has a blade control system which meets the requirements of 
the standard relating to blade controls (16 CFR 1205.5) except that 
the system stops the engine and requires a manual restart of the 
engine shall be considered in compliance with such requirements if 
the engine starting controls for the lawn mower are located within 
twenty-four inches from the top of the mower's handles or the mower 
has a protective foot shield which extends three hundred and sixty 
degrees around the mower housing. The Consumer Product Safety 
Act shall not apply with respect to the promulgation of the amend-
ment prescribed by this subsection. 
(b) The Commission shall conduct a study of the effect on consum-
ers of the amendment prescribed by subsection (a) and shall report 
the results of such study two years after the date the standard, as 
amended in accordance with suDsection (a), takes effect. The Commis-
sion may not amend the amendment prescribed by subsection (a) 
before the report is filed under this subsection. 
AMUSEMENT PARKS 
SEC. 1213. Section 3(aXl) (15 U.S.C. 2052(aXl)) is amended by 
inserting before the sentence following subparagraph (I) the follow-
ing: "Such term includes any mechanical device which carries or 
conveys passengers along, around, or over a fixed or restricted route 
or course or within a defined area for the purpose of giving its 
passengers amusement, which is customarily controlled or directed 
by an individual who is employed for that purpose and who is not a 
consumer with respect to such device, and which is not permanently 
fixed to a site. Such term does not include such a device which is 
permanently fixed to a site.". 
15 use 2052 
note. 
15 use 1261 
note. 
15 use 1191 
note. 
EXTENSION OF ACT 
SEC. 1214. Section 32(a) (15 U.S.C. 2081(a)) is amended (1) by striking 
out "and" at the end of paragraph (6), (2) by striking out the period at 
the end of paragraph (7) and inserting a semicolon, and (3) by adding 
at the end the following: 
"(8) $33,000,000 for the fiscal year ending September 30,1982; 
and 
"(9) $35,000,000 for the fiscal year ending September 30,1983. 
For payment of accumulated and accrued leave under section 5551 of 
title 5, United States Code, severance pay under section 5595 under 
such title, and any other expense related to a reduction in force in the 
Commission, there are authorized to be appropriated such sums as 
may be necessary.". 
EFFECTIVE DATE 
SEC. 1215. (a) Except as provided in subsection (b), the amendments 
made by this subtitle shall take effect on the date of the enactment of 
this Act. 
(b) The amendments made by section 1207 shall apply with respect 
to consumer product safety rules under the Consumer Product Safety 
Act and regulations under the Federal Hazardous Substances Act 
and the Flammable Fabrics Act promulgated by the Consumer 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 725 
Product Safety Commission after the date of the enactment of this 
Act; and the amendments made by sections 1202,1203, and 1206 of 
this subtitle shall apply with respect to regulations under the 
Consumer Product Safety Act, the Federal Hazardous Substances is use 205i 
Act, and the Flammable Fabrics Act for which notices of proposed ^ffjon IOAI 
rulemaking are issued after August 14,1981. 
note. 
Subtitle B—Communications 
15 u s e 1191 
note. 
CHAPTER 1-PUBUC BROADCASTING 
Public 
Broadcasting 
Amendmente 
SHORT TITLE 
Act of 1981. 
SEC. 1221. This chapter may be cited as the "Public Broadcasting 47 use 609 note. 
Amendments Act of 1981". 
AUTHORIZATION OP APPROPRIATIONS FOR PUBLIC TELECOMMUNICATIONS 
FACILITIES 
SEC. 1222. Section 391 of 
the Communications Act of 1934 (47 U.S.C. 
391) is amended by inserting after "1981," the following: "$20,000,000 
for fiscal year 1982, $15,000,000 for fiscal year 1983, and $12,000,000 
for fiscal year 1984,". 
GRANTS FOR CONSTRUCTION AND PLANNING 
SEC. 1223. (a) Section 392(aX4) of the Communications Act of 1934 
(47 U.S.C. 392(aX4)) is amended by striking out "only" and inserting 
in lieu thereof "primarily", and by inserting before the semicolon at 
the end thereof the following: ", and that the use of such public 
telecommunications facilities for purposes other than the provision of 
public telecommunications services will not interfere with the provi-
sion of such public telecommunications services as required in this 
part". 
(b) Section 392(gX2) of the Communications Act of 1934 (47 U.S.C. 
392(gX2)) is amended— 
(1) by striking out "only" and inserting in lieu thereof "primar-
ily"; and 
(2) by striking out "(unless" and all that follows through "do 
so)" and inserting in lieu thereof the following: "(or the use of 
such public telecommunications facilities for purposes other 
than the provision of public telecommunications services inter-
feres with the provision of such public telecommunications 
services as required in this part)". 
DECLARATION OF POUCY REGARDING CORPORATION 
SEC. 1224. Section 396(aX5) of the Communications Act of 1934 (47 
U.S.C. 396(a)(5)) is amended by striking out "and", and by inserting 
before the semicolon at the end thereof the following: ", and which 
will constitute a source of alternative telecommunications services 
for all the citizens of the Nation". 
BOARD OF DIRECTORS OF CORPORATION 
SEC. 1225. (aXD Section 396(c) of the Communications Act of 1934 
(47 U.S.C. 396(c)) is amended to read as follows: 
95 STAT. 726 
PUBLIC LAW 97-35—AUG. 13, 1981 
"Board of Directors 
"(c)(1) The Corporation for Public Broadcasting shall have a Board 
of Directors (hereinafter in this section referred to as the 'Board'), 
consisting of 10 members appointed by the President, by and with the 
advice and consent of the Senate, and the President of the Corpora-
tion. No more than 6 members of the Board appointed by the 
President may be members of the same political party. The President 
of the Corporation shall serve as the Chairman of the Board. 
"(2) The 10 members of the Board appointed by the President (A) 
shall be selected from among citizens of the United States (not 
regular full-time employees of the United States) who are eminent in 
such fields as education, cultural and civic affairs, or the arts, 
including radio and television; and (B) shall be selected so as to 
provide as nearly as practicable a broad representation of various 
regions of the Nation, various professions and occupations, and 
various kinds of talent and experience appropriate to the functions 
and responsibilities of the Corporation. 
"(3) Of the members of the Board appointed by the President under 
paragraph (1), one member shall be selected from among individuals 
who represent the licensees and permittees of public television 
stations, and one member shall be selected from among individuals 
who represent the licensees and permittees of public radio stations. 
"(4) The members of the initial Board of Directors shall serve as 
incorporators and shall take whatever actions are necessary to 
establish the Corporation under the District of Columbia Nonprofit 
DC. Code 
Corporation Act. 
29-1001. 
"(5) rpjjg term of office of each member of the Board appointed by 
the President shall be 5 years, except that any member appointed to 
fill a vacancy occurring prior to the expiration of the term for which 
his predecessor was appointed shall be appointed for the remainder of 
such term. No member of the Board shall be eligible to serve in excess 
of 2 consecutive terms of 5 years each. 
"(6) Any vacancy in the Board shall not affect its power, but shall 
be filled in the manner consistent with this Act. 
"(7) Members of the Board shall attend not less than 50 percent of 
all duly convened meetings of the Board in any calendar year. A 
member who fails to meet the requirement of the preceding sentence 
shall forfeit membership and the President shall appoint a new 
member to fill such vacancy not later than 30 days after such vacancy 
is determined by the Chairman of the Board.". 
47 use 396 note. 
(2)(A) The amendment made in paragraph (1) shall not affect the 
continuation in office of any individual serving on the Board of 
Directors of the Corporation for Public Broadcasting on the date of 
the enactment of this Act. 
(B) The first 5 vacancies occurring on the Board after October 1, 
1983 (other than any vacancy in the office of Chairman) shall not be 
filled, so as to reduce the membership of the Board to 10 members in 
addition to the Chairman of the Board. 
(b) Section 396(d) of the Communications Act of 1934 (47 U.S.C. 
396(d)) is amended to read as follows: 
"Election of Vice Chairman; Compensation 
"(dXD Members of the Board shall annually elect one or more of 
their members as a Vice Chairman or Vice Chairmen. 
"(2) The members of the Board shall not, by reason of such 
membership, be deemed to be officers or employees of the United 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 727 
States. They shall, while attending meetings of the Board or while 
engaged in duties related to such meetings or other activities of the 
Board pursuant to this subpart, be entitled to receive compensation 
at the rate of $150 per day, including traveltime. No Board member 
shall receive compensation of more than $10,000 in any fiscal year. 
While away from their homes or regular places of business. Board 
members shall be allowed travel and actual, reasonable, and neces-
sary expenses.". 
(c) Section 396(eXl) of the Communications Act of 1934 (47 U.S.C. 
396(eXl)) is amended— 
(1) by striking out "the Chairman and any" and inserting in 
lieu thereof "a"; and 
(2) by inserting "for services rendered" after "Corporation" the 
sixth time it appears therein. 
REPORT TO CONGRESS 
SEC. 1226. Section 396(i)(l) of the Communications Act of 1934 (47 
U.S.C. 396(iXl)) is amended by striking out "February" and inserting 
in lieu thereof "May". 
FINANCING; COMMUNITY ADVISORY BOARDS 
SEC. 1227. (a) Section 396(kXlXC) of the Communications Act of 
1934 (47 U.S.C. 396(kXlXC)) is amended— 
(1) by striking out "and" each place it appears therein; 
(2) by inserting "1984, 1985, and 1986," after "1983,"; and 
(3) by inserting before the period at the end thereof the 
following: ", and $130,000,000 for each of the fiscal years 1984, 
1985, and 1986". 
(b) Section 396(kX2XB) of the Communications Act of 1934 (47 
U.S.C. 396(kX2XB)) is amended— 
(1) by striking out "quarterly" and inserting in lieu thereof 
"fiscal year"; and 
(2) by striking out ", in such amounts" and all that follows 
through "quarter". 
(cXD Section 396(kX3XA) of the Communications Act of 1934 (47 
U.S.C. 396(kX3XA)) is amended to read as follows: 
"(3XAXi) The Corporation shall establish an annual budget for use 
in allocating amounts from the Fund. Of the amounts appropriated 
into the Fund available for allocation for any fiscal year— 
"(I) not more than 5 percent of such amounts shall be available 
for the administrative expenses of the Corporation; 
"(II) not less than 5 percent of such amounts shall be available 
for other expenses incurred by the Corporation, including 
research, training, technical assistance, engineering, instruc-
tional support, payment of interest on indebtedness, capital costs 
relating to telecommunications satellites, the payment of pro-
gramming royalties and other fees, and the costs of interconnec-
tion facilities and operations (as provided in clause (ivXD), except 
that the total amount available for obligation for any fiscal year 
under this subclause and subclause (I) shall not exceed 10 percent 
of the amounts appropriated into the Fund available for alloca-
tion for such fiscal year; 
"(III) 75 percent of the remainder (after allocations are made 
under subclause (I) and subclause (II)) shall be allocated in 
accordance with clause (iiXD; and 
-194 0—82 
48 : QL3 
95 STAT. 728 
PUBLIC LAW 97-35—AUG. 13, 1981 
"(IV) 25 percent of such remainder shall be allocated in 
accordance with clause (iii). 
"(ii) Of the amounts allocated under clause (i)(III) for any fiscal 
year— 
"(I) 75 percent of such amounts shall be available for distribu-
tion among the licensees and permittees of public television 
stations pursuant to paragraph (6)(B); and 
"(II) 25 percent of such amounts shall be available for distribu-
tion under subparagraph (B)(i) for public television program-
ming, 
"(iii) Of the amounts allocated under clause (iXIV) for any fiscal 
year— 
"(I) not less than 50 percent of such amounts (as determined 
under paragraph (6XA)) shall be available for distribution among 
the licensees and permittees of public radio stations pursuant to 
paragraph (6)(B); and 
"(II) not more than 50 percent of such amounts (as determined 
under paragraph (6)(A)) shall be available for distribution under 
subparagraph (BXi) for public radio. 
"(ivXI) Subject to the provisions of clause (v), the Corporation shall 
defray an amount equal to 50 percent of the total costs of interconnec-
tion facilities and operations to facilitate the availability of public 
television and radio programs among public broadcast stations. 
"(II) Of the amounts received as the result of any contract, lease 
agreement, or any other arrangement under which the Corporation 
directly or indirectly makes available interconnection facilities, 50 
percent of such amounts shall be distributed to the licensees and 
permittees of public television stations and public radio stations. The 
Corporation shall not have any authority to establish any require-
ments, guidelines, or limitations with respect to the use of such 
amounts by such licensees and permittees. 
"(v) If the expenses incurred by the Corporation under clause (iXII) 
for any fiscal year for— 
"(I) capital costs relating to telecommunications satellites; 
"(II) the payment of programming royalties and other fees; and 
"(III) the costs of interconnection facilities and operations (as 
provided in clause (iv)); 
exceed 6 percent of the amounts appropriated into the Fund available 
for allocation for such fiscal year, then 75 percent of such excess costs 
shall be defrayed by the licensees and permittees of public television 
stations from amounts available to such licensees and permittees 
under clause (ii)(I) and 25 percent of such excess costs shall be 
defrayed by the licensees and permittees of public radio stations from 
amounts available to such licensees and permittees under clause 
(iiiXI).". 
(2) Section 396(kX3XBXi) of the Communications Act of 1934 (47 
U.S.C. 396(kX3XBXi)) is amended to read as follows: 
"(B)(i) The Corporation shall utilize the funds allocated pursuant to 
subparagraph (AXii)(II) and subparagraph (AXiiiXII), and a signifi-
cant portion of such other funds as may be available to the Corpora-
tion, to make grants and contracts for production of public television 
or radio programs by independent producers and production entities 
and public telecommunications entities, and for acquisition of such 
programs by public telecommunications entities. Of the funds uti-
lized pursuant to this clause, a substantial amount shall be reserved 
for distribution to independent producers and production entities for 
the production of programs.". 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 729 
(3) Section 396(kK3XB) of 
the Ck)mmunications Act of 1934 (47 U.S.C. 
396(kX3)(B)) is amended— 
(A) in clause (ii) thereof, by striking out "contained in the 
annual budget established by the Corporation under clause (i)" 
and inserting in lieu thereof "available for distribution under 
clause (i)"; and 
(B) by striking out clause (iii) and clause (iv) thereof. 
(4) The amendments made in this subsection shall apply to fiscal 4
7 use 396 note. 
years beginning after September 30,1983. 
(dXD Section 396(kX6XA) of the Communications Act of 1934 (47 
U.S.C. 396(kX6XA)) is amended to read as follows: 
"(6XA) The Corporation, in consultation with public radio stations 
and with National Public Radio (or any successor organization), shall 
determine the percentage of funds allocated under subclause (I) and 
subclause (II) of paragraph (3XAXiii) for each fiscal year. The Corpora-
tion, in consultation with such organizations, also shall conduct an 
annual review of the criteria and conditions applicable to such 
allocations.". 
(2) Section 396(kX6XB) of 
the Communications Act of 1934 (47 U.S.C. 
396(kX6XB)) is amended— 
(A) by striking out the first sentence thereof; 
(B) in the second sentence thereof, by inserting "under para-
graph (3XA)(iiXI)" after "stations"; and 
(C) in the last sentence thereof, by inserting "under paragraph 
(3XAXiiiXI)" after "radio stations^'. 
(3) The amendments made in this subsection shall apply to fiscal 4
7 use 396 note. 
years beginning after September 30,1983. 
(e) Section 396(kX7) of the Communications Act of 1934 (47 U.S.C. 
396(k)(7)) is amended to read as follows: 
"(7) The funds distributed pursuant to paragraph (3XA) may be 
used at the discretion of the recipient for purposes related primarily 
to the production or acquisition of programming.". 
(f) Section 396(kX8) of the Communications Act of 1934 (47 U.S.C. 
396(kX8)) is amended to read as follows: 
"(8) Any public telecommunications entity which— 
"(A) receives any funds pursuant to this subpart for any fiscal 
year; and 
"(B) during such fiscal year has filed or was required to file a 
return with the Internal Revenue Service declaring unrelated 
business income related to station operations under sections 501, 
511, and 512 of 
the Internal Revenue Code of 1954; 
26 use 50i, 5ii, 
shall refund to the Corporation an amount e^ual to the amount of 
unrelated business income tax paid as stated m such filed return.". 
(gXD Section 396(kX9XA) of the Communications Act of 1934 (47 
U.S.C. 396(kX9XA)) is amended— 
(A) by inserting "(other than any station which is owned and 
operated by a State, a political or special purpose subdivision of a 
State, or a public agency)" after "public broadcast station"; 
(B) by inserting after "assure that" the following: "(i) its 
advisory board meets at regular intervals; (ii) the members of its 
advisory board regularly attend the meetings of the advisory 
board; and (iii)"; and 
(C) by striking out "reasonably reflects" and inserting in lieu 
thereof "are reasonably representative of. 
(2) Section 396(kX9XD) of the Communications Act of 1934 (47 
U.S.C. 396(kX9)CD)) is amended by inserting "(other than any station 
which is owned and operated by a State, a political or special purpose 
512. 
95 STAT. 730 
PUBLIC LAW 97-35—AUG. 13, 1981 
subdivision of a State, or a public agency)" after "public broadcast 
station". 
(3) Section 396(kX9)(E) of the Communications Act of 1934 (47 U.S.C. 
396(k)(9)(E)) is amended by inserting "(other than any station which is 
owned and operated by a State, a political or special purpose subdivi-
sion of a State, or a public agency)" after "public broadcast station". 
RECORDS AND AUDIT 
SEC. 1228. (a) Section 396(1X1XA) of the Communications Act of 1934 
(47 U.S.C. 396(1X1)(A)) is amended by inserting ", except that such 
requirement shall not preclude shared auditing arrangements be-
tween any public telecommunications entity and its licensee where 
such licensee is a public or private institution" after "United States". 
(b) Section 396(1X3XB) of the Communications Act of 1934 (47 U.S.C. 
396(1X3XB)) is amended— 
(1) in clause (ii) thereof, by striking out "an annual" and 
inserting in lieu thereof "a biannual"; and 
(2) in clause (iii) thereof, by striking out "annually" and 
inserting in lieu thereof "biannually". 
EDITORIAUZING AND SUPPORT OP POLITICAL CANDIDATES PROHIBITED 
SEC. 1229. Section 399 of the Communications Act of 1934 (47 U.S.C. 
399) is amended to read as follows: 
"EDITORIAUZING AND SUPPORT OF POLITICAL CANDIDATES PROHIBITED 
"SEC. 399. No noncommercial educational broadcasting station 
47 use 396. 
which receives a grant from the Corporation under subpart C of this 
part may engage in editorializing. No noncommercial educational 
broadcasting station may support or oppose any candidate for politi-
cal office.". 
U S E OF BUSINESS OR INSTITUTIONAL LOGOGRAMS 
SEC. 1230. Subpart D of part IV of title III of the Communications 
Act of 1934 (47 U.S.C. 397) is amended by adding at the end thereof 
the following new section: 
"USE OF BUSINESS OR INSTITUTIONAL LOGOGRAMS 
"Business or 
"SEC. 399A: (a) For purposes of this section, the term 'business or 
lo^o *ram"^ 
institutional logogram means any aural or visual letters or words, or 
47^lfsc'399A. 
^^Y symbol or sign, which is used for the exclusive purpose of 
identifying any corporation, company, or other organization, and 
which is not used for the purpose of promoting the products, services, 
or facilities of such corporation, company, or other organization. 
"Ot)) Each public television station and each public radio station 
shall be authorized to broadcast announcements which include the 
use of any business or institutional logogram and which include a 
reference to the location of the corporation, company, or other 
organization involved, except that such announcements may not 
interrupt regular programming. 
"(c) The provisions of this section shall not be construed to limit the 
authority of the Commission to prescribe regulations relating to the 
manner in which logograms may be used to identify corporations, 
companies, or other organizations.". 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 731 
OFFERING OF CERTAIN SERVICES, FACILITIES, OR PRODUCTS BY PUBUG 
BROADCAST STATIONS 
SEC. 1231. Subpart D of part IV of title III of the Communications 
Act of 1934, as amended in section 1230, is further amended by adding 
at the end thereof the following new section: 
"OFFERING OF CERTAIN SERVICES, FACIUTIES, OR PRODUCTS BY PUBUC 
BROADCAST STATIONS 
"SEC. 399B. (a) For purposes of this section, the term 'advertise- "Advertisement." 
ment' means any message or other programming material which is ^^ ^^ ^^^^• 
broadcast or otherwise transmitted in exchange for any remunera-
tion, and which is intended— 
"(1) to promote any service, facility, or product offered by any 
person who is engaged in such offering for profit; 
"(2) to express the views of any person with respect to any 
matter of public importance or interest; or 
"(3) to support or oppose any candidate for political office. 
"(b)(1) Except as provided in paragraph (2), each public broadcast 
station shall be authorized to engage in the offering of services, 
facilities, or products in exchange for remuneration. 
"(2) No public broadcast station may make its facilities available to 
any person for the broadcasting of any advertisement. 
"(c) Any public broadcast station which engages in any offering 
specified in subsection (bXD may not use any funds distributed by the 
Corporation under section 396(k) to defray any costs associated with 47 use 396. 
such offering. Any such offering by a public broadcast station shall 
not interfere with the provision of public telecommunications serv-
ices by such station. 
"(d) Each public broadcast station which engages in the activity 
specified in subsection (bXD shall, in consultation with the Corpora-
tion, develop an accounting system which is designed to identify any 
amounts received as remuneration for, or costs related to, such 
activities under this section, and to account for such amounts 
separately from any other amounts received by such station from any 
source.". 
STUDY ON ALTERNATIVE FINANCING FOR PUBUC TELECOMMUNICATIONS 
SEC. 1232. (a)(1) A study shall be conducted in accordance with the 47 use 396 note. 
provisions of this section regarding options which may be available to 
public telecommunications entities, the Public Broadcasting Service, 
and National Public Radio with respect to the development of sources 
of revenue in addition to the sources of revenue available to such 
entities and organizations on the date of the enactment of this Act. 
Such study shall be completed not later than July 1, 1982, and a Report to 
report shall be submitted to the Congress in accordance with subsec- Congress. 
tion (i). 
(2) The study required in paragraph (1) shall seek to identify 
funding options which also will ensure that public telecommunica-
tions as a source of alternative and diverse programming will be 
maintained and enhanced, and that public telecommunications serv-
ices will continue to expand and be available to increasing numbers 
of citizens throughout the Nation. 
(3) The studv required in paragraph (1), in examining funding 
alternatives, also shall seek to determine appropriate means for 
ensuring that the use of such funding alternatives does not interfere 
95 STAT. 732 
PUBLIC LAW 97-35-AUG. 13, 1981 
Temporary 
Commission on 
Alternative 
Financing for 
Public 
Telecommuni-
cations. 
Definitions. 
with the content and quality of programming appearing on public 
television and radio. 
(b)(1) The study required in subsection (aXD shall be conducted by a 
commission to be known as the Temporary Commission on Alterna-
tive Financing for Public Telecommunications (hereinafter in this 
section referred to as the "Commission"). 
(2) The Commission shall consist of the Chairman of the Federal 
Communications Commission (or a member of the Commission desig-
nated by the Chairman); the Assistant Secretary of Commerce for 
Communications and Information (or his delegate); the heads of the 
Corporation for Public Broadcasting, National Public Radio, and the 
National Association of Public Television Stations (or their dele-
gates); the Chairman and the ranking minority member of the 
Committee on Commerce, Science, and Transportation of the Senate 
(or any members of such committee designated by them); £ind the 
Chairman and ranking minority member of the Committee on 
Energy and Commerce of the House of Representatives (or any 
members of such committee designated by them). 
(3) In addition to the members of the Commission specified in 
paragraph (2), an officer or employee of a public television station and 
an officer or employee of a public radio station shall serve as 
members of the Commission. Such members shall be selected by the 
members of 
the Commission specified in paragraph (2). Such selection 
shall be made at the first meeting conducted by the Commission. 
(4) For purposes of this subsection, the terms "public television 
station" and public radio station" have the same meaning as the 
term "public broadcast station" in section 397(6) of the Communica-
tions Act of 1934 (47 U.S.C. 397(6)). 
(c) The members of the Commission shall serve without compensa-
tion, but the Federal Communications Commission shall make funds 
available to reimburse such members for travel expenses, including 
per diem in lieu of subsistence, in the same manner as persons 
employed intermittently in the Federal Government service are 
allowed expenses under section 5703 of title 5, United States Code. 
(d) The Chairman of the Federal Communications Commission (or 
the person designated by the Chsdrman under subsection (bX2)) shall 
serve as Chairman of the Commission. 
(e) The Commission shall meet at the call of the Chairman or a 
majority of the members of the Commission. Six members of the 
Commission shall constitute a quorum. 
(fXD Upon request of the Commission, the Federal Communica-
tions Commission shall furnish the Commission with such personnel 
and support services as may be necessarv to assist the Commission in 
carrying out its duties and functions unaer this section. The Commis-
sion shall not be required to pay or reimburse the Federal Communi-
cations Commission for such personnel and support services. 
(2) The Assistant Secretary of Commerce for Communications and 
Information, and the heads of the Corporation for Public Broadcast-
ing, the Public Broadcasting Service, National Public Radio, and the 
National Association of Public Television Stations, each are author-
ized to furnish the Commission with such personnel and support 
services as each such organization considers necessary or appropriate 
to assist the Commission in canying out its duties and functions 
under this section. 
(g) The Commission shall have authority to hold such hearings, sit 
and act at such times and places, and take such testimony as the 
Commission considers advisable. The Commission shall seek to obtain 
the testimony and advice of business representatives, persons repre-
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 733 
Report to 
Congress. 
senting public interest groups, and other persons and organizations 
which have an interest in public broadcasting. 
(h) The Commission shall be exempt from section 10(e), section 
10(f), and section 14 of the Federal Advisory Committee Act (5 U.S.C. 
Appendix). 
(i) The Commission shall submit a report to the Congress contain-
ing the results of the study required in'subsection (aXD not later than 
July 1, 1982. Such report shall include an evaluation of each option 
with respect to the development of additional sources of revenue, and 
shall include recommendations for such legislative or other action as 
the Commission considers necessary or appropriate. 
(jXD Except as provided in paragraph (2), the Commission shall Termination, 
terminate at the end of the 90-day period following the date of the 
submission of the report required in subsection (i). 
(2) If the Commission decides to establish the demonstration 
program specified in section 1233, then the Commission shall recon-
vene after the termination of the demonstration program conducted 
under section 1233 for the purpose of carrying out the functions of the 
Commission specified in section 1233(e). The Commission shall termi-
nate at the end of the 90-day period following the date of the 
submission of the report required in section 1233(e). 
DEMONSTRATION PROGRAM REGARDING ADVERTISING 
SEC. 1233. (a) The Temporary Commission on Alternative Financ- 47 use 396 note, 
ing for Public Telecommunications established in section 1232 may 
establish a demonstration program in accordance with this section 
for the purpose of determining the feasibility of permitting public 
television station licensees and public radio station licensees to 
broadcast advertising announcements. If the Commission decides to 
establish such demonstration program, then the Commission shall 
establish and carry out such demonstration program in accordance 
with the provisions of subsection (b) through subsection (f). 
(bXl)(A) The Commission shall establish the demonstration pro-
gram as soon as practicable after the date of the enactment of this 
Act. The Commission shsdl permit public broadcast station licensees 
to begin the broadcasting of qualifjdng advertising not later than 
January 1,1982, except that such licensees may begin such advertis-
ing before such date if the Commission completes the establishment 
of the demonstration program before such date. 
(B) Such broadcasting of qualifying advertising shall be carried out Termination, 
during the 18-month period beginning January 1,1982 (or beginning 
on such earlier date as may be authorized by the Commission under 
subparagraph (A)), except that such broadcasting of qualifying adver-
tising shall terminate not later than June 30, 1983. The demonstra-
tion program shall terminate at the end of such period. 
(2)(A) The Corporation for Public Broadcasting, in consultation 
with the Commission, shall select not more than 10 public television 
station licensees and not more than 10 public radio station licensees 
to participate in the demonstration program. 
(B) Such selection shall be made from among licensees which have 
expressed to the Corporation a desire to participate in the demonstra-
tion program, except that any public television station licensee or 
public radio station licensee which is represented on the Commission 
under section 1232(bX3) shall not be eligible to participate in the 
demonstration program. 
95 STAT. 734 
PUBLIC LAW 97-35—AUG. 13, 1981 
(C) If a licensee elects not to participate in the demonstration 
program, after receiving notice of its selection from the Corporation, 
then the Corporation shall select an alternate licensee. 
(D) The exemption from income tax of any public broadcast station 
26 use 501. 
licensee under section 501(a) of the Internal Revenue Code of 1954, 
relating to exemption from taxation, shall not be affected by the 
participation of such licensee in the demonstration program. 
(3) The Corporation shall make selections under paragraph (2), to 
the extent practicable, in a manner which ensures that— 
(A) a representative geographical distribution of public broad-
cast station licensees will be achieved; 
(B) licensees serving audiences and markets of various sizes 
will participate in the demonstration program; 
(C) licensees with operating budgets of various sizes will 
participate in the demonstration program; 
(D) different types of licensees will participate in the demon-
stration program; and 
(E) in the case of public radio station licensees, licensees with 
different tjrpes of programming formats will participate in the 
demonstration program. 
(c) Each public television station licensee or public radio station 
licensee which is selected by the Corporation for Public Broadcasting 
under subsection (b) shall be authorized to broadcast qualifying 
advertising in accordance with subsection (d). 
(dXlXA) Except as provided in subparagraph (B), any qualifying 
advertising announcement which is broadcast by any public televi-
sion station licensee or any public radio station licensee may be 
broadcast only at the beginning or at the end of regular programs, 
and may not interrupt regular programs. 
(B) In the case of any regular program which is 2 or more hours in 
duration, any public radio station licensee may broadcast (subject to 
paragraph (2)) a qualifying advertising announcement during the 
program, but only (i) during a break in the program scheduled for 
station identification; or (ii) at other times which will not unduly 
disrupt the program. 
(2) Any qualifying advertising announcements which are broadcast 
consecutively by any public television station licensee or any public 
radio station licensee may not exceed 2 minutes in duration. Such 
licensees may not engage in any such consecutive broadcasts of 
qualifying advertising announcements more than once during any 
30-minute period. 
Regulations. 
(3)(A) The Commission shall prescribe regulations which specify 
the t3T)es of advertisements which may be broadcast by licensees 
during the demonstration program. The Commission may authorize 
licensees participating in the demonstration program to broadcast 
institutional advertisements and advertisements relating to specific 
products, services, or facilities. Licensees shall not be authorized or 
required to broadcast any advertisement which— 
(i) is intended to promote any opinion or point-of-view regard-
ing any matter of public importance or interest, any political 
issue, or any matter relating to religion; or 
(ii) is intended to support or oppose any candidate for political 
office. 
(B) The Federal Communications Commission shall have authority 
to determine in disputed cases whether any advertising announce-
ment shall be considered to be qualifying advertising for purposes of 
this section. 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 735 
Report to 
Congress. 
(4) The Commission shall prescribe regulations which establish Regulations. 
requiremente relating to the sale of broadcast time for advertise-
ments during the demonstration program. Such regulations may 
authorize— 
(A) the assignment of broadcast time for advertisements 
through a ^rstem of 
random selection; 
(B) the sme of broadcast time for advertisements which will be 
broadcast at the beginning or at the end of particular programs, 
or during particular portions of 
the broadcast day; or 
(C) any other method for the sale of broadcast time which the 
Commission considers appropriate. 
(5) The Commission shall have authority to prescribe regulations 
under paragraph (3) and paragraph (4) which establish different 
criteria and requirements applicable to the various licensees partici-
pating in the demonstration program, to the extent the Commission 
considers the establishment of such different criteria and require-
ments to be necessary to assist the Commission in preparing the 
report, and making the recommendations, required in subsection (e). 
(6) Any issue regarding compliance with the provisions of this 
subsection shall be resolved by the Federal Communications Commis-
sion in accordance with its authority under the Communications Act 
of 1934 (47 U.S.C. 151 et seq.). 
(e)(1) The Commission, as soon as practicable after the termination 
of the demonstration program under subsection (bXlXA), shall ana-
lyze the results of the demonstration program and shall submit a 
report to each House of the Congress regarding the demonstration 
program. Such report shall be submitted not later than October 1, 
1983, and shall include— 
(A) an examination of whether qualifying advertising had any 
influence or effect upon programming broadcast by the public 
broadcast station licensees involved; 
(B) an analysis of the reaction of audiences to the broadcasting 
of such qualiQring advertising; 
(C) an examination of the extent to which businesses and other 
organizations engaged in the purchase of broadcast time for the 
broadcast of 
qualifying advertising; 
(D) an analysis of whether the broadcasting of qualifying 
advertising had any impact upon the underwriting of programs; 
and 
(E) any other findings or information which the Commission 
considers appropriate. 
(2) Such report also shall include such recommendations for legisla-
tive or other action as the Commission considers appropriate, includ-
ing a recommendation regarding whether public broadcast stations 
should be permitted to broadcast qualifying advertising on a perma-
nent basis. 
(f) For purposes of 
this section: 
(1) The term "Commission" means the Temporary Commission 
on Alternative Financing for Public Telecommunications estab-
lished in section 1232. 
(2) The term "demonstration program" means the demonstra-
tion program which the Commission is authorized to establish in 
accordance with this section. 
(3) The terms "public broadcast station", "public television 
station", and "public radio station" have the same meaning as 
the term "public broadcast station" in section 397(6) of the 
Communications Act of 1934 (47 U.S.C. 397(6)). 
Definitions. 
95 STAT. 736 
PUBLIC LAW 97-35—AUG. 13, 1981 
(4) The term "qualifjdng advertising" means any type of 
advertising specified by the Commission under subsection 
(dX3XA). 
TECHNICAL AMENDMENTS 
SEC. 1234. (a) Section 396(g) of the Communications Act of 1934 (47 
U.S.C. 396(g)) is amended by striking out paragraph (5) thereof, and 
by redesignating paragraph (6) as paragraph (5). 
(b) Section 397(15) of the Communications Act of 1934 (47 U.S.C. 
397(15)) is amended by striking out ", Education, and Welfare" and 
inserting in lieu thereof "Human Services". 
CHAPTER 2-TELEVISION AND RADIO BROADCASTING 
Effective date. 
47 u s e 307 note. 
TELEVISION AND RADIO UCENSE TERMS 
SEC. 1241. (a) Section 307(d) of the Communications Act of 1934 (47 
U.S.C. 307(d)) is amended— 
(1) by inserting "television" after "operation of a"; 
(2) by striking out "three years" each place it appears therein 
and inserting in lieu thereof "five years"; 
(3) by inserting "(other than a radio broadcasting station)" 
after "class of station"; 
(4) by inserting after the first sentence thereof the following 
new sentence: "£Ach license granted for the operation of a radio 
broadcasting station shall be for a term of not to exceed seven 
years."; 
(5) by inserting "television" after "in the case of* the first place 
it appears therem; 
(6) by inserting "for a term of not to exceed seven years in the 
case 01 radio broadcasting station licenses," after "licenses," the 
first place it appears therein; and 
(7) by inserting "for a term of after "and" the third place it 
£^)ears therein. 
(b) The amendments made in subsection (a) shall apply to television 
and radio broadcasting licenses granted or renewed by the Federal 
Communications Commission after the date of the enactment of this 
Act. 
GRANTING OF CERTAIN INITIAL UCENSES AND PERMITS BASED ON 
SYSTEM OF RANDOM SELECTION 
SEC. 1242. (a) Section 309 of the Communications Act of 1934 (47 
U.S.C. 309) is amended by adding at the end thereof the following new 
subsection: 
"(iXD If there is more than one applicant for any initial license or 
construction permit which will involve any use of the electro-
magnetic spectrum, then the Commission, after determining the 
47 use 308. 
qualifications of each such applicant under section 308(b), shall have 
authority to grant such license or permit to a qualified applicant 
through the use of 
a system of random selection. 
"(2) The determination of the Commission under paragraph (1) 
with respect to the qualifications of applicants for an initial license or 
construction permit shall be made after notice and opportunity for a 
47 use 409. 
hearing, except that the provisions of section 409(cX2) shall not apply 
in the case of any such determination. 
Rules. 
"(3XA) The Commission shall establish rules and procedures to 
ensure that, in the administration of any system of random selection 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 737 
under this subsection, groups or organizations, or members of groups 
or organizations, which are underrepresented in the ownership of 
telecommunications facilities or properties will be granted signifi-
cant preferences. 
"(B) The Commission shall have authority to require each qualified 
applicant seeking a significant preference under subparagraph (A) to 
submit to the Commission such information as may be necessary to 
enable the Commission to make a determination regarding whether 
such applicant shall be granted such preference. Such information 
shall be submitted in such form, at such times, and in accordance 
with such procedures, as the Commission may require. 
"(4XA) The Commission, not later than 180 days after the effective Rules on random 
date of this subsection, shall, after notice and opportunity for hear- selection. 
ing, prescribe rules establishing a system of random selection for use 
by the Commission under this subsection in any instance in which the 
Commission, in its discretion, determines that such use is appropriate 
for the granting of any license or permit in accordance with para-
graph (1). 
"(B) The Commission shall have authority to amend such rules 
from time to time to the extent necessary to carry out the provisions 
of this subsection. Any such amendment shall be made after notice 
and opportunity for hearing.". 
(b) The Commission shall have authority to use the system of 4
7 use 309 note. 
random selection established by the Commission under section 309(i) 
of the Communications Act of 1934, as added in subsection (a), with 
respect to any application for an initial license or construction permit 
which will involve any use of the electromgignetic spectrum and 
which— 
(1) is 
filed 
with the Commission after the date of the enactment 
ofthis Act;or 
(2) is pending before the Commission on such date of enactment 
but has not been designated for hearing on or before such date of 
enactment. 
SPECIAL REQUIREMENTS RELATING TO BROADCASTING STATION UCENSE 
APPUCATIONS 
SEC. 1243. Section 311 of the Communications Act of 1934 (47 U.S.C. 
311) is amended by adding at the end thereof the following new 
subsection: 
"(dXD If there are pending before the Commission two or more 
applications for a license granted for the operation of a broadcasting 
station, only one of which can be granted, it shall be unlawful, 
without approval of the Commission, for the applicants or any of 
them to effectuate an agreement whereby one or more of such 
applicants withdraws his or their application or applications in 
exchange for the pa3mient of money, or the transfer of assets or any 
other thing of value by the remaining applicant or applicants. 
"(2) The request for Commission approval in any such case shall be 
made in writing jointly by all the parties to the agreement. Such 
request shall contain or be accompanied by full information with 
respect to the E^eement, set forth in such detail, form, and manner 
as the Commission shall require. 
"(3) The Commission shall approve the agreement only if it deter-
mines that (A) the agreement is consistent with the public interest, 
convenience, or necessity; and (B) no party to the agreement filed its 
license application for the purpose of reaching or carrying out such 
agreement. 
95 STAT. 738 
PUBLIC LAW 97-35—AUG. 13, 1981 
"(4) For purposes of this subsection, an application shall be deemed 
to be pending before the Commission from the time such application 
is filed with the Commission until an order of the Commission 
granting or denying it is no longer subject to rehearing by the 
Commission or to review by any court.". 
CHAPTER 
3—REGULATORY 
AGENCIES 
Subchapter A—Federal Communications Commission 
AUTHORIZATION OF APPROPRIATIONS 
SEC. 1251. (a) The Communications Act of 1934 (47 U.S.C. 151 et 
seq.) is amended by inserting after section 5 the following new 
section: 
"AUTHORIZATION OF APPROPRIATIONS 
47 use 156. 
"SEC. 6. There is authorized to be appropriated for the administra-
tion of this Act by the Commission $76,900,000, together with such 
sums as may be necessary for increases resulting from adjustments in 
salary, pay, retirement, other employee benefits required by law, and 
other nondiscretionary costs, for each of the fiscal years 1982 and 
1983 " 
(b) Section 4(g) of the Communications Act of 1934 (47 U.S.C. 154(g)) 
is amended by striking out "from time to time may be appropriated 
for by Congress" and inserting in lieu thereof "may be appropriated 
for by the Congress in accordance with the authorizations of appro-
priations established in section 6". 
MANAGING DIRECTOR OF COMMISSION; ANNUAL REPORT 
SEC. 1252. Section 5 of the Communications Act of 1934 (47 U.S.C. 
155) is amended by adding at the end thereof the following new 
subsections: 
"(f) The Commission shall have a Managing Director who shall be 
appointed by the Chairman subject to the approval of the Commis-
sion. The Managing Director, under the supervision and direction of 
the Chairman, shall perform such administrative and executive 
functions as the Chairman shall delegate. The Managing Director 
shall be paid at a rate equal to the rate then payable for level V of the 
Executive Schedule. 
Report to 
"(g) The Commission shall submit an annual report to the Congress 
Congress. 
JJQ^ later than January 31 of each year. Such report shall— 
"(1) list the specific goals, objectives, and priorities of the 
Commission which shall be projected over 12-month, 24-month, 
and 36-month periods; 
"(2) describe in detail the programs which are, or shall be, 
established to meet or carry out such goals, objectives, and 
priorities; 
"(3) provide an evaluation of actions taken during the preced-
ing year with regard to fulfilling the functions of the Commis-
sion; and 
"(4) contain recommendations for legislative action required to 
enable the Commission to meet its objectives.". 
UNIFORM SYSTEM OF ACCOUNTS 
SEC. 1253. (a)(1) The Federal Communications Commission (herein-
after in this section referred to as the "Commission") shall complete 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 739 
the rulemaking proceeding relating to the revision of the uniform 
system of accounts used by telephone companies (Common Carrier 
Docket 78-196; notice of proposed rulemaking adopted June 28,1978, 
43 Federal Register 33560) as soon as practicable after the date of the 
enactment of this Act. 
(2) Such uniform system shall require that each common carrier 
shall maintain a system of accounting methods, procedures, and 
techniques (including accounts and supporting records and memo-
randa) which shall ensure a proper allocation of all costs to and 
among telecommunications services, facilities, and products (and to 
and among classes of such services, facilities, and products) which are 
developed, manufactured, or offered by such common carrier. 
(b) The Commission shall submit a report to each House of the Report to 
Congress not later than one year after the date of the enactment of Congress. 
this Act. Such report shall include a summary of actions taken by the 
Commission in connection with the rulemaking proceeding specified 
in subsection (a), together with such other information as the Com-
mission considers appropriate. 
Subchapter B—National Telecommunications and Information 
Administration 
AUTHORIZATION OP APPROPRIATIONS 
SEC. 1255. There is authorized to be appropriated for the adminis-
tration of the National Telecommunications and Information Admin-
istration $16,483,500, together with such sums as may be necessary 
for increases resulting from adjustments in salary, pay, retirement, 
other employee benefits required by law, and other nondiscretionary 
costs, for fiscal year 1982. 
Subtitle C—Department of Commerce 
AUTHORIZATION OF APPROPRIATIONS 
SEC. 1261. There are authorized to be appropriated to the Secretary 
of 
Commerce for expenses necessary for the general administration of 
the Department of Commerce not to exceed $33,472,300 for fiscal year 
1982, $33,472,300 for fiscal year 1983, and $33,472,300 for fiscal year 
1984. 
TITLE XIII—INTERNATIONAL AFFAIRS 
Subtitle A—Public Law 480 
APPROPRIATION UMITS 
SEC. 1301. Notwithstanding any other provision of law, programs ^ use 1733 note. 
shall not be undertaken under title I (including title III) and title II of 
the Agricultural Trade Development and Assistance Act of 1954 7 use I70i, 
during any calendar year which call for an appropriation of more ^^^^' ^^^^• 
than $1,304,836,000 for the fiscal year 1982, $1,320,292,000 for the 
fiscal year 1983, and $1,402,278,000 for the 
fiscal 
year 1984. 
95 STAT. 740 
PUBLIC LAW 97-35—AUG. 13, 1981 
Subtitle B—International Development Banks 
PART 1—INTERNATIONAL BANK FOR RECONSTRUCTION 
AND DEVELOPMENT 
INCREASE IN SUBSCRIPTION OF STOCK 
SEC. 1311. The Bretton Woods Agreements Act (22 U.S.C. 286 et 
seq.) is amended by adding at the end thereof the following new 
section: 
22 use 286e-ih. 
"SEC, 39. (a) The United States Governor of the Bank is author-
ized— 
"(1) to vote to increase by three hundred and sixty-five thou-
sand shares the authorized capital stock of the Bank; and 
"(2) to subscribe on behalf of the United States to not more 
than seventy-three thousand and ten shares of the capital stock 
of the Bank: Provided, however, That not more than seven and 
one-half percent ($658,305,195) of the price of the shares sub-
scribed may be paid in to the Bank on subscription, with the 
remainder of that price ($8,149,256,155) being subject to call only 
when a call on unpaid subscriptions is required to meet obliga-
tions of the Bank for funds borrowed or on loans guaranteed by it 
and not for use by the Bank in its lending activities or for 
administrative expenses: Provided further. That any subscrip-
tion to such additional shares shall be effective only to such 
extent or in such amounts as are provided in advance in appro-
priations Acts. 
Appropriation 
"(b) In Order to pay for the paid-in portion of the United States 
authorization. 
subscription to the Bank provided for in this section, there is 
authorized to be appropriated, without fiscal year limitation, 
$658,305,195 for payment by the Secretary of the Treasury: Provided, 
however. That not more than $109,720,549 of such sum may be made 
available for each of 
the fiscal years 1982,1983, and 1984.". 
FUTURE SUBSCRIPTIONS OF STOCK 
SEC. 1312. Section 27(aX2) of the Bretton Woods Agreements Act (22 
U.S.C. 286e-lf[aX2)) is amended by striking out "That any subscrip-
tion to additional shares shall be made only after the amount 
required for such subscription has been appropriated" and inserting 
in lieu thereof "That any subscription to additional shares shall be 
effective only to such extent or in such amounts as are provided in 
advance in appropriations Acts". 
PART 2—INTERNATIONAL DEVELOPMENT ASSOCIATION 
SIXTH REPLENISHMENT 
SEC. 1321. The Internationsd Development Association Act (22 
U.S.C. 284 et seq.) is amended by adding at the end thereof the 
following new section: 
22 use 284o. 
"SEC. 17. (a) The United States Governor is authorized to agree on 
behalf of the United States to pay to the Association $3,240,000,000 as 
the United States contribution to the sixth replenishment of the 
resources of the Association: Provided, however. That any commit-
ment to make such contributions shall be made subject to obtaining 
the necessary appropriations. 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 741 
"(b) In order to pay for the United States contributions provided for 
in this section, there is authorized to be appropriated, without fiscal 
year limitation, $3,240,000,000 for payment by the Secretary of the 
Treasury: Provided, however, That not more than $850,000,000 of 
such sum may be made available for the fiscal year 1982 and not more 
than $945,000,000 of such sum may be made available for the fiscal 
year 1983.". 
PART 3—AFRICAN DEVELOPMENT BANK 
SHORT TITLE 
SEC. 1331. This part may be cited as the "African Development 
Bank Act". 
ACCEPTANCE OF MEMBERSHIP 
SEC. 1332. The President is hereby authorized to accept member-
ship for the United States in the African Development Bank (herein-
after in this part referred to as the "Bank") provided for by the 
agreement establishing the Bank (hereinafter in this part referred to 
as the "agreement") deposited in the archives of the United Nations. 
Appropriation 
authorization. 
African 
Development 
Bank Act. 
22 u s e 290i 
note. 
22 u s e 290i. 
GOVERNOR AND ALTERNATE GOVERNOR 
SEC. 1333. (a) The President, by and with the advice and consent of 
the Senate, shall appoint a Governor and an Alternate Governor of 
the Bank. The term of office for the Governor and the Alternate 
Governor shall be five years, subject at any time to termination of 
appointment or to reappointment. The Governor and Alternate 
Governor shall remain in office until a successor has been appointed. 
(b) No person shall be entitled to receive any salary or other 
compensation from the United States for services as a Governor or 
Alternate Governor, except for reasonable expenses to attend meet-
ings of the Board of Governors. 
(c) The Governor, or in the Governor's absence the Alternate 
Governor, on the instructions of the President, shall cast the votes of 
the United States for the Director to represent the United States in 
the Bank. 
Appointment. 
22 u s e 290i-l. 
DIRECTOR OR ALTERNATE DIRECTOR; ALLOWANCES 
SEC. 1334. The Director or Alternate Director representing the 22 use 290i-2. 
United States, if citizens of the United States, may, in the discretion 
of the President, receive such compensation, allowances, and other 
benefits as, together with those received from the Bank and from the 
African Development Fund, may not exceed those authorized for a 
chief of mission under the Foreign Service Act of 1980. 
22 u s e 3901 
note. 
APPUCABILITY OF BRETTON WOODS AGREEMENTS ACT 
SEC. 1335. The provisions of section 4 of the Bretton Woods 22USe290i-3. 
Agreements Act (22 U.S.C. 286b) shall apply with respect to the Bank 
to the same extent as with respect to the International Bank for 
Reconstruction and Development and the International Monetary 
Fund. Reports with respect to the Bank under paragraphs (5) and (6) 
of section 4 of that Act shall be included in the first and subsequent 
reports made thereunder after the United States accepts membership 
in the Bank. 
95 STAT. 742 
PUBLIC LAW 97-35—AUG. 13, 1981 
RESTRICTIONS 
22 use 290i-4. 
SEC. 1336. (a) Unless authorized by law, neither the President, nor 
any person or agency, shall, on behalf of the United States— 
(1) subscribe to additional shares of stock of the Bank; 
(2) vote for or agree to any amendment of the agreement which 
increases the obligations of the United States, or which changes 
the purpose or functions of the Bank; or 
(3) make a loan or provide other financing to the Bank, except 
that funds for technical assistance may be provided to the Bank 
by a United States agency created pursuant to an Act of Congress 
which is authorized by law to provide funds to international 
organizations. 
FEDERAL RESERVE BANKS AS DEPOSITORIES 
22 use 290i-5. 
SEC. 1337. Any Federal Reserve bank which is requested to do so by 
the Bank shall act as its depository or as its fiscal agent, and the 
Board of Governors of the Federal Reserve System shall supervise 
and direct the carrying out of these functions by the Federal Reserve 
banks. 
SUBSCRIPTION OP STOCK 
22 use 290i-6. 
SEC. 1338. (a) The President is authorized to agree to subscribe on 
behalf of the United States to twenty-nine thousand eight hundred 
and twenty shares of the capital stock of the Bank: Provided, however, 
That the subscription shall be effective only to such extent or in such 
amounts as are provided in advance in appropriations Acts. 
Appropriation 
(b) There is authorized to be appropriated, without fiscal year 
authorization. 
limitation, for payment by the Secretary of the Treasury of the initial 
United States subscription to twenty-nine thousand eight hundred 
and twenty shares of the capital stock of the Bank, $359,733,570: 
Provided, however. That not more than $17,986,679 of such sum may 
be made available for paid in subscriptions to the Bank for each of the 
fiscal years 1982,1983, and 1984. 
(c) Any pa5mient or distributions of moneys from the Bank to the 
United States shall be covered into the Treasury as a miscellaneous 
receipt. 
JURISDICTION OF UNITED STATES COURTS 
22 use 290i-7. 
SEC. 1339. For the purposes of any civil action which may be 
brought within the United States, its territories or possessions, or the 
Commonwealth of Puerto Rico, by or against the Bank in accordance 
with the agreement, the Bank shall be deemed to be an inhabitant of 
the Feder^ judicial district in which its principal office within the 
United States or its agent appointed for the purpose of accepting 
service or notice of service is located, and any such action to which 
the Bank shall be a party shall be deemed to arise under the laws of 
the United States, and the district courts of the United States, 
including the courts enumerated in section 460 of title 28, United 
States Code, shall have original jurisdiction of any such action. When 
the Bank is defendant in any action in a State court, it may at any 
time before the trial thereof remove the action into the appropriate 
district court of the United States by following the procedure for 
removal provided in section 1446 of title 28, United States Code. 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 743 
EFFECTIVENESS OF AGREEMENT 
SEC. 1340. Paragraph 5 of article 49, articles 50 through 59, and the 22 use 290i-8. 
other provisions of the agreement shall have full force and effect in 
the United States, its territories and possessions, and the Common-
wealth of Puerto Rico, upon acceptance of membership by the United 
States in the Bank. The President, at the time of deposit of the 
instrument of acceptance of membership by the United States in the 
Bank, shall also deposit a declaration as provided in article 64, 
paragraph 3, of the agreement that the United States retains for 
itself and its political subdivisions the right to tax salaries and 
emoluments paid by the Bank to United States citizens or nationals. 
SECURITIES ISSUED BY THE BANK 
SEC. 1341. (a) Any securities issued by the Bank (including any 22 use 290i-9. 
guarantee by the Bank, whether or not limited in scope) in connection 
with the raising of funds for inclusion in the Bank's ordinary capital 
resources as defined in article 9 of the agreement and any securities 
guaranteed by the Bank as to both principal and interest to which the 
commitment in article 7, paragraph 4(a), of the agreement is ex-
pressly applicable, shall be deemed to be exempted securities within 
the meaning of section 3(aX2) of the Securities Act of 1933 (15 U.S.C. 
77c) and section 3(a)(12) of the Securities Exchange Act of 1934 (15 
U.S.C. 78c). The Bank shall file with the Securities and Exchange 
Commission such annual and other reports with regard to such 
securities as the Commission shall determine to be appropriate in 
view of the special character of the Bank and its operations as 
necessary in the public interest or for the protection of investors. 
(b) The Securities and Exchange Commission, acting in consulta-
tion with such agency or officer as the President shall designate, is 
authorized to suspend the provisions of subsection (a) at any time as 
to any or all securities issued or guaranteed by the Bank during the 
period of such suspension. The Commission shall include in its 
annual reports to Congress such information as it shall deem advis-
able with regard to the operations and effect of this section and in 
connection therewith shall include any views submitted for such 
purpose by any association of dealers registered with the Commis-
sion. 
TECHNICAL AMENDMENTS 
SEC. 1342. (a) The seventh sentence of paragraph 7 of section 5136 of 
the Revised Statutes of the United States (12 U.S.C. 24) is amended by 
striking out "or" after "the Inter-American Development Bank" and 
inserting in lieu thereof a comma, and by inserting "or the African 
Development Bank" after "the Asian Development Bank". 
(b) Section 701(a) of Public Law 95-118 (22 U.S.C. 262d(a)) is 
amended by striking out "and" after "the African Development 
Fund," and inserting "and the African Development Bank, after 
"the Asian Development Bank,". 
(c) Section 801(a) of Public Law 95-118 (22 U.S.C. 262f(a)) is 
amended by striking out "and" after "the African Development 
Fund," and inserting "and the African Development Bank, after 
"the Asian Development Bank,". 
(d) Section 51 of Public Law 91-599 (22 U.S.C. 276c-2) is amended by 
striking out "and" after "the Asian Development Bank," and insert-
ing "and the African Development Bank," after "the African Devel-
opment Fund,". 
89-194 O—82 
49:QL3 
95 STAT. 744 
PUBLIC LAW 97-35—AUG. 13, 1981 
PART 4—INTER-AMERICAN DEVELOPMENT BANK AND 
ASIAN DEVELOPMENT BANK 
22 u s e 283Z-2. 
Appropriation 
authorization. 
22 u s e 283Z-1. 
CONTRIBUTIONS TO THE INTER-AMERICAN DEVELOPMENT BANK 
SEC. 1351. (a) The Inter-American Development Bank Act (22 
U.S.C. 283 et seq.) is amended by adding at the end thereof the 
following new section: 
"SEC. 30. (a) The United States Governor of the Bank is authorized 
on behalf of the United States to contribute to the Fund for Special 
Operations $70,000,000: Provided, however. That any commitment to 
make such contribution shall be made subject to obtaining the 
necessary appropriations. 
"(b) In order to pay for a portion of the increase in the United 
States subscription to the capital stock of the Bank provided for in 
section 29(a) and for the United States contribution to the Fund for 
Special Operations provided for in this section, there are authorized 
to be appropriated, without fiscal year limitation, for payment by the 
Secretary of the Treasury, (1) $274,920,799 for the United States 
subscription, and (2) $70,000,000 for the United States contribution to 
the Fund for Special Operations: Provided, however. That no funds 
may be made available for such contribution to the Fund for Special 
Operations for the 
fiscal 
year 1982.", 
(b) Section 29(b) of the Inter-American Development Bank Act (22 
U.S.C. 283z-l(b)) is amended by striking out the period and inserting 
in lieu thereof the following: ": Provided, however. That for contribu-
tions to the Fund for Special Operations, not more than $175,000,000 
may be made available for the fiscal year 1982, and not more than 
$105,000,000 may be made available for the fiscal year 1983.". 
(c) Section 26(b) of the Inter-American Development Bank Act (22 
U.S.C 283w(b)) is amended by striking out the period and inserting in 
lieu thereof the following: ": Provided, however. That not more than 
$15,677,000 may be made available to the Fund for Special Operations 
for the 
fiscal 
year 1982.". 
22 u s e 285w. 
Appropriation 
authorization. 
CONTRIBUTIONS TO THE ASIAN DEVELOPMENT FUND 
SEC. 1352. (a) The Asian Development Bank Act (22 U.S.C. 285 et 
seq.) is amended by adding at the end thereof the following new 
section: 
"SEC. 26. (a) The United States Governor of the Bank is authorized 
to contribute on behalf of the United States $66,750,000 to the Asian 
Development Fund, a special fund of the Bank: Provided, however. 
That any commitment to make such contribution shall be made 
subject to obtaining the necessary appropriations. 
"(b) In order to pay for the United States contribution to the Asian 
Development Fund provided for in this section, there is authorized to 
be appropriated, without fiscal year limitation, $66,750,000 for pay-
ment by the Secretary of the Treasury: Provided, however, That no 
funds may be made available for such contribution for the fiscal year 
1982.". 
(b) Section 24(b) of the Asian Development Bank Act (22 U.S.C. 
285u(b)) is amended by striking out the period and inserting in lieu 
thereof the following: ": Provided, however. That not more than 
$111,250,000 of such sum may be made available for the fiscal year 
1982, and not more than $44,500,000 of such sum may be made 
available for the 
fiscal 
year 1983.". 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 745 
(c) Section 23(b) of the Asian Development Bank Act (22 U.S.C. 
285t(b)) is amended by striking out the period and inserting in lieu 
thereof the following: ": Provided, however, That not more than 
$14,116,177 may be made available for such contribution for the fiscal 
year 1982.". 
FUTURE SUBSCRIPTIONS OF STOCK TO THE ASIAN DEVELOPMENT BANK 
SEC. 1353. Section 22(a) of the Asian Development Bank Act (22 
U.S.C. 285s(a)) is amended by striking out '.'That any subscription to 
additional shares shall be made only after the amount required for 
such subscription has been appropriated" and inserting in lieu 
thereof "That any subscription to additional shares shall be effective 
only to such extent or in such amounts as are provided in advance in 
appropriations Acts". 
PART 5-TARGETING ASSISTANCE TO THE NEEDY; 
CONGRESSIONAL CONSULTATIONS 
AMENDMENTS TO PUBUC LAW 95-118 
SEC. 1361. (a) Public Law 95-118 (22 U.S.C. 262c et seq.) is amended 
by inserting immediately after the enacting clause the following: 
"SHORT TITLE 
"SECTION 1. This Act may be cited as the 'International Financial 22 use 262c 
Institutions Act'". 
''''^• 
(b) Public Law 95-118 is further amended by adding at the end 
thereof the following new titles: 
"TITLE XI-TARGETING ASSISTANCE TO THE NEEDY 
"SEC. 1101. (a) The Congress finds that there is a need for concerted 22 use 262g-i. 
international efforts to deal with the problems of malnutrition, low 
life expectancy, childhood disease, underemployment, and low pro-
ductivity in developing countries. 
"(b) Tlie Congress notes with approval that the Inter-American 
Development Bank, under the terms of its Fifth Replenishment, has 
adopted the target that 50 percent of its lending benefit the poorest 
groups and has developed a usable methodology for determining the 
proportion of its lending which benefits such groups. 
"SEC. 1102. (a) The Secretary of the Treasury shall consult with 22 use 262g-2. 
representatives of other member countries of the International Bank 
for Reconstruction and Development, the International Development 
Association, the Asian Development Bank, the African Development 
Fund, and the African Development Bank (if the United States 
becomes a member of that Bank), for the purpose of establishing 
guidelines within each of those institutions which specify that, in a 
manner consistent with the purposes and charters of those institu-
tions, a specified proportion of the annual lending by each institution 
shall be designed to benefit needy people, primarily by financing 
sound, efficient, productive, self-sustaining projects designed to 
benefit needy people in developing countries, thus helping poor 
people improve their conditions of life. 
"(b) The Congress finds that projects to construct basic infrastruc-
ture, to expand productive capacity (including private enterprise), 
and to address social problems can all meet the objectives of this 
95 STAT. 746 
PUBLIC LAW 97-35—AUG. 13, 1981 
"Needy people.' 
Report to 
Congress. 
22 u s e 262g-2 
note. 
section if they are designed and implemented properly. For the 
purposes of this title, 'needy people' means those people living in 
absolute' or 'relative' poverty as determined under the standards 
employed by the International Bank for Reconstruction and Develop-
ment and the International Development Association. 
"SEC. 1103. The Secretary of the Treasury shall, not later than 
May 1 of 1982, 1983, and 1984, report to the Speaker of the House 
of Representatives and the Chairman of the Committee on Foreign 
Relations of the Senate on the progress being made toward achieving 
the goals of section 1102, and shall include in each such report, for 
each of the institutions referred to in sections 1101 and 1102, as 
accurate an estimate as is practicable of the proportion of the lending 
by that institution which benefits needy people in its borrower 
countries. 
"TITLE XII—CONGRESSIONAL CONSULTATIONS 
22 use 262g-3. 
"SEC. 1201. The Secretary of the Treasury or his designee shall 
consult with the Chairman and the Ranking Minority Member o
f
— 
"(1) the Committee on Banking, Finance and Urban Affairs of 
the House of Representatives, the Committee on Appropriations 
of the House of Representatives, and the appropriate subcommit-
tee of each such committee, and 
"(2) the Committee on Foreign Relations of the Senate, the 
Committee on Appropriations of the Senate, and the appropriate 
subcommittee of each such committee, 
for the purpose of discussing the position of the executive branch and 
the views of the Congress with respect to any international negotia-
tions being held to consider future replenishments or capital expan-
sions of any multilateral development bank which may involve an 
increased contribution or subscription by the United States. Such 
consultation shall be made (A) not later than 30 days before the 
initiation of such international negotiations, (B) during the period in 
which such negotiations are being held, in a frequent and timely 
manner, and (C) before a session of such negotiations is held at which 
the United States representatives may agree to such a replenishment 
or capital expansion.". 
PART 6—MISCELLANEOUS PROVISIONS 
Repeal. 
ELIMINATION OF CERTAIN REPORTS 
SEC. 1371. (a)(1) Section 31 of the Bretton Woods Agreements Act 
(22 U.S.C. 286e-10) is repealed. 
(2) Section 35 of that Act (22 U.S.C. 286u) is amended by striking out 
", and shall report" and all that follows through "goal". 
(b)(1) Section 801 of Public Law 95-118 (22 U.S.C. 262f) is amended— 
(A) by striking out "(a)"; and 
(B) by repealing subsection (b). 
(2) Section 901 of that Act (22 U.S.C. 262g) is amended— 
(A) by striking out "(a)"; and 
(B) by repealing subsection Ot)). 
•'" .*' 
22 u s e 290i 
note. 
EFFECTIVE DATE AND AVAILABILITY OF FUNDS 
SEC. 1372. This subtitle shall take effect upon its enactment, except 
that funds authorized to be appropriated by any provision contained 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 747 
in part 1 or part 4 shall not be available for use or obligation prior to 
October 1,1981. 
Subtitle C—Foreign Assistance and Foreign Affairs 
Agencies 
AUTHORIZATION CEIUNGS 
SEC. 1381. The following ceilings are hereby established: 
(1) AMERICAN SCHOOLS AND HOSPITALS ABROAD: The amount 
authorized to be appropriated for the fiscal year 1982 to carry out 
section 214 of the Foreign Assistance Act of 1961 shall not exceed 
$20,000,000. 
(2) INTERNATIONAL ORGANIZATIONS AND PROGRAMS: The amount 
authorized to be appropriated for the fiscal year 1982 under 
section 302(aXl) of the Foreign Assistance Act of 1961 shall not 
exceed $255,650,000. 
(3) INTERNATIONAL NARCOTICS CONTROL: The amount author-
ized to be appropriated for the fiscal year 1982 to carry out 
section 481 of the Foreign Assistance Act of 1961 shall not exceed 
$37,700,000. 
(4) INTERNATIONAL DISASTER ASSISTANCE: The amount author-
ized to be appropriated for the fiscal year 1982 under section 492 
of the Foreign Assistance Act of 1961 to carry out section 491 of 
that Act shall not exceed $27,000,000. 
(5) INTER-AMERICAN FOUNDATION: The amount authorized to be 
appropriated for the fiscal year 1982 to carry out section 401 of 
the Foreign Assistance Act of 1969 shall not exceed $12,000,000. 
(6) PEACE CORPS: The amount authorized to be appropriated for 
the fiscal year 1982 under section 3(b) of the Peace Corps Act to 
carry out that Act shall not exceed $105,000,000. 
(7) 
INTERNATIONAL ORGANIZATIONS AND CONFERENCES—AS-
SESSED CONTRIBUTIONS: The amount authorized to be appropri-
ated for the fiscal year 1982 for assessed contributions to interna-
tional organizations under "International Organizations and 
Conferences" shall not exceed $454,591,000. 
(8) BOARD FOR INTERNATIONAL BROADCASTING: The amount 
authorized to be appropriated for the fiscal year 1982 under 
section 8(aXlXA) of the Board for International Broadcasting Act 
of 1973 to carry out that Act shall not exceed $98,317,000. 
(9) INTERNATIONAL COMMUNICATION AGENCY—SALARIES AND 
EXPENSES: The amount authorized to be appropriated for the 
fiscal year 1982 for salaries and expenses for the International 
Communication Agency, excluding amounts authorized by sec-
tion 704 of the United States Information and Educational 
Exchange Act of 1948 (relating to nondiscretionary personnel 
costs and currency fluctuations), shall not exceed $452,187,000. 
(10) ARMS CONTROL AND DISARMAMENT AGENCY: The amount 
authorized to be appropriated for the fiscal year 1982 under 
section 49(aXl) of the Arms Control and Disarmament Act to 
carry out the purposes of that Act (other than the amounts 
necessary for increases in salary, pay, retirement, other em-
ployee benefits authorized by law, and other nondiscretionary 
costs, and to offset adverse fluctuations in foreign currency 
exchange rates) shall not exceed $18,268,000. 
22 use 2174 
note. 
22 use 2174. 
22 u s e 2222 
note. 
22 use 2222. 
22 use 2291a 
note. 
22 use 2291. 
22 use 
note. 
22 use 
22 use 
22 use 
note. 
22 use 
22 use 
note. 
22 use 
2292a 
2292a. 
2292. 
290f 
290f. 
2502 
2502. 
22 use 2877 
note. 
22 use 2877. 
22 use 1477b 
note. 
22 use 1477b. 
22 use 2589 
note. 
22 use 2589. 
95 STAT. 748 
PUBLIC LAW 97-35—AUG. 13, 1981 
TITLE XIV—DEPARTMENT OF INTERIOR 
AND RELATED PROGRAMS 
Appropriation 
limitations. 
43 use 1457a. 
30 use 1221. 
Noncompetitive 
oil and 
gas leases, 
application filing 
43 use 1734 
note. 
31 use 483a. 
43 use 1734. 
study. 
Report to 
eongress. 
SEC. 1401. (a) Notwithstanding any other provision of law, there 
shall not be appropriated to the Secretary of the Interior for Depart-
ment of the Interior programs as defined in subsection (e) in excess of 
$4,095,404,000 for the fiscal year ending on September 30, 1981; in 
excess of $3,970,267,000 for the fiscal year ending on September 30, 
1982; $4,680,223,000 for the fiscal year ending on September 30,1983; 
and $4,797,281,000 for the fiscal year ending on September 30, 1984. 
(b) It is the sense of the Congress that the appropriation targets for 
such fiscal years should be: not less than $275,000,000 to be appropri-
ated annually pursuant to the provisions of the Land and Water 
Conservation Fund Act of 1965 (78 Stat. 897; 16 U.S.C. 460z); not less 
than $30,000,000 to be appropriated annually pursuant to the provi-
sions of the National Historic Preservation Act of 1966 (80 Stat. 915; 
16 U.S.C. 470); not less than $10,000,000 to be appropriated annually 
pursuant to the provisions of the Urban Park and Recreation Recov-
ery Act of 1978 (92 Stat. 3538; 16 U.S.C. 2501, et seq.); not less than 
$105,000,000 to be appropriated annually to be used for the restora-
tion and rehabilitation of units of the National Park System, as 
authorized by law; not less than $239,000,000 to be appropriated 
annually for the Office of Territorial and International Affairs 
(including amounts for the Trust Territory of the Pacific Islands); not 
less than $6,200,000 to be appropriated annually to carry out the 
provisions of title III of the Surface Mining Control and Reclamation 
Act of 1977 (91 Stat. 445); and not less than $100,000,000 to be 
appropriated annually pursuant to the Act of October 20, 1976 (90 
Stat. 2662; 31 U.S.C. 1601, et seq.) including not less than $5,000,000 
annually to carry out the purposes of section 3 of said Act. 
(c) Notwithstanding the limitation otherwise imposed by subsec-
tion (a) of this section— 
(1) the authorization for obligation and appropriations for the 
Department of the Interior may exceed the amount specified in 
subsection (a) by such amount as permanent and annual indefi-
nite appropriations exceed the estimates for such appropriations 
as contained in "The Budget of the United States Government, 
Fiscal Year 1982," as revised by the March 1981, publication of 
the Office of Management and Budget entitled "Fiscal Year 1982 
Budget Revisions", when receipts available to be appropriated 
equal or exceed such appropriations, and 
(2) the authorization for obligation and appropriations for the 
Department of the Interior may exceed the amount specified in 
subsection (a) by such amounts as may be required for emergency 
firefighting 
and for increased pay costs authorized by law. 
(d)(1) Notwithstanding any other provision of law, effective Octo-
ber 1,1981, all applications for noncompetitive oil and gas leases shall 
be accompanied by a filing fee of not less than $25 for each such 
application: Provided, That any increase in the filing fee above $25 
shall be established by regulation and subject to the provisions of the 
Act of August 31, 1951 (65 Stat. 290), the Act of October 20, 1976 (90 
Stat. 2765) but not limited to actual costs. Such fees shall be retained 
as a service charge even though the application or offer may be 
rejected or withdrawn in whole or in part. 
(2) The Secretary of the Interior is hereby directed to conduct a 
study and report to Congress within one year of the date of enactment 
of this Act, regarding the current annual rental charges on all 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 749 
noncompetitive oil and gas leases to investigate the feasibility and 
effect of raising such rentals. 
(e) For the purposes of this section, the term "Department of the 
Interior programs" means— 
(1) Alaska Native Fund amounts included in Bureau of Indian 
Affairs programs funded from Miscellaneous Trust Funds and 
Miscellaneous Permanent Appropriations accounts; 
(2) Bureau of Land Management programs; 
(3) Bureau of 
Mines programs; 
(4) National Park Service programs other than the John F. 
Kennedy Center for the Performing Arts (including those pro-
grams formerly administered by the Heritage Conservation and 
Recreation Service as of 
October 1,1980); 
(5) Offices of the Solicitor and the Secretary; 
(6) Office of Surface Mining Reclamation and Enforcement 
programs; 
(7) Office of 
Territorial Affairs programs; 
(8) United States Geological Survey programs; and 
(9) Bureau of Reclamation (including those programs formerly 
administered by the Water and Power Resources Service). 
"Department of 
the Interior 
programs." 
43 u s e 1457a. 
ADVISORY COUNCIL ON HISTORIC PRESERVATION 
SEC. 1402. Notwithstanding any other provision of law, there shall 
not be appropriated for programs of the Advisory Council on Historic 
Preservation in excess of 
$1,590,000 for the 
fiscal 
year ending Septem-
ber 30, 1981; in excess of $1,865,000 for the fiscal year ending on 
September 30,1982; in excess of $1,920,000 for the fiscal year ending 
on September 30,1983; and in excess of $2,000,000 for the fiscal year 
ending on September 30,1984. 
16 u s e 470t 
note. 
OFFICE OF FEDERAL INSPECTOR FOR THE ALASKA NATURAL GAS 
TRANSPORTATION SYSTEM 
SEC. 1403. Notwithstanding any other provision of law, there shall 
not be appropriated for programs of the Office of Federal Inspector 
for the AlasKa Natural Gas Transportation System in excess of 
$21,038,000 for the fiscal year ending September 30,1981; $36,568,000 
for the fiscal year ending September 30,1982; in excess of $45,532,000 
for the fiscal year ending on September 30, 1983, or $46,908,000 for 
the fiscal year ending on September 30,1984. 
15 u s e 719e 
note. 
PENNSYLVANIA AVENUE DEVELOPMENT CORPORATION 
SEC. 1404. Notwithstanding any other provision of law, there shall 
not be appropriated for programs of the Pennsylvania Avenue 
Development Corporation in excess of $31,612,000 for the fiscal year 
ending September 30,1981; in excess of $19,040,000 for the fiscal year 
ending on September 30, 1982; in excess of $19,500,000 for the fiscal 
year ending on September 30,1983; or in excess of $19,300,000 for the 
fiscal year ending September 30,1984. 
40 u s e 885 note. 
UNITED STATES HOLOCAUST MEMORIAL COUNCIL 
SEC. 1405. Notwithstanding any other provision of law, there shall 
not be appropriated for programs of the United States Holocaust 
Memorial Council in excess of $900,000 for the fiscal year ending on 
September 30,1982, in excess of $950,000 for the fiscal year ending on 
36 u s e 1408 
note. 
95 STAT. 750 
PUBLIC LAW 97-35—AUG. 13, 1981 
September 30, 1983, or in excess of $1,000,000 for the fiscal year 
ending on September 30,1984. 
CORPS OF ENGINEERS 
1
6 use 460/-6a 
SEC. 1406. Notwithstanding any other provision of law, there shall 
" 
not be appropriated to the Secretary of Defense for special recrea-
tional user fees programs of the corps of Engineers in excess of 
$5,000,000 for the Hscal year ending September 30,1981; in excess of 
$5,200,000 for the fiscal year ending September 30,1982; in excess of 
$6,000,000 for the fiscal year ending September 30,1983; or in excess 
of $6,000,000 for the fiscal year ending September 30,1984. 
YOUTH CONSERVATION CORPS ACT OF 1970 
1
6 use 1706 
SEC. 1407. No funds may be appropriated to carry out the Act of 
" 
August 13, 1970, commonly referred to as the Youth Conservation 
1
6 use 1701. 
Corps Act of 1970, for fiscal year 1982,1983, or 1984. 
TITLE XV—DEPARTMENT OF JUSTICE 
AND RELATED PROVISIONS 
AUTHORIZATION OF APPROPRIATIONS FOR SALARIES AND EXPENSES OF 
PATENT AND TRADEMARK OFFICE FOR FISCAL YEAR 1982 
35 use 3 note. 
SEC. 1501. Notwithstanding any other provision of law, there are 
authorized to be appropriated for the payment of salaries and 
expenses of the Patent and Trademark Office $118,961,000 for the 
fiscal year ending September 30,1982, and such additional or supple-
mental amounts as may be necessary for increases in salary, pay, 
retirement, or other employee benefits authorized by law. 
LIMITATION ON APPROPRIATIONS FOR REFUGEE ASSISTANCE FOR FISCAL 
YEAR 1982 
8 use 1524 note. 
SEC. 1502. The total amount of appropriations to carry out— 
8 use 1521. 
(1) chapter 2 of title IV of the Immigration and Nationality Act 
8 use 1522. 
(relating to refugee assistance), other than section 412(b) thereof 
(relating to initial resettlement assistance), and 
8 use 1522 note. 
(2) sections 313(c) and 401 of the Refugee Act of 1980 (Public 
Law 96-212), 
shall not exceed $583,705,000 for fiscal year 1982, and none of the 
amounts appropriated for fiscal year 1982 to carry out such provi-
sions shall be available to carry out any of the provisions of Public 
8 u s e 1522 note. Law 96-422. 
JUVENILE JUSTICE AND DELINQUENCY PREVENTION ACT OF 1974 
42 u s e 5671 
SEC. 1503. The total amount of appropriations to carry out title II of 
"°*® 
the Juvenile Justice and Delinquency Prevention Act of 1974 shall 
not exceed $77,000,000 for fiscal year 1982; $77,500,000 for fiscal year 
1983; and $74,900,000 for fiscal year 1984. 
42 use 5611. 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 751 
TITLE XVI—MARITIME AND RELATED 
PROGRAMS 
Appropriation 
authorization. 
Appropriation 
authorization. 
Operating 
differential 
subsidy contract. 
46 use 1184. 
SEC. 1601. Funds are authorized to be appropriated without fiscal 
year limitation as the appropriation Act may provide for the use of 
the Department of Commerce of fiscal year 1982, as follows: 
(1) for payment of obligations incurred for operating differen-
tial subsidy, $417,148,000; 
(2) for research and development, $10,491,000; 
(3) for operations and training, $74,898,000 including— 
(A) $8,005,000 for reserve fleet expenses; 
(B) $33,684,000 for maritime education and training ex-
penses, including $19,205,000 for maritime training at the 
Merchant Marine Academy at Kings Point, New York, 
$12,599,000 for financial assistance to State maritime acade-
mies and $1,880,000 for expenses necessary for additiongd 
training; and 
(C) $33,209,000 for other operating and training expenses. 
SEC. 1602. There are authorized to be appropriated for the fiscal 
year 1982, in addition to the amounts authorized by section 1601, such 
supplemental amounts for the activities for which appropriations are 
authorized under section 1601, as may be necessary for increases in 
salary, pay, retirement, or other employee benefits authorized by law. 
SEC. 1603. The Merchant Marine Act, 1936, as amended (46 tJ.S.C. 
1101-1294), is further amended by adding a new section 614 to read as 
follows: 
"SEC. 614. (a) Any operator receiving operating differential subsidy 
funds may elect, for all or a portion of its ships, to suspend its 
operating differential subsidy contract with all attendant statutory 
and contractual restrictions, except as to those pertaining to the 
domestic intercoastal or coastwise service, including any agreement 
providing for the replacement of vessels, if— 
"(1) the vessel is less th£in ten years of age; 
"(2) the suspension period is not less than twelve months; 
"(3) the operator's financial condition is maintained at a level 
acceptable to the Secretary of Commerce; and 
"(4) the owner agrees to pay to the Secretary, upon such terms 
and conditions as he may prescribe, an amount which bears the 
same proportion to the construction differential subsidy paid by 
the Secretary as the portion of the suspension period during 
which the vessel is operated in any preference trade from which 
a subsidized vessel would otherwise be excluded by law or 
contract bears to the entire economic life of the vessel. 
"(b) Any operator making an election under this section is entitled 
to full reinstatement of the suspended contract on request. The 
Secretary of Commerce may prescribe rules and regulations consist-
ent with the purpose of this section.". 
SEC. 1604. Section 809(a) of the Merchant Marine Act, 1936 (46 
U.S.C. 1213(a)) is amended by inserting after the second sentence the 
following: "For the purposes of this section and section 211(a), the 46 use 1121 
Secretary shall establish trade routes, services, or lines that take into 
account the seasonal closure of the Saint Lawrence Seaway and 
provide for alternate routing of ships via a diffferent range of ports 
during that closure so as to maintain continuity of service on a year-
round basis. For the purposes of section 605(c), such an alternate 46 use 1175 
routing via a different range of ports shall be deemed to be service 
from Great Lakes ports, provided such alternative routing is based 
95 STAT. 752 
PUBLIC LAW 97-35—AUG. 13, 1981 
46 u s e 1248. 
46 u s e 1273 and 
note. 
Limitation. 
46 u s e 1279c. 
"Independent 
ocean freight 
forwarder." 
46 u s e 841b. 
"Independent 
ocean freight 
forwarder." 
46 u s e 801 and 
note. 
upon receipt or delivery of cargo at Great Lakes-Saint Lawrence 
Seaway ports under through intermodal bills of lading. 
SEC. 1605. The Merchant Marine Act, 1936 is amended by adding a 
new section 909 to read as follows: 
"SEC. 909. No vessel may receive construction differential subsidy 
or operating differential subsidy if it is not offered for enrollment in a 
sealift readiness program approved by the Secretary of Defense.". 
SEC. 1606. (a) Section 203(b) of Public Law 96-320 (94 Stat. 994) is 
repealed. 
(b) Section 1103(f) of the Merchant Marine Act, 1936, as amended 
(46 U.S.C. 1273), is amended to read as follows: 
"(f) The aggregate unpaid principal amount of the obligations 
guaranteed under this section and outstanding at any one time shall 
not exceed $12,000,000,000, of which $1,650,000,000 shall be limited to 
obligations pertaining to commerical demonstration ocean thermal 
energy conversion facilities or plantships guaranteed under section 
1110 of this title, and of which $850,000,000 shall be limited to 
obligations pertaining to guarantees of obligations for fishing vessels 
and fishery facilities made under this title." 
(c) Section 1104(d) of the Merchant Marine Act, 1936, as amended 
(46 U.S.C. 1274(d)), as amended— 
(1) in paragraph (1), by striking "Except as provided in para-
graph (2), no an inserting in lieu thereof No"; 
(2) by striking paragraph (2); and 
(3) by redesignating paragraph (3) as paragraph (2). 
(d) Section 1104(g) of the Merchant Marine Act, 1936, as amended 
(46 U.S.C. 1274(g)) is amended— 
(1) by striking "(1)" immediately after "(g)"; and 
(2) by striking paragraph (2). 
(e) The first sentence of section 1105(d) of the Merchant Marine Act, 
as amended (46 U.S.C. 1275(d)), is amended by striking ", and shall be 
paid from the appropriate subfund required to be established under 
section 1104(g)(2)'^. 
(f) The last sentence of section 1110(c) of the Merchant Marine Act, 
1936, as amended (46 U.S.C. 1279(c)), is amended by striking 
"$2,000,000,000" and inserting in lieu thereof "$1,650,000,000". 
SEC. 1607. Section 1303(hX2XD) of the Merchant Marine Act, 1936 
(46 U.S.C. 1295b(h)(2XD)), is amended by striking "1 Member" and 
inserting in lieu thereof "2 Members". 
SEC. 1608. (a) Section 1 of the Shipping Act, 1916 (39 Stat. 728), as 
amended (46 U.S.C. 801), is amended by striking at the end thereof 
the paragraph defining an independent ocean freight forwarder and 
inserting in lieu thereof the following: "The term 'independent ocean 
freight forwarder' means a person that is carrying on the business of 
forwarding for a consideration who is not a shipper, consignee, seller, 
or purchaser of shipments to foreign countries.'. 
(b) Section 44 of the Shipping Act, 1916 (75 Stat. 552; 46 U.S.C. 
841(b)), is amended by adding at the end thereof the following new 
subsection: 
"(f) A forwarder may not receive compensation from a common 
carrier with respect to any shipment in which the forwarder has a 
beneficial interest or with respect to any shipment in which any 
holding company, subsidiary, affiliate, officer, director, agent, or 
executive of such forwarder has a beneficial interest.". 
(c) This section shall remain in effect until December 31,1983, after 
which time the definition in section 1, Shipping Act, 1916, of 'inde-
pendent ocean freight forwarder' shall read: An 'independent ocean 
freight forwarder' is a person carrying on the business of forwarding 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 753 
Report to 
Congress. 
Study, submittal 
to Congress. 
for a consideration who is not a shipper or consignee or a seller or 
purchaser of shipments to foreign countries, nor has any beneficial 
interest therein, nor directly or indirectly controls or is controlled by 
such shipper or consignee or by any person having such a beneficial 
interest. By June 1, 1983, the Federal Maritime Commission shall 
submit a report to Congress evaluating the enforceability of this 
section and describing any reasons why this section should not be 
made permanent law. 
SEC. 1609. The Secretary of Comirierce shall conduct a study 
comparing the relative costs of repairing and outfitting the training 
vessel Bay State with the costs of reactivating and converting the 
steamship Tulare of the United States Naval Reserve Fleet, in order 
to aid in the determination of the appropriate vessel for use as the 
training ship of the Massachusetts Maritime Academy. This study 
shall be completed and submitted to the Congress within ninety days 
of enactment of this Act. 
SEC. 1610. The Merchant Marine Act, 1936 (46 U.S.C. 1101 et seq.) is 
amended by adding a new section 615 to read as follows: 
"SEC, 615. (a) The Secretary of Commerce may, until September 30, 46 use 1185. 
1983, authorize an operator receiving or applying for operating 
differential subsidy under this title to construct, reconstruct, or 
acquire its vessels of over five thousand deadweight tons in a foreign 
shipyard if the Secretary finds and certifies in writing that such 
operator's application for construction differential subsidy cannot be 
approved due to the unavailability of funds in the construction 
differential subsidy account. Vessels constructed, reconstructed, or 
modified pursuant to this section shall be deemed to have been 
United States built for the purposes of this title, section 901(b) of this 
Act, and section 5(7) of the Port and Tanker Safety Act of 1978 (46 
U.S.C. 391(a)(7)): Provided, That the provisions of section 607 of this 
Act shall not apply to vessels constructed, reconstructed, modified, or 
acquired pursuant to this section. 
"(b) The provisions of this section shall be effective for fiscal year 
1983 only if the President in his annual budget message for that year 
requests at least $100,000,000 in construction differential subsidy or 
proposes an alternate program that would create equivalent mer-
chant shipbuilding activity in privately owned United States ship-
yards and the Secretary reports to Congress on the effect such action 
will have on the shipyard mobilization base at least thirty days prior 
to making the certification referred to in subsection (a).". 
46 use 1241. 
46 use 391a. 
TITLE XVII—CIVIL SERVICE AND POSTAL 
SERVICE PROGRAMS; GOVERNMENTAL 
AFFAIRS GENERALLY 
Subtitle A—Civil Service Programs 
4.8 PERCENT PAY CAP ON FEDERAL EMPLOYEES 
SEC. 1701. (a) Notwithstanding any other provision of law, the 
overall percentage of the adjustment of the rates of pay under the 
General Schedule or any other statutory pay system under section 
5305 of title 5, United States Code, which is to become effective with 
the first applicable pay period commencing on or after October 1, 
1981, shall not exceed 4.8 percent. 
5 use 5305 
note. 
95 STAT. 754 
PUBLIC LAW 97-35—AUG. 13, 1981 
5 use 5343 note. 
0>)(1) Notwithstanding any other provision of law, in the case of a 
prevailing rate employee described in section 5342(a)(2) of title 5, 
United States Code, or an employee covered by section 5348 of that 
title— 
I . • 
(A) any increase in the rate of pay payable to such employee 
which would result from the expiration of the limitation con-
5 use 5343 
tained in section 114(a)(2) of Public Law 96-369 shall not take 
"0^- 
effect, and 
(B) any adjustment under subchapter IV of chapter 53 of such 
5 use 5341. 
title to any wage schedule or rate applicable to such employee 
which results from a wage survey and which is to become 
effective during the fiscal year beginning October 1, 1981, shall 
not exceed the amount which is 4.8 percent above the schedule or 
rate payable on September 30, 1981 (determined with regard to 
the limitation contained in section 114(a)(2) of Public Law 
96-369). 
(2) Notwithstanding the provisions of section 9(b) of Public Law 
5 use 5343 note. 92-392 or section 704(b) of the Civil Service Reform Act of 1978, the 
provisions of paragraph (1) shall apply (in such manner as the Office 
of Personnel Management shall prescribe) to prevailing rate employ-
ees to whom such section 9(b) applies, except that the provisions of 
paragraph (1) shall not apply to any increase in a wage schedule or 
rate which is required by the terms of a contract entered into before 
the date of the enactment of this Act. 
ANNUAUZATION OF COST-OF-LIVING ADJUSTMENT FOR FEDERAL 
EMPLOYEES 
SEC. 1702. (a) Section 8340(b) of title 5, United States Code, is 
amended to read as follows: 
"(b) Except as provided in subsection (c) of this section, effective 
March 1 of each year each annuity payable from the Fund having a 
commencing date not later than such March 1 shall be increased by 
the percent change in the price index published for December of the 
preceding year over the price index published for December of the 
year prior to the preceding year, adjusted to the nearest Vic of 1 
percent.". 
(b) Section 8340(c)(1) of title 5, United States Code, is amended to 
read as follows: 
"(1) The first increase (if any) made under subsection (b) of this 
section to an annuity which is payable from the Fund to an employee 
or Member who retires, to the widow or widower of a deceased 
employee or Member, or to the widow or widower of a deceased 
annuitant whose annuity has not been increased under this subsec-
tion or subsection (b) of this section, shall be equal to the product 
(adjusted to the nearest Vio of 1 percent) of— 
"(A) Vi2 of the applicable percent change computer under 
subsection (b) of this section, multiplied by 
"(B) the number of months (counting any portion of a month as 
a month)— 
"(i) for which the annuity was payable from the Fund 
before the effective date of the increase, or 
"(ii) in the case of a widow or widower of a deceased 
annuitant whose annuity has not been so increased, since 
the annuity was first payable to the deceased annuitant.". 
Effective date. 
(c) The amendments made by this section shall take effect on the 
n^e^ ^^^^ 
^^*® °^ ^^^ enactment of this Act and shall apply to annuities which 
commence before, on, or after such date. 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 755 
AWARDS FOR THE DISCLOSURE OF WASTE, FRAUD, AND 
MISMANAGEMENT 
SEC. 1703. (a) Chapter 45 of title 5, United States Code, is amended 
by adding at the end thereof the following new subchapter: 
"SUBCHAPTER II—AWARDS FOR COST SAVINGS DISCLOSURES 
"§4511. Dennition and general provisions 
5 use 4511. 
"(a) For purposes of this subchapter, the term 'agency' means any "Agency." 
Executive agency. 
"(b) A cash award under this subchapter is in addition to the 
regular pay of the recipient. Acceptance of a cash award under this 
subchapter constitutes an agreement that the use by the Government 
of an idea, method, or device for which the award is made does not 
form the basis of a further claim of any nature against the Govern-
ment by the employee, his heirs, or assigns. 
"§4512. Agency awards for cost savings disclosures 
5 use 4512. 
"(a) The Inspector General of an agency, or any other agency 
employee designated under subsection (b), may pay a cash award to 
any employee of such agency whose disclosure of fraud, waste, or 
mismanagement to the Inspector General of the agency, or to such 
other designated agency employee, has resulted in cost savings for 
the agency. The amount of an award under this section may not 
exceed the lesser of^ 
"(1) $10,000; or 
"(2) an amount equal to 1 percent of the agency's cost savings 
which the Inspector General, or other employee designated 
under subsection (b), determines to be the total savings attributa-
ble to the employee's disclosure. 
For purposes of paragraph (2), the Inspector General or other 
designated employee may take into account agency cost savings 
projected for subsequent fiscal years which will be attributable to 
such disclosure. 
"(b) In the case of an agency for which there is no Inspector 
General, the head of the agency shall designate an agency employee 
who shall have the authority to make the determinations and grant 
the awards permitted under this section. 
"(cXD The Inspector General, or other employee designated under 
subsection (b), shall submit to the Comptroller General documenta-
tion substantiating any award made under this section. 
"(2) The Comptroller General shall, from time to time, review 
awards made under this section and procedures used in making such 
awards to verify the cost savings for which the awards were made. 
"§ 4513. Presidential awards for cost savings disclosures 
5 use 4513. 
"The President may pay a cash award in the amount of $20,000 to 
any employee whose disclosure of fraud, waste, or mismanagement 
has resulted in substantial cost savings for the Government. In 
evaluating the significance of a cost savings disclosure made by an 
employee for purposes of determining whether to make an award to 
such employee under this section, the President may take into 
account cost savings projected for subsequent fiscal years which will 
be attributable to the disclosure. During any fiscal year, the Presi-
dent may not make more than 50 awards under this section. 
95 STAT. 756 
PUBLIC LAW 97-35—AUG. 13, 1981 
5 use 4514 
«
«
§ 4514. Expiration of authority 
"No award may be made under this title after September 30, 
1984.". 
(b)(1) Chapter 45 of title 5, United States Code, is amended by 
inserting immediately before section 4501 the following new sub-
chapter heading: 
"Subchapter I—Awards for Superior Accomplishments". 
(2) Chapter 45 of title 5, United States Code, is amended in sections 
4501, 4502, 4505, and 4506, by striking out "chapter" each place it 
appears and inserting in lieu thereof "subchapter'. 
(3) The analysis for chapter 45 of title 5, United States Code, is 
amended— 
(A) by inserting immediately after the chapter heading the 
following new item: 
"Subchapter I—Awards for Superior Accomplishments"; 
and 
(B) by inserting after the item relating to section 4507 the 
following: 
"Subchapter II—Awards for Cost Savings Disclosures 
"4511. Definition and general provisions. 
"4512. Agency awards for cost savings disclosures. 
"4513. Presidential awards for cost savings disclosures. 
"4514. Expiration of authority.". 
Effective date. 
(c) The amendments made by this section shall take effect on 
5 use 4501 note. October 1,1981. 
REDUCTIONS IN FORCE OF CAREER SENIOR EXECUTIVES 
SEC. 1704. (a)(1) Chapter 35 of title 5, United States Code, relating to 
retention preference, restoration, and reemployment, is amended by 
redesignating section 3595 as section 3596 and by inserting after 
section 3594 the following new section: 
5 use 3595. 
"§ 3595. Reduction in force in the Senior Executive Service 
"(a) An agency shall establish competitive procedures for determin-
ing who shall be removed from the Senior Executive Service in any 
reduction in force of career appointees within that agency. The 
competitive procedures shall be designed to assure that such determi-
nations are primarily on the basis of performance, as determined 
5 use 4311. 
under subchapter II of chapter 43 of this title. 
"(b)(1) This subsection applies to any career appointee who has 
successfully completed the probationary period prescribed under 
section 3393(d) of this title. 
"(2) Except as provided in paragraphs (4) and (5), a career appointee 
may not be removed from the Senior Executive Service due to a 
reduction in force within an agency. 
"(3) A career appointee who, but for this subsection, would be 
removed from the Senior Executive Service due to a reduction in 
force within an agency— 
"(A) is entitled to be assigned by the head of that agency to a 
vacant Senior Executive Service position for which the career 
appointee is qualified; or 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 757 
"(B) if the agency head certifies, in writing, to the Office of 
Personnel Management that no such position is available in the 
agency, is entitled to be placed by the Office in any agency in any 
vacant Senior Executive Service position unless the head of that 
agency determines that the career appointee is not qualified for 
that position. 
The Office of Personnel Management shall take all reasonable steps 
to place a career appointee under subparagraph (B) and may require 
any agency to take any action which the Office considers necessary to 
carry out any such placement. 
"(4) A career appointee who is not assigned under paragraph (3)(A) 
may be removed from the Senior Executive Service and the civil 
service due to a reduction in force if— 
"(A) the career appointee declines a reasonable offer for 
placement in a Senior Executive Service position under para-
graph (3)(B); or 
"(B) subject to paragraph (5), the career appointee is not placed 
in another Senior Executive Service position under paragraph 
(3)(B) within 120 days after the Office receives certification 
regarding that appointee under paragraph (3)(B). 
"(5) An individual who was a career appointee on May 31, 1981, 
may be removed from the Senior Executive Service and the civil 
service due to a reduction in force after the 120-day period specified in 
paragraph (4)(B) only if the Director of the Office of Personnel 
Management certifies to the Committee on Post Office and Civil 
Service of the House of Representatives and the Committee on 
Governmental Affairs of the Senate, no later than 30 days prior to the 
effective date of such removal, that— 
"(A) the Office has taken all reasonable steps to place the 
career appointee in accordance with paragraph (3) of this subsec-
tion, and 
"(B) due to the highly specialized skills and experience of the 
career appointee, the Office has been unable to place the career 
appointee. 
"(c) A career appointee is entitled to appeal to the Merit Systems 
Protection Board under section 7701 of this title— 
"(1) whether the reduction in force complies with the competi-
tive procedures required under subsection (a), 
"(2) any removal under subsection (b)(4)(A), and 
"(3) in the event the career appointee is not placed under 
subsection (bX3) of this section whether the Office of Personnel 
Management took all reasonable steps to achieve such place-
ment. 
"(d) For purposes of this section, 'reduction in force' includes the "Reduction in 
elimination or modification of a position due to a reorganization, due fo^e." 
to a lack of funds or curtailment of work, or due to any other factor.". 
(2) The table of sections for chapter 35 of title 5, United States Code, 
is amended by striking out the item relating to section 3595 and 
inserting in lieu thereof the following: 
"3595. Reduction in force in the Senior Executive Service. 
"3596. Regulations.". 
(b) Section 3593 of title 5, United States Code, is amended by adding 
at the end thereof the following new subsection: 
"(c)(1) A former career appointee shall be reinstated, without 
regard to section 3393(b) and (c) of this title, to any vacant Senior 
Executive Service position in an agency for which the appointee is 
qualified if— 
95 STAT. 758 
PUBLIC LAW 97-35-AUG. 13, 1981 
"(A) the individual was a career appointee on May 31, 1981; 
"(B) the appointee was removed from the Senior Executive 
Service under section 3595 of this title due to a reduction in force 
in that agency; 
"(C) before the removal occurred, the appointee successfully 
completed the probationary period established under section 
3393(d) ofthis title; and 
"(D) the appointee applies for that vacant position within one 
year after the Office receives certification regarding that 
appointee pursuant to section 3595 (b)(3)(B) ofthis title. 
"(2) A career appointee is entitled to appeal to the Merit Systems 
Protection Board under section 7701 of this title any determination 
by the agency that the appointee is not qualified for a position for 
which the appointee applies under paragraph (1) ofthis subsection.". 
(c) Section 3393 of title 5, United States Code, is amended by adding 
at the end thereof the following new subsection: 
"(g) A career appointee may not be removed from the Senior 
Executive Service or civil service except in accordance with the 
applicable provisions of sections 1207, 3592, 3595, 7532, or 7543 ofthis 
title.". 
(d)(1) Section 7542 of title 5, United States Code, is amended by 
inserting "or 3595" after "3592". 
(2) Section 7543(a) of title 5, United States Code, is amended by 
striking out "such cause" and all that follows down through the 
period and inserting in lieu thereof "misconduct, neglect of duty, or 
malfeasance.". 
Effective date. 
(e)(1) Subject to paragraph (2), the amendments made by this 
5 use 3595 note, section shall be effective as of June 1,1981. 
(2)(A) Except as provided in subparagraph (B), the amendments 
made by this section shall apply to any career appointee removed 
from the civil service after May 31, 1981, and before the date of the 
enactment of this section if, not later than 14 days after such date of 
enactment, application therefor is made to the Office of Personnel 
Management and to the head of the agency in which the appointee 
was employed. 
(B) The provisions of section 3595(a), as added by subsection (a)(1), 
shall take effect on the date of the enactment ofthis Act. 
(3) The effectiveness of the amendments made by this section shall 
be subject to section 415(b) of the Civil Service Reform Act of 1978 (5 
U.S.C. 3131 note) to the same extent and manner as the amendments 
5 use 2101a. 
made by title IV of that Act. 
VOLUNTARY STATE INCOME TAX WITHHOLDING FOR ANNUITANTS 
SEC. 1705. (a) Section 8345 of title 5, United States Code, is amended 
by adding at the end thereof the following new subsection: 
"(k)(l) The Office shall, in accordance with this subsection, enter 
into an agreement with any State within 120 days of a request for 
agreement from the proper State official. The agreement shall 
provide that the Office shall withhold State income tax in the case of 
the monthly annuity of any annuitant who voluntarily requests, in 
writing, such withholding. The amounts withheld during any calen-
dar quarter shall be held in the Fund and disbursed to the States 
during the month following that calendar quarter. 
"(2) An annuitant may have in effect at any time only one request 
for withholding under this subsection, and an annuitant may not 
have more than two such requests in effect during any one calendar 
year. 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 759 
"(3) Subject to paragraph (2) of this subsection, an annuitant may 
change the State designated by that annuitant for purposes of having 
withholdings made, and may request that the withholdings be remit-
ted in accordance with such change. An annuitant also may revoke 
any request of that annuitant for withholding. Any change in the 
State designated or revocation is effective on the first day of the 
month after the month in which the request or the revocation is 
processed by the Office, but in no event later than on the first day of 
the second month beginning after the day on which such request or 
revocation is received by the Office. 
"(4) This subsection does not give the consent of the United States 
to the application of a statute which imposes more burdensome 
requirements on the United States than on employers generally, or 
which subjects the United States or any annuitant to a penalty or 
liability because of this subsection. The Office may not accept pay 
from a State for services performed in withholding State income 
taxes from annuities. Any amount erroneously withheld from an 
annuity and paid to a State by the Office shall be repaid by the State 
in accordance with regulations issued by the Office. 
"(5) For the purpose of this subsection, 'State' means a State, the "State." 
District of Columbia, or any territory or possession of the United 
States.". 
(b) The amendment made by subsection (a) shall take effect Octo- Effective date. 
b e r 1, 1981. 
5 USC 8345 note. 
(c) The Civil Service Retirement and Disability Fund is available 5 USC 8345 note. 
for expenses incurred by the Office of Personnel Management in the 
initial implementation of the amendments made by this section. 
Subtitle B—Savings Under the Postal Service Program 
AUTHORIZATIONS FOR PUBLIC SERVICE APPROPRIATIONS 
SEC. 1721. Section 2401(b)(1) of title 39, United States Code, is 
amended— 
(1) in subparagraph (D), by striking out "an amount equal to 7 
percent of such sum for fiscal year 1971" and inserting in lieu 
thereof "$250,000,000"; 
(2) in subparagraph (E), by striking out "an amount equal to 6 
percent of such sum for fiscal year 1971" and inserting in lieu 
thereof "$100,000,000"; and 
(3) in subparagraph (F), by striking out "an amount equal to 5 
percent of such sum for fiscal year 1971" and inserting in lieu 
thereof "no funds are authorized to be appropriated". 
CONTINUATION OF SIX-DAY MAIL DELIVERY 
SEC. 1722. During fiscal years 1982 through 1984, the Postal Service 39 USC 403 note. 
shall take no action to reduce or to plan to reduce the number of days 
each week for regular mail delivery. 
REDUCTION OF AUTHORIZATION FOR REVENUE FOREGONE 
SEC. 1723. (a) Notwithstanding section 2401(c) of title 39, United 39 USC 2401 
States Code, the amount authorized to be appropriated under such 
section shall not exceed— 
(1) $696,000,000 for fiscal year 1982; 
(2) $708,000,000 for fiscal year 1983; or 
(3) $760,000,000 for fiscal year 1984. 
-194 0—82 
50:QL3 
note. 
95 STAT. 760 
PUBLIC LAW 97-35—AUG. 13, 1981 
(b)(1) If during any of the fiscal years 1982 through 1984, the 
amount which would have been authorized to be appropriated under 
section 2401(c) of title 39, United States Code, if this section were not 
enacted exceeds the amount authorized to be appropriated by subsec-
tion (a) of this section for that fiscal year, the rates for the class of 
mail under former sections 4452(b) and 4452(c) of such title shall be 
adjusted (in the same manner as rates are adjusted under section 
3627 of such title) so that the increased revenues received from the 
users of such class of mail will equal the amount of such difference. 
During such fiscal years, adjustments in rates under such section 
3627 as a result of a failure of appropriations (as described by that 
section) may be made under section 3627 only to the extent permitted 
under paragraph (2) of this subsection. 
(2) If during any of the fiscal years 1982 through 1984 the Congress 
fails to appropriate the maximum amount authorized by subsection 
(a) of this section for purposes of section 2401(c) of title 39, United 
States Code, then rates for any class of mail sent at a free or reduced 
rate under section 3217 or section 3626 of such title 39, under the 
50 use 1451 
Federal Voting Assistance Act of 1955, or under the Overseas Citizens 
!?9\^ar Q
7
Q
^
^ 
Voting Rights Act of 1975, may be adjusted during such fiscal year in 
note 
accordance with section 3627 of title 39, United States Code, in order 
to provide for additional revenues equal to the difference between (A) 
the maximum amount authorized to be appropriated for such fiscal 
year by subsection (a) of this section, and (B) any lesser amount 
actually appropriated for such fiscal year for purposes of section 
2401(c) of title 39, United States Code. 
REDUCTION OF TRANSITIONAL APPROPRIATIONS 
39 use 2004 
SEC. 1724. (a) Notwithstanding the authorization contained in 
"°*^^- 
section 2004 of title 39, United States Code, no sums are authorized to 
be appropriated to the Fund for the purposes of such section during 
fiscal years 1982 through 1984. During fiscal year 1985, there are 
authorized to be appropriated to the Fund such amounts as may be 
necessary to carry out such section during such fiscal year, together 
with such amounts as would have been available to the Fund for 
fiscal years 1982 through 1984 were this section not enacted. 
(b) From amounts available to the Postal Service from the Fund, 
during fiscal years 1982 through 1984 the Postal Service shall meet 
the transitional expenses referred to under section 2004 of title 39, 
United States Code, to the same extent as the Postal Service would 
have met such expenses were subsection (a) of this section not 
enacted. 
QUARTERLY PAYMENTS OF APPROPRIATIONS TO THE POSTAL SERVICE 
FUND 
SEC. 1725. Section 2003(e) of title 39, United States Code, is 
amended— 
(1) by inserting "(1)" after "(e)"; and 
(2) by adding at the end thereof the following: 
"(2) Funds appropriated to the Postal Service under sections 2401 
and 2004 of this title shall be apportioned as provided in this 
paragraph. From the total amounts appropriated to the Postal 
Service for any fiscal year under the authorizations contained in 
sections 2401 and 2004 of this title, the Secretary of the Treasury 
shall make available to the Postal Service 25 percent of such amount 
at the beginning of each quarter of such fiscal year.". 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 761 
PROHIBITION OF 9-DIGIT ZIP CODE 
SEC. 1726. (a) The Postal Service shall not implement any ZIP code 39 use 403 note, 
system using more than 5 digits before October 1, 1983. This subsec-
tion shall not be construed as precluding the Postal Service or the 
Postal Rate Commission from taking such actions as may be required 
before October 1, 1983, to prepare for the implementation of such a 
ZIP code system. 
(b) During the period beginning on the date of the enactment of this 
Act and ending December 31, 1982, no Executive agency shall take 
any action to conform its mailing procedures to those appropriate for 
use under any ZIP code system using more than 5 digits. As used in "Executive 
this subsection, the term "Executive agency" has the same meaning ^s^'^'^y 
given such term by section 105 of title 5, United States Code. 
EFFECTIVE DATE 
SEC. 1727. The provisions of this subtitle (other than section 1726 39 use 2003 
and this section) shall take effect on October 1,1981. The provisions of "°*^ 
sections 1726 and this section shall take effect on the date of the 
enactment of this Act. 
Subtitle C—Governmental Affairs Generally 
CHAPTER 
1—CONSULTANTS 
AND 
TRAVEL 
REDUCTION IN EXPENDITURES FOR CONSULTANTS 
SEC. 1731. (a) The President shall submit with the Budget of the 
United States Government transmitted by the President under 
section 201(a) of the Budget and Accounting Act, 1921, in January, 3i use ii. 
1982, a rescission bill (as that term is defined in section 1011(3) of the 
Impoundment Control Act of 1974) to reduce by the amount described 3i use I40i. 
in subsection (b) the total amount of funds appropriated for the fiscal 
year 1982 which may be obligated for consultant services, manage-
ment and professional services, and special studies and analyses for 
all departments, agencies, and instrumentalities of the executive 
branch of the Government. Such bill shall be accompanied by a 
special message specifying the matters required by paragraphs (1) 
through (5) of section 1012(a) of the Impoundment Control Act of 1974 3i use 1402. 
with respect to the rescission proposal and shall specifically allocate 
the reduction in such total amount required by the preceding sen-
tence among the departments, agencies, and instrumentalities of the 
executive branch. 
(b) The amount of the reduction referred to in subsection (a) shall 
be $500,000,000 less the difference between— 
(1) the amounts which can be identified for the consultant 
services, management and professional services, and special 
studies and analyses referred to in subsection (a) in the Budget of 
the United States Government for the fiscal year 1982 which was 
transmitted by the President on January 15, 1981, under section 
201(a) of the Budget and Accounting Act, 1921, and 
(2) the amounts appropriated for the fiscal year 1982 for such 
purposes, 
to the extent that the amounts described in paragraph (1) exceed the 
amounts described in paragraph (2). The special message required by 
subsection (a) shall identify the amounts in appropriations Acts and 
95 STAT. 762 
PUBLIC LAW 97-35—AUG. 13, 1981 
the amounts in the Budget of the United States Government on the 
basis of which the reduction described in this subsection is calculated. 
REDUCTION IN EXPENDITURES FOR TRAVEL BY FEDERAL EMPLOYEES 
SEC. 1732. (a) The President shall submit with the Budget of the 
United States Government transmitted by the President under 
31 use 11. 
section 201(a) of the Budget and Accounting Act, 1921, in January, 
1982, a rescission bill (as that term is defined in section 1011(3) of the 
31 use 1401. 
Impoundment Control Act of 1974) to reduce by the amount described 
in subsection (b) the total amount of funds appropriated for the fiscal 
year 1982 which may be obligated for direct administrative travel for 
all departments, agencies, and instrumentalities of the executive 
branch of the Government. Such bill shall be accompanied by a 
special message specifying the matters required by paragraphs (1) 
31 use 1402. 
through (5) of section 1012(a) of the Impoundment Control Act of 1974 
with respect to the rescission proposal and shall specifically allocate 
the reduction in such total amount required by the preceding sen-
tence among the departments, agencies, and instrumentalities of the 
executive branch. In making such allocation, the President shall 
not— 
(1) propose the reduction of any amounts to be obligated for 
debt collection, supervision of loans, necessary and essential law 
enforcement activities, or emergency national defense activities 
of the Federal Government; or 
(2) propose the reduction of the total amount which may be 
obligated by any department, agency, or instrumentality for 
direct administrative travel for officers and employees of such 
department, agency, or instrumentality by more than 15 percent 
of the amount proposed thereof in such budget. 
(b) The amount of the reduction referred to in subsection (a) shall 
be $100,000,000 less the difference between— 
(1) the amounts which can be identified for the direct adminis-
trative travel referred to in subsection (a) in the Budget of the 
5 United States Government for the fiscal year 1982 which was 
> transmitted by the President on January 15, 1981, under section 
)v 
201(a) of the Budget and Accounting Act, 1921, and 
(2) the amounts appropriated for the fiscal year 1982 for such 
purposes, 
to the extent that the amounts described in paragraph (1) exceed the 
amounts described in paragraph (2). The special message required by 
subsection (a) shall identify the amounts in the appropriations Acts 
and the amounts in the Budget of the United States Government on 
the basis of which the reduction described in this subsection is 
calculated. 
CHAPTER 2—BLOCK GRANT FUNDS 
DISTRIBUTION OF BLOCK GRANT FUNDS 
31 use 1243 
SEC. 1741. (a) To help assure that (1) block grant funds are allocated 
"°*^ 
for programs of special importance to meet the needs of local 
governments, their residents, and other eligible entities, and (2) all 
eligible urban and rural local governments, their residents, and other 
eligible entities are treated fairly in the distribution of such funds, 
each State which receives block grant funds under this Act shall 
comply with the requirements of this chapter, to the extent that such 
funds may be used at the discretion of the State, as described in 
subsection (b)(1)(B). 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 763 
(b) For purposes of this chapter— 
(1) block grant funds are funds which are received for a 
program— 
(A) which provides for the direct allocation of funds to 
States only, except for the allocation of funds for use by the 
Federal agency administering the program; and 
(B) which provides funds that may be used at the discre-
tion of the State, in whole or in part, for the purpose of 
continuing to support activities funded, immediately before 
the date of the enactment of this Act, under programs the 
authorizations of which are discontinued by this Act and 
which were funded, immediately before such date of the 
enactment, by Federal Government allocations to units of 
local government or other eligible entities, or both; and 
(2) "State" includes the District of Columbia and any territory "State." 
or possession of the United States. 
REPORTS ON PROPOSED USE OF FUNDS; PUBLIC HEARINGS 
SEC. 1742. (a) Each State shall prepare a report on the proposed use 31 use 1243 
of block grant funds received by that State, including (1) a statement "°^® 
of goals and objectives, (2) information on the types of activities to be 
supported, geographic areas to be served, and categories or character-
istics of individuals to be served, and (3) the criteria and method 
established for the distribution of the funds, including details on how 
the distribution of funds will be targeted on the basis of need to 
achieve the purposes of the block grant funds. Beginning in the fiscal 
year 1983, the report required by this subsection shall include a 
description of how the State has met the goals, objectives, and needs 
in the use of funds for the previous fiscal year as identified in the 
report prepared pursuant to this subsection for that previous fiscal 
year. 
(b) The report prepared by a State pursuant to subsection (a), and 
any changes in such report, shall be made public within the State on 
a timely basis and in such manner as to facilitate comments from 
interested local governments and persons. 
(c) No State may receive block grant funds for any fiscal year until 
the State has conducted a public hearing, after adequate public 
notice, on the use and distribution of the funds proposed by the State 
as set forth in the report prepared pursuant to subsection (a) with 
respect to that fiscal year. 
TRANSITION PROVISION 
SEC. 1743. (a) In the fiscal year 1982 only, each State shall certify to 31 use 1243 
the responsible Federal agency that it is in compliance with section "^^^ 
1742 and that it is prepared to use all or part of available block grant 
funds. Such certifications shall be submitted to the responsible 
Federal agency prior to the beginning of the first quarter of the fiscal 
year 1982 or at least 30 days before the beginning of any other quarter 
of that fiscal year. For purposes of this section, the quarters for the 
fiscal year 1982 shall commence on October 1, January 1, April 1, and 
July 1 of the fiscal year 1982. 
(b) Except as otherwise provided in this Act, until such time as the 
responsible Federal agency receives a certification from a State 
pursuant to subsection (a), such agency shall distribute the block 
grant funds involved for programs to which the funds relate and 
95 STAT. 764 
PUBLIC LAW 97-35—AUG. 13, 1981 
which are discontinued by this Act as referred to in section 
1741(bXlXB). 
31 u s e 1243 
note. 
31 u s e 1243 
note. 
33 u s e 1287. 
Appropriation 
authorization. 
33 u s e 1285 
note. 
33 u s e 1285. 
ACCESS TO RECORDS BY COMPTROLLER GENERAL 
SEC. 1744. For the purpose of evaluating and reviewing the use of 
block grant funds, consolidated assistance, or other grant programs 
established or provided for by this Act, the Comptroller General shall 
have access to any books, accounts, records, correspondence, or other 
documents that are related to such funds, assistance, or programs, 
and that are in the possession, custody, or control of States, political 
subdivisions thereof, or any of the grantees of such States or political 
subdivisions. 
STATE AUDITING REQUIREMENTS 
SEC. 1745. (a) Each State shall conduct financial and compliance 
audits of any block grant funds which the State receives under this 
Act and any funds which the State receives under any consolidated 
assistance program established or provided for by this Act. 
(b) Any audit required by subsection (a) shall be conducted with 
respect to the 2-year period beginning on October 1, 1981, and with 
respect to each 2-year period thereafter. 
(c) Any audit required by subsection (a) shall, insofar as is practica-
ble, be conducted in accordance with standards established by the 
Comptroller General for the audit of governmental organizations, 
programs^ activities, and functions. 
(d) The audit of funds by a State required by subsection (a) shall be 
conducted in lieu of any other financial and compliance audit of the 
same funds which the State is required to conduct under any other 
provision of this Act, unless such other provision, by explicit refer-
ence to this section, otherwise provides. 
TITLE XVIII—WATER RESOURCE DEVEL-
OPMENT AND ECONOMIC DEVELOP-
MENT PROGRAMS 
Subtitle A—Water Projects 
PART 
1—WATER 
POLLUTION 
CONTROL 
SEC. 1801. (a) Section 207 of the Federal Water Pollution Control 
Act is amended by striking out "September 30, 1981, and Septem-
ber 30,1982, not to exceed $5,000,000,000 per fiscal year." and inserting 
in lieu thereof "not to exceed $5,000,000,000; for the fiscal year ending 
September 30, 1981, not to exceed $2,548,837,000; and for the fiscal 
year ending September 30, 1982, not to exceed $0, unless there is 
enacted legislation establishing an allotment formula for fiscal year 
1982 construction grant funds and otherwise reforming the munici-
pal sewage treatment construction grant program under this title, in 
which case the authorization for fiscal year 1982 shall be an amount 
not to exceed $2,400,000,000.". 
(b) There is authorized to be appropriated to the Administrator of 
the Environmental Protection Agency for the fiscal year ending 
September 30, 1982, not to exceed $40,000,000 to carry out section 
205(g) of the Federal Water Pollution Control Act. The Administrator 
shall make such authorization available to the States in accordance 
with such section 205(g) in the same manner and to the same extent 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 765 
as would be the case if $2,000,000,000 had been authorized under 
section 207 of such Act, using the same allotment table as was 33 USC 1287. 
applicable to the fiscal year ending September 30,1981. 
PART 2—RIVER AND HARBOR, FLOOD CONTROL, AND 
RELATED PROJECTS 
16 USC 460/-6a 
note. 
SEC. 1805. Notwithstanding any other provision of law, the total Appropriation 
amount authorized to be appropriated to the Secretary of the Army, oo ncp^f 
*A°" 
acting through the Chief of Engineers, for construction of river and 
"°*® 
harbor, flood control, shore protection, and related authorized proj-
ects (other than the project for the Mississippi River and tributaries) 
and detailed studies, and plans and specifications, of projects author-
ized or made eligible for selection by law, shall not exceed 
$1,546,755,000 for the fiscal year ending September 30, 1982; 
$1,688,948,000 for the fiscal year ending September 30, 1983; and 
$1,575,750,000 for the fiscal year ending September 30,1984. 
SEC. 1806. Notwithstanding any other provision of law, there shall 
not be appropriated to the Secretary of Defense for special recrea-
tional user fees programs of the Corps of Engineers in excess of 
$5,000,000 for the fiscal year ending September 30, 1981; in excess of 
$5,200,000 for the fiscal year ending September 30, 1982; in excess of 
$6,000,000 for the fiscal year ending September 30, 1983; or in excess 
of $6,000,000 for the fiscal year ending September 30,1984. 
SEC. 1807. (a) Subject to enactment of legislation establishing a 
National Board on Water Resources Policy, there is hereby author-
ized to be appropriated to such Board for the purposes of coordination 
of water resources policy and water resources planning grants to the 
States the sum of $12,500,000 per fiscal year for each of the fiscal 
years ending September 30,1982, September 30,1983, and September 
30, 1984. Upon establishment of a National Board on Water Funds, transfer 
Resources Policy, all unobligated funds of the Water Resources 
Council, established by the Water Resources Planning Act, are 
transferred to such National Board. 
(b) No funds are authorized to be appropriated to the Secretary of 
the Interior for the purposes of water resources research and develop-
ment, saline water research, development and demonstration, and 
associated activities in excess of $23,650,000 per fiscal year for each of 
the fiscal years ending September 30, 1982, September 30, 1983, and 
September 30,1984. 
Limitation. 
42 USC 787-4 
note. 
PART 3—TVA PROJECT 
SEC. 1811. No amount shall be authorized to be appropriated for the 
fiscal years ending September 30, 1982, September 30, 1983, and 
September 30, 1984, to the Tennessee Valley Authority to carry out 
the North Alabama Coal Gasification Project at Murphy Hill, Ala-
bama. The Tennessee Valley Authority shall provide for the repay-
ment out of its proceeds from the project with interest at the rate 
established in accordance with section 15d(e) of the Tennessee Valley 
Authority Act of 1933 (16 U.S.C. 831n-4(e)) of all Federal funds 
invested in the North Alabama Coal Gasification Project at Murphy 
Hill, Alabama. 
North Alabama 
Coal Gasification 
Project. 
95 STAT. 766 
PUBLIC LAW 97-35—AUG. 13, 1981 
Subtitle B—Economic Development Programs 
PART 1—PUBLIC WORKS AND ECONOMIC DEVELOPMENT 
Appropriation 
SEC. 1821. (a) The Public Works and Economic Development Act of 
authorization. 
jggg (43 ijQQ 3121 et seq.) is amended as follows: 
42 use 3135. 
(1) Section 105 is amended by striking out "September 80,1981, 
and September 30, 1982." at the end of the first sentence and 
inserting in lieu thereof "and September 30, 1981, and not to 
exceed $150,000,000 for the fiscal year ending September 30, 
1982 " 
42 use 3141. 
(2)' Section 201(c) is amended by striking out "September 30, 
1981, and September 30, 1982." at the end thereof and inserting 
in lieu thereof "and September 30, 1981, and not to exceed 
$46,500,000 for the fiscal year ending September 30, 1982.". 
42 use 3144. 
(3) Section 204(c) is amended by striking out "September 30, 
1981, and September 30,1982." and inserting in lieu thereof "and 
September 30,1981.". 
42 use 3152. 
(4) Section 303(a) is amended by striking out "September 30, 
1981, and September 30,1982." and inserting in lieu thereof "and 
September 30, 1981, and not to exceed $35,500,000 for the fiscal 
year ending September 30,1982.". 
42 use 3153. 
(5) The first sentence of section 304(a) is amended by striking 
out "September 30,1981, and September 30,1982," and inserting 
in lieu thereof "and September 30,1981,". 
42 use 3171. 
(6) Section 403(g) is amended by striking out "September 30, 
1981, and September 30,1982," and inserting in lieu thereof "and 
September 30,1981,". 
42 use 3172. 
(7) Section 404 is amended by striking out "September 30,1981, 
and September 30, 1982," and inserting in lieu thereof "and 
September 30,1981,". 
42 use 3181. 
(8) Effective September 30,1981, title V is repealed. 
42 use 3219. 
(9) Section 709 is amended by inserting ", except that there are 
hereby authorized to be appropriated to carry out those provi-
sions of the Act for which specific authority for appropriations is 
not otherwise provided in this Act not to exceed $25,000,000 for 
the fiscal year ending September 30, 1982" before the period at 
the end of the first sentence. 
42 use 3236. 
(10) Title VIII is amended by striking out section 806. 
42 use 3245. 
(H) Section 905 is amended by striking out "September 30, 
1981, and September 30,1982." and inserting in lieu thereof "and 
September 30, 1981, and not to exceed $33,000,000 for the fiscal 
year ending September 30,1982.". 
42 use 3246g. 
(12) Section 1007 is amended by striking out "September 30, 
1982." and inserting in lieu thereof "September 30, 1981.". 
42 use 3219 
(b) The total of all authorizations to carry out the Public Works and 
'^°t^ 
Economic Development Act of 1965 for the fiscal year 1982 shall not 
exceed $290,000,000 and in the obligation of such sum the Secretary 
shall approve projects in accordance with such Act as follows: (1) 
highest priority to those projects for which applications have been 
authorized to be filed as of the date of enactment of this section; (2) 
next priority to those projects for which preapplications or project 
profiles have been authorized to be filed as of the date of enactment of 
this section; and (3) thereafter other projects. The Secretary shall 
ensure that only technically approvable projects under these prior-
ities will be funded, and that no new projects are approved which 
cannot be completed with funds obligated in fiscal year 1982. 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 
STAT. 
767 
PART 
2—APPALACHIAN 
REGIONAL 
DEVELOPMENT 
SEC. 1822. (a) The Appalachian Regional Development Act of 1965 
is amended as follows: 
(1) Section 105(b) is amended by striking out "$3,350,000 for the 40 USC app. 105. 
fiscal year ending September 30, 1982 (of such amount not to 
exceed $550,000 shall be available for expenses of the Federal 
cochairman, his alternate, and his staff).' and inserting in lieu 
thereof "$2,900,000 for the fiscal year ending September 30,1982 
(of such amount not to exceed $400,000 shall be available for 
expenses of the Federal cochairman, his alternate, and his 
staff).". 
(2) Section 201(g) is amended by striking out "and $215,000,000 40 USC app. 201. 
for fiscal year 1982" and inserting in lieu thereof "and 
$165,000,000 for fiscal year 1982". 
(3) Section 401 is amended by striking out "$140,000,000 for the 40 use app. 40i. 
fiscal year ending September 30, 1982." and inserting in lieu 
thereof "$50,000,000 for the fiscal year ending September 30, 
1982.". 
(4) Section 401 is amended by adding at the end thereof the 
following: "No part of the sums authorized in this section for the 
fiscal year ending September 30, 1982, shall be obligated for any 
project unless such project was undertaken with funds obligated 
in a previous fiscal year or is a capital project which was 
originally approved for funding in fiscal year 1981 and can be 
started and completed with funds authorized for fiscal year 
1982." 
TITLE XIX—SMALL BUSINESS 
SEC. 1901. This title may be cited as the "Small Business Budget 
Reconciliation and Loan Consolidation/Improvement Act of 1981". 
SEC. 1902. Subsection (a) of section 7 of the Small Business Act is 
amended to read as follows: 
"(a) The Administration is empowered to the extent and in such 
amounts as provided in advance in appropriation Acts to make loans 
for plant acquisition, construction, conversion, or expansion, includ-
ing the acquisition of land, material, supplies, equipment, and work-
ing capital, and to make loans to any qualified small business 
concern, including those owned by qualified Indian tribes, for pur-
poses of this Act. Such financings may be made either directly or in 
cooperation with banks or other financial institutions through agree-
ments to participate on an immediate or deferred (guaranteed) basis. 
These powers shall be subject, however, to the following restrictions, 
limitations, and provisions: 
"(1) No financial assistance shall be extended pursuant to this 
subsection if the applicant can obtain credit elsewhere. No 
immediate participation may be purchased unless it is shown 
that a deferred participation is not available; and no direct 
financing may be made unless it is shown that a participation is 
not available. 
"(2) In agreements to participate in loans on a deferred basis 
under this subsection, such participation by the Administration, 
except as provided in paragraph (6), shall be: 
"(A) not less than 90 per centum of the balance of the 
financing outstanding at the time of disbursement if such 
financing does not exceed $100,000; and 
Small Business 
Budget 
Reconciliation 
and Loan 
Consolidation/ 
Improvement 
Act of 1981. 
15 USC 631 note. 
15 USC 636. 
Loan authority 
limitations. 
95 STAT. 768 
PUBLIC LAW 97-35—AUG. 13, 1981 
"(B) subject to the limitation in paragraph (3)— 
"(i) not less than 70 per centum nor more than 90 per 
centum of the financing outstanding at the time of 
disbursement if such financing exceeds $100,000 but is 
less than $714,285, and 
"(ii) less than 70 per centum of the financing outstand-
ing at the time of disbursement if such financing 
exceeds $714,285; 
Provided, That the Administration shall not use the per centum 
of guarantee requested as a criterion to establish priorities in 
approving guarantee requests nor shall the Administration 
reduce the per centum guaranteed to less than 90 per centum 
pursuant to subparagraph (B) other than by a determination 
made on each application. 
"(3) No loan under this subsection shall be made if the total 
amount outstanding and committed 0)y participation or other-
wise) to the borrower from the business loan and investment 
fund established by this Act would exceed $500,000: Provided, 
That no such loan made or effected either directly or in coopera-
tion with banks or other lending institutions through agree-
ments to participate on an immediate basis shall exceed 
$350,000. 
"(4) The rate of interest on financings made on a deferred basis 
shall be legal and reasonable but shall not exceed a rate pre-
scribed by the Administration, and the rate of interest for the 
Administration's share of any direct or immediate participation 
loan shall not exceed the current average market yield on 
outstanding marketable obligations of the United States with 
remaining periods to maturity comparable to the average matu-
rities of such loans and adjusted to the nearest one-eighth of 1 per 
centum, and an additional amount as determined by the Admin-
istration, but not to exceed 1 per centum per annum: Provided, 
That for those loans to assist any public or private organization 
for the handicapped or to assist any handicapped individual as 
provided in paragraph (10) of this subsection, the interest rate 
shall be 3 per centum per annum. 
"(5) No such loans including renewals and extensions thereof 
may be made for a period or periods exceeding twenty-five years, 
except that such portion of a loan made for the purpose of 
acquiring real property or constructing, converting, or expand-
ing facilities may have a maturity of twenty-five years plus such 
additional period as is estimated may be required to complete 
such construction, conversion, or expansion. 
"(6) All loans made under this subsection shall be of such sound 
value or so secured as reasonably to assure repayment: Provided, 
however. That— 
"(A) for loans to assist any public or private organization 
or to assist any handicapped individual as provided in 
paragraph (10) of this subsection any reasonable doubt shall 
be resolved in favor of the applicant; 
"(B) recognizing that greater risk may be associated with 
loans for energy measures as provided in paragraph (12) of 
this subsection, factors in determining 'sound value' shall 
include, but not be limited to, quality of the product or 
service; technical qualifications of the applicant or his em-
ployees; sales projections; and the financial status of the 
business concern: Provided further. That such status need 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 769 
not be as sound as that required for general loans under this 
subsection; and 
"(C) the Administration shall not decline to participate in 
a loan on a deferred basis under this subsection solely 
because such loan will be used to refinance all or any part of 
the existing indebtedness of a small business concern, unless 
the Administration determines that— 
"(i) the holder of such existing indebtedness is in a 
position likely to sustain a loss if such refinancing is not 
provided, and 
"(ii) if the Administration provides such refinancing 
through an agreement to participate on a deferred bas/is, 
it will be in a position likely to sustain part or all of any 
loss which would have otherwise been sustained by the 
holder of the original indebtedness: Provided 
further, 
That the Administration may decline to approve such 
refinancing if it determines that the loan will not 
benefit the small business concern. 
On that portion of the loan used to refinance existing indebted-
ness held by a bank or other lending institution, the Administra-
tion shall limit the amount of deferred participation to 80 per 
centum of the amount of the loan at the time of disbursement: 
Provided further, That any authority conferred by this subpara-
graph on the Administration shall be exercised solely by the 
Administration and shall not be delegated to other than Admin-
istration personnel. 
"(7) The Administration may defer payments on the principal 
of such loans for a grace period and use such other methods as it 
deems necessary and appropriate to assure the successful estab-
lishment and ojperation of such concern. 
"(8XA) Any loan made under the authority of this subsection 
by the Administration in cooperation with a bank or other 
lending institution through an agreement to participate on a 
deferred basis, may, upon the concurrence of the Administration, 
borrower and such bank or institution, have the term of such 
loan extended or such loan refinanced with an extension of its 
term: Provided, That the aggregate term of such extended or 
refinanced loan does not exceed the term permitted pursuant to 
paragraph (5): And provided further. That such extended loans, 
or refinancings shall be repaid in equal installments of principal 
and interest. 
"(B) An additional service fee not exceeding 1 per centum of 
the outstanding amount of the principal may be paid by the 
borrower to the lender in consideration for such lender extending 
the term or refinancing of such borrower's indebtedness if such 
extension or refinancing results in the term of such indebtedness 
exceeding ten years. 
"(C) The authority provided in this paragraph shall not be 
construed to otherwise limit the authority of the Administration 
to set terms and conditions of the loan. 
"(9) The Administration may provide loans under this subsec-
tion to finance residential or commerical construction or reha-
bilitation for sale: Provided, however, That such loans shall not 
be used primarily for the acquisition of land. 
"(10) The Administration may provide loans under this subsec-
tion to assist any public or private organization for the handi-
capped or to assist any handicapped individual in establishing, 
acquiring, or operating a small business concern. 
95 STAT. 770 
PUBLIC LAW 97-35—AUG. 13, 1981 
"(11) The Administration may provide loans under this subsec-
tion to any small business concern, or to any qualified person 
seeking to establish such a concern when it determines that such 
loan will further the policies established in section 2(c) of this 
15 use 631. 
Act, with particular emphasis on the preservation or establish-
ment of small business concerns located in urban or rural areas 
with high proportions of unemployed or low-income individuals 
or owned by low-income individuals. 
"(12) The Administration may provide loans under this subsec-
tion to assist any small business concern, including start up, to 
enable such concern to design architecturally or engineer, manu-
facture, distribute, market, install, or service energy measures: 
Provided, however, That such loan proceeds shall not be used 
primarily for research and development. 
"(13) The Administration may provide financings under this 
subsection to State and local development companies for the 
purposes of, and subject to the restrictions in, title V of the Small 
15 use 695. 
Business Investment Act of 1958. 
"(14) The Administration under this subsection may provide 
extensions and revolving lines of credit for export purposes to 
enable small business concerns to develop foreign markets and 
for preexport financing: Provided, however. That no such exten-
sion or revolving line of credit may be made for a period or 
periods exceeding eighteen months. A bank or participating 
lending institution may establish the rate of interest on ex-
tensions and revolving lines of credit as may be legal and 
reasonable. 
"(15)(A) The Administration may guarantee loans under this 
subsection to qualified employee trusts with respect to a small 
business concern for the purpose of purchasing stock of the 
concern under a plan approved by the Administrator which, 
when carried out, results in the qualified employee trust owning 
at least 51 per centum of the stock of the concern. 
"(B) The plan requiring the Administrator's approval under 
subparagraph (A) shall be submitted to the Administration by 
the trustee of such trust with its application for the guarantee. 
Such plan shall include an agreement with the Administrator 
which is binding on such trust and on the small business concern 
and which provides that— 
"(i) not later than the date the loan guaranteed under 
subparagraph (A) is repaid (or as soon thereafter as is 
consistent with the requirements of section 401(a) of the 
26 use 401. 
Internal Revenue Code of 1954), at least 51 per centum of the 
total stock of such concern shall be allocated to the accounts 
of at least 51 per centum of the employees of such concern 
who are entitled to share in such allocation, 
"(ii) there will be periodic reviews of the role in the 
management of such concern of employees to whose ac-
counts stock is allocated, and 
"(iii) there will be adequate management to assure man-
agement expertise and continuity. 
"(C) In determining whether to guarantee any loan under this 
paragraph, the individual business experience or personal assets 
of employee-owners shall not be used as criteria, except inas-
much as certain employee-owners may assume managerial re-
sponsibilities, in which case business experience may be 
considered. 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 771 
Report to 
Congress. 
Definitions. 
15 use 632. 
15 use 636. 
"(D) For purposes of this paragraph, a corporation which is 
controlled by any other person shall be treated as a small 
business concern if such corporation would, after the plan 
described in subparagraph (B) is carried out, be treated as a small 
business concern. 
"(E) The Administration shall compile a separate list of appli-
cations for assistance under this paragraph, indicating which 
applications were accepted and which were denied, and shall 
report periodically to the Congress on the status of employee-
owned firms assisted by the Administration.". 
SEC. 1903. Section 3 of the Small Business Act is amended by adding 
thereto the following subsections: 
"(d) For purposes of section 7 of this Act, the term 'qualified Indian 
tribe' means an Indian tribe as defined in section 4(a) of the Indian 
Self-Determination and Education Assistance Act, which owns and 25 use 450b. 
controls 100 per centum of a small business concern. 
"(e) For purposes of section 7 of this Act, the term 'public or private 
organization for the handicapped' means one— 
"(1) which is organized under the laws of the United States or 
of any State, operated in the interest of handicapped individuals, 
the net income of which does not inure in whole or in part to the 
benefit of any shareholder or other individual; 
"(2) which complies with any applicable occupational health 
and safety standard prescribed by the Secretary of Labor; and 
"(3) which, in the production of commodities and in the 
provision of services during any fiscal year in which it received 
financial assistance under this subsection, employs handicapped 
individuals for not less than 75 per centum of the man-hours 
required for the production or provision of the commodities or 
services. 
"(f) For purposes of section 7 of this Act, the term 'handicapped 
individual' means a person who has a physical, mental, or emotional 
impairment, defect, ailment, disease, or disability of a permanent 
nature which in any way limits the selection of any type of 
employment for which the person would otherwise be qualified or 
qualifiable. 
"(g) For purposes of section 7 of this Act, the term 'energy 
measures' includes— 
"(1) solar thermal energy equipment which is either of the 
active type based upon mechanically forced energy transfer or of 
the passive type based on convective, conductive, or radiant 
energy transfer or some combination of these types; 
"(2) photovoltaic cells and related equipment; 
"(3) a product or service the primary purpose of which is 
conservation of energy through devices or techniques which 
increase the energy efficiency of existing equipment, methods of 
operation, or systems which use fossil fuels, and which is on the 
Energy Conservation Measures list of the Secretary of Energy or 
which the Administrator determines to be consistent with the 
intent of this subsection; 
"(4) equipment the primary purpose of which is production of 
energy from wood, biological waste, grain, or other biomass 
source of energy; 
"(5) equipment the primary purpose of which is industrial 
cogeneration of energy, district heating, or production of energy 
from industrial waste; 
"(6) hydroelectric power equipment; 
"(7) wind energy conversion equipment; and 
95 STAT. 772 
PUBLIC LAW 97-35—AUG. 13, 1981 
15 use 636. 
Report to 
congressional 
committees. 
15 use 639. 
15 use 631 note. 
Loan program 
expenditure 
levels. 
15 use 697. 
15 use 681. 
15 use 694a. 
15 use 636. 
15 use 694-1, 
694-2. 
"(8) engineering, architectural, consulting, or other profes-
sional services which are necessary or appropriate to aid citizens 
in using any of the measures described in paragraph (1) through 
(7). 
"(h) For purposes of this Act, the term 'credit elsewhere' means the 
availability of credit from non-Federal sources on reasonable terms 
and conditions taking into consideration the prevailing rates and 
terms in the community in or near where the concern transacts 
business, or the homeowner resides, for similar purposes and periods 
of time. 
"(i) For purposes of section 7 of this Act, the term 'homeowners' 
includes owners and lessees of residential property and also includes 
personal property.". 
SEC. 1904. Section 10(b) of the Small Business Act is amended by 
striking out "subsection" and all that follows and by inserting in lieu 
thereof, "this Act. Such report shall provide such information sepa-
rately on each type of loan made under paragraphs (10) through (15) 
of section 7(a) and separately for all other loan programs. In addition, 
the information on loans shall be supplied on a monthly basis to the 
Committee on Small Business of the Senate and the Committee on 
Small Business of the House of Representatives.". 
SEC. 1905. Section 20 of the Small Business Act is amended by 
striking out all after subsection 0) and inserting the following: 
"(k) The following program levels are authorized for fiscal year 
1982: 
"(1) For the programs authorized by section 7(a) of this Act, the 
Administration is authorized to make $195,000,000 in direct and 
immediate participation loans; and of such sum, the Administra-
tion is authorized to make $15,000,000 in loans as provided in 
paragraph (10), $45,000,000 in loans as provided in paragraph 
(11), and $10,00(),000 in loans as provided in paragraph (12). 
"(2) For the programs authorized by 7(a) of this Act, and section 
503 of the Small Business Investment Act of 1958, the Adminis-
tration is authorized to make $3,140,000,000 in deferred partici-
pation loans and guarantees of debentures; and of such sum, the 
Administration is authorized to make $5,000,000 in loans as 
provided in paragraph (10), $60,000,000 in loans as provided in 
paragraph (11), $17,000,000 in loans as provided in paragraph 
(12), and $250,00(),000 in loans as provided in paragraph (13) and 
guarantees of debentures as proivded in section 503. 
"(3) For the programs authorized by title III of the Small 
Business Investment Act of 1958, the Administration is author-
ized to make $35,000,000 in direct purchase of debentures and 
preferred securities and to make $160,000,000 in guarantees of 
debentures. 
"(4) For the programs authorized by part B of title IV of the 
Small Business Investment Act of 1958, the Administration is 
authorized to enter into guarantees not to exceed $1,400,000,000. 
"(5) For the program authorized by section 70bX3) of this Act, 
the Administration shall not enter into any loans, guarantees, or 
other obligations or commitments. 
"(6) For the programs authorized in sections 404 and 405 of the 
Small Business Investment Act of 1958, the Administration is 
authorized to enter into guarantees not to exceed $250,000,000. 
"(7) There are hereby authorized to be appropriated such sums 
as may be necessary and appropriate for the carrying out of the 
provisions and purposes, including administrative expenses, of 
sections 70i)Xl) and 7 Ot>)(2) of this Act; and there are authorized to 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 773 
be transferred from the disaster loan revolving funds such sums 
as may be necessary and appropriate for such administrative 
expenses. 
"(1) There are authorized to be appropriated to the Administration Appropriation 
for fiscal year 1982, $623,000,000. Of such sum, $362,000,000 shall be authorization. 
available for the purpose of carrying out the programs referred to in 
subsection (k), paragraphs (1) through (3); $30,000,000 shall be availa-
ble for the purpose of carrying out the provisions of section 412 of the 
Small Business Investment Act of 1958; $4,000,000 shall be available 15 USC 694c. 
for the purpose of carrying out the provisions of section 403 of the 
Small Business Investment Act of 1958; and $227,000,000 shall be 15 USC 694. 
available for salaries and expenses of the Administration of which 
amount— 
"(1) $12,526,000 shall be available for procurement and techni-
cal Eissistance; of which amount not less than $2,318,000 shall be 
available for technical assistance, and of this amount not less 
than $903,000 shall be used to pay for the continued development 
of a procurement automated source system, and not less than 
$175,000 shall be used to develop and maintain technology 
assistance centers which shall have direct or indirect access to a 
minimum of thirty technology data banks to define the technol-
ogy problems or needs of small businesses by searching technol-
ogy data banks or other sources to locate, obtain and interpret 
the appropriate technology for such small business. 
"(2) $26,638,000 shall be available for management assistance 
of which amount not less than $1,214,000 shall be used to sustain 
the small business export development program and to employ 
not less than seventeen staff people for the Office of Interna-
tional Trade, ten of whom shall serve as export development 
specialists with each of the Administration's regional offices 
being assigned one such specialist. 
"(3) $8,000,000 shall be available for economic research and 
analysis and advocacy, of which amount not less than $2,420,000 
shall be used to employ at least sixty-nine staff people for the 
office of the Chief Counsel for Advocacy to carry out research and 
those functions prescribed by Public Law 94-305; not less than 15 USC 634a. 
$1,400,000 shall be used to develop an external small business 
data bank and small business index; not less than $1,350,000 
shall be used for research; and not less than $1,000,000 shall be 
used to pay for development and maintenance of an indicative 
small business data base comprised of names and addresses and 
related information. 
"(4) $30,250,000 shall be available for the Office of Minority 
Small 
Business 
and 
Capital 
Ownership 
Development, 
$13,655,000 of which shall be used to carry out those functions, 
including administrative expenses, prescribed by section 7(j) of 
this Act. 
15 USC 636. 
"(5) $10,546,000 shall be available for program evaluation and 
data management with priority given to the development of an 
automated internal Administration management data base, to 
the enhancement of the Administration's document tracking 
system, and to the installation of terminals in Administration 
field offices. 
"(6) There are hereby authorized to be appropriated such sums 
as may be necessary and appropriate for carrying out the 
provisions and purposes of the small business development 
center program in section 21. 
15 USC 648. 
95 STAT. 774 
PUBLIC LAW 97-35—AUG. 13, 1981 
Funds, transfer. 
Ante, p. 772. 
Program 
expenditure 
levels. 
Ante, p. 767. 
15 u s e 697. 
15 u s e 681. 
15 u s e 694a. 
15 u s e 694-1, 
694-2. 
Appropriation 
authorization. 
15 u s e 694c. 
15 u s e 694. 
"(m) The Administrator may transfer no more than 10 per centum 
of each of the total levels for salaries and expenses authorized in 
paragraphs (1) through (5) of section 20(1) of this Act: Provided, 
however, That no level authorized in such paragraphs may be 
increased more than 20 per centum by einy such transfers. 
"(n) The following program levels are authorized for fiscal year 
1983: 
"(1) For the programs authorized by section 7(a) of this Act, the 
Administration is authorized to make $195,000,000 in direct and 
immediate participation loans; and of such sum, the Administra-
tion is authorized to make $15,000,000 in loans as provided in 
paragraph (10), $45,000,000 in loans as provided in paragraph 
(11), and $10,000,000 in loans as provided in paragraph (12). 
"(2) For the programs authorized by section 7(a) of this Act and 
section 503 of the Small Business Investment Act of 1958, the 
Administration is authorized to make $3,140,000,000 in deferred 
participation loans and guarantees of debentures; and of such 
sum, the Administration is authorized to make $5,000,000 in 
loans as provided in paragraph (10), $60,000,000 in loans as 
provided in paragraph (11), $17,000,000 in loans as provided in 
paragraph (12), and $350,000,000 in loans £is provided in para-
graph (13) and guarantees of debentures as provided in section 
503. 
"(3) For the programs authorized by title III of the Small 
Business Investment Act of 1958, the Administration is author-
ized to make $35,000,000 in direct purchases of debentures and 
preferred securities and to make $160,000,000 in guarantees of 
debentures. 
"(4) For the programs authorized by part B of title IV of the 
Small Business Investment Act of 1958, the Administration is 
authorized to enter into guarantees not to exceed $1,400,000,000. 
"(5) For the progrsmi authorized by section 7(bX3) of this Act, 
the Administration shall not enter into any loans, guarantees, or 
other obligations or commitments. 
"(6) For the programs authorized in sections 404 and 405 of the 
Small Business Investment Act of 1958, the Administration is 
authorized to enter into guarantees not to exceed $250,000,000. 
"(7) There are hereby authorized to be appropriated such sums 
as may be necessary and appropriate for the carrying out of the 
provisions and purposes, including administrative expenses, of 
sections 7(bXl) and 7(bX2) of this Act; and there are authorized to 
be transferred from the disaster loan revolving funds such sums 
as may be necessary and appropriate for such administrative 
expenses, 
"(o) There are authorized to be appropriated to the Administration 
for fiscal year 1983, $675,000,000. Of such sum, $408,000,000 shall be 
available for the purpose of carrying out the programs referred to in 
subsection (n), paragraphs (1) through (3); $30,000,000 shall be availa-
ble for the purpose of carrjdng out the provisions of section 412 of the 
Small Business Investment Act of 1958; $4,000,000 shall be available 
for the purpose of carrying out the provisions of section 403 of the 
Small Business Investment Act of 1958; and $233,000,000 shall be 
available for salaries and expenses of the Administration of which 
amount— 
"(1) $12,526,000 shall be available for procurement and techni-
cal assistance; of which amount not less than $2,318,000 shall be 
available for technical assistance, and of this amount not less 
than $903,000 shall be used to pay for the continued development 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 775 
of a procurement automated source system, and not less than 
$175,000 shall be used to develop and maintain technology 
£issistance centers which shall have direct or indirect access to a 
minimum of thirty technology data banks to define the technol-
ogy problems or needs of small businesses by searching technol-
ogy data banks or other sources to locate, obtain and interpret 
the appropriate technology for such small business. 
"(2) $29,638,000 shall be available for management assistance 
of which amount not less than $1,214,000 shall be used to sustain 
the small business export development program and to employ 
not less than seventeen staff people for the Office of Interna-
tional Trade, ten of whom shall serve as export development 
specialists with each of the Administration's regional offices 
being assigned one such specialist. 
"(3) $8,000,000 shall be available for economic research and 
analysis and advocacy, of which amount not less than $2,420,000 
shall be used to employ at least sixty-nine staff people for the 
office of the Chief Counsel for Advocacy to carry out research and 
those functions prescribed by Public Law 94-305; not less than 15 USC 634a. 
$1,400,000 shall be used to develop an external small business 
data bank and small business index; not less than $1,350,000 
shall be used for research; and not less than $1,000,000 shall be 
used to pay for development and maintenance of an indicative 
small business data beise comprised of names and addresses and 
related information. 
"(4) $30,250,000 shall be available for the Office of Minority 
Small 
Business 
and 
Capital 
Ownership 
Development, 
$13,655,000 of which shall be used to carry out those functions, 
including administrative expenses, prescribed by section 7(j) of 
this Act. 
15 USC 636. 
"(5) $10,546,000 shall be available for program evaluation and 
data management with priority given to the development of an 
automated internal Administration management data base, to 
the enhancement of the Administration's document tracking 
system, and to the installation of terminals in Administration 
field offices. 
"(6) There are hereby authorized to be appropriated such sums 
as may be necessary and appropriate for carrying out the 
provisions and purposes of the Small business development 
center program in section 21. 
"(p) The Administrator may transfer no more than 10 per centum 
of each of the total levels for salaries and expenses authorized in 
paragraphs (1) through (5) of section 20(o) of this Act: Provided, 
however, That no level authorized in such paragraphs may be 
increased more than 20 per centum by any such transfers. 
"(q) The following program levels are authorized for fiscal year 
1984: 
"(1) For the programs authorized by section 7(a) of this Act, the 
Administration is authorized to make $195,000,000 in direct and 
immediate participation loans; and of such sum, the Administra-
tion is authorized to make $15,000,000 in loans as provided in 
paragraph (10), $45,000,000 in loans as provided in paragraph 
(11), and $10,000,000 in loans as provided in paragraph (12). 
"(2) For the programs authorized by 7(a) of this Act and section 
503 of the Small Business Investment Act of 1958, the Adminis- 15 USC 697. 
tration is authorized to make $3,140,000,000 in deferred partici-
pation loans and guarantees of debentures; and of such sum, the 
Administration is authorized to make $5,000,000 in loans sis 
15 USC 648. 
Funds, transfer. 
Ante, p. 772. 
Loan program 
expenditure 
levels. 
Ante, p. 767. 
-194 0—82 
51:QL3 
95 STAT. 776 
PUBLIC LAW 97-35—AUG. 13, 1981 
15 use 697. 
15 use 681. 
15 use 694a. 
15 use 636. 
15 use 694-1, 
694-2. 
Appropriation 
authorization. 
15 use 694c. 
15 use 694. 
15 use 634a. 
provided in paragraph (10), $60,000,000 in loans as provided in 
paragraph (11), $17,000,000 in loans as provided in paragraph 
(12), and $350,00(),000 in loans as provided in paragraph (13) and 
guarantees of debentures as provided in section 503. 
"(3) For the programs authorized by title III of the Small 
Business Investment Act of 1958, the Administration is author-
ized to make $35,000,000 in direct purchases of debentures and 
preferred securities and to make $160,000,000 in guarantees of 
debentures. 
"(4) For the programs authorized by part B of title IV of the 
Small Business Investment Act of 1958, the Administration is 
authorized to enter into guarantees not to exceed $1,400,000,000. 
"(5) For the program authorized by section 7(b)(3) of this Act, 
the Administration shall not enter into any loans, guarantees, or 
other obligations or commitments. 
"(6) For the programs authorized in sections 404 and 405 of the 
Small Business Investment Act of 1958, the Administration is 
authorized to enter into guarantees not to exceed $250,000,000. 
"(7) There are hereby authorized to be appropriated such sums 
as may be necessary and appropriate for the carrying out of the 
provisions and purposes, including administrative expenses, of 
sections 7(b)(1) and 7(bX2) of this Act; and there are authorized to 
be transferred from the disaster loan revolving funds such sums 
as may be necessary and appropriate for such administrative 
expenses, 
"(r) There are authorized to be appropriated to the Administration 
for fiscal year 1984, $804,000,000. Of such sum, $531,000,000 shall be 
available for the purpose of carrying out the programs referred to in 
subsection (q), paragraphs (1) through (3); $30,000,000 shall be availa-
ble for the purpose of carrjdng out the provisions of section 412 of the 
Small Business Investment Act of 1958; $4,000,000 shall be available 
for the purpose of carrying out the provisions of section 403 of the 
Small Business Investment Act of 1958; and $239,000,000 shall be 
available for salaries and expenses of the Administration of which 
amount— 
"(1) $12,526,000 shall be available for procurement and techni-
cal assistance; of which amount not less than $2,318,000 shall be 
available for technical assistance, and of this amount not less 
than $903,000 shall be used to pay for the continued development 
of a procurement automated source system, and not less than 
$175,000 shall be used to develop and maintain technology 
assistance centers which shall have direct or indirect access to a 
minimum of thirty technology data banks to define the technol-
ogy problems or needs of small businesses by searching technol-
ogy data banks or other sources to locate, obtain and interpret 
the appropriate technology for such small business. 
"(2) $32,138,000 shall be available for management assistance 
of which amount not less than $1,214,000 shall be used to sustain 
the small business export development program and to employ 
not less than seventeen staff people for the Office of Inter-
national Trade, ten of whom shall serve as export development 
specialists with each of the Administration's regional offices 
being assigned one such specialist. 
"(3) $8,000,000 shall be available for economic research and 
analysis and advocacy, of which amount not less than $2,420,000 
shall be used to employ at least sixty-nine staff people for the 
office of the Chief Counsel for Advocacy to carry out research and 
those functions prescribed by Public Law 94-305; not less than 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 777 
$1,400,000 shall be used to develop an external small business 
data bank and small business index; not less than $1,350,000 
shall be used for research; and not less than $1,000,000 shall be 
used to pay for development and maintenance of an indicative 
small business data base comprised of names and addresses and 
related information. 
"(4) $30,250,000 shall be available for the Office of Minority 
Small 
Business 
and 
Capital 
Ownership 
Development, 
$13,655,000 of which shall be used to carry out those functions, 
including administrative expenses, prescribed by section 7(j) of 
this Act. 
"(5) $10,546,000 shall be available for program evaluation and 
data management with priority given to the development of an 
automated internal Administration management data base, to 
the enhancement of the Administration's document tracking 
system, and to the installation of terminals in Administration 
field offices. 
"(6) There are hereby authorized to be appropriated such sums 
as may be necessary and appropriate for carrying out the 
provisions and purposes of the small business development 
center program in section 21. 
"(s) The Administrator may transfer no more than 10 per centum of 
each of the total levels for salaries and expenses authorized in 
paragraphs (1) through (5) of section 20(r) of this Act: Provided, 
however, That no level authorized in such paragraphs may be 
increased more than 20 per centum by any such transfers.". 
SEC. 1906. Section 20(h) of the Small Business Act is hereby 
amended by striking from paragraph (9) the figure "$110,000,000" 
and by inserting "$180,000,000". 
SEC. 1907. Not later than February 28,1984, and February 28,1985, 
the Small Business Administration shall submit to the Committee on 
Small Business of the Senate and the Committee on Small Business of 
the House of Representatives, a report which shall contain— 
(1) with respect to section 7(aX5) of the Small Business Act— 
(A) the aggregate number, dollar value, and default rate of 
all loans (other than for the acquisition of real property or 
for construction) having a maturity not in excess of ten 
years, and the aggregate number, dollar value, and default 
rate of all loans made for the purpose of acquiring real 
property or for construction having a maturity of between 
ten years and twenty years plus such additional period as is 
estimated may be required to complete such construction; 
and 
(B) the aggregate number, dollar value, and default rate of 
all loans (other than for the acquisition of real property or 
for construction) made since the effective date of this section, 
having a maturity in excess of ten years, and the aggregate 
number, dollar value, and default rate of all loans made for 
the purpose of acquiring real property or for construction 
made since the effective date of this section, having a 
maturity in excess of twenty years plus such additional 
period as is estimated may be required to complete such 
construction; 
(2) with respect to section 7(a)(8)(A) of the Small Business Act— 
(A) the aggregate number, dollar value, and default rate of 
loans extended or refinanced pursuant to such section; and 
15 u s e 648. 
Funds, transfer. 
Ante, p. 772. 
15 u s e 631 note. 
15 u s e 631 note. 
Report to 
congressional 
committees. 
15 u s e 636 note. 
Ante, p. 767. 
95 STAT. 778 
PUBLIC LAW 97-35—AUG. 13, 1981 
(B) the average term of loans before such extension or 
refinancing and the average term of such loans after such 
extension or refinancing; and 
Ante, p. 767. 
(3) with respect to section 7(a)(6)(C) of the Small Business Act, 
the aggregate number, dollar value, and default rate of all loans 
refinanced pursuant to such provision. 
15 use 633. 
SEC. 1908. Section 4(c)(lXB) of the Small Business Act is amended 
by deleting "7(e), 7(h), 7(i), 7(1),". 
15 use 696. 
SEC. 1909. Section 502 of the Small Business Investment Act of 1958 
is amended by striking paragraphs (1) and (5) and by renumbering 
paragraphs (2), (3), and (4) as paragraphs (1), (2), and (3), respectively. 
Ante, p. 767. 
SEC. 1910. Sections 7(a)(6)(C) and 7(a)(8) of the Small Business Act as 
enacted herein are repealed October 1,1985. 
Disaster loans. 
SEC. 1911. Sections 7(b)(1) and 7(b)(2) of the Small Business Act are 
15 use 636. 
amended to read as follows: 
"(b) The Administration also is empowered to the extent and in 
such amounts as provided in advance in appropriation Acts— 
"(1)(A) to make such loans (either directly or in cooperation 
with banks or other lending institutions through agreements to 
participate on an immediate or deferred (guaranteed) basis) as 
the Administration may determine to be necessary or appropri-
ate to repair, rehabilitate or replace property, real or personal, 
damaged or destroyed by or as a result of floods, riots or civil 
disorders, or other catastrophes: Provided, That such damage or 
destruction is not compensated for by insurance or otherwise; 
"(B) to refinance any mortgage or other lien against a totally 
destroyed or substantially damaged home or business concern: 
Provided, That no loan or guarantee shall be extended unless the 
Administration finds that (i) the applicant is not able to obtain 
credit elsewhere; (ii) such property is to be repaired, rehabili-
tated, or replaced; (iii) the amount refinanced shall not exceed 
the amount of physical loss sustained; and (iv) such amount shall 
be reduced to the extent such mortgage or lien is satisfied by 
insurance or otherwise; 
"(2) to make such loans (either directly or in cooperation with 
banks or other lending institutions through agreements to par-
ticipate on an immediate or deferred (guaranteed) basis) as the 
Administration may determine to be necessary or appropriate to 
any small business concern located in an area affected by a 
disaster, if the Administration determines that the concern has 
suffered a substantial economic injury as a result of such disaster 
and if such disaster constitutes— 
"(A) a major disaster, as determined by the President 
under the Act entitled "An Act to authorize Federal assist-
ance to States and local governments in major disasters, and 
for other purposes", approved September 30, 1950, as 
amended (42 U.S.C. 1855-1855g); or 
"(B) a natural disaster, as determined by the Secretary of 
Agriculture pursuant to the Consolidated Farmers Home 
.' , ;: 
Administration Act of 1961 (7 U.S.C. 1961); or 
"(C) a disaster, as determined by the Administrator of the 
Small Business Administration; or 
"(D) if no disaster declaration has been issued pursuant to 
subparagraph (A), (B), or (C), the Governor of a State in 
which a disaster has occurred may certify to the Small 
Business Administration that small business concerns (1) 
have suffered economic injury as a result of such disaster, 
and (2) are in need of financial assistance which is not 
15 use 636. 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 779 
available on reasonable terms in the disaster stricken area. 
Upon receipt of such certification, the Administration may 
then make such loans as would have been available under 
this paragraph if a disaster declaration had been issued. 
Provided, That no loan or guarantee shall be extended pursuant 
to this paragraph (2) unless the Administration finds that the 
applicant is not able to obtain credit elsewhere. 
SEC. 1912. Section 7(c) of the Small Business Act is amended by Interest rates on 
adding the following: 
federal bans. 
"(4) Notwithstanding the provisions of any other law, the 
interest rate on the Federal share of any loan made under 
subsection (b) shall be— 
"(A) in the case of a homeowner unable to secure credit 
elsewhere, the rate prescribed by the Administration but not 
more than one-half the rate determined by the Secretary of 
the Treasury taking into consideration the current average 
market yield on outstanding marketable obligations of the 
United States with remaining periods to maturity compara-
ble to the average maturities of such loans plus an additional 
charge of not to exceed 1 per centum per annum as deter-
mined by the Administrator, and adjusted to the nearest 
one-eighth of 1 per centum but not to exceed 8 per centum 
per annum; 
"(B) in the case of a homeowner able to secure credit 
elsewhere, the rate prescribed by the Administration but not 
more than the rate determined by the Secretary of the 
Treasury taking into consideration the current average 
market yield on outstanding marketable obligations of the 
United States with remaining periods to maturity compara-
ble to the average maturities of such loans plus an additional 
charge of not to exceed 1 per centum per annum as deter-
mined by the Administrator, and adjusted to the nearest 
one-eighth of 1 per centum; 
"(C) in the case of a business concern unable to obtain 
credit elsewhere, not to exceed 8 per centum per annum; 
"(D) in the case of a business concern able to obtain credit 
elsewhere, the rate prescribed by the Administration but not 
in excess of the rate prevailing in private market for similar 
loans and not more than the rate prescribed by the Adminis-
tration as the maximum interest rate for deferred participa-
tion (guaranteed) loans under section 7(a) of this Act. Loans 
under this subparagraph shall be limited to a maximum 
term of three years. 
Such loans, subject to the reductions required by subparagraphs 
(A) and (B) of paragraph (1), shall be in amounts equal to 100 
percent of loss if the applicant is a homeowner and 85 percent of 
loss if the applicant is a business or otherwise. The interest rates 
for loans made under paragraphs (1) and (2), as determined 
pursuant to this paragraph (4), shall be the rate of interest which 
is in effect on the date the disaster commenced: Provided, That 
no loan under paragraphs (1) and (2) shall be made, either 
directly or in cooperation with banks or other lending institu-
tions through agreements to participate on an immediate or 
deferred (guaranteed) basis, if the total amount outstanding and 
committed to the borrower under this subsection would exceed 
$500,000 for each disaster unless an applicant constitutes a major 
source of employment in an area suffering a disaster, in which 
95 STAT. 780 
PUBLIC LAW 97-35—AUG. 13, 1981 
case the Administration, in its discretion, may waive the 
$500,000 limitation.". 
Disaster loans. 
SEC. 1913. (a) Section 7(b) of the Small Business Act is amended by 
15 use 636. 
striking out paragraphs (3) through (9) and inserting in lieu thereof 
the following: 
"(3) to make such loans (either directly or in cooperation with 
banks or other lending institutions through agreements to par-
ticipate on an immediate or deferred basis) as the Administra-
tion may determine to be necessary or appropriate to assist any 
small business concern in effecting additions to, alterations in, or 
reestablishment in the same or a new location of its plant, 
facilities, or methods of operation made necessary by direct 
action of the Federal Government or as a consequence of Federal 
Government action or to meet requirements or restrictions 
imposed on such concern under any Federal law heretofore or 
hereafter enacted or any State law enacted in conformity there-
with, or any regulation or order of a duly authorized Federal, 
State, regional, or local agency issued in conformity with such 
Federal law, if the Administration determines that such concern 
is likely to suffer substantial economic injury or be unable to 
market a product without assistance under this paragraph: 
Provided, That the maximum loan made to anv small business 
concern under this paragraph shall not exceed $500,000 and the 
amount thereof shall be based solely on a determination made on 
each application: Provided further. That no loan or guarantee 
shall be extended unless the Administration finds that the 
K TTon «QQ 
applicant is unable to obtain credit elsewhere."; 
15 use 633. 
(ij) Section 4(cKl) of the Small Business Act is amended by striking 
all of 
subparagraph (A) after "7(bX3)," and by inserting in lieu thereof 
"and 7(cX2) of this Act; and". 
15 use 636. 
(c) Section 7(g) of the Small Business Act is hereby repealed. 
SEC. 1914. Section 7(cX3) of the Small Business Act is amended by 
striking "to October 1,1983" and by inserting "the effective date of 
this Act". 
SEC. 1915. Section 4(cX5XBXii) of 
the Small Business Act is amended 
by striking all of the first sentence after "are made" and by inserting 
"from amounts appropriated for the disaster loan fond aft;er Octo-
ber 1,1980 or are made from repayments of principal of loans made 
from funds appropriated to the disaster loan fund, or from amounts 
appropriated to the business loan and investment fund on or after 
October 1, 1981 or are made from repayments of principal of loans 
made from funds appropriated to the business loan and investment 
fund and received on or after October 1,1981.". 
15 use 636 note. 
SEC. 1916. (a) Notwithstanding section 5(bX6) of the Small Business 
Act, or any other provision of law, any business concern applicant for 
assistance made pursuant to paragraph (1), (2), or (4) of 
subsection 7(b) 
of the Small Business Act whose application was received but not 
approved by the Small Business Administration on or before 
March 19,1981, shall be offered loan assistance by the Small Business 
Administration as provided in this section. 
(b) The Small Business Administration is specifically directed to 
reconsider and act upon any such application and to make, remake, 
obligate, reobligate, commit or recommit such financing as provided 
herein. 
(c) If the applicant was a business concern able to obtain credit 
elsewhere, the terms and conditions shall be those specified in 
section 7(bX3) of the Small Business Act; but if the Administrator 
determines that imposition of these provisions would impose a 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 781 
substantial hardship on the applicant, he may, in his discretion on a 
case-by-case basis waive these provisions and provide assistance in 
accord with rules and regulations in effect for the date the disaster 
commenced for applicants able to secure credit elsewhere. If the 
applicant was a business concern unable to obtain credit elsewhere, 
or was an applicant under sections 7(b)(2) or 7(b)(4) of the Small 
Business Act, the terms and conditions shall be those in effect for Ante, p. 778 
such applicants on the date such application was first received. As 
used herein, the term "credit elsewhere" shall have the meaning 
prescribed by the Small Business Act as amended herein. 
SEC. 1917. Section 231 of the Disaster Relief Act is hereby repealed. 
SEC. 1918. Sections 1908, 1909, and 1913 of this title shall be 
effective October 1, 1981, and section 1910 of this title shall be 
effective as provided therein. All other provisions of this title shall be 
effective immediately but shall not affect any financing made, 
obligated, or committed under the Small Business Act or the Small 
Business Investment Act of 1958 prior to the effective date hereof. 
TITLE XX—VETERANS' PROGRAMS 
Repeal. 
15 u s e 636a. 
Effective dates. 
15 u s e 631 note. 
15 u s e 631 note, 
661 note. 
BURIAL BENEFITS 
SEC. 2001. (a)(1) Section 902(a) of title 38, United States Code, is 
amended by striking out "Where a veteran dies—" and clauses (1) 
and (2) and inserting in lieu thereof "When a veteran dies who was in 
receipt of compensation (or but for the receipt of retirement pay 
would have been entitled to compensation) or in receipt of pension,'. 
(2) The amendment made by paragraph (1) shall take effect with 
respect to deaths occurring after September 30,1981. 
(b) Section 903(b) of such title is amended by inserting "who was 
discharged from the active military, naval, or air service for a 
disability incurred or aggravated in line of duty, or who is a veteran 
of any war" after "such subsection,". 
Effective date. 
38 u s e 902 note. 
OUTPATIENT DENTAL TREATMENT 
SEC. 2002. (a) Section 612(b) of title 38, United States Code, is 
amended— 
(1) in clause (2)— 
(A) by striking out "and (B)" after "service" and inserting 
in lieu thereof a comma and the following: "(B) if the veteran 
had served not less than 180 days of active military, naval, or 
air service immediately before such discharge or release, 
(C)"; 
(B) by striking out "within one year" both places it 
appears and inserting in lieu thereof within 90 days"; and 
(C) by striking out the semicolon and inserting in lieu 
thereof a comma and the following: "and (D) if the veteran's 
certificate of discharge or release from active duty does not 
bear a certification that the veteran was provided, within 
the 90-day period immediately before the date of such 
discharge or release, a complete dental examination (includ-
ing dental X-rays) and all appropriate dental services and 
treatment indicated by the examination to be needed;"; and 
(2) by inserting before the second sentence the following: 
"The Secretary concerned shall at the time a member of the Armed 
Forces is discharged or released from a period of active military, 
naval, or air service of not less than 180 days provide to such member 
95 STAT. 782 
PUBLIC LAW 97-35—AUG. 13, 1981 
Effective date. 
38 u s e 612 note. 
a written explanation of the provisions of clause (2) of this subsection 
and enter in the service records of the member a statement signed by 
the member acknowledging receipt of such explanation (or, if the 
member refuses to sign such statement, a certification from an officer 
designated for such purpose by the Secretary concerned that the 
member was provided such explanation).". 
(bXD The amendments made by clauses (1)(A), (1)(C), and (2) of 
subsection (a) shall take effect on October 1,1981. 
(2) The amendment made by clause (1)(B) of subsection (a) shall 
apply only to veterans discharged or released from active military, 
naval, or air service after September 30,1981. 
TERMINATION OF EDUCATIONAL ASSISTANCE FOR PURSUIT OF FLIGHT 
TRAINING 
SEC. 2003. (a)(1) Section 1631(c) of title 38, United States Code, is 
amended by striking out "either" and "or a program of flight 
training". 
(2) Section 1641 of such title is amended to read as follows: 
"§ 1641. Requirements 
"The provisions of sections 1663,1670,1671,1673,1674,1676,1683, 
38 use 1770 et 
and 1691(a)(1) of this title and the provisions of chapter 36 of this title 
««<? 
(with the exception of sections 1777, 1780(c), and 1787) shall be 
applicable to the program.". 
38 use 1662. 
(b)(1) Section 1662(c) of such title is amended by striking out "or 
flight training within the provisions of section 1677 of this chapter,". 
(2) Section 1673(b) of such title is amended by striking out "Except 
as provided in section 1677 of this title, the" and inserting in lieu 
thereof "The". 
(3)(A) Section 1677 of such title, relating to flight training, is 
repealed. 
(B) The table of sections at the beginning of chapter 34 of such title 
is amended by striking out the item relating to section 1677. 
(4) Section 1681 of such title is amended— 
(A) in subsection (b), by striking out "or a program of flight 
training"; and 
(B) by striking out subsection (c) (including the center heading 
preceding such subsection). 
(5) Section 1682(a)(1) of such title is amended by striking out "1677 
or". 
(c) Section 1780(a) of such title is amended by striking out "or a 
program of flight training". 
Effective date. 
38 u s e 1786 
note. 
REDUCTION IN LEVEL OF EDUCATIONAL ASSISTANCE FOR 
CORRESPONDENCE COURSES 
SEC 2004. (a) Section 1786(a)(1) of title 38, United States Code, is 
amended by striking out "70 percent" and inserting in lieu thereof 
"55 percent". 
(b) The amendment made by subsection (a) shall not apply to 
correspondence lessons completed and submitted to the educational 
institution concerned before October 1,1981. 
EDUCATION LOAN PROGRAM 
SEC. 2005. (a) Section 1631 of title 38, United States Code, is 
amended by striking out subsection (d). 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 783 
(b) Section 1686 of such title is amended by inserting "to whom 38 use 1686. 
section 1662(a)(2) of this title is applicable" after "eligible veteran". 
(c) Section 1737 of such title is amended by inserting a comma and 
"before October 1,1981," after "shall be entitled". 
(d) Section 1798(a) of such title is amended— 
(1) by striking out "Each" and inserting in lieu thereof "(1) 
Subject to paragraph (2) of this subsection, each"; and 
(2) by adding at the end the following new paragraph: 
"(2) Except in the case of a veteran to whom section 1662(a)(2) of 
this title is applicable, no loan may be made under this subchapter 
after September 30,1981.". 
EFFECTIVE DATES WITH RESPECT TO FLIGHT TRAINING 
SEC. 2006. (a) Except as provided in subsection (b), the amendments 38 use I63i 
made by sections 2003 and 2005 shall take effect on October 1, 1981. "ote. 
(b) The amendments made by such sections shall not apply to any 
person receiving educational assistance under section 1677 of title 38, 
United States Code, as such section was in effect on August 31,1981, Ante, p. 782. 
for the pursuit of a program of education (as defined in section 1652(b) 
of such title) in which such person was enrolled on that date, for as 
long as such person is continuously thereafter so enrolled and meets 
the requirements of eligibility for such assistance for the pursuit of 
such program under the provisions of chapters 34 and 36 of such title, 38 use I65i et 
as in effect on that date. 
s^?- I'^'^o ^
^ s
^
*
?
-
TITLE XXI—MEDICARE, MEDICAID, AND 
MATERNAL AND CHILD HEALTH 
SHORT TITLE OF SUBTITLES A, B, AND C; TABLE OF CONTENTS OF TITLE 
SEC. 2100. Subtitles A, B, and C of this title may be cited as the Medicare and 
"Medicare and Medicaid Amendments of 1981". 
Medicaid 
Amendments of 
TABLE OF CONTENTS OF TITLE 
42^USe 1305 
TITLE XXI—MEDICARE, MEDICAID, AND MATERNAL AND CHILD HEALTH 
"°*^' 
Sec. 2100. Short title for subtitles A, B, and C; table of contents of title. 
Subtitle A—Provisions Relating to Medicare and Medicaid 
CHAPTER 1—REIMBURSEMENT CHANGES 
Sec. 2101. Payments to promote closing and conversion of underutilized hospital 
facilities. 
Sec. 2102. Adjustment in payment for inappropriate hospital services. 
Sec. 2103. Limitation on medicare and medicaid payments for certain drugs. 
Sec. 2104. Withholding of payments for certain medicaid providers. 
CHAPTER 2—OTHER ADMINISTRATIVE CHANGES 
Sec. 2105. Civil monetary penalties. 
Sec. 2106. Technical corrections for errors made by the Medicare and Medicaid 
Amendments of 1980. 
CHAPTER 3—PROFESSIONAL STANDARDS REVIEW ORGANIZATIONS 
(PSRO'S) 
Sec. 2111. Making delegated review optional. 
,,,> . , . , . £ ; ; 
. j ; ! ' 
Sec. 2112. Assessment of PSRO performance. 
-V -./ 
95 STAT. 784 
PUBLIC LAW 97-35—AUG. 13, 1981 
Sec. 2113. Optional use of PSRO's under State medicaid plans. 
Sec. 2114. Secretarial determination in lieu of PSRO certification. 
Subtitle B—Provisions Relating to Medicare 
CHAPTER 1-CHANGES IN SERVICES AND BENEFITS 
Sec. 2121. Elimination of part A coverage of alcohol detoxification facility services. 
Sec. 2122. Elimination of occupational therapy as a basis for initial entitlement to 
home health services. 
CHAPTER 2-CHANGES IN COINSURANCE, DEDUCTIBLES, AND 
COPAYMENTS 
Sec. 2131. Making part A coinsurance current with the year in which services 
furnished. 
Sec. 2132. Making part A coinsurance and deductible more current. 
Sec. 2133. Elimination of carryover from previous year of incurred expenses for 
meeting the part B deductible. 
Sec. 2134. Increase in part B deductible. 
CHAPTER 3-REIMBURSEMENT CHANGES 
Sec. 2141. Limitation on routine nursing differential. 
Sec. 2142. Limitation on reeisonable cost and reasonable charge for outpatient 
services. 
Sec. 2143. Limits on reimbursement to hospitals. 
Sec. 2144. Limits on reimbursement to home health agencies. 
Sec. 2145. Incentive reimbursement rate for renal dialysis services. 
Sec. 2146. Medicare payments secondary in cases of end stage renal disease services 
covered under certain group health policies. 
CHAPTER 4-MISCELLANEOUS CHANGES 
Sec. 2151. Elimination of unlimited open enrollment. 
Sec. 2152. Utilization guidelines for provision of home health services. 
Sec. 2153. Repeal of statutory time limitation on agreement with skilled nursing 
facilities. 
Sec. 2154. Removal of limitation on number of medicare demonstration projects. 
Sec. 2155. Repeal of temporary delay in periodic interim payments (PIP). 
Sec. 2156. Statutory deadlines for implementing AFDC home health aide demon-
stration projects. 
Subtitle C—Provisions Relating to Medicaid 
CHAPTER 1—CHANGES IN PAYMENTS TO STATES 
Sec. 2161. Reduction in medicaid payments to States and offset for meeting Federal 
medicaid expenditure targets. 
Sec. 2162, Payments to territories. 
Sec. 2163. Eliminating time period limitation on pajrment of interest on disputed 
claims. 
Sec. 2164. Eliminating Federal matching for certain laboratory tests. 
Sec. 2165. Study of Federal medical assistance percentage formula and of actjust-
ments of target amounts for Federal medicaid expenditures. 
CHAPTER 2-INCREASED FLEXIBILITY FOR STATES 
Sec. 2171. Coverage of, and services for, the medically needy. 
Sec. 2172. Flexibility in coverage of individuals aged 18-20. 
Sec. 2173. Reimbursement of hospitals. 
Sec. 2174. Removal of medicaid reasonable charge limitation. 
Sec. 2175. Inapplicability and waiver of freedom-of-choice and other State plan 
requirements. 
Sec. 2176. Waiver to provide home and community-based services for certain 
individuals. 
Sec. 2177. Time limitation for action on requests for plan amendments and waivers. 
Sec. 2178. Flexibility in HMO and prepaid provider participation in State plans. 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 785 
CHAPTER 3-MISCELLANEOUS CHANGES 
Sec. 2181. Repeal of EPSDT penalty. 
Sec. 2182. Flexibility in requiring collection of third-party payments. 
Sec. 2183. Permitting physician assistants and nurse practitioners to provide cer-
tain recertifications. 
Sec. 2184. Repeal of obsolete authority for medical assistance. 
Subtitle D—Maternal and Child Health Services Block Grant 
Sec. 2191. Short title of subtitle. 
Sec. 2192. Maternal and child health services block grant. 
Sec. 2193. Repeals and conforming amendments. 
Sec. 2194. Effective date; transition. 
Subtitle A—Provisions Relating to Medicare and Medicaid 
CHAPTER 1—REIMBURSEMENT CHANGES 
PAYMENTS TO PROMOTE CLOSING AND CONVERSION OF UNDERUTILIZED 
HOSPITAL FACILITIES 
SEC. 2101. (a) Part C of title XVIII of the Social Security Act is 
amended by adding at the end the following new section: 
" P A Y M E N T S TO PROMOTE CLOSING AND CONVERSION OF UNDERUTILIZED 
HOSPITAL FACILITIES 
"SEC. 1884. (a) Any hospital may file an application with the 42 USC I395uu. 
Secretary (in such form and including such data and information as 
the Secretary may require) for establishment of a transitional allow-
ance under this title with respect to the closing or conversion of an 
underutilized hospital facility. The Secretary also may establish 
procedures, consistent with this section, by which a hospital, before 
undergoing an actual closure or conversion of a hospital facility, can 
have a determination made as to whether or not it will be eligible for 
a transitional allowance under this section with respect to such 
closure or conversion. 
"(b) If the Secretary finds, after consideration of an application 
under subsection (a), that— 
"(1) the hospital's closure or conversion— 
"(A) is formally initiated after September 30,1981, 
"(B) is expected to benefit the program under this title by 
(i) eliminating excess bed capacity, (ii) discontinuing an 
underutilized service for which there are adequate alterna-
tive sources, or (iii) substituting for the underutilized service 
some other service which is needed in the area, and 
"(C) is consistent with the findings of an appropriate 
health planning agency and with any applicable State pro-
gram for reduction in the number of hospital beds in the 
State, and 
"(2) in the case of a complete closure of a hospital— 
"(A) the hospital is a private nonprofit hospital or a local 
governmental hospital, and 
"(B) the closure is not for replacement of the hospital, 
the Secretary may include as an allowable cost in the hospital's 
reasonable cost (for the purpose of making payments to the hospital 
under this title) an amount (in this section referred to as a 'transi-
tional allowance'), as provided in subsection (c). 
95 STAT. 786 
PUBLIC LAW 97-35—AUG. 13, 1981 
42 use 1396b. 
Ante, p. 785. 
42 use 1395UU 
note. 
Report to 
eongress. 
"(cXD Each transitional allowance established shall be reasonably 
related to the prior or prospective use of the facility involved under 
this title and shall recognize— 
"(A) in the case of a facility conversion or closure (other than a 
complete closure of a hospital)— 
"(i) in the case of a private nonprofit or local governmental 
hospital, that portion of the hospital's costs attributable to 
capital assets of the facility which have been taken into 
account in determining reasonable cost for purposes of 
determining the amount of payment to the hospital under 
this title, and 
"(ii) in the case of any hospital, transitional operating cost 
increases related to the conversion or closure to the extent 
that such operating costs exceed amounts ordinarily reim-
bursable under this title; and 
"(B) in the case of complete closure of a hospital, the outstand-
ing portion of actual debt obligations previously recognized as 
reasonable for purposes of reimbursement under this title, less 
any salvage value of the hospital. 
"(2) A transitional allowance shall be for a period (not to exceed 20 
years) specified by the Secretary, except that, in the case of a 
complete closure described in paragraph (IXB), the Secretary may 
provide for a lump-sum allowance where the Secretary determines 
that such a one-time allowance is more efficient and economical. 
"(3) A transitional allowance shall take effect on a date established 
by the Secretary, but not earlier than the date of completion of the 
closure or conversion concerned. 
"(4) A transitional allowance shall not be considered in applying 
the limits to costs recognized as reasonable pursuant to the third 
sentence of subparagraph (A) and subparagraph (LXi) of section 
1861(vXl) of this Act, or in determining whether the reasonable cost 
exceeds the customary charges for a service for purposes of determin-
ing the amount to be paid to a provider pursuant to sections 1814(b) 
and 1833(a)(2) of this Act. 
"(c) A hospital dissatisfied with a determination of the Secretary on 
its application under this section may obtain an informal or formal 
hearing, at the discretion of the Secretary, by filing (in such form and 
within such time period as the Secretary establishes) a request for 
such a hearing. The Secretary shall make a final determination on 
such application within 30 days after the last day of such hearing.". 
(2) Section 1903 of such Act is amended by inserting after subsec-
tion (d) the following new subsection: 
"(e) A State plan approved under this title may include, as a cost 
with respect to hospital services under the plan under this title, 
periodic expenditures made to reflect transitional allowances estab-
lished with respect to a hospital closure or conversion under section 
1884.". 
(bXD Notwithstanding section 1884(a) of the Social Security Act, 
the Secretary of Health and Human Services may not establish under 
such section transitional allowances with respect to more than 50 
hospitals prior to January 1,1984. 
(2) The Secretary of Health and Human Services shall evaluate the 
effectiveness of the program of transitional allowances established 
under section 1884 of the Social Security Act and shall, not later than 
January 1, 1983, report to the Congress on such evaluation and 
include in such report such recommendations for such legislative 
changes as he deems appropriate. 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 787 
(c) The amendment made by subsection (a) shall apply only to 
services furnished by a hospital during any accounting year begin-
ning on or after October 1,1981. 
Effective date. 
42 u s e 1395UU 
note. 
ADJUSTMENT IN PAYMENT FOR INAPPROPRIATE HOSPITAL SERVICES 
SEC. 2102. (a)(1) Section 1861(vXlXGXi) of the Social Security Act is 42 use I395x. 
amended by striking out "the hospital had (during the immediately 
preceding calendar year) an average daily occupancy rate of 80 
percent or more" and inserting in lieu thereof "there is not an excess 
of hospital beds in such hospital and (subject to clause (iv)) there is not 
an excess of hospital beds in the area of such hospital". 
(2) Clause (iv) of section 1861(vXlXG) of such Act is amended to read 
as follows: 
"(iv) In determining under clause (i), in the case of a public hospital, 
whether or not there is an excess of hospital beds in the area of such 
hospital, such determination shall be made on the basis of only the 
public hospitals (including the hospital) which are in the area of the 
hospital and which are under common ownership with that 
hospital.". 
(bXD The amendments made by subsection (a) shall apply to 
services provided on or after the first day of the first month beginning 
after the date of the enactment of this Act. 
(2) For amendments respecting reimbursement for inappropriate 
hospital services under medicaid, see section 2173 of this subtitle. 
Effective date. 
42 u s e 1395x 
note. 
LIMITATION ON MEDICARE AND MEDICAID PAYMENTS FOR CERTAIN 
DRUGS 
SEC 2103. (aXD Section 1862 of the Social Security Act is amended 4
2 use I395y. 
by inserting after subsection (b) the following new subsection: 
"(c) No payment may be made under part B for any expenses 
incurred for— 
"(1) a drug product— 
"(A) which is described in section 107(cX3) of the Drug 
Amendments of 1962, 
21 use 321 note. 
"(B) which may be dispensed only upon prescription, 
"(C) for which the Secretary has issued a notice of an 
opportunity for a hearing under subsection (e) of section 505 
of the Federal Food, Drug, and Cosmetic Act on a proposed 2i use 355. 
order of the Secretary to withdraw approval of an applica-
tion for such drug product under such section because the 
Secretary has determined that the drug is less than effective 
for all conditions of use prescribed, recommended, or sug-
gested in its labeling, and 
"(D) for which the Secretary has not determined there is a 
compelling justification for its medical need; and 
"(2) any other drug product— 
"(A) which is identical, related, or similar (as determined 
in accordance with section 310.6 of title 21 of the Code of 
Federal Regulations) to a drug product described in para-
graph (1), and 
"(B) for which the Secretary has not determined there is a 
compelling justification for its medical need, 
until such time as the Secretary withdraws such proposed order.". 
(2) The amendment made by paragraph (1) shall apply with respect Effective date. 
to expenses incurred on or after October 1,1981. 
42 use I395y 
note. 
95 STAT. 788 
PUBLIC LAW 97-35—AUG. 13, 1981 
42 u s e 1396b. 
Ante, p. 787. 
Effective date. 
42 u s e 1396b 
note. 
(bXD Section 1903(i) of such Act is amended by striking out the 
period at the end of paragraph (4) and inserting in lieu thereof "; or" 
and by adding after such paragraph the following new paragraph: 
"(5) with respect to any amount expended for any drug product 
for which pa3rment may not be made under part B of title XVIII 
because of section 1862(c).". 
(2) The amendment made by paragraph (1) shall apply to amounts 
expended on or after October 1,1981. 
WITHHOLDING OP PAYMENTS FOR CERTAIN MEDICAID PROVIDERS 
SEC. 2104. Part C of title XVIII of the Social Security Act is 
amended by adding after section 1884 (added by section 2101 of this 
subtitle) the following new section: 
42 u s e 1395w. 
42 u s e 1395u. 
42 u s e 1396. 
42 u s e 1395i, 
1395t. 
WITHHOLDING OF PAYMENTS FOR CERTAIN MEDICAID PROVIDERS 
"SEC. 1885. (a) The Secretary may adjust, in accordance with this 
section, payments under parts A and B to any institution which has 
in effect an agreement with the Secretary under section 1866, and 
any person who has accepted pasnnent on the basis of an assignment 
under section 1842(bX3XBXii), where such institution or person— 
"(1) has (or previously had) in effect an agreement with a State 
agency to furnish medical care and services under a State plan 
approved under title XIX, and 
"(2) from which (or from whom) such State agency (A) has been 
unable to recover overpayments made under the State plan, or 
(B) has been unable to collect the information necessary to enable 
it to determine the amount (if any) of the overpayments made to 
such institution or person under the State plan. 
"(b) The Secretary shall by regulation provide procedures for 
implementation of this section, which procedures shall— 
"(1) assure that the authority under this section is exercised 
only on behalf of a State agency which demonstrates to the 
Secretary's satisfaction that it has provided adequate notice of a 
determination or of a need for information, and an opportunity 
to appeal such determination or to provide such information, 
"(2) determine the amount of the payment to which the 
institution or person would otherwise be entitled under this title 
which shall be treated as a setoff against overpayments under 
,. title XIX, and 
"(3) assure the restoration to the institution or person of 
amounts withheld under this section which are ultimately deter-
mined to be in excess of overpayments under title XIX and to 
which the institution or person would otherwise be entitled 
under this title. 
"(c) Notwithstanding any other provision of this Act, from the trust 
funds established under sections 1817 and 1841, as appropriate, the 
Secretary shall pay to the appropriate State agency amounts recov-
ered under this section to offset the State agency's overpayment 
under title XIX. Such payments shall be accounted for by the State 
agency as recoveries of overpayments under the State plan.". 
PUBLIC LAW 97-35—AUG. 13, 1981 
CHAPTER 2-OTHER ADMINISTRATIVE CHANGES 
95 STAT. 789 
CIVIL MONETARY PENALTIES 
SEC. 2105. (a) Part A of title XI of the Social Security Act is 
amended by inserting after section 1128 the following new section: 
"CIVIL MONETARY PENALTIES 
"SEC. 1128A. (a) Any person (including an organization, agency, or 
other entity) that presents or causes to be presented to an officer, 
employee, or agent of the United States, or of any department or 
agency thereof, or of any State agency (as defined in subsection (hXD), 
a claim (as defined in subsection (h)(2)) that the Secretary 
determines— 
"(1) is for a medical or other item or service— 
"(A) that the person knows or has reason to know was not 
provided as claimed, or 
"(B) payment for which may not be made under the 
program under which such claim was made, pursuant to a 
determination by the Secretary under section 1128, 1160(b), 
1862(d), or 1866(b)(2), or 
"(2) is submitted in violation of an agreement between the 
person and the United States or a State agency, 
shall be subject, in addition to any other penalties that may be 
prescribed by law, to a civil money penalty of not more than $2,000 for 
each item or service. In addition, such a person shall be subject to an 
assessment of not more than twice the amount claimed for each such 
item or service in lieu of damages sustained by the United States or a 
State agency because of such claim. 
"Ot))(l) The Secretary may initiate a proceeding to determine 
whether to impose a civil money penalty or assessment under 
subsection (a) only as authorized by the Attorney General pursuant to 
procedures agreed upon by them. 
"(2) The Secretary shall not make a determination adverse to any 
person under subsection (a) until the person has been given written 
notice and an opportunity for the determination to be made on the 
record after a hearing at which the person is entitled to be repre-
sented by counsel, to present witnesses, and to cross-examine wit-
nesses against the person. 
"(c) In determining the amount or scope of any penalty or assess-
ment imposed pursuant to subsection (a), the Secretary shall take 
into account— 
"(1) the nature of claims and the circumstances under which 
they were presented, 
"(2) the degree of culpability, history of prior offenses, and 
financial condition of the person presenting the claims, and 
"(3) such other matters as justice may require. 
"(d) Any person adversely affected by a determination of the 
Secretary under this section may obtain a review of such determina-
tion in the United States Court of Appeals for the circuit in which the 
person resides, or in which the claim was presented, by filing in such 
court (within sixty days following the date the person is notified of 
the Secretary's determination) a written petition requesting that the 
determination be modified or set aside. A copy of the petition shall be 
forthwith transmitted by the clerk of the court to the Secretary, and 
thereupon the Secretary shall file in the Court the record in the 
proceeding as provided in section 2112 of title 28, United States Code. 
42 use 
1320a-7a. 
94 Stat. 2619. 
42 u s e 1320a-7, 
1320C-9,1395y, 
1395CC. 
Notice and 
hearing. 
95 STAT. 790 
PUBLIC LAW 97-35—AUG. 13, 1981 
Upon such filing, the court shall have jurisdiction of the proceeding 
and of the question determined therein, and shall have the power to 
make and enter upon the pleadings, testimony, and proceedings set 
forth in such record a decree affirming, modifying, remanding for 
further consideration, or setting aside, in whole or in part, the 
determination of the Secretary and enforcing the same to the extent 
that such order is affirmed or modified. No objection that has not 
been urged before the Secretary shall be considered by the court, 
unless the failure or neglect to urge such objection shall be excused 
because of extraordinary circumstances. The findings of the Secre-
tary with respect to questions of fact, if supported by substantial 
evidence on the record considered as a whole, shall be conclusive. If 
any party shall apply to the court for leave to adduce additional 
evidence and shall show to the satisfaction of the court that such 
additional evidence is material and that there were reasonable 
grounds for the failure to adduce such evidence in the hearing before 
the Secretary, the court may order such additional evidence to be 
taken before the Secretary and to be made a part of the record. The 
Secretary may modify his findings as to the facts, or make new 
findings, by reason of additional evidence so taken and filed, and he 
shall file with the court such modified or new findings, which findings 
with respect to questions of fact, if supported by substantial evidence 
on the record considered as a whole, shall be conclusive, and his 
recommendations, if any, for the modification or setting aside of his 
original order. Upon the filing of the record with it, the jurisdiction of 
the court shall be exclusive and its judgment and decree shall be 
final, except that the same shall be subject to review by the Supreme 
Court of the United States, as provided in section 1254 of title 28, 
United States Code. 
"(e) Civil money penalties and assessments imposed under this 
section may be compromised by the Secretary and may be recovered 
in a civil action in the name of the United States brought in United 
States district court for the district where the claim was presented, or 
where the claimant resides, as determined by the Secretary. Amounts 
recovered under this section shall be paid to the Secretary and 
disposed of as follows: 
"(IXA) In the case of amounts recovered arising out of a claim 
42 use 1396. 
under title XIX, there shall be paid to the State agency an 
amount equal to the State's share of the amount paid by the 
State agency for such claim. 
"(B) In the case of amounts recovered arising out of a claim 
42 use 701. 
under an allotment to a State under title V, there shall be paid to 
the State agency an amount equal to three-sevenths of the 
amount recovered. 
"(2) Such portion of the amounts recovered as is determined to 
have been paid out of the trust funds under sections 1817 and 
42 use 13951, 
1841 shall be repaid to such trust funds. 
^^^^^- 
"(3) The remainder of the amounts recovered shall be deposited 
as miscellaneous receipts of the Treasury of the United States. 
The amount of such penalty or assessment, when finally determined, 
or the amount agreed upon in compromise, may be deducted from any 
sum then or later owing by the United States or a State agency to the 
person against whom the penalty or assessment has been assessed. 
"(f) A determination by the Secretary to impose a penalty or 
assessment under subsection (a) shall be final upon the expiration of 
the sixty-day period referred to in subsection (d). Matters that were 
raised or that could have been raised in a hearing before the 
Secretary or in an appeal pursuant to subsection (d) may not be raised 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 791 
as a defense to a civil action by the United States to collect a penalty 
or assessment assessed under this section. 
"(g) Whenever the Secretary's determination to impose a penalty 
or assessment under subsection (a) becomes final, he shall notify the 
appropriate State or local medical or professional organization, and 
the appropriate Professional Standards Review Organization, and 
the appropriate State or local licensing agency or organization 
(including the agency specified in section 1864(a) and 1902(a)(33)) that 
such a penalty or assessment has become final and the reasons 
therefor. 
"(h) For the purposes of this subsection: 
"(1) The term 'State agency' means the agency established or 
designated to administer or supervise the administration of the 
State plan under title XIX of this Act or designated to administer 
the State's program under title V of this Act. 
"(2) The term 'claim' means an application submitted by— 
"(A) a provider of services or other person, agency, or 
organization that furnishes an item or service under title 
XVIII ofthis Act, or 
"(B) a person, agency, or organization that furnishes an 
item or service for which medical assistance is provided 
under title XIX ofthis Act, or 
"(C) a person, agency, or organization that provides an 
item or service for which pa5mient is made under title V of 
this Act or from an allotment to a State under such title, 
to the United States or a State agency, or agent thereof, for 
payment for health care services under title XVIII or XIX of this 
Act or for any item or service under title V of this Act. 
"(3) The term 'item or service' includes (A) any particular item, 
device, medical supply, or service claimed to have been provided 
to a patient and listed in an itemized claim for payment, and (B) 
in the case of a claim based on costs, any entry in the cost report, 
books of account or other documents supporting such claim. 
"(4) The term 'agency of the United States' includes any 
contractor acting as a fiscal intermediary, carrier, or fiscal agent 
or any other claims processing agent for a health insurance or 
medical services program under title XVIII or XIX of this Act.". 
(b) Section 1128 of such Act is amended— 
(1) by striking out ", for such period as he may deem appropri-
ate," in subsection (aXD, 
(2) by striking out "subsection (a)" in subsection (c) and 
inserting in lieu thereof "subsection (a) or (b)", 
(3) by redesignating subsections (b) and (c) as subsections (c) 
and (d), respectively, and 
(4) by inserting after subsection (a) the following new 
subsection: 
"(b) Whenever the Secretary makes a final determination to 
impose a civil money penalty or assessment against a person (includ-
ing an organization, agency, or other entity) under section 1128A 
relating to a claim under title XVIII or XIX, the Secretary— 
' (1) may bar the person from participation in the program 
under title XVIII, and 
"(2)(A) shall promptly notify each appropriate State agency 
administering or supervising the administration of a State plan 
approved under title XIX of the fact and circumstances of such 
determination, and (except as provided in subparagraph (B)) may 
require each such agency to bar the person from participation in 
the program established by such plan for such period as he shall 
42 use 1395aa, 
1396a. 
Definitions. 
42 use 1396. 
42 use 701. 
42 use 1395. 
94 Stat. 2619. 
42 use 1320a-7. 
9-194 O—82 
52:QL3 
95 STAT. 792 
PUBLIC LAW 97-35—AUG. 13, 1981 
42 u s e 1396a. 
specify, which in the case of an individual shall be the period 
established pursuant to paragraph (1), and 
"(B) may waive the requirement of subparagraph (A) to bar a 
person from participation in such program where he receives and 
approves a request for such waiver with respect to that person 
from the State agency referred to in that subparagraph.". 
(c) Section 1902(aX39) of such Act is amended by striking out 
"individual" and inserting in lieu thereof "person" each place it 
appears. 
94 Stat. 2641. 
42 u s e 1395/. 
42 u s e 1395x. 
42 u s e 1395f. 
42 u s e 1395CC. 
42 u s e 1395n. 
42 u s e 1395q. 
42 u s e 1395p. 
42 u s e 1396b. 
Effective date. 
42 u s e 1395/ 
note. 
TECHNICAL CORRECTIONS FOR ERRORS MADE BY THE MEDICARE AND 
MEDICAID AMENDMENTS OF 1980 
SEC. 2106. (a) Section 1833(aX2) of the Social Security Act (as 
amended by section 942 of the Medicare and Medicaid Amendments 
of 1980, P.L. 96-499) is amended by amending subparagraphs (A) and 
(B) to read as follows: 
"(A) with respect to home health services and to items and 
services described in section 1861(sX10), the lesser of^ 
"(i) the reasonable cost of such services, as determined 
under section 1861(v), or 
"(ii) the customary charges with respect to such services, 
or, if such services are furnished by a public provider of services 
free of charge or at nominal charges to the public, the amount 
determined in accordance with section 1814(b)(2); 
"(B) with respect to other services (except those described in 
subparagraph (C) of this paragraph)— 
"(i) the lesser of— 
"(I) the reasonable cost of such services, as determined 
under section 1861(v), or 
"(II) the customary charges with respect to such 
services, 
less the amount a provider may charge as described in clause 
(ii) of section 1866(aX2)(A), but in no case may the payment 
for such other services exceed 80 percent of such reasonable 
cost, or 
"(ii) if such services are furnished by a public provider of 
services free of charge or at nominal charges to the public, 80 
percent of the amount determined in accordance with sec-
tion 1814(bX2), or 
"(iii) if (and for so long as) the conditions described in 
section 1814(b)(3) are met, the amounts determined under 
the reimbursement system described in such section; and". 
(bXD Section 1835(aX2) of such Act is amended— 
(A) by adding "and" at the end of subparagraph (D), and 
(B) by striking out "; and" at the end of subparagraph (E) and 
inserting in lieu thereof a period. 
(2) The paragraph after section 1838(b) of such Act is amended by 
striking out "and such notice shall not be considered a disenroUment 
for the purposes of section 1837(b)". 
(3) Section 1903(n) of such Act is amended by striking out "of this 
section" after "section 1866". 
(c) The amendment made by subsection (a) is effective as of 
December 5, 1980, and the amendment made by subsection (bX2) is 
effective as of April 1,1981. 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 793 
CHAPTER 3-PROFESSIONAL STANDARDS REVIEW 
ORGANIZATIONS (PSRO'S) 
MAKING DELEGATED REVIEW OPTIONAL 
SEC. 2111. Section 1155(e) of the Social Security Act is amended by 42 use i320c-4. 
striking out "shall utilize" and inserting in lieu thereof "may 
utilize . 
ASSESSMENT OP PSRO PERFORMANCE 
42 u s e 1320C-3. 
SEC. 2112. (a)(1) Section 1154 of the Social Security Act is amended 
by adding at the end the following new subsection: 
"(g)(1) The Secretary shall, not later than September 30, 1981, 
identify and specify those requirements imposed by the Secretary 
with respect to the performance of Professional Standards Review 
Organizations which the Secretary will use for the assessment of the 
performance of such Organizations under this subsection. Such 
requirements shall include requirements relating to the effectiveness 
of such Organizations in (A) monitoring the quality of patient care, 
(B) reducing unnecessary utilization, and (C) managing its activities 
efficiently. 
"(2) Based on such requirements, the Secretary shall assess and 
determine the relative performance of each of such Organizations 
designated, conditionally or otherwise, as of September 30, 1981. 
"(3) If the Secretary determines that such an Organization has a 
relatively ineffective or inefficient performance, the Secretary may 
refuse to renew an agreement with the Organization under this part, 
except that, in exercising the Secretary's authority under this para-
graph in fiscal year 1982, the sum of the number of Organizations 
with respect to which agreements are not renewed under this 
paragraph and under any other provision of this Act in the fiscal year 
may not exceed 30 percent of the number of such Organizations with 
agreements under this part on May 1,1981.". 
(2)(A) Section 1152(d) of such Act is amended— 
(i) by striking out "for a term of 12 months" and inserting in 
lieu thereof "for a term of not longer than 12 months"; 
(ii) by striking out "at such time and upon such reasonable 
notice to the organization as may be prescribed in regulations" 
and inserting in lieu thereof "upon 90 days notice to the organi-
zation"; and 
(iii) by striking out "(after providing such organization with an 
opportunity for a formal hearing on the matter)". 
(B) Sections 1152(d) and 1154(d) of such Act are each amended by 
adding at the end the following sentence: "A termination of an 
agreement by the Secretary under this subsection shall not be subject 
to judicial review.". 
(C) The amendment made by subparagraph (A)(iii) shall apply to 
agreements entered into on or after the date of the enactment of this 
Act. 
(D) The Secretary of Health and Human Services shall, not later 
than September 30, 1982, report to the Congress on his assessment 
(under section 1154(g) of the Social Security Act) of the relative 
performance of Professional Standards Review Organizations and on 
any determinations made not to renew agreements with such Organi-
zations on the basis of such performance. 
(b)(1) The first sentence of subsection (b) of section 1154 of such Act 42 use i320c-3 
is amended— 
42 u s e 1320C-1. 
Effective date. 
42 u s e 1320C-1 
note. 
42 u s e 1320C-3 
note. 
95 STAT. 794 
PUBLIC LAW 97-35—AUG. 13, 1981 
(A) by striking out "(other than ancillary, ambulatory care, 
and long-term care services)" and 
(B) by striking out "under subsection (f)(2) or subsection (fX4)" 
and inserting in lieu thereof "under subsection (f)". 
(2) Subsection (f) of such section is amended— 
(A) by striking out the parenthetical phrase in paragraph (1); 
(B) by striking out paragraphs (2) and (3); 
(C) by redesignating paragraph (4) as paragraph (2) and amend-
ing it to read as follows: 
"(2) Where the Secretary finds that the review of particular health 
care services is cost-effective or 3delds other significant benefits, the 
Secretary may require Professional Standards Review Organizations 
(either generally or under such conditions and circumstances as the 
Secretary may specify) to review such services under this part."; and 
(D) by striking out the parenthetical phrase in paragraph (5) 
. J' and redesignating such paragraph as paragraph (3). 
OPTIONAL USE OF PSRO'S UNDER STATE MEDICAID PLANS 
42 use 1320c. 
SEC. 2113. (a) Section 1151 of the Social Security Act is amended— 
(1) by striking out "under this Act" and inserting in lieu 
thereof "under title XVIII of this Act"; and 
(2) by striking out "the Social Security Act" and inserting in 
lieu thereof "title XVIII of this Act". 
42 use 1320C-1. 
(b) Section 1152(e) of such Act is amended by inserting "title XVIII 
o f before "this Act" each place it appears. 
(c) Section 1152 of such Act is amended by striking out subsection 
42 use 1320C-3. 
(h), and section 1154 of such Act is amended by striking out subsection 
(e). 
42 use 1320C-4. 
(d)(1) Section 1155(a) of such Act is amended by inserting "title 
XVIII o f before "this Act" each place it appears in paragraphs (1) 
and (2). 
(2) Section 1155(aXl) of such Act is amended by adding after and 
below subparagraph (C) the following new sentence: 
"Each agreement with an Organization under this part shall require 
the Organization, if requested by a State with a plan approved under 
title XIX, to enter into a contract with the State, for the performance 
of review functions in the case of health care services and items 
provided under such State plan under terms and conditions similar to 
those contained in the agreement between the Organization and the 
Secretary under this part.". 
(3) Section 1155(a) of such Act is amended by striking out para-
graph (7). 
(4) Section 1155(eXl) of such Act is amended by striking out ", or 
intermediate care facility, as defined in section 1905(c) and "or 
intermediate care facility . 
42 use 1320C-7. 
(eXD Section 1158(a) of such Act is amended by striking out "under 
any title of this Act (other than title V)" and inserting in lieu thereof 
"under title XVIII" and by striking out "or any program established 
pursuant thereto". 
(2) Section 1158(c) of such Act is amended— 
(A) by striking out "(subject to sections 1159, 1171(aXl), and 
1171(dX3)) for purposes of payment under this Act" and inserting 
in lieu thereof "(subject to section 1159) for purposes of payment 
under title XVIII"; and 
(B) by striking out ", or single State agencies" and all that 
follows through "under title XIX". 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 795 
42 use 
1320C-11. 
Repeal. 
42 use 
1320C-13. 
42 use 
1320C-17. 
(3) Section 1158(d) of such Act is amended by striking out "or 42 use i320c-7. 
section 1902(h)". 
(0 Section 1159(a) of such Act is amended by striking out "under 42 use i320c-8. 
this Act (other than title V)" and inserting in lieu thereof "under title 
XVIII". 
(g)(1) Section 116(KaXl) of such Act is amended by striking out 42 use i320c-9. 
"under this Act" the first place it appears and inserting in lieu 
thereof "under title XVIII (or under a State plan approved under title 
XIX, where the services furnished by the person are subject to review 
under a contract between the State and an Organization under 
section 1155(a))", and by striking out "under this Act" the second 
place it appears and inserting in lieu thereof "under such title (or 
such State plan)". 
(2) Section 1160(bXl) of such Act is amended by striking out "under 
this Act" and inserting in lieu thereof "under title XVIIF . 
(h) Section 1162(eXl) of such Act is amended by striking out "any 
program established by or pursuant to this Act" and inserting in lieu 
thereof "title XVIII". 
(i) Section 1164 of such Act is repealed. 
(j) Section 1168 of such Act is amended— 
(1) by inserting "and" at the end of paragraph (a); 
(2) by striking out "and" at the end of paragraph (b); 
(3) by striking out paragraph (c) and redesignating paragraphs 
(a) and (b) as paragraphs (1) and (2), respectively-
(4) by striking out subsections (a), (b), and (c)' and inserting in 
lieu thereof "paragraphs (1) and (2)"; 
(5) by amending the second sentence to read as follows: "The 
Secretary shall make such transfers of moneys between such 
funds as may be appropriate to settle accounts between them."; 
and 
(6) by striking out the second parenthetical phrase in the third 
sentence. 
(k) Section 1171 of such Act is repealed. 
(1) Section 1172(4) of such Act is amended by striking out "V, XI, 
XVIII, and XIX" and inserting in lieu thereof "XI and XVIII". 
(m) Section 1902 of such Act is amended by inserting after subsec-
tion (c) the following new subsection: 
"(d) If a State contracts with a Professional Standards Review 
Organization designated, conditionally or otherwise, under part B of 
title XI for the performance of medical or utilization review functions 
required under this title of a State plan with respect to specific 
services or providers (or services or providers in a geographic area of 
the State), such requirements shall be deemed to be met for those 
services or providers (or services or providers in that area) by 
delegation to such Organization (or Organizations) under the con-
tract of the State's authority to conduct such review activities if the 
contract provides for the performance of activities not inconsistent 
with part B of title XI and provides for such assurances of satisfactory 
performance by such Organization (or Organizations) as the Secre-
tary may prescribe.". 
(n) Section 1903(aX3) of such Act is amended— 
42 use I396b. 
(1) by striking out "plus" at the end of subparagraph (B) and 
inserting in lieu thereof "and", and 
(2) by adding after subparagraph (B) the following new 
subparagraph: 
"(C) 75 per centum of the sums expended with respect to 
costs incurred during such quarter (as found necessary by 
the Secretary for the proper and efficient administration of 
Repeal. 
42 use 
1320C-20. 
42 use 
1320C-21. 
42 u s e 1396a. 
42 u s e 1320c. 
95 STAT. 796 
PUBLIC LAW 97-35—AUG. 13, 1981 
Ante, p. 795. 
Effective date. 
42 u s e 1320c 
note. 
the State plan) as are attributable to the performance of 
medical and utilization review by a Professional Standards 
Review Organization under a contract entered into under 
section 1902(d); plus" 
(o) The amendments made by this section apply to agreements with 
Professional Standards Review Organizations entered into on or after 
October 1,1981. 
SECRETARIAL DETERMINATION IN UEU OF PSRO CERTIFICATION 
42 use 1395X. 
SEC. 2114. Section 1861(vXlXGXi) of the Social Security Act is 
amended by striking out "an organization or agency with review 
responsibility as is otherwise provided for under part A of title XI" 
and inserting in lieu thereof "the Secretary or such agent as the 
Secretary may designate". 
Subtitle B—Provisions Relating to Medicare 
CHAPTER 1—CHANGES IN SERVICES AND BENEFITS 
42 u s e 1395d. 
42 u s e 1395f. 
42 u s e 1395X. 
42 u s e 1320C-3. 
42 u s e 1320C-4. 
42 u s e 1320C-7. 
42 u s e 1395// 
note. 
Effective date. 
42 u s e 1320C-3 
note. 
ELIMINATION OF PART A COVERAGE OF ALCOHOL DETOXIFICATION 
FACIUTY SERVICES 
SEC. 2121. (a) Section 1812(a) of the Social Security Act is 
amended— 
(1) by inserting "and" at the end of paragraph (2), 
(2) by striking out "; and" at the end of paragraph (3) and 
inserting in lieu thereof a period, and 
(3) by striking out paragraph (4). 
(b) Section 1814(aX2) of such Act is amended— 
(1) by inserting "or" at the end of subparagraph (D), 
(2) by striking out "or" at the end of subparagraph (E), and 
(3) by striking out subparagraph (F). 
(c) Section 1861(u) of such Act is amended by striking out "detoxifi-
cation facility,". 
(d) Subsection (bb) of section 1861 of such Act is repealed. 
(e) The first sentence of section 1154(b) of such Act is amended by 
striking out "and to review of alcohol detoxification facility services'. 
(f) Section 1155 of such Act is amended by striking out subsection 
(i). 
(g) Section 1158 of such Act is amended— 
(1) by striking out "subsections (d) and (e)" in subsection (a) and 
inserting in lieu thereof "subsection (d)", and 
(2) by striking out subsection (e). 
(h) Section 931 of the Medicare and Medicaid Amendments of 1980 
(P.L. 96-499; 94 Stat. 2634) is amended by striking out subsection (f) 
(relating to a study of medicare coverage of certain additional 
detoxification-related services). 
(i) The amendments made by this section (other than by subsection 
(h)) shall apply to services furnished in detoxification facilities for 
inpatient stays beginning on or after the tenth day after the date of 
the enactment of this Act. 
42 u s e 1395f, 
1395n. 
EUMINATION OF OCCUPATIONAL THERAPY AS A BASIS FOR INITIAL 
ENTITLEMENT TO HOME HEALTH SERVICES 
SEC. 2122. (aXD Sections 1814(aX2XD) and 1835(aX2XA) of the Social 
Security Act are each amended by striking out "needed skilled 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 797 
nursing care on an intermittent basis, or physical, occupational, or 
speech therapy" and inserting in lieu thereof "needs or needed 
skilled nursing care on an intermittent basis or physical or speech 
therapy or, in the case of an individual who has been furnished home 
health services based on such a need and who no longer has such a 
need for such care or therapy, continues or continued to need 
occupational therapy". 
(b) The amendments made by this section shall apply to services 
furnished pursuant to plans of treatment implemented after the 
third month beginning after the date of the enactment of this Act. 
CHAPTER 2—CHANGES IN COINSURANCE, DEDUCTIBLES, 
AND COPAYMENTS 
Effective date. 
42 u s e 1395f 
note. 
MAKING PART A COINSURANCE CURRENT WITH THE YEAR IN WHICH 
SERVICES FURNISHED 
SEC. 2131. (a) The first sentence of section 1813(b)(2) of the Social 
Security Act is amended by striking out "any spell of illness begin- 42 use I395e. 
ning" and inserting in lieu thereof "any inpatient hospital services or 
post-hospital extended care services furnished". 
(b) The amendment made by subsection (a) is effective for inpatient 
hospital services or post-hospital extended care services furnished on 
or after January 1,1982. 
Effective date. 
42 u s e 1395e 
note. 
MAKING PART A COINSURANCE AND DEDUCTIBLE MORE CURRENT 
SEC. 2132. (a) Section 1813(bX2) of the Social Security Act is 
amended by striking out "$40" and inserting in lieu thereof "$45". 
(b) The amendment made by subsection (a) shall apply to inpatient 
hospital services and post-hospital extended care services furnished 
in calendar years beginning with calendar year 1982. 
42 u s e 1395e 
note. 
EUMINATION OF CARRYOVER FROM PREVIOUS YEAR OF INCURRED 
EXPENSES FOR MEETING THE PART B DEDUCTIBLE 
SEC. 2133. (a) The first sentence of section 1833(b) of the Social 
Security Act is amended by striking out "the amount of the deduct- 42 use 1395/. 
ible for such calendar year" and all that follows through "(2)", and by 
redesignating clauses (3) and (4) as clauses (2) and (3), respectively. 
(b) The amendments made by subsection (a) first apply to the 
deductible for calendar year 1982 with respect to expenses incurred 
on or after October 1,1981. 
Effective date. 
42 u s e 13%l 
note. 
INCREASE 
IN 
PART 
B 
DEDUCTIBLE 
SEC. 2134. (a) Section 1833(b) of the Social Security Act is amended 
by striking out "$60" and inserting in lieu thereof "$75". 
(b) The amendment made by subsection (a) shall take effect on 
January 1,1982, and shall apply to the deductible for calendar years 
beginning with 1982. 
CHAPTER 3—REIMBURSEMENT CHANGES 
Effective date. 
42 u s e 1395/ 
note. 
UMITATION ON ROUTINE NURSING DIFFERENTIAL 
SEC. 2141. (a) Section 1861(vXl) of the Social Security Act is 42 use I395x. 
amended by adding at the end thereof the following new 
subparagraph: 
95 STAT. 798 
PUBLIC LAW 97-35—AUG. 13, 1981 
Study. 
42 u s e 1395. 
Effective date. 
42 u s e 1395x 
note. 
"(J) Such regulations shall provide that an inpatient routine 
nursing salary cost differential shall be allowable as a reimbursable 
cost of hospitals, at a rate not to exceed 5 percent, to be applied under 
the same methodology used for the nursing salary cost differential for 
the month of April 1981.". 
(b) The Comptroller General shall conduct a study to determine the 
extent (if any) to which the average cost of efficiently providing 
routine inpatient nursing care to individuals entitled to benefits 
under title XVIII of the Social Security Act exceeds the average cost 
of providing such care to other patients. The Comptroller General 
shall submit a final report with respect to the results of such study to 
the Congress within six months after the date of the enactment of this 
Act. 
(c)(1) Subject to paragraph (2), the amendment made by subsection 
(a) shall apply to cost reporting periods ending after September 30, 
1981. 
(2) In the case of a cost reporting period beginning before October 1, 
1981, any reduction in payments resulting from the amendment 
made by subsection (a) shall be imposed only in proportion to the part 
of the period that occurs after September 30,1981. 
LIMITATION ON REASONABLE COST AND REASONABLE CHARGE FOR 
OUTPATIENT SERVICES 
Regulations. 
SEC. 2142. (a) Section 1861(vXl) of the Social Security Act is further 
42 use I395x. 
amended by adding after subparagraph (J) (added by section 2141 of 
this subtitle) the following new subparagraph: 
"(K) The Secretary shall issue regulations that provide, to the 
extent feasible, for the establishment of limitations on the amount of 
any costs or charges that shall be considered reasonable with respect 
to services provided on an outpatient basis by hospitals (other than 
bona fide emergency services provided in an emergency room) or 
clinics (other than rural health clinics), which are reimbursed on a 
cost basis or on the basis of cost related charges, and by physicians 
utilizing such outpatient facilities. Such limitations shall be reason-
ably related to the charges in the same area for similar services 
provided in physicians' offices. Such regulations shall provide for 
exceptions to such limitations in cases where similar services are not 
generally available in physicians' offices in the area to individuals 
entitled to benefits under this title.". 
42 use I395u. 
(b) Section 1842(bX3) of such Act is amended by adding at the end 
thereof the following new sentence: "The amount of any charges for 
outpatient services which shall be considered reasonable shall be 
subject to the limitations established by regulations issued by the 
Secretary pursuant to section 1861(v)(lXK).". 
Supra. 
LIMITS ON REIMBURSEMENT TO HOSPITALS 
SEC. 2143. (a) Section 1861(vXl) of the Social Security Act is further 
amended by adding after subparagraph (K) (added by section 2142 of 
this subtitle) the following new subparagraph: 
"(L) The Secretary, in determining the amount of the payments 
that may be made under this title with respect to routine operating 
costs for the provision of general inpatient hospital services, may not 
recognize as reasonable (in the efficient delivery of health services) 
routine operating costs for the provision of general inpatient hospital 
services by a hospital to the extent these costs exceed 108 percent of 
the mean of such routine operating costs per diem for hospitals, or, in 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 799 
the judgment of the Secretary, such lower percentage or such 
comparable or lower limit as the Secretary may determine. The 
Secretary may provide for such exemptions and exceptions to such 
limitation as he deems appropriate.". 
(b)(1) Subject to paragraph (2), the amendment made by subsection 
(a) shall apply to costs reporting periods ending after September 80, 
1981. 
(2) In the case of a cost reporting period beginning before October 1, 
1981, any reduction in payments resulting from the amendment 
made by subsection (a) shall be imposed only in proportion to the part 
of the period that occurs after September 80,1981. 
Effective date. 
42 u s e 1395x 
note. 
LIMITS ON REIMBURSEMENT TO HOME HEALTH AGENCIES 
SEC. 2144. (a) Subparagraph (L) of section 1861(v)(l) of the Social 42 use I395x 
Security Act (added by section 2143 of this subtitle) is amended by 
inserting "(i)" after "(L)" and by adding at the end the following new 
clause: 
"(ii) The Secretary, in determining the amount of the payments 
that may be made under this title with respect to services furnished 
by home health agencies, may not recognize as reasonable (in the 
efficient delivery of such services) costs for the provision of such 
services by an agency to the extent these costs exceed (on the 
aggregate for the agency) the 75th percentile of such costs per visit for 
home health agencies, or, in the judgment of the Secretary, such 
lower percentile or such comparable or lower limit (based on or 
related to the mean of the costs of such agencies or otherwise) as the 
Secretary may determine. The Secretary may provide for such 
exemptions and exceptions to such limitation as he deems appro-
priate.". 
(b)(1) Subject to paragraph (2), the amendment made by subsection 
(a) shall apply to cost reporting periods ending after September 30, 
1981. 
(2) In the case of a cost reporting period beginning before October 1, 
1981, any reduction in payments resulting from the amendment 
made by subsection (a) shall be imposed only in proportion to the part 
of the period that occurs after September 30,1981. 
Effective date. 
42 u s e 1395x 
note. 
INCENTIVE REIMBURSEMENT RATE FOR RENAL DIALYSIS SERVICES 
SEC. 2145. (a) Section 1881(b) of the Social Security Act is 42 use I395rr. 
amended— 
(1) by inserting "and consistent with any regulations promul-
gated under paragraph (7)" in paragraph (2)(B) after "section 
1861(v))"; 
(2) by striking out the second sentence of paragraph (2)(B); 
(3) by inserting "(which effectively encourages the efficient 
delivery of dialysis services and provides incentives for the 
increased use of home dialysis)" in paragraph (3)(B) after "or 
other basis"; 
(4) by inserting "or on the basis of a method established under 
paragraph (7)" before the period at the end of paragraph (4); 
(5) by inserting "(except as may be provided in regulations 
under paragraph (7))" in the second sentence of paragraph (6) 
after "in no event" and by striking out "70 percent" in such 
sentence and inserting in lieu thereof "75 percent"; 
95 STAT. 800 
PUBLIC LAW 97-35—AUG. 13, 1981 
(6) by inserting "(including methods established under para-
graph (7))" in the fifth sentence of paragraph (6) after "any other 
procedure"; 
(7) by redesignating paragraphs (7) through (9) as paragraphs 
(8) through (10), respectively; and 
(8) by inserting after paragraph (6) the following new 
paragraph: 
"(7) The Secretary shall provide by regulation for a method (or 
methods) for determining prospectively the amounts of payments to 
be made for dialysis services furnished by providers of services and 
renal dialysis facilities to individuals in a facility and to such 
individuals at home. Such method (or methods) shall provide for the 
prospective determination of a rate (or rates) for each mode of care 
based on a single composite weighted formula (which takes into 
account the mix of patients who receive dialysis services at a facility 
or at home and the relative costs of providing such services in such 
settings) for hospital-based facilities and such a single composite 
weighted formula for other renal dialysis facilities, or based on such 
other method or combination of methods which differentiate between 
hospital-based facilities and other renal dialysis facilities and which 
the Secretary determines, after detailed analysis, will more effec-
tively encourage the more efficient delivery of dialysis services and 
will provide greater incentives for increased use of home dialysis 
than through the single composite weighted formulas. The Secretary 
shall provide for such exceptions to such niethods as may be war-
ranted by unusual circumstances (including the special cir-
cumstances of sole facilities located in isolated, rural areas). The 
Secretary may provide that such method will serve in lieu of any 
target reimbursement rate that would otherwise be established 
under paragraph (6).". 
Effective date. 
(b) The amendments made by subsection (a) apply to services 
42 use I395rr 
furnished on or after October 1,1981, and the Secretary of Health and 
^ 
Human Services shall first promulgate regulations to carry out 
Supra. 
section 1881(b)(7) of the Social Security Act not later than October 1, 
1981. 
MEDICARE PAYMENTS SECONDARY IN CASES OF END STAGE RENAL 
DISEASE SERVICES COVERED UNDER CERTAIN GROUP HEALTH POLICIES 
42 use I395y. 
SEC. 2146. (a) Section 1862(b) of the Social Security Act is amended 
by inserting "(1)" after "(b)" and by adding at the end thereof the 
following new paragraph: 
"(2)(A) In the case of an individual who is entitled to benefits under 
part A or is eligible to enroll under part B solely by reason of section 
226A, payment under this title may not be made, except as provided 
in subparagraph (B), with respect to any item or service furnished 
during the period described in subparagraph (C) to the extent that 
payment with respect to expenses for such item or service (i) has been 
made under any group health plan (as defined in section 162(h)(2) of 
Post, p. 801. 
the Internal Revenue Code of 1954) or (ii) the Secretary determines 
will be made under such a plan as promptly as would otherwise be the 
case if payment were made by the Secretary under this title. 
"(B) Any payment under this title with respect to any item or 
service to an individual described in subparagraph (A) during the 
period described in subparagraph (C) shall be conditioned on reim-
bursement to the appropriate Trust Fund established by this title 
when notice or other information is received that payment for such 
item or service has been made under a plan described in subpara-
graph (A). The Secretary may waive the provisions of this subpara-
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 801 
graph in the case of an individual claim if he determines that the 
probability of recovery or amount involved in such claim does not 
warrant the pursuing of the claim. 
"(C) The provisions of subparagraphs (A) and (B) shall apply to an 
individual only during the 12-month period which begins with the 
earlier o
f
— 
"(i) the month in which a regular course of renal dialysis is 
initiated, or 
"(ii) in the case of an individual who receives a kidney 
transplant, the first month in which he would be eligible for 
benefits under this title (if he had filed an application for such 
benefits) under the provisions of section 226A(bXl)(B). 
"(D) Where payment for an item or service under such plan is less 
than the amount of the charge for such item or service, payment may 
be made under this title (without regard to deductibles and coinsur-
ance under this title) for the remainder of such charge, but— 
"(i) such payment under this title may not exceed an amount 
which would be payable under this title for such item or service 
in the absence of such group health plan; and 
"(ii) such pa)mient under this title, when combined with the 
amount payable under such plan, may not exceed the combined 
amount which would have been payable under this title and such 
plan if this paragraph were not in effect.", 
(b) Section 162 of the Internal Revenue Code of 1954 (relating to 26 use 162. 
trade or business expenses) is amended by redesignating subsection 
(h) as subsection (i) and by inserting after subsection (g) the following 
new subsection: 
"(h) GROUP HEALTH PLANS.— 
"(1) GENERAL RULE.—The expenses paid or incurred by an 
employer for a group health plan shall not be allowed as a 
deduction under this section if the plan differentiates in the 
benefits it provides between individuals having end stage renal 
disease and other individuals covered by such plan on the basis of 
the existence of end stage renal disease, the need for renal 
dialysis, or in any other manner. 
"(2) GROUP HEALTH PLAN.—For purposes of this subsection the 
term 'group health plan' means any plan of, or contributed to by, 
an employer to provide medical care (as defined in section 213(e)) 
to his employees, former employees, or the families of such 
employees or former employees, directly or through insurance, 
reimbursement, or otherwise.". 
(c)(1) The amendments made by subsection (a) shall become effec- Effective date. 
tive on October 1,1981. 
42 use I395y 
(2) The amendments made by subsection (b) shall be effective with gg use 162 note 
respect to taxable years beginning on or after January 1, 1982. 
CHAPTER 4—MISCELLANEOUS CHANGES 
EUMINATION OF UNUMITED OPEN ENROLLMENT 
SEC. 2151. (a)(1) Section 1837(e) of the Social Security Act is 42 use I395p. 
amended to read as follows: 
"(e) There shall be a general enrollment period during the period 
beginning on January 1 and ending on March 31 of each year.". 
(2) Section 1837(g)(3) of such Act is amended by striking out "the 
month in which the individual files an application establishing such 
entitlement" and inserting in lieu thereof "the earlier of the then 
95 STAT. 802 
PUBLIC LAW 97-35—AUG. 13, 1981 
42 u s e 1395q. 
42 u s e 1395r. 
Effective date. 
42 u s e 1395p 
note. 
current or immediately succeeding general enrollment period (as 
defined in subsection (e) of this section)". 
(3) Section 1838(a)(2)(E) of such Act is amended by striking out "the 
first day of the third month" and inserting in lieu thereof "the 
July 1". 
(4) The second sentence of section 1839(d) of such Act is amended by 
striking out "the month after the month in which he reenrolled" and 
inserting in lieu thereof "the close of the enrollment period in which 
he reenrolled". 
(b) The amendments made by this section shall not apply to 
enrollments pursuant to written requests for enrollment filed before 
October 1,1981. 
42 u s e 1395y. 
42 u s e 1395y 
note. 
UTILIZATION GUIDELINES FOR PROVISION OP HOME HEALTH SERVICES 
SEC. 2152. (a) Section 1862 of the Social Security Act is amended by 
adding at the end the following new subsection: 
"(f) The Secretary shall establish utilization guidelines for the 
determination of whether or not payment may be made, consistent 
with paragraph (1) of subsection (a), under part A or part B for 
expenses incurred with respect to the provision of home health 
services, and shall provide for the implementation of such guidelines 
through a process of selective postpayment coverage review by 
intermediaries or otherwise.". 
(b) The Secretary of Health and Human Services shall establish, 
and provide for the implementation of, the guidelines described in 
section 1862(f) of the Social Security Act not later than October 1, 
1981. 
42 u s e 1395CC. 
REPEAL OF STATUTORY TIME LIMITATION ON AGREEMENT WITH SKILLED 
NURSING FACILITIES 
SEC. 2153. Section 1866(a)(1) of the Social Security Act is amended 
by striking out the second sentence. 
42 u s e 1395b-l 
note. 
REMOVAL OF LIMITATION ON NUMBER OF MEDICARE DEMONSTRATION 
PROJECTS 
SEC. 2154. Section 903 of the Medicare and Medicaid Amendments 
of 1980 (P.L. 96-499; 94 Stat. 2615) is amended by striking out 
subsection (c). 
42 u s e 1395g 
note. 
42 u s e 632a. 
REPEAL OF TEMPORARY DELAY IN PERIODIC INTERIM PAYMENTS (PIP) 
SEC. 2155. Section 959 of the Medicare and Medicaid Amendments 
of 1980 (P.L. 96-499; 94 Stat. 2650) is repealed. 
STATUTORY DEADLINES FOR IMPLEMENTING AFDC HOME HEALTH AIDE 
DEMONSTRATION PROJECTS 
SEC. 2156. Section 966 of the Medicare and Medicaid Amendments 
of 1980 (P.L. 96-499; 94 Stat. 2652) is amended— 
(1) by adding at the end of subsection (c)(2) the following new 
sentence: "The Secretary shall, not later than October 1, 1981, 
establish such guidelines and establish such regulations as may 
be necessary to assure that agreements are entered into under 
this section by not later than January 1,1982.", and 
(2) by striking out "The Secretary" in subsection (h) and 
inserting in lieu thereof "The Secretary shall, during January 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 803 
1982, submit to the Congress a report on steps taken by Janu-
ary 1,1982, to enter into agreements under this section, including 
a general description of each of such agreements entered into by 
such date and the timetable under which he anticipates other 
such agreements will be entered into. Thereafter, the Secretary". 
Subtitle C—Provisions Relating to Medicaid 
CHAPTER 1 —CHANGES IN PAYMENTS TO STATES 
REDUCTION IN MEDICAID PAYMENTS TO STATES AND OFFSET FOR 
MEETING FEDERAL MEDICAID EXPENDITURE TARGETS 
SEC. 2161. (a) Section 1903 of the Social Security Act is amended by 42 use I396b. 
adding at the end the following new subsection: 
"(sXlXA) Notwithstanding any other provision of this section 
(except as otherwise provided in this subsection), the amount of 
payments which a State is otherwise entitled to receive under this 
title for any quarter in— 
"(i) fiscal year 1982, shall be reduced by 3 percent, 
"(ii) fiscal year 1983, shall be reduced by 4 percent, and 
"(iii) fiscal year 1984, shall be reduced by 4.5 percent, 
of the amount to which the State is otherwise entitled (without 
regard to payments under subsection (t) and without regard to 
payments for claims relating to expenditures made before fiscal year 
1981). 
"(B) No reduction may be made undpr subparagraph (A) for a 
quarter unless, as of the first day of the quarter, the Secretary has 
promulgated and has in effect final regulations (on an interim or 
other basis) implementing paragraphs (lOXC) and (13XA) of section 
1902(a) (as amended by the Medicare and Medicaid Amendments of 
1981). 
"(C) For purposes of this paragraph, the term 'State' only includes 
the fifty States and the District of Columbia and does not include any 
State which did not have a plan approved under this title as of July 1, 
1981. 
"(2) The percentage reduction imposed by paragraph (1) for a State 
for a quarter shall be reduced— 
"(A) by one percentage point if the State has a qualified 
hospital cost review program (described in paragraph (3)) for the 
quarter, 
"(B) by one percentage point if the State has a high unemploy-
ment rate (as determined under paragraph (4)) for the quarter, 
and 
"(C) by one percentage point if the total amount of the State's 
third party and fraud and abuse recoveries (as defined in para-
graph (5XA)) for the previous quarter is equal to or exceeds one 
percent of the amount of Federal payments that the Secretary 
estimates are due the State under this title for that previous 
quarter (without regard to payments under subsection (t)). 
"(3) For purposes of paragraph (2XA), a State has a qualified 
hospital cost review program for a calendar quarter if such program 
meets the following requirements: 
"(A) The progremi must have been established by statute and in 
effect on July 1, 1981, and at the be^nning of the quarter. 
"(B) The program must be operated directly by the State and 
must apply (i) to substantially all nonfederal acute care hospitals 
(as defined by the Secretary) in the State and (ii) to review of 
95 STAT. 804 
PUBLIC LAW 97-35—AUG. 13, 1981 
either all revenues or expenses for inpatient hospital services 
42 use 1395. 
(other than revenues under title XVIII of this Act, unless 
approved by the Secretary) or at least 75 percent of all revenues 
or expenses for inpatient hospital services (including revenues 
under title XVIII of this Act). 
"(C) The State must provide the Secretary with satisfactory 
assurances as to the equitable treatment under the program of 
all entities (including Federal and State programs) that pay 
hospitals for inpatient hospital services, of hospital employees, 
and of hospital patients. 
"(D) The Secretary determines that the annual rate of increase 
in aggregate hospital inpatient costs per capita or per admission 
(as defined by the Secretary) in the State during the most recent 
calendar year ending at least nine months before such quarter 
(or, at the State's option, during the 2 or 3 calendar-year period 
ending with that calendar year) is at least two percentage points 
less than the annual rate of increase during that calendar year 
(or that period, as the case may be) in such costs per capita or per 
admission for hospitals located in the United States (excluding 
from such computation, with respect to any calendar year in any 
period, any State which had in existence a qualified hospital cost 
review program (or, in the case of periods before January 1,1982, 
had a hospital cost review program which the Secretary deter-
mines met for such periods the provisions of subparagraphs (A), 
(B), and (C) of this paragraph) during that entire calendar year). 
"(4)(A) For purposes of paragraph (2)(B), a State has a high 
unemployment rate with respect to a quarter if the average of the 
monthly unemployment rates (as determined by the Bureau of Labor 
Statistics) for the State for the three months immediately before such 
quarter is equal to or greater than 150 percent of the average of such 
rates for the United States for such months. 
"(B) For purposes of subparagraph (A), the term 'United States' 
only includes the fifty States and the District of Columbia. 
"(5)(A) For purposes of paragraph (2)(C), the term 'third party and 
fraud and abuse recoveries' means, for a State for a previous 
quarter— 
"(i) the total amount that State demonstrates to the Secretary 
that it has recovered or diverted in the quarter on the basis of (I) 
third-party payments (described in section 1902(a)(25)), (II) the 
operation of its State medicaid fraud control unit (defined in 
subsection (q)), and (III) other fraud or abuse control activities, 
plus 
"(ii) any amount carried forward from the previous quarter 
under subparagraph (B). 
Subclause (I) of clause (i) shall only apply to quarters during fiscal 
year 1982. 
"(B) If the total amount of the State's third party and fraud and 
abuse recoveries (defined in subparagraph (A)) for a quarter (begin-
ning on or after October 1,1981) exceeds one percent of the amount of 
Federal payments that the Secretary estimates are due the State 
under this title for that quarter (without regard to subsection (t)), the 
amount of such excess shall be carried forward to the following 
quarter for purposes of clause (ii) of subparagraph (A).". 
42 use 1396b. 
0^) Section 1902 of such Act is further amended by adding after 
subsection (s) (added by subsection (a) of this section) the following 
new subsection: 
"(t)(l) The Secretary shall determine for each State (as defined in 
subsection (s)(l)(C)) for each of fiscal years 1982, 1983, and 1984, a 
"United States. 
Definition. 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 805 
target amount of Federal medicaid expenditures. Such target amount 
for a State for fiscal year— 
"(A) 1982, is equal to 109 percent of the estimate (based upon 
the last such estimate for such State received by the Secretary 
before April 1, 1981) of the Federal share of expenditures under 
this title (other than interest paid under subsection (dX5), with-
out taking into account reductions in payment under subsection 
(s) or additional payments under this subsection, and without 
regard to payments for claims relating to expenditures made 
prior to October 1, 1980) in fiscal year 1981 for such State; 
"(B) 1983, is equal to the target amount determined under 
subparagraph (A) for the State increased or decreased by a 
percentage equal to the percentage increase or decrease (as the 
case may be) in the index of the medical care expenditure 
category of the consumer price index for all urban consumers 
(published by the Bureau of Labor Statistics) between September 
1982 and September 1983; and 
"(C) 1984, is equal to the target amount determined under 
subparagraph (A) for the State increased or decreased by a 
percentage equal to the percentage increase or decrease (as the 
case may be) in the index of the medical care expenditure 
category of the consumer price index for all urban consumers 
(published by the Bureau of Labor Statistics) between September 
1982 and September 1984. 
"(2) Notwithstanding any other provision of this section (except as 
otherwise provided in this subsection), the amount of payments 
which a State (with a State plan approved under this title) is 
otherwise entitled to receive for the first quarter of any fiscal year 
(beginning with fiscal year 1983 and ending with fiscal year 1985) 
shall be supplemented by an amount equal to the lesser of— 
"(A) the amount by which the Secretary determines or esti-
mates (subject to appropriate subsequent adjustments) the Fed-
eral share of expenditures under this title (other than interest 
paid under subsection (d)(5), without taking into account reduc-
tions in payment under subsection (s) or payments under this 
subsection, without regard to payments for claims relating to 
expenditures made prior to October 1, 1980, and subject to 
paragraph (3) of this subsection) under the State's plan for the 
previous fiscal year was less than the target amount of Federal 
medicaid expenditures for that State for that fiscal year deter-
mined under paragraph (1), or 
"(B) the amount of the reductions imposed with respect to the 
State under subsection (s) for the quarters in the previous fiscal 
year. 
"(3) Only for the purpose of computing under this subsection the 
Federal share of expenditures for a State for fiscal year 1984 (in the 
case of the payment which may be made for the first quarter of fiscal 
year 1985), the Federal medical assistance percentage for fiscal year 
1984 shall be the Federal medical assistance percentage for States in 
effect for fiscal year 1983, disregarding any change in such percent-
age between fiscal year 1983 and fiscal year 1984.". 
(c)(1) Effective for calendar quarters beginning on or after Octo-
ber 1, 1984, subsection (s) of section 1902 of the Social Security Act Ante, p. 803. 
(added by subsection (a) of this section) is repealed. 
(2) Effective after payments for the first quarter of fiscal year 1985, 
subsection (t) of section 1902 of the Social Security Act (added by Ante, p. 804. 
subsection (b) of this section) is repealed. 
95 STAT. 806 
PUBLIC LAW 97-35—AUG. 13, 1981 
42 u s e 1301. 
42 u s e 1396d. 
42 u s e 1308. 
42 u s e 1396. 
Effective date. 
42 u s e 1308 
note. 
42 u s e 1396b. 
PAYMENTS TO TERRITORIES 
SEC. 2162. (aXD Section llOl(aXl) of the Social Security Act is 
amended (1) by striking out "American Samoa and" in tne third 
sentence and inserting in lieu thereof "American Samoa, the North-
ern Mariana Islands, and", and (2) by inserting after the third 
sentence the following new sentence: "Such term when used in title 
XIX also includes the Northern Mariana Islands.". 
(2) Clause (2) of section 1905(b) of such Act is amended by striking 
out "and Guam" and inserting in lieu thereof "Guam, and the 
Northern Mariana Islands". 
Ot)Xl) Subsection (c) of section 1108 of such Act is amended to read as 
follows: 
"(c) The total amount certified by the Secretary under title XIX 
with respect to a fiscal year for payment to— 
"(1) Puerto Rico shall not exceed $45,000,000, 
"(2) the Virgin Islands shall not exceed $1,500,000, 
"(3) Guam shall not exceed $1,400,000, and 
"(4) the Northern Mariana Islands shall not exceed $350,000.". 
(2) The amendment made by paragraph (1) shaJl apply to fiscal 
years beginning with fiscal year 1982. 
ELIMINATING TIME PERIOD UMFf 
ATION ON PAYMENT OF INTEREST ON 
DISPUTED CLAIMS 
SEC. 2163. Section 1903(dX5) of the Social Security Act is amended 
by striking out "Obut not to exceed a period of twelve months" and all 
that follows through "disallowances made thereafter)". 
Effective date. 
42 u s e 1396b 
note. 
42 u s e 1396d 
note. 
42 u s e 1396d. 
Ante, p. 804. 
EUMINATING FEDERAL MATCHING FOR CERTAIN LABORATORY TESTS 
SEC. 2164. (a) Section 1903(i) of the Social Security Act, as amended 
by section 2103 of this subtitle, is further amended by striking out the 
period at the end of paragraph (5) and inserting in lieu thereof "; or" 
and by adding at the end the following new paragraph: 
"(6) with respect to any amount expended for inpatient hospi-
tal tests (other than in emergency situations) not specifically 
ordered by the attending physician or other responsible practi-
tioner.". 
O
o
) The amendments made by subsection (a) shall apply to tests 
occurring on or after October 1,1981. 
STUDY OF FEDERAL MEDICAL ASSISTANCE PERCENTAGE FORMULA AND 
OF ADJUSTMENTS OF TARGET AMOUNTS FOR FEDERAL MEDICAID EX-
PENDITURES 
SEC. 2165. (a) The Comptroller General, in consultation with the 
Advisory Committee for Intergovermental Relations, shall conduct a 
study of— 
(1) the formula, under section 1905(b) of the Social Security 
Act, defining the Federal medical assistance percentage, as it 
applies to distribution of Federal funds to States (as defined for 
purposes of title XIX of such Act) under that Act, £uid 
(2) the validity and equity of any adjustment to the target 
amount of Federal medical expenditures (under section 1903(t) of 
the Social Security Act, added by section 2161 of this subtitle) for 
all States or any particular State which ought to be made for 
fiscal year 1983 or fiscal year 1984 (including methodology for 
calculating and implementing such adjustments) to reflect eco-
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 807 
nomic and demographic factors affecting such State which are 
out of the ordinary sphere of control of such State. 
Specifically, pursuant to paragraph (1) the Comptroller General shall 
examine the feasibility and consequences of revising the medicaid 
matching formula so as to take into account the relative economic 
positions and needs of the different States, the different amounts of 
support and income payments made by different States under the 
Social Security Act, the relative cost of living and the unemployment 42 USC 1305. 
rates in the different States, the relative taxable wealth and amount 
of taxes raised per capita by the different States, and other relevant 
factors bearing on an equitable distribution of Federal funds to States 
under that Act. 
(b) The Comptroller General shall report to the Congress on the 
study required under this section not later than October 1, 1982. 
CHAPTER 2—INCREASED FLEXIBILITY FOR STATES 
42 USC 301, 
1201, 1351, 1381, 
601; 94 Stat. 501. 
42 USC 670. 
COVERAGE OF, AND SERVICES FOR, THE MEDICALLY NEEDY 
SEC. 2171. (a) Section 1902(a)(10) of the Social Security Act is 42 USC 1396a. 
amended— 
(1) by amending subparagraph (A) to read as follows: 
"(A) for making medical assistance available, including at least 
the care and services listed in paragraphs (1) through (5) and (17) 
of section 1905(a), to all individuals receiving aid or assistance 42 USC I396d. 
under any plan of the State approved under title I, X, XIV, or 
XVI, or part A or part E of title IV (including pregnant women 
deemed by the State to be receiving such aid as authorized in 
section 406(g) and individuals considered by the State to be 
receiving such aid as authorized under section 414(g)), or with 
respect to whom supplemental security income benefits are being 
paid under title XVI;"; 
(2) by striking out "clause" each place it appears in subpara-
graph (B) and inserting in lieu thereof "subparagraph" and by 
striking out "and" at the end of subparagraph (B); and 
(3) by striking out paragraph (C) and by inserting in lieu 
thereof the following: 
"(C) that if medical assistance is included for any group of 
individuals described in section 1905(a) who are not 
described in subparagraph (A), then— 
"(i) the plan must include a description of (I) the 
criteria for determining eligibility of individuals in the 
group for such medical assistance and (II) the amount, 
duration, and scope of medical assistance made availa-
ble to individuals in the group; 
"(ii) the plan must make available medical assist-
ance— 
"(I) to individuals described in section 1905(a)(i), 
and 
"(II) to pregnant women, during the course of 
their pregnancy, who (but for income and resources) 
would be eligible for medical assistance as an indi-
vidual described in subparagraph (A); 
"(iii) such medical assistance must include (I) with 
respect to children under 18 and individuals entitled to 
institutional services, ambulatory services, and (II) with 
respect to pregnant women, prenatal care and delivery 
services; and 
-194 O—82 
53:QL3 
95 STAT. 808 
PUBLIC LAW 97-35—AUG. 13, 1981 
"(iv) if such medical assistance includes services in 
institutions for mental diseases or intermediate care 
facility services for the mentally retarded (or both) for 
any such group, it also must include for all groups 
covered at least the care and services listed in para-
graphs (1) through (5) and (17) of section 1905(a) or the 
care and services listed in any 7 of the paragraphs 
numbered (1) through (17) of such section; and 
"(D) for the inclusion of home health services for any 
individual who, under the State plan, is entitled to skilled 
nursing facility services;". 
42 use 1396a. 
(b) Section 1902(a)(13) of such Act is amended by striking out 
subparagraphs (A), (B), and (C). 
Effective date. 
(c) The amendments made by this section shall become effective on 
42 use 1396a 
the date of the enactment of this Act. 
note. 
FLEXIBILITY IN COVERAGE OF INDIVIDUALS AGED 18-20 
SEC. 2172. (a) Paragraph (2) of section 19020)) of the Social Security 
Act is amended to read as follows: 
"(2) any age requirement which excludes any individual who 
has not attained the age of 19 and is a dependent child under part 
A of title IV;". 
42 use I396d. 
(b)(1) Clause (i) of section 1905(a) of such Act is amended to read as 
follows: 
"(i) under the age of 21, or, at the option of the State, under the 
age of 20, 19, or 18 as the State may choose, or any reasonable 
category of such individuals,". 
(2) Section 1905(a)(ii) of such Act is amended by striking out ", 
except for section 406(a)(2),". 
Effective date. 
(c) The amendments made by this section shall become effective on 
42 use 1396a 
the date of the enactment of this Act. 
note. 
REIMBURSEMENT OF HOSPITALS 
42 use 1396a. 
SEC. 2173. (a)(1) Section 1902(a)(13) of the Social Security Act is 
amended— 
(A) by striking out subparagraph (D); 
(B) in subparagraph (E)— 
(i) by striking out "skilled nursing facility and intermedi-
ate care facility" and inserting in lieu thereof "hospital, 
skilled nursing facility, and intermediate care facility"; 
(ii) by inserting "and which, in the case of hospitals, take 
into account the situation of hospitals which serve a dispro-
portionate number of low income patients with special needs 
and provide, in the case of hospital patients receiving serv-
ices at an inappropriate level of care (under conditions 
42 use I395x. 
similar to those described in section 1861(vXl)(G)), for lower 
reimbursement rates reflecting the level of care actuallv 
received (in a manner consistent with section 1861(v)(l)(G))' 
after "determined in accordance with methods and stand-
ards developed by the State"; 
(iii) by inserting before the first semicolon the following: 
"and to assure that individuals eligible for medical assist-
ance have reasonable access (taking into account geographic 
location and reasonable travel time) to inpatient hospital 
services of adequate quality"; and 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 809 
(iv) by striking out "each skilled nursing or intermediate 
care facility" and inserting in lieu thereof "each hospital, 
skilled nursing facility, and intermediate care facility"; and 
(C) by redesignating subparagraphs (E) and (F) as subpara-
graphs (A) and (B), respectively. 
(2) Section 1902(a)(20) of such Act is amended— 
(A) by inserting "and" at the end of subparagraph (B); 
(B) by striking out "and" at the end of subparagraph (C); and 
(C) by striking out subparagraph (D). 
(b)(1) Subsection (h) of section 1902 of such Act is repealed. 
(2) The amendment made by paragraph (1) shall not apply with 
respect to services furnished before the date the Secretary of Health 
and Human Services first promulgates and has in effect final regula-
tions (on an interim or other basis) to carry out section 1902(aX13)(A) 
of the Social Security Act (as amended by this subtitle). 
(c) Part A of title XI of such Act is amended by adding after section 
1134 the following new section: 
42 u s e 1396a. 
42 u s e 1396a 
note. 
DEVELOPMENT OF MODEL PROSPECTIVE RATE METHODOLOGY 
"SEC. 1135. (a) The Secretary shall develop a model svstem or 42 use i320b-5. 
systems for the payment of hospitals for inpatient hospital services 
on a prospective basis which may be applied for reimbursement of 
hospitals under title XVIII or under a State plan approved under title 
XIX. 
"Ot)) The Secretary shall report to the Congress on the development 
of such system or systems not later than July 31,1982.". 
42 u s e 1395, 
1396. 
REMOVAL OF MEDICAID REASONABLE CHARGE UMITATION 
SEC. 2174. (a) Section 1902(a)(30) of the Social Security Act is 42 use I396a. 
amended by striking out "(including payments" and all that follows 
through "reasonable charges" and inserting in lieu thereof "are". 
(b) Section 1903(i) of such Act is amended by striking out paragraph 42 use 1396b. 
(1). 
(c) The amendments made by this section shall apply to services Effective date. 
furnished on or after October 1,1981. 
42 use 1396a 
note. 
INAPPLICABILITY AND WAIVER OF FREEDOM-OF-CHOICE AND OTHER 
STATE PLAN REQUIREMENTS 
SEC. 2175. (a) Paragraph (23) of section 1902(a) of the Social Security 
Act is amended— 
(1) by inserting "except as provided in section 1915 and" after 
"(23)", and 
(2) by striking out all that follows the first semicolon. 
(b) Title XIX of the Social Security Act is amended by adding at the 
end the following new section: 
PROVISIONS RESPECTING INAPPLICABILITY AND WAIVER OF CERTAIN 
REQUIREMENTS OF THIS TITLE 
"SEC 1915. (a) A State shall not be deemed to be out of compliance 42 use I396n. 
with the requirements of paragraphs (1), (10), or (23) of section 1902(a) 
solely by reason of the fact that the State (or any political subdivision 
thereof)— 
"(1) has entered into— 
"(A) a contract with an organization which has agreed to 
provide care and services in addition to those offered under 
95 STAT. 810 
PUBLIC LAW 97-35—AUG. 13, 1981 
42 use 1396d. 
42 use 1395x. 
42 use 1395c, 
1895J. 
42 use 1396a, 
1396b. 
the State plan to individuals eligible for medical assistance 
who reside in the geographic area served by such organiza-
tion and who elect to obtain such care and services from such 
organization, or by reason of the fact that the plan provides 
for payment for rural health clinic services only if those 
services are provided by a rural health clinic; or 
"(B) arrangements tnrough a competitive bidding process 
or otherwise for the purchase of laboratory services referred 
to in section 1905(a)(3) or medical devices if the Secretary has 
found that— 
"(i) adequate services or devices will be available 
under such arrangements, and 
"(ii) any such laboratory services will be provided only 
through laboratories— 
"(I) which meet the applicable requirements of 
section 1861(e)(9) or paragraphs (11) and (12) of 
section 1861(s), and such additional requirements as 
the Secretary may require, and 
"(II) no more than 75 percent of whose charges for 
such services are for services provided to individ-
uals who are entitled to benefits under this title or 
under part A or part B of title XVIII; or 
"(2) restricts— 
"(A) for a reasonable period of time the provider or 
providers from which an individual (eligible for medical 
assistance for items or services under the State plan) can 
receive such items or services, if the State has found, after 
notice and opportunity for a hearing (in accordance with 
procedures established by the State), that the individual has 
utilized such items or services at a frequency or amount not 
medically necessary (as determined in accordance with utili-
zation guidelines established by the State), or 
"(B) (through suspension or otherwise) for a reasonable 
period of time the participation of a provider of items or 
services under the State plan, if the State has found, after 
notice and opportunity for a hearing (in accordance with 
procedures established by the State), that the provider has 
(in a significant number or proportion of cases) provided 
such items or services either (i) at a frequency or amount not 
medically necessary (as determined in accordance with utili-
zation guidelines established by the State), or (ii) of a quality 
which does not meet professionally recognized standards of 
health care, 
if, under such restriction, individuals eligible for medical assist-
ance for such services have reasonable access (taking into 
account geographic location and reasonable travel time) to such 
services of adequate quality. 
"(b) The Secretary, to the extent he finds it to be cost-effective and 
efficient and not inconsistent with the purposes of this title, may 
waive such requirements of section 1902 and section 1903(m) as may 
be necessary for a State— 
"(1) to implement a case-management system or a specialty 
physician services arrangement which restricts the provider 
from (or through) whom an individual (eligible for medical 
assistance under this title) can obtain primary care services 
(other than in emergency circumstances), if such restriction does 
not substantially impair access to such services of adequate 
quality where medically necessary, 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 811 
"(2) to allow a locality to act as a central broker in assisting 
individuals (eligible for medical assistance under this title) in 
selecting among competing health care plans, if such restriction 
does not substantially impair access to services of adequate 
quality where medically necessary, 
"(3) to share (through provision of additional services) with 
recipients of medical assistance under the State plan cost savings 
resulting from use by the recipient of more cost-effective medical 
care, and 
"(4) to restrict the provider from (or through) whom an individ-
ual (eligible for medical assistance under this title) can obtain 
services (other than in emergency circumstances) to providers or 
practitioners who undertake to provide such services and who 
meet, accept, and comply with the reimbursement, quality, and 
utilization standards under the State plan, which standards are 
consistent with access, quality, and efficient and economic provi-
sion of covered care and services, if such restriction does not 
discriminate among classes of providers on grounds unrelated to 
their demonstrated effectiveness and efficiency in providing 
those services. 
"(c) No waiver under this section may extend over a period of 
longer than two years unless the State requests continuation of such 
waiver, and such request shall be deemed granted unless the Secre-
tary denies such request in writing within 90 days after the date of its 
submission to the Secretary. 
"(d)(1) The Secretary shall monitor the implementation of waivers 
granted under this section to assure that the requirements for such 
waiver are being met and shall, after notice and opportunity for a 
hearing, terminate any such waiver where he finds noncompliance 
has occurred. 
"(2) The Secretary shall report, not later than September 30, 1984, 
to Congress on waivers granted under this section.". 
(d)(1) Section 1902(a)(9) of such Act is amended— 
(A) by striking out "and" at the end of subparagraph (A), 
(B) by striking out the semicolon at the end of subparagraph (B) 
and inserting in lieu thereof ", and", and 
(C) by adding after subparagraph (B) the following new 
sulDparagraph: 
"(C) that any laboratory services paid for under such plan must 
be provided by a laboratory which meets the applicable require-
ments of section 1861(e)(9) or paragraphs (11) and (12) of section 
1861(s), or, in the case of a laboratory which is in a rural health 
clinic, of section 1861(aa)(2)(G);". 
(2)(A) The amendments made by paragraph (1) shall (except as 
provided under subparagraph (B)) be effective with respect to pay-
ments under title XIX of the Social Security Act for calendar 
quarters beginning on or after October 1,1981. 
(B) 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 in order for the plan to 
meet the additional requirement imposed by the amendment made 
by paragraph (1)(C), 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 year beginning after the close of the first regular 
session of the State legislature that begins after the date of the 
enactment of this Act. 
Report to 
Congress. 
42 u s e 1396a. 
42 u s e 1395x. 
Effective date. 
42 u s e 1396a 
note. 
42 u s e 1396. 
95 STAT. 812 
PUBLIC LAW 97-35—AUG. 13, 1981 
WAIVER TO PROVIDE HOME AND COMMUNITY-BASED SERVICES FOR 
CERTAIN INDIVIDUALS 
Ante, p. 809. 
SEC. 2176. Section 1915 of the Social Security Act (added by section 
2175 of this subtitle) is amended— 
(1) by inserting "(other than a waiver under subsection (c))" in 
subsection (c) after "No waiver under this section", and 
(2) by redesignating subsections (c) and (d) as subsections (d) 
and (e), respectively, and by inserting after subsection (b) the 
following new subsection: 
"(cXD The Secretary may by waiver provide that a State plan 
approved under this part may include as 'medical assistance' under 
such plan home or community-based services (other than room and 
board) approved by the Secretary which are provided pursuant to a 
written plan of care to individuals with respect to whom there has 
been a determination that but for the provision of such services the 
individuals would require the level of care provided in a skilled 
nursing facility or intermediate care facility the cost of which could 
be reimbursed under the State plan. 
"(2) A waiver shall not be granted under this subsection unless the 
State provides assurances satisfactory to the Secretary that— 
"(A) necessary safeguards (including adequate standards for 
provider participation) have been taken to protect the health and 
welfare of individuals provided services under the waiver and to 
assure financial accountability for funds expended with respect 
to such services; 
"(B) the State will provide, with respect to individuals who are 
entitled to medical assistance for skilled nursing facility or 
intermediate care facility services under the State plan and who 
may require such services, for an evaluation of the need for such 
services; 
"(C) such individuals who are determined to be likely to 
require the level of care provided in a skilled nursing facility or 
intermediate care facility are informed of the feasible alterna-
tives, if available under the waiver, at the choice of such 
individuals, to the provision of skilled nursing facility or inter-
mediate care facility services; 
"(D) under such waiver the average per capita expenditure 
estimated by the State in any fiscal year for medical assistance 
provided with respect to such individuals does not exceed the 
average per capita expenditure that the State reasonably esti-
mates would have been made in that fiscal year for expenditures 
under the State plan for such individuals if the waiver had not 
been granted; and 
"(E) the State will provide to the Secretary annually, consist-
ent with a data collection plan designed by the Secretary, 
information on the impact of the waiver granted under this 
subsection on the type and amount of medical assistance pro-
vided under the State plan and on the health and welfare of 
recipients. 
"(3) A waiver granted under this subsection may include a waiver 
of the requirements of subsection (aXD (relating to statewideness) and 
42 use 1396a. 
subsection (aXlO) of section 1902. A waiver under this subsection shall 
be for an initial term of three years and, upon the request of a State, 
shall be extended for additional three-year periods unless the Secre-
tary determines that for the previous three-year period the assur-
ances provided under paragraph (2) have not been met. 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 813 
"(4) A waiver granted under this section may, consistent with 
paragraph (2)— 
"(A) limit the individuals provided benefits under such waiver 
to individuals with respect to whom the State has determined 
that there is a reasonable expectation that the amount of 
medical assistance provided with respect to the individual under 
such waiver will not exceed the amount of such medical assist-
ance provided for such individual if the waiver did not apply, and 
"(B) provide medical assistance to individuals (to the extent 
consistent with written plans of care, which are subject to the 
approval of the State) for case management services, home-
maker/home health aide services and personal care services, 
adult day health services, habilitation services, respite care, and 
such other services requested by the State as the Secretary may 
approve.". 
TIME LIMITATION FOR ACTION ON REQUESTS FOR PLAN AMENDMENTS 
AND WAIVERS 
SEC. 2177. (a) Section 1915 of the Social Security Act (added by Ante, p. 812. 
section 2175 of this subtitle) is further amended by adding at the end 
thereof the following new subsection: 
"(f) A request to the Secretary from a State for a proposed State 
plan or plan amendment or a waiver of a requirement of this title 
submitted by the State pursuant to a provision of this title shall be 
deemed granted unless the Secretary, within 90 days after the date of 
its submission to the Secretary, either denies such request in writing 
or informs the State agency in writing with respect to any additional 
information which is needed in order to make a final determination 
with respect to the request. After the date the Secretary receives such 
additional information, the request shall be deemed granted unless 
the Secretary, within 90 days of such date, denies such request.". 
(b) The amendment made by this section shall become effective 90 
days after the date of the enactment of this Act. 
Effective date. 
42 u s e 1396n 
note. 
FLEXIBILITY IN HMO AND PREPAID PROVIDER PARTICIPATION IN STATE 
PLANS 
SEC. 2178. (aXD Paragraph (IXA) of section 1903(m) of the Social 
Security Act is amended by striking out "means" and all that follows 42 use I396b. 
through the end thereof and inserting in lieu thereof the following: 
"means a public or private organization, organized under the laws of 
any State, which is a qualified health maintenance organization (as 
defined in section 1310(d) of the Public Health Service Act) or 42USe300e-9. 
which— 
"(i) makes services it provides to individuals eligible for bene-
fits under this title accessible to such individuals, within the area 
served by the organization, to the same extent as such services 
are made accessible to individuals (eligible for medical assistance 
under the State plan) not enrolled with the organization, and 
"(ii) has made adequate provision against the risk of insol-
vency, which provision is satisfactory to the State and which 
assures that individuals eligible for benefits under this title are 
in no case held liable for debts of the organization in case of the 
organization's insolvency.". 
(2) Paragraph (2)(A) of section 1903(m) of such Act is amended— 42 use I396b. 
(A) by striking out "and" at the end of clause (i). 
95 STAT. 814 
PUBLIC LAW 97-35—AUG. 13, 1981 
42 use 1395. 
42 use 1396a. 
42 use 300e. 
42 use 1396b. 
(B) by striking out "one-half of the membership of the entity" 
in clause (ii) and inserting in lieu thereof "75 percent of the 
membership of the entity which is enrolled on a prepaid basis"; 
(C) by striking out the period at the end of clause (ii) and 
inserting in lieu thereof a semicolon, and 
(D) by adding at the end the following new clauses: 
"(iii) such services are provided for the benefit of individuals 
eligible for benefits under this title in accordance with a contract 
between the State and the entity under which prepaid payments 
to the entity are made on an actuarially sound basis; 
"(iv) such contract provides that the Secretary and the State 
(or any person or organization designated by either) shall have 
the right to audit and inspect any books and records of the entity 
(and of any subcontractor) that pertain (I) to the ability of the 
entity to bear the risk of potential financial losses, and (II) to 
services performed or determinations of amounts payable under 
the contract; 
"(v) such contract provides that in the entity's enrollment, 
reenrollment, or disenrollment of individuals who are eligible for 
benefits under this title and eligible to enroll, reenroll, or 
disenroU with the entity pursuant to the contract, the entity will 
not discriminate among such individuals on the basis of their 
health status or requirements for health care services; 
"(vi) such contract (I) permits individuals who have elected 
under the plan to enroll with the entity for provision of such 
benefits to terminate such enrollment without cause as of the 
beginning of the first calendar month following a full calendar 
month after the request is made for such termination, and (II) 
provides for notification of each such individual, at the time of 
the individual's enrollment, of such right to terminate such 
enrollment; and 
"(vii) such contract provides that, in the case of medically 
necessary services which were provided (I) to an individual 
enrolled with the entity under the contract and entitled to 
benefits with respect to such services under the State's plan and 
(II) other than through the organization because the services 
were immediately required due to an unforseen illness, injury, or 
condition, either the entity or the State provides for reimburse-
ment with respect to those services.". 
(3) Paragraph (2) of such section is further amended by adding after 
subparagraph (C) the following new subparagraph: 
"(D) In the case of a health maintenance organization that is a 
public entity, the Secretary may modify or waive the requirement 
described in subparagraph (A)(ii) but only if the Secretary determines 
that (i) special circumstances warrant such modification or waiver, 
and (ii) the organization has taken and is taking reasonable efforts to 
enroll individuals who are not entitled to benefits under the State 
plan approved under this title or under title XVIII.". 
(b) Section 1902(e) of such Act is amended by inserting "(1)" after 
"(e)" and by adding at the end the following new paragraph: 
"(2)(A) In the case of an individual who is enrolled with a qualified 
health maintenance organization (as defined in title XIII of the 
Public Health Service Act) under a contract described in section 
1903(m)(2)(A) and who would (but for this paragraph) lose eligibility 
for benefits under this title before the end of the minimum enroll-
ment 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 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 815 
until the end of such minimum period, but only with respect to such 
benefits provided to the individual as an enrollee of such 
organization. 
'(B) For purposes of subparagraph (A), the term 'minimum enroll-
ment period' means, with respect to an individual's enrollment with a 
health maintenance organization under a State plan, a period, 
established by the State, of not more than six months beginning on 
the date the individual's enrollment with the organization becomes 
effective.". 
(c) The amendments made by this section shall apply with respect 
to services furnished, under a State plan approved under title XIX of 
the Social Security Act, on or after October 1, 1981; except that such 
amendments shall not apply with respect to services furnished by a 
health maintenance organization under a contract with a State 
entered into under such title before October 1, 1981 unless the 
organization requests that such amendments apply and the Secretary 
of Health and Human Services and the single State agency (adminis-
tering or supervising the administration of the State plan under such 
title) agree to such request. 
(d) The Secretary of Health and Human Services shall conduct a 
study evaluating the extent of, and reasons for, the termination by 
medicaid beneficiaries of their memberships in health maintenance 
organizations. In conducting such study, the Secretary shall place 
special emphasis on the quantity and quality of medical care provided 
in health maintenance organizations and the quality of such care 
when provided on a fee-for-service basis. The Secretary shall submit 
an interim report to the Congress, within two years after the date of 
the enactment of this Act, and a final report within five years from 
such date containing, respectively, the interim and final findings and 
conclusions made as a result of such study. 
CHAPTER 3—MISCELLANEOUS CHANGES 
"Minimum 
enrollment 
period." 
42 u s e 1396a 
note. 
42 u s e 1396. 
42 u s e 1396a 
note. 
Report to 
eongress. 
42 u s e 603. 
42 u s e 1396a. 
REPEAL OF EPSDT PENALTY 
SEC. 2181. (a)(1) Subsection (g) of section 403 of the Social Security 
Act is repealed. 
(2) Section 1902(a) of such Act is amended— 
(A) by striking out "and" at the end of paragraph (42), 
(B) by striking out the period at the end of paragraph (43) and 
inserting in lieu thereof "; and", and 
(C) by inserting after paragraph (43) the following new para-
graph: 
"(44) provide for— 
' (A) informing all persons in the State who are under the 
age of 21 and who have been determined to be eligible for 
medical assistance including services described in section 
1905(a)(4)(B), of the availability of early and periodic screen- 42 use I396d 
ing, diagnostic, and treatment services as described in sec-
tion 1905(a)(4XB), 
"(B) providing or arranging for the provision of such 
screening services in all cases where they are requested, and 
"(C) arranging for (directly or through referral to appro-
priate agencies, organizations, or individuals) corrective 
treatment the need for which is disclosed by such child 
health screening services.", 
(b) The amendment made by subsection (a)(1) shall apply to reduc-
tions for calendar quarters beginning on or after June 30, 1974, and 
Effective date. 
42 u s e 603 note. 
95 STAT. 816 
PUBLIC LAW 97-35—AUG. 13, 1981 
the amendments made by subsection (a)(2) shall take effect on 
October 1,1981. 
FLEXIBILITY IN REQUIRING COLLECTION OF THIRD-PARTY PAYMENTS 
42 use 1396a. 
SEC. 2182. Section 1902(a)(25)(C) of the Social Security Act is 
amended by inserting "and where the amount of reimbursement the 
State can reasonably expect to recover exceeds the costs of such 
recovery" after "of the individual". 
PERMITTING PHYSICIAN ASSISTANTS AND NURSE PRACTITIONERS TO 
PROVIDE CERTAIN RECERTIFICATIONS 
42 use 1396b. 
SEC. 2183. (a) Section 1903(g)(1)(A) of the Social Security Act is 
amended— 
(1) by striking out "(and recertifies" and inserting in lieu 
thereof "(and the physician, or a physician assistant or nurse 
practitioner under the supervision of a physician, recertifies", 
and 
(2) by inserting "(or, in the case of services that are intermedi-
ate care facility services described in section 1905(d), every year)" 
after "every 60 days". 
Effective date. 
(b) The amendments made by subsection (a) shall apply to pay-
42 use 1396b 
ments made to States for calendar quarters beginning on or after 
"°*^- 
October 1,1981. 
REPEAL OF OBSOLETE AUTHORITY FOR MEDICAL ASSISTANCE 
SEC. 2184. (a)(1) The heading of title I of the Social Security Act is 
amended by striking out "AND MEDICAL ASSISTANCE". 
42 use 301. 
(2) Section 1 of such Act is amended— 
(A) by striking out "(a)" the first place it appears in the first 
sentence, 
(B) by striking out ", (b) of enabling" and all that follows 
through "for self-care" in the first sentence, and 
(C) by striking out ", or for medical assistance for the aged, or 
for old-age assistance and medical assistance for the aged" in the 
second sentence. 
42 use 302. 
(3) Section 2 of such Act is amended— 
(A) by striking out "AND MEDICAL ASSISTANCE" in the heading; 
(B) by striking out ", or for medical assistance for the aged, or 
for old-age assistance and medical assistance for the aged" in 
subsection (a) before paragraph (1); 
(C) by striking out "; and" at the end of subsection (a)(10) and 
inserting in lieu thereof a period; and 
(D) by striking out paragraphs (11), (12), and (13) of subsection 
(a). 
42 use 303. 
(4) Section 3 of such Act is amended— 
(A) by striking out paragraphs (1) and (3) of subsection (a); 
(B) by amending paragraph (2) of subsection (a) to read as 
follows: 
"(2) in the case of Puerto Rico, the Virgin Islands, and Guam, 
an amount equal to one-half of the total of the sums expended 
during such quarter as old-age assistance under the State plan, 
not counting so much of any expenditure with respect to any 
month as exceeds $37.50 multiplied by the total number of 
recipients of old-age assistance for such month; plus"; and 
(C) by striking out subsection (d). 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 817 
(5) Section 6 of such Act is amended by striking out subsections Qo) ^2 use 306. 
and (c). 
(bXD Section 403 of such Act is amended— 
42 use 603. 
(A) by striking out "(including expenditures for premiums" 
and all that follows through "the cost thereof)" in subsection 
(aXD in the matter before subparagraph (A); 
(B) by striking out "plus (ii)" and all that follows through 
"clause (i) or (ii)" in subsection (aXlXA) and inserting in lieu 
thereof "plus (ii) the number of individuals, not counted under 
clause (i) ; and 
(C) by striking out "(including expenditures" and all that 
follows through '^he cost thereof) in subsection (aX2). 
(2) Section 406 of 
such Act is amended— 
42 use 606. 
(A) by striking out ", or (if provided" and all that follows 
through "under State law in behalf of," and "or medical care or 
any type of remedial care recc^nized under State law" in 
subsection (b) in the matter preceding subparagraph (A), and 
(B) by inserting "(for which such individual is not entitled to 
medical assistance under the State plan under title XIX)" in 
subsection (eXlXA) after "recognized under State law". 
(cXD Sections 1001 and 1401 of such Act are each amended by 42 use 1201, 
striking out "and of encouraging each State" and all that follows ^
^
^
^ 
through "self-care". 
(2) Sections 1003(a) and 1403(a) of such Act are each amended— 42 use 1203, 
(A) by striking out paragraph (1), and 
^^^^• 
(B) by striking out "(including expenditures for" and all that 
follows through "the cost thereof)" in paragraph (2). 
(3) Sections 1006 and 1405 of such Act are each amended by striking 42 use 1206, 
out ", or (if provided" and all that follows through "under State law i^^^ 
in behalf of, in the matter before paragraph (1). 
(dXD The amendments made by this subsection are to the title XVI 
of the Social Security Act which only appUes in the case of Puerto 42 use 1381. 
Rico, Guam, and the Virgin Islands imder section 303(b) of the Social 
Security Amendments of 1972 (Public Law 92-603). 
42 use 30i note. 
(2) The heading of such title is amended by striking out "AND 
MEDICAL ASSISTANCE". 
(3) Section 1601 of such title is amended— 
42 use 1381 
(A) by striking out "(a)" the first place it appears in the first ^°^^-
sentence, 
(B) by striking out ", (b) of enabling" and all that follows 
through "or self-care" in the first sentence, and 
(C) by striking out ", or for aid to the aged, blind, or disabled 
and medical assistance for the aged" in the second sentence. 
(4) Section 1602 of such title is amended— 
42 use 1
3
8
2 
(A) by striking out", OR FOR SUCH AID AND MEDICAL ASSISTANCE ^°^-
F
O
R T
H
E AGED" in the heading; 
(B) by striking out ", or for aid to the aged, blind, or disabled 
and medical assistance for the aged" in subsection (a) in the 
matter before paragraph (1); 
(C) by inserting and" at the end of paragraph (13) of subsec-
tion (a); 
(D) by striking out the semicolon at the end of paragraph (14) of 
subsection (a) and inserting in lieu thereof a period; 
(E) by striking out paragraphs (15), (16), and (17) of subsection 
(a); 
(F) by striking out "(or for aid to the aged, blind, or disabled 
and medical assistance for the aged)" in the second sentence of 
subsection (a); 
95 STAT. 818 
PUBLIC LAW 97-35—AUG. 13, 1981 
(G) by striking out "(A) in the case of ^plicants for aid to the 
aged, blind, or disabled" in subsection (bX^; 
(H) by striking out "and (B)" and all that follows through "who 
resides in the State" in subsection (b)(2); and 
(I) by striking out "(or for aid to the aged, blind, or disabled and 
medical assistance for the aged)" each place it appears in the 
third sentence of 
subsection (b). 
42 use 1383 
(5) Section 1603 of 
such title is amended— 
(A) by striking out paragraphs (1) and (3) of subsection (a): 
(B) by striking out (including expenditures for premiums 
and all that follows through "cost thereof)" in paragraph (2)(A); 
(C) by striking out "the larger of the following amounts: (i)", 
"(I)", and ", or (II)" and all that follows before the semicolon, in 
paragraph (2)(B); and 
note. 
42 u s e 1385 
note. 
(D) by striking out subsection (d). 
(6) Section 1605 ofsuch title is amended— 
(A) by striking out ", or (if provided" and all that follows 
through "under State law in behalf of," in subsection (a) in the 
matter before paragraph (1), and 
(B) by striking out subsection (b). 
Maternal a
n
d 
Subtitle D—Matcmal and Child Health Services Block 
ehild Health 
^ 
, 
Services Block 
Urailt 
Grant Act. 
SHORT TITLE OF SUBTITLE 
42 use 1305 
SEC. 2191. This subtitle may be cited as the "Maternal and Child 
note. 
Health Services Block Grant Act". 
MATERNAL AND CHILD HEALTH SERVICES BLOCK GRANT 
SEC. 2192. (a) Title V of the Social Security Act is amended to read 
as follows: 
"TITLE V—MATERNAL AND CHILD HEALTH SERVICES 
BLOCK GRANT 
"AUTHORIZATION OP APPROPRIATIONS 
42 use 701. 
"SEC. 501. (a) For the purpose of 
enabling each State— 
"(1) to assure mothers and children (in particular those with 
low income or with limited availability of health services) access 
to quality maternal and child health services, 
(2) to reduce infant mortality and the incidence of prevent-
able diseases and handicapping conditions among children, to 
reduce the need for inpatient and long-term care services, to 
increase the number of children (especially preschool children) 
appropriately immunized against disease and the number of low 
income children receiving health assessments and follow-up 
diagnostic and treatment services, and otherwise to promote the 
headth of mothers and children (especially by providing preven-
tive and primary ceire services for low income children, and 
prenatal, delivery, and postpartum care for low income mothers), 
"(3) to provide rehabilitation services for blind and disabled 
individuals under the age of 16 receiving benefits under title XVI 
42 use 1381. 
of 
this Act, and 
"(4) to provide services for locating, and for medical, surgical, 
corrective, and other services, and care for, and facilities for 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 819 
diagnosis, hospitalization, and aftercare for, children who are 
crippled or who are suffering from conditions leading to crip-
pling; 
and for the purpose of enabling the Secretary to provide for special 
projects of regional and national significance, research, and training 
with respect to maternal and child health and crippled children, for 
genetic disease testing, counseling, and information development and 
dissemination programs, and for grants relating to hemophilia (with-
out regard to age), there are authorized to be appropriated 
$373,000,000 for fiscal year 1982 and for each fiscal year thereafter. 
"(b) For purposes of this title: 
"(1) The term 'consolidated health programs' means the pro-
grams administered under the provisions o
f
— 
"(A) this title (relating to maternal and child health and 
crippled children's services), 
'XB) section 1615(c) of this Act (relating to supplemental 42 use I382d. 
security income for disabled children), 
"(C) sections 316 (relating to lead-based paint poisoning 
prevention programs), 1101 (relating to genetic disease pro-
grams), 1121 (relating to sudden infant death syndrome 
programs) and 1131 (relating to hemophilia treatment cen-
ters) of the Public Health Service Act, and 
"(D) title IV of the Health Services and Centers Amend-
ments of 1978 (Public Law 95-626; relating to adolescent 42 use 247b-i. 
pregnancy grants), 
as such provisions were in effect before the date of the enactment 
of the Maternal and Child Health Services Block Grant Act. 
"(2) The term 'low income' means, with respect to an individ- "Low income." 
ual or family, such an individual or family with an income 
determined to be below the nonfarm income official poverty line 
defined by the Office of Management and Budget and revised 
annually in accordance with section 624 of the Economic Oppor-
tunity Act of 1964. 
42 use 2971d. 
42 u s e 247a, 
1301, 1320a, 
1320b-l. 
ALLOTMENTS TO STATES AND FEDERAL SET-ASIDE 
"SEC. 502. (a)(1) Of the amount appropriated under section 501(a), 42 use 702. 
the Secretary shall retain an amount equal to 15 percent thereof in 
the case of fiscal year 1982, and an amount equal to not less than 10, 
nor more than 15, percent thereof in the case of each fiscal year 
thereafter, for the purpose of carrying out (through grants, contracts, 
or otherwise) special projects of regional and national significance, 
training, and research and for the funding of genetic disease testing, 
counseling, and information development and dissemination pro-
grams and of comprehensive hemophilia diagnostic and treatment 
centers. The authority of the Secretary to enter into any contracts 
under this title is effective for any fiscal year only to such extent or in 
such amounts as are provided in appropriations Acts. 
"(2) For purposes of paragraph (1)— 
"(A) amounts retained by the Secretary for training shall be 
used to make grants to public or nonprofit private institutions of 
higher learning for training personnel for health care and 
related services for mothers and children; Lnd 
"(B) amounts retained by the Secretary for research shall be 
used to make grants to, contracts with, or jointly financed 
cooperative agreements with, public or nonprofit institutions of 
higher learning and public or nonprofit private agencies and 
organizations engaged in research or in maternal and child 
95 STAT. 820 
PUBLIC LAW 97-35—AUG. 13, 1981 
health or crippled children's programs for research projects 
relating to maternal and child health services or crippled chil-
dren's services which show promise of substantial contribution to 
the advancement thereof. 
"(3) No funds may be made available by the Secretary under this 
subsection unless an application therefor has been submitted to, and 
approved by, the Secretary. Such application shall be in such form, be 
submitted in such manner, and contain and be accompanied by such 
information as the Secretary may specify. No such application may 
be approved unless it contains assurances that the applicant will use 
the funds provided only for the purposes specified in the approved 
application and will establish such fiscal control and fund accounting 
procedures as may be necessary to assure proper disbursement and 
accounting of Federal funds paid to the applicant under this title. 
"(b) From the remaining amounts appropriated under section 
501(a) for any fiscal year, the Secretary shall allot to each State which 
has transmitted a description of intended activities and statement of 
assurances for the fiscal year under section 505, an amount deter-
mined as follows: 
"(1) The Secretary shall determine, for each State— 
"(A)(i) the amount provided or allotted by the Secretary to 
the State and to entities in the State under the provisions of 
the consolidated health programs (as defined in section 
501(b)(1)), other than for any of the projects or programs 
described in subsection (a), from appropriations for fiscal 
year 1981, 
"(ii) the proportion that such amount for that State bears 
to the total of such amounts for all the States, and 
"(B)(i) the number of low income children in the State, and 
"(ii) the proportion that such number of children for that 
State bears to the total of such numbers of children for all 
the States. 
"(2)(A) For each of fiscal years 1982 and 1983, each such State 
shall be allotted for that fiscal year an amount equal to the 
State's proportion (determined under paragraph (l)(A)(ii)) of the 
amounts available for allotment to all the States under this 
subsection for that fiscal year. 
"(B) For fiscal years beginning with fiscal year 1984, if the 
amount available for allotment under this subsection for that 
fiscal year— 
"(i) does not exceed the amount available under this 
subsection for allotment for fiscal year 1983, each such State 
shall be allotted for that fiscal year an amount equal to the 
State's proportion (determined under paragraph (l)(A)(ii)) of 
the amounts available for allotment to all the States under 
this subsection for that fiscal year, or 
"(ii) exceeds the amounts available under this subsection 
for allotment for fiscal year 1983, each such State shall be 
allotted for that fiscal year an amount equal to the sum of^ 
"(I) the amount of the allotment to the State under 
this subsection in fiscal year 1983 (without regard to 
paragraph (3) of this subsection), and 
"(II) the State's proportion (determined under para-
graph (l)(B)(ii)) of the amount by which the allotment 
available under this subsection for all the States for that 
fiscal year exceeds the amount that was available under 
this subsection for allotment for all the States for fiscal 
year 1983. 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 821 
"(3)(A) To the extent that all the funds appropriated under this 
title for a fiscal year are not otherwise allotted to States either 
because all the States have not qualified for such allotments 
under section 505 for the fiscal year or because some States have 
indicated in their descriptions of activities under section 505 that 
they do not intend to use the full amount of such allotments, such 
excess shall be allotted among the remaining States in propor-
tion to the amount otherwise allotted to such States for the fiscal 
year without regard to this subparagraph. 
"(B) To the extent that all the funds appropriated under this 
title for a fiscal year are not otherwise allotted to States because 
some State allotments are offset under section 506(b)(2), such 
excess shall be allotted among the remaining States in propor-
tion to the amount otherwise allotted to such States for the fiscal 
year without regard to this subparagraph. 
"PAYMENTS TO STATES 
"SEC. 503. (a) From the sums appropriated therefor and the allot- 4
2 use 703. 
ments available under section 502(b), the Secretary shall make 
pa5mients as provided by section 203 of the Intergovernmental 
Cooperation Act of 1968 (42 U.S.C. 4213) to each State provided such 
an allotment under section 5O20i)), for each quarter, of an amount 
equal to four-sevenths of the total of the sums expended by the State 
during such quarter in canying out the provisions of this title. 
"
O
t
>
) Any amount payable to a State under this title from allotments 
for a fiscal year which remains unobligated at the end of such year 
shall remain available to such State for obligation during the next 
fiscal year. No payment may be made to a State under this title from 
allotments for a fisc^ year for expenditures made after the following 
fiscal year. 
"(c) The Secretary, at the request of a State, may reduce the 
amount of payments under subsection (a) by— 
"(1) the fair market value of any supplies or equipment 
furnished the State, and 
"(2) the amount of the pay, allowances, and travel expenses of 
any officer or employee of the Government when detailed to the 
State and the amount of any other costs incurred in connection 
with the detail of such officer or employee, 
when the furnishing of supplies or equipment or the detail of an 
officer or employee is for the convenience of and at the request of the 
State and for the purpose of conducting activities described in section 
505 on a temporary basis. The amount by which any payment is so 
reduced shall be available for pajmient by the Secretary of the costs 
incurred in furnishing the supplies or equipment or in detailing the 
personnel, on which the reduction of the pa3mient is based, and the 
amount shall be deemed to be part of the payment and shall be 
deemed to have been paid to the State. 
"USE OF ALLOTMENT FUNDS 
"SEC. 504. (a) Except as otherwise provided under this section, a 42 use 704. 
State may use amounts paid to it under section 503 for the provision 
of health services and related activities (including planning, adminis-
tration, education, and evaluation) consistent with its description of 
intended expenditures and statement of assurances transmitted 
under section 505. 
"(b) Amounts described in subsection (a) may not be used for— 
95 STAT. 822 
PUBLIC LAW 97-35—AUG. 13, 1981 
"(1) inpatient services, other than inpatient services provided 
to crippled children or to high-risk pregnant women and infants 
and such other inpatient services as the Secretary may approve; 
"(2) cash payments to intended recipients of health services; 
"(3) the purchase or improvement of land, the purchase, 
construction, or permanent improvement (other than minor 
remodeling) of any building or other facility, or the purchase of 
maior medical equipment; 
(4) satisfying any requirement for the expenditure of non-
Federal funds as a condition for the receipt of Federal funds; or 
"(5) providing funds for research or training to any entity other 
than a public or nonprofit private entity. 
The Secretary may waive the limitation contained in paragraph (3) 
upon the request of a State if the Secretary finds that there are 
extraordinary circumstances to justify the waiver and that granting 
the waiver will assist in carrying out this title. 
"(c) A State may use a portion of the amounts described in 
subsection (a) for the purpose of purchasing technical assistance from 
public or private entities if the State determines that such assistance 
is required in developing, implementing, and administering pro-
grams funded under this title. 
"DESCRIPTION OF INTENDED EXPENDITURES AND STATEMENT OF 
ASSURANCES 
42 use 705. 
"SEC. 505. In order to be entitled to payments for allotments under 
section 502 for a fiscal year, a State must prepare and transmit to the 
Secretary— 
"(1) a report describing the intended use of payments the State 
is to receive under this title for the fiscal year, including (A) a 
description of those populations, areas, and localities in the State 
which the State has identified as needing maternal and child 
health services, (B) a statement of goals and objectives for 
meeting those needs, (C) information on the types of services to 
be provided and the categories or characteristics of individuals to 
be served, and (D) data the State intends to collect respecting 
activities conducted with such payments; and 
"(2) a statement of assurances that represents to the Secretary 
that— 
"(A) the State will provide a fair method (as determined by 
the State) for allocating funds allotted to the State under 
this title among such individuals, areeis, and localities identi-
fied under paragraph (IXA) as needing maternal and child 
health services, and the State will identify and apply guide-
lines for the appropriate frequency and content of, and 
appropriate referral and followup with respect to, health 
care assessments and services financially assisted by the 
State under this title and methods for assuring quality 
assessments and services; 
"(B) funds allotted to the State under this title will only be 
used, consistent with section 508, to carry out the purposes of 
this title or to continue activities previously conducted 
under the consolidated health programs (described in section 
502(bXl)); 
"(C) the State will use— 
"(i) a substantial proportion of the sums expended by 
the State for carrying out this title for the provision of 
health services to mothers and children, with special 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 823 
consideration given (where appropriate) to the continu-
ation of the funding of special projects in the State 
previously funded under this title (as in effect before the 
date of the enactment of the Maternal and Child Health 
Services Block Grant Act), and 
"(ii) a reasonable proportion (based upon the State's 
previous use of funds under this title) of such sums to 
carry out the purposes described in paragraphs (1) 
through (3) of section 501(a); 
"(D) if the State imposes any charges for the provision of 
health services assisted by the State under this title, such 
charges (i) will be pursuant to a public schedule of charges, 
(ii) will not be imposed with respect to services provided to 
low income mothers or children, and (iii) will be adjusted to 
reflect the income, resources, and family size of the individ-
ual provided the services; and 
"(E) the State agency (or agencies) administering the 
State's program under this title will participate— 
"(i) in the coordination of activities between such 
program and the early and periodic screening, diagno-
sis, and treatment program under title XIX, to ensure 
that such programs are carried out without duplication 
of effort, 
"(ii) in the arrangement and carrying out of coordina-
tion agreements described in section 1902(aXll) (relat-
ing to coordination of care and services available under 
this title and title XIX), and 
"(iii) in the coordination of activities within the State 
with programs carried out under this title and related 
Federal grant programs (including supplemental food 
programs for mothers, infants, and children, related 
education programs, and other health, developmental 
disability, and family planning programs). 
The description and statement shall be made public within the State 
in such manner as to facilitate comment from any person (including 
any Federal or other public agency) during development of the 
description and statement and after its transmittal. The description 
and statement shall be revised (consistent with this section) through-
out the year as may be necessary to reflect substantial changes in any 
element of such description or statement, and any revision shall be 
subject to the requirements of the preceding sentence. 
"REPORTS AND AUDITS 
"SEC. 506. (a)(1) Each State shall prepare and submit to the 42 use 706. 
Secretary annual reports on its activities under this title. In order 
properly to evaluate and to compare the performance of different 
States assisted under this title and to assure the proper expenditure 
of funds under this title, such reports shall be in such form and 
contain such information as the Secretary determines (after consulta-
tion with the States and the Comptroller General) to be necessary (A) 
to secure an accurate description of those activities, (B) to secure a 
complete record of the purposes for which funds were spent, of the 
recipients of such funds, and of the progress made toward achieving 
the purposes of this title, and (C) to determine the extent to which 
funds were expended consistent with the State's description and 
statement transmitted under section 505. Copies of the report shall be 
9-194 O—82 
54 : QL3 
95 STAT. 824 
PUBLIC LAW 97-35—AUG. 13, 1981 
provided, upon request, to any interested public agency, and each 
such agency may provide its views on these reports to the Congress. 
"(2) The Secretary shall annually report to the Congress on 
activities funded under section 502(a) and shall provide for transmit-
tal of a copy of such report to each State. 
"(b)(1) Each State shall, not less often than once every two years, 
audit its expenditures from amounts received under this title. Such 
State audits shall be conducted by an entity independent of the State 
agency administering a program funded under this title in accord-
ance with the Comptroller General's standards for auditing govern-
mental organizations, programs, activities, and functions and gener-
ally accepted auditing standards. Within 30 days following the 
completion of each audit report, the State shall submit a copy of that 
audit report to the Secretary. 
"(2) Each State shall repay to the United States amounts found by 
the Secretary, after notice and opportunity for a hearing to the State, 
not to have been expended in accordance with this title and, if such 
repayment is not made, the Secretary may offset such amounts 
against the amount of any allotment to which the State is or may 
become entitled under this title or may otherwise recover such 
amounts. 
"(3) The Secretary may, after notice and opportunity for a hearing, 
withhold payment of funds to any State which is not using its 
allotment under this title in accordance with this title. The Secretary 
may withhold such funds until the Secretary finds that the reason for 
the withholding has been removed and there is reasonable assurance 
that it will not recur. 
"(c) The State shall make copies of the reports and audits required 
by this section available for public inspection within the State. 
"(d)(1) For the purpose of evaluating and reviewing the block grant 
established under this title, the Secretary and the Comptroller 
General shall have access to any books, accounts, records, correspond-
ence, or other documents that are related to such block grant, and 
that are in the possession, custody, or control of States, political 
subdivisions thereof, or any of their grantees. 
"(2) In conjunction with an evaluation or review under paragraph 
(1), no State or political subdivision thereof (or grantee of either) shall 
be required to create or prepare new records to comply with para-
graph (1). 
"(3) For other provisions relating to deposit, accounting, reports, 
and auditing with respect to Federal grants to States, see section 202 
of the Intergovernmental Cooperation Act of 1968 (42 U.S.C. 4212). 
"CRIMINAL PENALTY FOR FALSE STATEMENTS 
42 use 707. 
"SEC. 507. (a) Whoever— 
"(1) knowingly and willfully makes or causes to be made any 
false statement or representation of a material fact in connection 
with the furnishing of items or services for which payment may 
be made by a State from funds allotted to the State under this 
title, or 
"(2) having knowledge of the occurrence of any event affecting 
his initial or continued right to any such payment conceals or 
fails to disclose such event with an intent fraudulently to secure 
such payment either in a greater amount than is due or when no 
such payment is authorized, 
shall be fined not more than $25,000 or imprisoned for not more than 
five years, or both. 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 825 
"(b) For civil monetary penalties for certain submissions of false 
claims, see section 1128A of this Act. 
Ante, p. 789. 
"NONDISCRIMINATION 
"SEC. 508. (aXD For the purpose of applying the prohibitions 42 use 708. 
against discrimination on the basis of age under the Age Discrimina-
tion Act of 1975, on the basis of handicap under section 504 of the 42 use 6101 
Rehabilitation Act of 1973, on the basis of sex under title IX of the gg^usc 794 
Education Amendments of 1972, or on the basis of race, color, or 2
0 use 1681. 
national origin under title VI of the Civil Rights Act of 1964, 42use2000d. 
programs and activities funded in whole or in part with funds made 
available under this title are considered to be programs and activities 
receiving Federal financial assistance. 
"(2) No person shall on the ground of sex or religion be excluded 
from participation in, be denied the benefits of, or be subjected to 
discrimination under, any program or activity funded in whole or in 
part with funds made available under this title. 
"(h) Whenever the Secretary finds that a State, or an entity that 
has received a pa3mient from an allotment to a State under section 
502(b), has f^led to comply with a provision of law referred to in 
subsection (aXD, with subsection (aX2), or with an applicable regula-
tion (including one prescribed to carry out subsection (aX2)), he shall 
notify the chief executive officer of the State and shall request him to 
secure compliance. If within a reasonable period of time, not to 
exceed sixty days, the chief executive officer fails or refuses to secure 
compliance, the Secretary may— 
"(1) refer the matter to the Attorney General with a recom-
mendation that an appropriate civil action be instituted, 
"(2) exercise the powers and functions provided by title VI of 
the Civil Rights Act of 1964, the Age Discrimination Act of 1975, 
or section 504 of the Rehabilitation Act of 1973, as may be 
applicable, or 
"(3) take such other action as may be provided by law. 
"(c) When a matter is referred to the Attorney General pursuant to 
subsection (bXD, or whenever he has reason to believe that the entity 
is engaged in a pattern or practice in violation of a provision of law 
referred to in subsection (aXl) or in violation of subsection (aX2), the 
Attorney Greneral may bring a civil action in any appropriate district 
court of the United States for such relief as may be appropriate, 
including injunctive relief 
"ADMINISTRATION OF TITLE AND STATE PROGRAMS 
"SEC. 509. (a) The Secretary shall designate an identifiable adminis- 42 use 709. 
trative unit with expertise in maternal and child health within the 
Department of Health and Human Services, which unit shall be 
responsible for— 
"(1) the Federal program described in section 502(a); 
"(2) promoting coordination at the Federal level of the activi-
ties authorized under this title and under title XIX of this Act, 42 use 1396. 
especially early and periodic screening, diagnosis and treatment, 
related activities funded by the Departments of Agriculture and 
Education, and under health block grants and categorical health 
programs, such as immunizations, administered by the 
Secretary; 
95 STAT. 826 
PUBLIC LAW 97-35—AUG. 13, 1981 
"(3) disseminating information to the States in such areas as 
preventive health services and advances in the care and treat-
ment of mothers and children; 
"(4) providing technical assistance, upon request, to the States 
in such areas as program planning, establishment of goals and 
objectives, standards of care, and evaluation; 
'(5) in cooperation with the National Center for Health Statis-
tics and in a manner that avoids duplication of data collection, 
collection, maintenance, and dissemination of information relat-
ing to the health status and health service needs of mothers and 
children in the United States; and 
"(6) assisting in the preparation of reports to the Congress on 
the activities funded and accomplishments achieved under this 
title from the information required to be reported by the States 
under sections 505 and 506. 
"(b) The State health agency of each State shall be responsible for 
the administration (or supervision of the administration) of programs 
carried out with allotments made to the State under this title, except 
that, in the case of a State which on July 1, 1967, provided for 
administration (or supervision thereof) of the State plan under this 
title (as in effect on such date) by a State agency other than the State 
health agency, that State shall be considered to comply the require-
ment of this subsection if it would otherwise comply but for the fact 
that such other State agency administers (or supervises the adminis-
tration of) any such program providing services for crippled 
children.". 
42 use 706 note. 
(b)(1) The Secretary of Health and Human Services shall, no later 
than October 1,1984, report to the Congress on the activities of States 
receiving allotments under title V of the Social Security Act (as 
amended by this section) and include in such report any recommen-
dations for appropriate changes in legislation. 
(2) The Secretary of Health and Human Services, in consultation 
with the Comptroller General, shall examine alternative formulas, 
for the allotment of funds to States under section 502(b) of the Social 
Security Act (as amended by this section) which might be used as a 
substitute for the method of allotting funds described in such section, 
which provide for the equitable distribution of such funds to States 
(as defined for purposes of such section), and which take into 
account— 
(A) the populations of the States, 
(B) the number of live births in the States, 
(C) the number of crippled children in the States, 
(D) the number of low income mothers and children in the 
States, 
(E) the financial resources of the various States, and 
(F) such other factors as the Secretary deems appropriate, 
and shall report to the Congress thereon not later than June 30,1982, 
REPEALS AND CONFORMING AMENDMENTS 
42 use 247a. 
SEC. 2193. (a)(1)(A) Section 316(g) of the Public Health Service Act is 
amended by inserting ", and, subject to section 2194(b)(3) of the 
Maternal and Child Health Services Block Grant Act, $8,300,000 for 
the fiscal year ending September 30,1982" before the period. 
42 use 300b. 
(B) Section 1101(b) of such Act is amended by inserting "and, 
subject to section 2194(b)(3) of the Maternal and Child Health 
Post, p. 828. 
Services Block Grant Act, $9,680,000 for the fiscal year ending 
September 30,1982" before the period. 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 827 
(C) Section 1121(d)(1) of such Act is amended by inserting "; and, 
subject to section 2194(b)(3) of the Maternal and Child Health 
Services Block Grant Act, $2,075,000 for fiscal year 1982" before the 
period. 
(D) Section 1131(f) of such Act is amended by inserting ", and, 
subject to section 21940t))(3) of the Maternal and Child Health 
Services Block Grant Act, $2,765,000 for the fiscal year ending 
September 30,1982" before the period. 
(2) Section 607 of the Health Services and Centers Amendments of 
1978 (Public Law 95-626) is amended by inserting ", and, subject to 
section 2194(b)(3) of the Maternal and Child Health Services Block 
Grant Act, $8,530,000 for the fiscal year ending September 30, 1982" 
before the period. 
(3) Section 501 of the Social Security Act (as in effect before the date 
the amendment made by section 2192(a) becomes effective) is 
amended by striking out "for each fiscal year thereafter" and 
inserting in lieu thereof "and for each of the next three fiscal years, 
and, subject to section 21940t))(3) of the Maternal and Child Health 
Services Block Grant Act, $317,580,000 for the fiscal year ending 
September 30,1982". 
(4)(A) Section 1615(e)(1) of the Social Security Act is amended by 
inserting "and subject to section 2194(b)(3) of the Maternal and Child 
Health Services Block Grant Act" after "paragraphs (2) and (3)". 
(B) Effective for fiscal year 1982, section 1615(e)(3) of such Act is 
amended by striking out "$30,000,000" and inserting in lieu thereof 
"$24,070,000". 
(b)(1) Sections 316,1101,1121 and 1131 of the Public Health Service 
Act are repealed. 
(2) Section 1104(a) of such Act is amended by inserting "and" at the 
end of paragraph (3), by striking out paragraph (4), and by redesignat-
ing paragraph (5) as paragraph (4). 
(3) Section 1104 of such Act is further amended (A) by striking out 
subsections (b) and (d), (B) by striking out "or under section 1101" in 
subsection (c), and (C) by redesignating subsection (c) as subsection (b). 
(4) Sections 1106 and 227 of such Act are repealed. 
(5) Section 1107 of such Act is amended by striking out "appropri-
ated under section llOlOb)" and inserting in lieu thereof "allotted for 
use under section 502(a) of the Social Security Act". 
(c)(1) Section 1108(d) of the Social Security Act is amended by 
striking out "section 502(a)" and all that follows through "1967" and 
inserting in lieu thereof "section 421". 
(2) Section 1101(aX9)(D) of such Act is amended by striking out "V, 
XVIII, and XIX" and inserting in lieu thereof "XVIII and XIX". 
(3) Section 1122 of such Act is amended— 
(A) by striking out "V, XVIII, and XIX" and inserting in lieu 
thereof "XVIII and XIX" each place it appears, and 
(B) by striking out "V, XVIII, or X" in subsection (d)(2) and 
inserting in lieu thereof "XVIII or XIX". 
(4) Section 1129 of such Act is amended— 
(A) by striking out "V or" each place it appears in subsection 
(a), and 
(B) by striking out "V, XVIII, or" in subsection (b)(2) and 
inserting in lieu thereof "XVIII or". 
(5) Section 1132(aXl) of such Act is amended by striking out "V,". 
(6) Section 1134 of such Act is amended by striking out "V, XVIII," 
and inserting in lieu thereof "XVIII". 
(7) Section 1172(4) of such Act is amended by striking out "V,". 
42 u s e 300C-11. 
Post, p. 828. 
42 u s e 300C-21. 
42 u s e 300a-27. 
42 u s e 701. 
42 u s e 1382d. 
42 u s e 247a, 
300b, 300C-11, 
300C-21. 
42 u s e 300b-3. 
42 u s e 300b-5, 
236. 
42 u s e 300b-6. 
42 u s e 1308. 
42 u s e 1301. 
42 u s e 1320a-l. 
42 u s e 1320a-8. 
42 u s e 1320b-2. 
42 u s e 1320b-4. 
42 use 
1320C-21. 
95 STAT. 828 
PUBLIC LAW 97-35—AUG. 13, 1981 
42 u s e 1382d. 
Ante, p. 818. 
42 u s e 1395x. 
42 u s e 1396a. 
42 u s e 1395b-l. 
42 u s e 1395b-l 
note. 
42 u s e 300a-21, 
300a-41. 
42 u s e 1320a-8 
note. 
(8)(A) Subsection (a) of section 1615 of such Act is amended by 
striking out "appropriate State agency administering the State plan 
under subsection (b) of this section, and (except in such cases" and 
inserting in tieu thereof "State agency administering the State 
program under title V, and (except for individuals who have not 
attained age 16 and except in such other cases". 
(B) Subsections (b) and (e) of such section are repealed. 
(9) Section 1861(wX2) of such Act is amended by striking out "V or". 
(9) Section 1902(a)(llXB) of such Act is amended— 
(A) by striking out "for part or all of the cost of plans or 
projects under" and inserting in lieu thereof "under (or through 
an allotment under)", and 
(B) by striking out "such plan or project under title V" and 
inserting in lieu thereof "such title or allotment". 
(d)(1) The second sentence of section 402(a)(1) of the Social Security 
Amendments of 1967 (P.L. 90-248) is amended— 
(A) by striking out "title XVIII of such Act," and inserting in 
lieu thereof "title XVIII of such Act and", and 
(B) by striking out the ", and a program established by a plan of 
a State approved under title V of such Act". 
(2) Section 402(a)(2) of such Act is amended by striking out "titles V 
and XIX" and inserting in lieu thereof "title XIX" both places it 
occurs. 
(3) Section 4020t)) of such Act is amended by striking out", XIX, and 
V" and inserting in lieu thereof "and XIX". 
(e)(1) Section 222(aXl) of the Social Security Amendments of 1972 
(P.L. 92-603) is amended by striking out "titles XIX and V" and 
inserting in lieu thereof "title XIX". 
(2) The first sentence of section 222(aX3) of such Act is amended by 
striking out ", XIX, and V" and inserting in lieu thereof "and XIX' . 
(3) Section 222(a)(4) of such Act is amended by striking out "titles V 
and XIX" and inserting in lieu thereof "title XIX" both places it 
appears. 
(f) Titles VI and VII of the Health Services and Centers Amend-
ments of 1978 (P.L. 95-626) are repealed. 
(g) Section 914(d) of the Omnibus Reconciliation Act of 1980 (P.L. 
96-499; 94 Stat. 2622) is amended by striking out "V, XVIII," and 
inserting in lieu thereof "XVIII". 
EFFECTIVE DATE; TRANSITION 
42 use 701 note. 
SEC. 2194. (a) Except as otherwise provided in this section, the 
amendments made by sections 2192 and 2193 of this subtitle do not 
apply to any grant made, or contract entered into, or amounts 
payable to States under State plans before the earlier o
f
— 
(1) October 1,1982, or 
(2)(A) in the case of such grants, contracts, or payments under 
consolidated State programs (as defined in subsection (cX2XC)) to 
a State (or entities in the State), the date the State is first entitled 
to an allotment under title V of the Social Security Act (as 
amended by this subtitle), or 
(B) in the case of grants and contracts under consolidated 
Federal programs (as defined in subsection (cX2XB)), October 1, 
1981, or such later date Obefore October 1,1982) as the Secretary 
determines to be appropriate. 
(bXD The Secretary of Health and Human Services (hereinafter in 
this section referred to as the "Secretary") may not provide for any 
allotment to a State under title V of the Social Security Act (as 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 829 
amended by this subtitle) for a calendar quarter in fiscal year 1982 
unless the State has notified the Secretary, at least 30 days (or 15 days 
in the case of the first calendar quarter of the fiscal year) before the 
beginning of the calendar quarter, that the State requests an allot-
ment for that calendar quarter (and subsequent calendar quarters). 
(2)(A) Any grants or contracts entered into under the authorities of 
the consolidated State programs (as defined in subsection (c)(2)(C)) 
after the date of the enactment of this subtitle shall permit the 
termination of such grant or contract upon three months notice by 
the State in which the grantee or contractor is located. 
(B) The Secretary shall not make or renew any grants or contracts 
under the provisions of the consolidated State programs (as defined in 
subsection (c)(2XC)) to a State (or an entity in the State) after the date 
the State becomes entitled to an allotment of funds under title V of 
the Social Security Act (as amended by this subtitle). 
(3)(A) In the C£ise of funds appropriated for fiscal year 1982 for 
consolidated health programs (as defined in subsection (c)(2)(A)), such 
funds shall (notwithstanding any other provision of law) be available 
for use under title V of the Social Security Act (as amended by this 
subtitle), subject to subparagraphs (B) and (C). 
(B) Notwithstanding any other provision of law— 
(i) the amount that may be made available for expenditures for 
the consolidated Federal programs for fiscal year 1982 and for 
projects and programs under section 502(a) of the Social Security 
Act (as amended by this subtitle) may not exceed the amount 
provided for projects and programs under such section 502(a) for 
that fiscal year, and 
(ii) the amount that may be made available to a State (or 
entities in the State) for carrying out the consolidated State 
programs for fiscal year 1982 and for allotments to the State 
under section 502(b) of the Social Security Act (as amended by 
this subtitle) may not exceed the amount which is allotted to the 
State for that fiscal year under such section (without regard to 
paragraphs (3) and (4) thereof). 
(C) For fiscal year 1982, the Secretary shall reduce the amount 
which would otherwise be available— 
(i) for expenditures by the Secretary under section 502(a) of the 
Social Security Act (as amended by this subtitle) by the amounts 
which the Secretary determines or estimates are payable for 
consolidated Federal programs (as defined in subsection (c)(2)(B)) 
from funds for fiscal year 1982, and 
(ii) for allotment to each of the States under section 502(b) of 
such Act (as so amended) by the amounts which the Secretary 
determines or estimates are payable to that State (or entities in 
the State) under the consolidated State programs (as defined in 
subsection (c)(2)(C)) from funds for fiscal year 1982. 
(c) For purposes of this section: 
Definitions. 
(1) The term "State" has the meaning given such term for 
purposes of title V of the Social Security Act. 
(2)(A) The term "consolidated health programs" has the mean-
ing given such term in section 501(b) of the Social Security Act (as 
amended by this subtitle). 
(B) The term "consolidated Federal programs" means the 
consolidated health programs— 
(i) of special projects grants under sections 503 and 504, 
and training grants under section 511, of the Social Security 
Act, 
95 STAT. 830 
PUBLIC LAW 97-35—AUG. 13, 1981 
(ii) of grants and contracts for genetic disease projects and 
programs under section 1101 of the Public Health Service 
42 use 300b. 
Act, and 
(iii) of grants or contracts for comprehensive hemophilia 
diagnostic and treatment centers under section 1131 of the 
42 use 300C-21. 
Public Health Service Act, 
as such sections are in effect before the date of the enactment of 
this subtitle. 
(C) The term "consolidated State programs" means the consoli-
dated health programs, other than the consolidated Federal 
programs. 
Ante, p. 762. 
(d) The provisions of chapter 2 of subtitle C of title XVII of this Act 
shall not apply to this subtitle (or the programs under the amend-
Ante, p. 764. 
ments made by this title) and, specifically, section 1745 of this Act 
shall not apply to financial and compliance audits conducted under 
42 use 706. 
section 5060t>) of the Social Security Act (as amended by this subtitle). 
TITLE XXII—FEDERAL OLD-AGE, SURVI-
VORS, 
AND 
DISABILITY 
INSURANCE 
PROGRAM 
TABLE OF CONTENTS OF TITLE 
Sec. 2201. Repeal of minimum benefit provisions. 
Sec. 2202. Restrictions on the lump-sum death payment. 
Sec. 2203. Payment of certain benefits only for months after month in which enti-
tlement conditions are fulfilled. 
Sec. 2204. Temporary extension of earnings limitation to include all persons aged 
less than seventy-two. 
Sec. 2205. Termination of mother's and father's benefits when child attains age six-
teen. 
Sec. 2206. Rounding of benefits. 
Sec. 2207. Requests for information; cost reimbursement. 
Sec. 2208. Reduction in disability benefits on account of other related payments; 
extension of offset to disabled worker beneficiaries aged 62 through 64 
and their families; change in month in which pajrments are offset. 
Sec. 2209. Reimbursement of States for successful rehabilitation services. 
Sec. 2210. Elimination of child's insurance benefits in the case of children aged 18 
through 22 who attend postsecondary schools. 
REPEAL OF MINIMUM BENEFIT PROVISIONS 
42 use 415. 
SEC. 2201. (a) Section 215(a)(l)(C)(i) of the Social Security Act is 
amended to read as follows: 
"(C)(i) No primary insurance amount computed under subpara-
graph (A) may be less than an amount equal to $11.50 multiplied by 
the individual's years of coverage in excess of 10, or the increased 
amount determined for purposes of this clause under subsection (i).". 
(b)(1) Section 215(a)(l)(CXii) of such Act is amended by striking out 
"For purposes of clause (iXII)" and inserting in lieu thereof "For 
purposes of clause (i)". 
(2) Section 215(a)(3)(A) of such Act is amended by striking out 
"subparagraph (C)(i)(II)" and inserting in lieu thereof "subparagraph 
(C)(i)^. 
(3) Section 215(a)(4) of such Act is amended— 
(A) by striking out "subparagraph (C)(i)(II)" and inserting in 
lieu thereof "subparagraph (C)(i)"; and 
(B) in subclause (I) thereof, by striking out "but without regard 
to clauses (iv) and (v) thereof. 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 831 
(4) Section 215(0(8) of such Act is amended by striking out "subsec- 4
2 use 4i5. 
tion (a)(l)(C)(i)(II)" and inserting in lieu thereof "subsection 
(aXlXCXi)". 
(5) Section 215(iX2XAXiiXn) of such Act is amended by striking out 
"(including a primary insurance amount determined under subsec-
tion (aXl)(CXiXI), but subject to the provisions of such subsection 
(aXlXCXi) and clauses (iv) and (v) of this subparagraph)". 
(6) Section 215(iX2XA)(ii) of such Act is amended in the matter 
following subclause (III) by striking out "subparagraph (CXi)(II)" and 
inserting in lieu thereof "subparagraph (CXi) • 
(7) Section 215(iX2XAXiii) of such Act is amended by striking out 
"and, with respect to a primary insurance amount determined under 
subsection (aXlXCXiXD, subject to the provisions of subsection 
(aXl)(C)(i) and clauses (iv) and (v) of this subparagraph". 
(8) Section 215(iX2)(A) of such Act is amended by striking out 
clauses (iv) and (v) thereof. 
(9) Section 215(iX2XD) of such Act is amended by striking out 
"subparagraph (CXiXII)" each place it appears and inserting in lieu 
thereof in each instance "subparagraph (CXi)". 
(10) Section 202(m) of such Act is repealed. 
4
2 use 402. 
(11) Paragraphs (1) and (5) of section 202(w) of such Act are each 
amended by striking out "section 215(aXlXCXi)(II)" and inserting in 
lieu thereof in each instance "section 215(aXlXC)(i)". 
(12) Section 233(cX2) of such Act is amended to read as follows: 4
2 use 433. 
"(2) Any such agreement may provide that an individual who is 
entitled to cash benefits under this title shall, notwithstanding the 
provisions of section 202(t), receive such benefits while he resides in a 
foreign country which is a party to such agreement.". 
(c)(1) Section 215(a) of such Act is amended by adding at the end 4
2 use 4i5. 
thereof the following new paragraph: 
"(6)(A) The table of benefits in effect in December 1978 under this 
section, referred to in paragraph (4) in the matter following subpara-
graph (B) and in paragraph (5), revised as provided by subsection (i), 
as applicable, shall be extended for average monthly wages of less 
than $76.00 and primary insurance benefits (as determined under 
subsection (d)) of less than $16.20. 
"(B) The Secretary shall determine and promulgate in regulations 
the methodology for extending the table under subparagraph (A).". 
(2) Section 215(aX4) of such Act is amended, in the matter following 
subparagraph (B), by inserting ", as modified by paragraph (6)," after 
"table of benefits in effect in December 1978". 
(3) Section 215(aX5) of such Act is amended— 
(A) by inserting before the period at the end of the first 
sentence the following: ", and the table for determining primary 
insurance amounts and maximum family benefits contained in 
this section in December 1978 shall be modified as specified in 
paragraph (6)"; and 
(B) in the last sentence by inserting ", modified by the applica-
tion of paragraph (6)," after "December 1978". 
(4) Section 215(fX7) of such Act is amended by adding at the end 
thereof the following new sentence: "The recomputation shall be 
modified by the application of section 215(aX6), where applicable.". 
(5) Section 215(iX4) of such Act is amended by inserting ", modified 
by the application of subsection (aX6)," after "December 1978" each 
place it appears. 
(6) Section 203(aX8) of such Act is amended by inserting ", modified 4
2 use 403. 
by the application of section 215(a)(6)" before ", except that". 
95 STAT. 832 
PUBLIC LAW 97-35—AUG. 13, 1981 
42 use 417. 
42 use 402. 
Primary 
insurance 
amounts, 
recalculation. 
42 use 415 note. 
42 use 415. 
42 use 414 note. 
(7) Section 2170b)(l) of such Act is amended by inserting before the 
period at the end of the first sentence the following: ", and as 
modified by the application of section 215(a)(6)". 
(d)(1) Section 202(q)(4) of such Act is amended by striking out 
"increased" and "increase" each place they appear and inserting in 
lieu thereof "changed" and "change", respectively. 
(2) Section 202(qX10) of such Act is amended in the matter preced-
ing subparagraph (A) by striking out "increased", "increase", and 
"increases" each place they appear and inserting in lieu thereof 
"changed", "change", and "changes", respectively. 
(e)(1) The Secretary of Health and Human Services shall recalcu-
late the primary insurance amounts applicable to— 
(A) beneficiaries whose benefits are based on a primary insur-
ance amount that was computed under section 215(a)(lXC)(i)(I) of 
the Social Security Act, and 
(B) beneficiaries with average monthly wages of less than 
$76.00 and primary insurance benefits of less than $16.20 whose 
benefits are based on primary insurance amounts computed 
under section 215(a)(4) or section 215(a)(5) of such Act. 
(2) In the case of individuals to whom sections 215(a)(1) and 215(a)(4) 
of such Act as in effect after December 1978 do not apply, the 
Secretary shall recalculate the primary insurance amount computed 
under section 215 as in effect in December 1978 as though the 
individual had first become entitled in December 1978; except that— 
(A) the table in, or deemed to be in, the law as the result of the 
amendments made by subsection (c)(1) of this section shall be 
used in lieu of the table in effect in December 1978; 
(B) in the case of individuals who were born after January 1, 
1913, the first sentence of section 2150t))(3) of the law as so in 
effect shall be deemed to read: "For purposes of paragraph (2), 
the number of an individual's elapsed years is the number of 
calendar years after 1950 (or, if later, after the year of attain-
ment of age 21) and before 1961 or, if later, the earlier of the year 
in which such individual died or attained age 62."; 
(C) in the case of individuals who were born prior to January 2, 
1913, the first sentence of section 215(b)(3) of the law as so in 
effect shall be deemed to read: "For purposes of paragraph (2), 
the number of an individual's elapsed years is the number of 
calendar years after 1950 and before 1961 or, if later, the earlier 
of the year in which such individual died or attained, in the case 
of a man (except as provided by section 104(j) of Public Law 
92-603) age 65, or in the case of a woman, age 62.'; 
(D) section 215(b)(4) of the law as so in effect shall be 
disregarded; 
(E) section 215(dX2)(C) of the law as so in effect shall be 
disregarded; 
(F) section 215(dX4) of the law as so in effect shall be deemed, 
for purposes of such recalculation, to read: 
"(4) The provisions of this subsection as in effect in December 1977 
(but without regard to paragraph (2XC)) shall be applicable to individ-
uals who became eligible for old-age or disability insurance benefits 
or died prior to 1978.'^; 
(G) in the case of individuals who became disabled, died, or 
attained age 65 prior to 1951, the Secretary shall by regulations 
provide an alternative computation in lieu of the computation 
provided by the law as so in effect (and modified by this 
paragraph); and 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 833 
(H) in no event may the recalculated primary insurance 
amount exceed the primary insurance amount that is based on 
an average monthly wage of $76.00 or the primary insurance 
amount that is based on a primary insurance benefit of $16.20. 
(3) In the case of individuals to whom either section 215(a) (1) or (4) 
of such Act apply, the primary insurance amount shall be recal- 42 USC 415. 
culated under section 215 as in effect after December 1978; except 
that the table in or deemed to be in the law as a result of the 
amendments made by subsection (c)(1) of this section shall be used 
(where appropriate) in lieu of the table in effect in December 1978. 
(f) The first sentence of section 202(i) of such Act is amended by Post, p. 834. 
inserting after "primary insurance amount" the following: "(as 
determined without regard to the amendments made by section 2201 
of the Omnibus Budget Reconciliation Act of 1981, relating to the Ante, p. 830. 
repeal of the minimum benefit provisions)". 
(g) Part A of title XVI of the Social Security Act is amended by 
adding at the end thereof the following new section: 
"BENEFITS FOR INDIVIDUALS FORMERLY RECEIVING MINIMUM BENEFITS 
UNDER TITLE II 
"SEC. 1622. (a) Any individual who— 
42 use I382k. 
"(1) is 60 years of age or older but has not attained the age of 65; 
"(2) would be an eligible individual or eligible spouse under 
section 1611 if such individual were 65 years of age; 
42 USC 1382. 
"(3) is not otherwise eligible for a benefit under section 1611; 
"(4) for the month of February 1982 was entitled to a monthly 
benefit under title II of this Act for which he made application 42 use 401. 
prior to March 1, 1982, as determined without regard to any 
deductions on account of work required by section 203, which 42 use 403. 
entitlement amount (as so determined) was reduced for any 
month by reason of the amendments made by section 2201 of the 
Omnibus Budget Reconciliation Act of 1981 (relating to the 
repeal of the minimum benefit provisions); and 
(5) is not entitled under title II to a monthly benefit, as 
determined without regard to any deductions on account of work 
required by section 203, in an amount equal to or greater than 
such entitlement amount (as so determined) for February 1982; 
shall be eligible for a benefit for each month in which he meets the 
requirements of this subsection in an amount determined under 
subsection (b) or (c). 
"(b) The amount of the monthly benefit payable under subsection 
(a) shall be the amount of the monthly benefit which would otherwise 
be payable to such individual under this title if he were 65 years of 
age; except that— 
"(1) the amount of such monthly benefit shall not exceed— 
"(A) in the case of an individual described in subsection (a) 
who does not have an eligible spouse, an amount equal to the 
amount by which such individual's monthly benefit entitle-
ment under title II for such month as determined without 
regard to any deductions on account of work required by 
section 203, is less than the amount of such individual's 
monthly benefit entitlement under title II for February 1982 
(as so determined); or 
"(B) in the case of an individual and his spouse, both of 
whom are individuals described in subsection (a), an amount 
equal to the amount by which the combined amount of their 
monthly benefit entitlements under title II for such month 
95 STAT. 834 
PUBLIC LAW 97-35—AUG. 13, 1981 
42 u s e 401. 
42 u s e 1382f. 
42 u s e 403. 
42 u s e 1382e. 
Effective dates. 
42 u s e 1382k 
note. 
42 u s e 401. 
42 u s e 415. 
(as so determined), is less than the combined amount of their 
monthly benefit entitlements under title II for February 
1982 (as so determined); 
"(2) the benefit amount shall be determined on the basis of the 
dollar amounts applicable under this title for February 1982 
(without regard to cost-of-living adjustments made after Febru-
ary 1982 under section 1617) in the case of any individuals 
described in paragraph (1); and 
"(3) in the case of an individual described in subsection (a) who 
has a spouse eligible for benefits under this title, other than by 
reason of this section, the amount of such monthly benefit for 
such individual (described in subsection (a)) shall be determined 
under subsection (c), and the amount of the monthly benefit for 
such spouse shall be determined in the same manner as for an 
individual who does not have an eligible spouse. 
"(c) The amount of the monthly benefit for an individual described 
in subsection (b)(3) shall be an amount equal to the amount by 
which— 
"(1) the monthly benefit amount for which such individual and 
his spouse would be eligible for such month under this title if 
both he and his spouse were 65 years of age, determined on the 
basis of the dollar amounts applicable under this title for 
February 1982 (without regard to cost-of-living adjustments 
made after February 1982 under section 1617); exceeds 
"(2) the monthly benefit amount under this title for which his 
spouse is eligible for such month; 
except that the amount of such monthly benefit shall not exceed the 
amount by which such individual's monthly benefit entitlement 
under title II for such month, as determined without regard to 
deductions on account of work under section 203, is less than his 
monthly benefit entitlement under title II (as so determined) for 
February 1982. 
"(d) An individual who is entitled to a benefit under this section 
shall not be considered to be an individual receiving supplemental 
security income benefits under this title for purposes of section 1616 
of this title or of any provision of law other than this title.". 
(h)(1) This section and the amendments made thereby shall be 
effective with respect to— 
(A) benefits payable for months after October 1981 in the case 
of individuals who initially become eligible for benefits under 
title II of the Social Security Act after October 1981; and 
(B) benefits payable for months after February 1982 in the case 
of all other individuals. 
(2) For purposes of this subsection, eligibility shall be determined in 
accordance with paragraphs (2)(A) and (3)(B) of section 215(a) of the 
Social Security Act. 
RESTRICTIONS ON THE LUMP-SUM DEATH PAYMENT 
42 u s e 402. 
42 u s e 416. 
SEC. 2202. (a)(1) Section 202(i) of the Social Security Act is 
amended— 
(A) in the second sentence, by striking out paragraphs (1), (2), 
(3), and (4) and inserting in lieu thereof the following: 
"(1) to a widow (as defined in section 216(c)) or widower (as 
defined in section 216(g)) who is entitled (or would have been so 
entitled had a timely application been filed), on the basis of the 
wages and self-employment income of such insured individual, to 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 835 
benefits under subsection (e), (f), or (g) of this section for the 
month in which occurred such individual's death; or 
"(2) if no person Qualifies for payment under paragraph (1), or 
if such person dies before receiving payment, in equal shares to 
each person who is entitled (or would have been so entitled had a 
timely application been filed), on the basis of the wages and self-
employment income of such insured individual, to benefits under 
subsection (d) of this section for the month in which occurred 
such individual's death."; and 
(B) in the third sentence, by striking out "(except a payment as 
authorized pursuant to clause (1)(A) of the preceding sentence)". 
(2)(A) Section 216(c) of such Act is amended by inserting "the first 42 use 416. 
sentence of before "section 202(i)". 
(B) Section 216(g) of such Act is amended by inserting "the first 
sentence of* before "section 202(i)". 
(b) The amendments made by subsection (a) shall apply only with Effective date. 
respect to deaths occurring after August 1981. 
42 use 402 note. 
PAYMENT OF CERTAIN BENEFFTS ONLY FOR MONTHS AFTER MONTH IN 
WHICH ENTITLEMENT CONDFTIONS ARE FULFILLED 
SEC. 2203. (a) Section 202(a) of the Social Security Act is amended 42 use 402. 
by striking out so much of the first sentence as follows paragraph (3) 
and inserting in lieu thereof the following: 
"shall be entitled to an old-age insurance benefit for each month, 
beginning with— 
"(A) in the case of an individual who has attained age 65, the 
first month in which such individual meets the criteria specified 
in parap-aphs (1), (2), and (3), or 
(B) in the case of an individual who has attained age 62, but 
has not attained age 65, the first month throughout which such 
individual meets the criteria specified in paragraphs (1) and (2) (if 
in that month he meets the criterion specified in paragraph (3)), 
and ending with the month preceding the month in which he dies.". 
(b)(1) Section 202(bXl) of such Act is amended by striking out the 
matter that follows subparagraph (D) and precedes subparagraph (E) 
and inserting in lieu thereof the following: 
"shall (subject to subsection (s)) be entitled to a wife's insurance 
benefit for each month, beginning with— 
"(i) in the case of a wife or divorced wife (as so defined) of an 
individual entitled to old-age benefits, if such wife or divorced 
wife has attained age 65, the first month in which she meets the 
criteria specified in subparagraphs (A), (B), (C), and (D), or 
"(ii) in the case of a wife or divorced wife (as so defined) o
f
— 
"(I) an individual entitled to old-age insurance benefits, if 
such wife or divorced wife has not attained age 65, or 
"(ID an individual entitled to disability insurance benefits, 
the first month throug:hout which she is such a wife or divorced 
wife and meets the criteria specified in subparagraphs (B), (C), 
and (D) (if in such month she meets the criterion specified in 
subparagraph (A)), 
whichever is earlier, and ending with the month preceding the month 
in which any of the following occurs—". 
(2) Section 216(b) of such Act is amended by adding at the end 42 use 4i6. 
thereof the following new sentences: "For purposes of clause (2), a 
wife shall be deemed to have been married to an individual for a 
period of one year throughout the month in which occurs the first 
anniversary of her marriage to such individual. For purposes of 
95 STAT. 836 
PUBLIC LAW 97-35—AUG. 13, 1981 
42 use 402. 
subparagraph (C) of section 202(bXl), a divorced wife shall be deemed 
not to be married throughout the month in which she becomes 
divorced.". 
(c)(1) Section 202(cXl) of such Act is amended by striking out the 
matter that follows subparagraph (C) and precedes the colon and 
inserting in lieu thereof the following: 
"shall be entitled to a husband's insurance benefit for each month, 
beginning with— 
"(i) in the case of a husband (as so defined) of an individual who 
is entitled to an old-age insurance benefit, if such husband has 
attained age 65, the first month in which he meets the criteria 
specified in subparagraphs (A), (B), and (C), or 
"(ii) in the case of a husband (as so defined) of— 
"(I) an individual entitled to old-age insurance benefits, if 
such husband has not attained age 65, or 
"(II) an individual entitled to disability benefits, 
the first month throughout which he is such a husband and 
meets the criteria specified in subparagraphs (B) and (C) (if in 
such month he meets the criterion specified in subparagraph 
(A)), 
whichever is earlier, and ending with the month preceding the month 
in which any of the following occurs". 
42 use 416. 
(2) Section 216(f) of such Act is amended by adding at the end 
thereof the following new sentence: "For purposes of clause (2), a 
husband shall be deemed to have been married to an individual for a 
period of one year throughout the month in which occurs the first 
anniversary of his marriage to her.". 
42 use 402. 
(dXl) Section 202(dXl) of such Act is amended by striking out so 
much of the first sentence as follows subparagraph (C) and precedes 
subparagraph (D) and inserting in lieu thereof the following: 
"shall be entitled to a child's insurance benefit for each month, 
beginning with— 
"(i) in the case of a child (as so defined) of such an individual 
who h£is died, the first month in which such child meets the 
criteria specified in subparagraphs (A), (B), and (C), or 
"(ii) in the case of a child (as so defined) of an individual 
entitled to an old-age insurance benefit or to a disability insur-
ance benefit, the first month throughout which such child is a 
child (as so defined) and meets the criteria specified in para-
graphs (B) and (C) (if in such month he meets the criterion 
specified in paragraph (A)), 
whichever is earlier, and ending with the month preceding whichever 
of the following first occurs—". 
(2) Section 202(d)(7) of such Act is amended bv adding at the end of 
subparagraph (A) the following new sentence: 'An individual who is 
determined to be a full-time elementary or secondary school student 
shall be deemed to be such a student throughout the month with 
respect to which such determination is made.". 
42 use 416. 
(3) Section 216(e) of such Act is amended by adding at the end 
thereof the following new sentences: "For purposes of clause (2), a 
child shall be deemed to have been the stepchild of an individual for a 
period of one year throughout the month in which occurs the 
expiration of such one year. For purposes of clause (3), a person shall 
be deemed to have no natural or adoptive parent living (other than a 
parent who was under a disability) throughout the most recent 
month in which a natural or adoptive parent (not under a disability) 
dies.". 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 837 
94 Stat. 2263. 
42 u s e 426. 
(4) Section 216(h) of such Act is amended by adding at the end of 42 use 416. 
paragraph (3) the following new sentence: "For purposes of subpara-
graph (A)(i), an acknowledgement, court decree, or court order shall 
be deemed to have occurred on the first day of the month in which it 
actually occurred.". 
(e) Section 226(aX2) of such Act is amended— 
(1) by striking out "or" after "section 202,"; and 
(2) by inserting, immediately after "therefor)" the following: 
", or would be entitled to such benefits but for the failure of 
another individual, who meets all the criteria of entitlement to 
monthlv insurance benefits, to meet such criteria throughout a 
month,'. 
(f)(1) The amendments made by subsections (a), (b), and (c) of this 
section shall apply only to monthly insurance benefits payable to 
individuals who attain age 62 after August 1981. 
(2) The amendments made by subsection (d) of this section shall 
apply to monthly insurance benefits for months after August 1981, 
and only in the case of individuals who were not entitled to such 
insurance benefits for August 1981 or any preceding month. 
(3) The amendments made by subsection (e) of this section shall 42 USC 426 note. 
apply only to individuals aged 65 and over whose insured spouse 
attains age 62 after August 1982. 
Effective dates. 
42 u s e 402 note. 
TEMPORARY EXTENSION OF EARNINGS LIMITATION TO INCLUDE ALL 
PERSONS AGED LESS THAN SEVENTY-TWO 
SEC. 2204. (a) Notwithstanding subsection (e) of section 302 of the 42 use 403 note. 
Social Security Amendments of 1977 (91 Stat. 1531; Public Law 
95-216), the amendments made to section 203 of the Social Security 
Act by subsections (a) through (d) of such section 302 shall, except as 
provided in subsection O
t
>
) of this section, apply only with respect to 
monthly insurance benefits payable under title II of the Social 
Security Act for months after December 1982. 
(b) In the case of any individual whose first taxable year (as in effect 
on the date of the enactment of this Act) ending after December 31, 
1981, begins before January 1,1982, the amendments made by section 
302 of the Social Security Amendments of 1977 shall apply with 
respect to taxable years beginning with such taxable year. 
42 u s e 403 note. 
42 USC 403. 
. 
42 u s e 401. 
TERMINATION OF MOTHER S AND FATHER S BENEFITS WHEN CHILD 
ATTAINS AGE SIXTEEN 
SEC 2205. (aXD Section 202(s)(l) of the Social Security Act is 42 use 402. 
amended by striking out "the age of 18" and inserting in lieu thereof 
"the age of 16". 
(2) The heading of section 202(s) of such Act is amended by striking 
out "Child Aged 18 or Over Attending School" and inserting in lieu 
thereof "Child Over Specified Age to be Disregarded for Certain 
Benefit Purposes Unless Disabled". 
O
b
) The amendments made by subsection (a) shall apply with Effective date. 
respect to wife's and mother's insurance benefits for months after the 42 use 402 note. 
month in which this Act is enacted; except that, in the case of an 
individual who is entitled to such a benefit (on the basis of having a 
child in her care) for the month in which this Act is enacted, such 
amendments shall not take effect until the first day of the first month 
which begins 2 years or more after the date of the enactment of this 
Act. 
42 u s e 402. 
95 STAT. 838 
PUBLIC LAW 97-35—AUG. 13, 1981 
ROUNDING OF BENEFITS 
42 use 415. 
SEC. 2206. (a) The text of section 215(g) of the Social Security Act is 
amended to read as follows: 
"(g) The amount of any monthly benefit computed under section 
42 use 402, 423, 202 or 223 which (after any reduction under sections 203(a) and 224 
403, 424a. 
^j^^j ^^y deduction under section 203(b), and after any deduction 
42 use 1395s. 
under section 1840(aXl)) is not a multiple of $1 shall be rounded to the 
next lower multiple of $1.". 
(b)(1) Section 202(q)(8) of such Act is amended— 
(A) in the first sentence, by striking out "after application of 
section 215(g)" and inserting in lieu thereof "before application 
of section 215(g)"; and 
(B) in the last sentence, by striking out "reduced to the next 
lower" and inserting in lieu thereof "increased to the next 
higher". 
42 use 403. 
(2) Section 203(a)(1) of such Act is amended in the last sentence by 
striking out "increased to the next higher" and inserting in lieu 
thereof "decreased to the next lower". 
(3) Section 203(aX3)(B)(iii) of such Act is amended in the parentheti-
cal phrase immediately preceding the semicolon at the end thereof by 
striking out "higher" and inserting in lieu thereof "lower". 
(4) Section 203(a)(8) of such Act is amended by inserting at the end 
the following new sentence: "For purposes of the preceding sentence, 
the phrase 'rounded to the next higher multiple of $0.10', as it 
appeared in subsection (a)(2)(C) of this section as in effect in Decem-
ber 1978, shall be deemed to read 'rounded to the next lower multiple 
of $0.10'". 
42 use 415. 
(5) Section 215(a)(lXA) of such Act is amended by striking out 
"rounded in accordance with subsection (g)," and inserting in lieu 
thereof "rounded, if not a multiple of $0.10, to the next lower multiple 
of$0.10,". 
(6) Section 215(iX2XAXii) of such Act is amended in the sentence 
immediately following subclause (III) by striking out "increased to 
the next higher" and inserting in lieu thereof "decreased to the next 
lower". 
(7) Section 215(iX4) of such Act is amended by inserting before the 
period at the end of the first sentence the following: ", except that for 
this purpose, in applying paragraphs (2XAXii), (2XDXiv), and (2XD)(v) 
of this subsection as in effect in December 1978, the phrase 'increased 
to the next higher multiple of $0.10' shall be deemed to read 
'decreased to the next lower multiple of $0.10' ". 
Effective date. 
(c) The amendments made by this section shall apply only with 
42 use 402 note, 
respect to initial calculations and adjustments of primary insurance 
amounts and benefit amounts which are attributable to periods after 
August 1981. 
REQUESTS FOR INFORMATION; COST REIMBURSEMENT 
42 use 1306. 
SEC. 2207. Section 1106 of the Social Security Act is amended— 
(1) by striking out "as provided in part D of title IV of this Act" 
in the first sentence of subsection (a) and inserting in lieu thereof 
"as otherwise provided by Federal law"; and 
(2) by inserting after subsection (b) the following new subsec-
tion: 
"(c) Notwithstanding sections 552 and 552a of title 5, United States 
Code, or any other provision of law, whenever the Secretary deter-
mines that a request for information is made in order to assist a party 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 839 
in interest (as defined in section 3 of the Employee Retirement 
Income Security Act of 1974 (29 U.S.C. 1002)) with respect to the 
administration of an employee benefit plan (as so defined), or is made 
for any other purpose not directly related to the administration of the 
program or programs under this Act to which such information 
relates, the Secretary may require the requester to pay the full cost, 
as determined by the Secretary, of providing such information.". 
REDUCTION IN DISABILITY BENEFITS ON ACCOUNT OF OTHER RELATED 
PAYMENTS; EXTENSION OF OFFSET TO DISABLED WORKER BENEFICIA-
RIES AGED 62 THROUGH 64 AND THEIR FAMIUES; CHANGE IN MONTH 
IN WHICH PAYMENTS ARE OFFSET 
SEC 2208. (a) Section 224 of the Social Security Act is amended— 42 use 424a. 
(1) in the caption, by striking out "ON ACCOUNT OF RECEIPT OF 
WORKMEN'S COMPENSATION"; 
(2) in subsection (a), in the matter preceding paragraph (1), bv 
striking out "age of 62" and inserting in lieu thereof "age of 65 ; 
(3) by amending subsection (aX2) to read as follows: 
"(2) such individual is entitled for such month to periodic 
benefits on account of such individual's total or partial disability 
(whether or not permanent) under— 
"(A) a workmen's compensation law or plan of the United 
States or a State, or 
"(B) any other law or plan of the United States, a State, a 
political subdivision (as that term is used in section 218(b)(2)), 42 use 418. 
or an instrumentality of two or more States (as that term is 
used in section 218(k)), 
other than benefits payable under title 38, United States Code, 
benefits payable under a program of assistance which is based on 
need, benefits based on service all, or substantially all, of which 
was included under an agreement entered into by a State and the 
Secretary under section 218, and benefits under a law or plan of 
the United States based on service all or part of which is 
employment as defined in section 210,"; 
42 use 4io. 
(4) in subsection (aX4), by striking out "the workmen's compen-
sation law or plan" and inserting in lieu thereof "such laws or 
plans"; 
(5) in subsection Ot)), by striking out "under a workmen's 
compensation law or plan' and inserting in lieu thereof "for a 
total or partial disability under a law or plan described in 
subsection (aX2)"; 
(6) in subsection (d), by— 
(A) striking out "workmen's compensation law or plan" 
and inserting in lieu thereof "law or plan described in 
subsection (aX2)", and 
(B) inserting before the period at the end thereof the 
following: ", and such law or plan so provided on February 
18,1981'^; 
(7) in subsection (e), by striking out "workmen's compensa-
tion"; and 
(8) by adding at the end thereof the following new subsection: 
"(h)(1) Notwithstanding any other provision of law, the head of any 
Federal agency shall provide such information within its possession 
as the Secretary may require for purposes of making a timely 
determination of the amount of the reduction, if any, required by this 
section in benefits payable under this title, or verifying other infor-
mation necessary in carrjdng out the provisions of this section. 
89-194 0—82 
55:QL3 
95 STAT. 840 
PUBLIC LAW 97-35—AUG. 13, 1981 
Effective date. 
42 u s e 424a 
note. 
42 u s e 423. 
"(2) The Secretary is authorized to enter into agreements with 
States, political subdivisions, and other organizations that administer 
a law or plan subject to the provisions of this section, in order to 
obtain such information as he may require to carry out the provisions 
of this section.". 
(b) The amendments made by subsection (a) shall be effective with 
respect to individuals who first become entitled to benefits under 
section 223(a) of the Social Security Act for months beginning after 
the month in which this Act is enacted, but only in the case of an 
individual who became disabled within the meaning of section 223(d) 
of such Act after the sixth month preceding the month in which this 
Act is enacted. 
REIMBURSEMENT OF STATES FOR SUCCESSFUL REHABILITATION SERVICES 
42 use 422. 
SEC. 2209. (a) Section 222(d) of the Social Security Act is amended to 
read as follows: 
"Costs of Rehabilitation Services From Trust Funds 
"(d)(1) For purposes of making vocational rehabilitation services 
more readily available to disabled individuals who are— 
"(A) entitled to disability insurance benefits under section 223, 
42 use 402. 
"(B) entitled to child's insurance benefits under section 202(d) 
after having attained age 18 (and are under a disability), 
"(C) entitled to widow's insurance benefits under section 202(e) 
prior to attaining age 60, or 
"(D) entitled to widower's insurance benefits under section 
202(f) prior to attaining age 60, 
I 
to the end that savings will accrue to the Trust Funds as a result of 
rehabilitating such individuals into substantial gainful activity, 
there are authorized to be transferred from the Federal Old-Age and 
Survivors Insurance Trust Fund and the Federal Disability Insur-
ance Trust Fund each fiscal year such sums as may be necessary to 
enable the Secretary to reimburse the State for the reasonable and 
necessary costs of vocational rehabilitation services furnished such 
individuals (including services during their waiting periods), under a 
State plan for vocational rehabilitation services approved under title 
I of the Rehabilitation Act of 1973 (29 U.S.C. 701 et seq.), which result 
in their performance of substantial gainful activity which lasts for a 
continuous period of nine months. The determination that the 
vocational rehabilitation services contributed to the successful 
return of such individuals to substantial gainful activity and the 
determination of the amount of costs to be reimbursed under this 
subsection shall be made by the Commissioner of Social Security in 
accordance with criteria formulated by him. 
"(2) In the case of any State which is unwilling to participate or 
does not have a plan which meets the requirements of paragraph (1), 
the Commissioner of Social Security may provide such services in 
such State by agreement or contract with other public or private 
agencies, organizations, institutions, or individuals. The provision of 
such services shall be subject to the same conditions as otherwise 
apply under paragraph (1). 
Payments. 
"(3) Payments under this subsection shall be made in advance or by 
way of reimbursement, with necessary adjustments for overpayments 
and underpayments. 
"(4) Money paid from the Trust Funds under this subsection for the 
reimbursement of the costs of providing services to individuals who 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 841 
are entitled to benefits under section 223 (including services during 
their waiting periods), or who are entitled to benefits under section 
202(d) on the basis of the wages and self-employment income of such 
individuals, shall be charged to the Federal Disability Insurance 
Trust Fund, and all other money paid from the Trust Funds under 
this subsection shall be charged to the Federal Old-Age and Survivors 
Insurance Trust Fund. The Secretary shall determine according to 
such methods and procedures as he may deem appropriate— 
"(A) the total amount to be reimbursed for the cost of services 
under this subsection, and 
"(B) subject to the provisions of the preceding sentence, the 
amount which should be charged to each of the Trust Funds. 
"(5) For purposes of this subsection the term 'vocational rehabilita-
tion services' shall have the meaning assigned to it in title I of the 
Rehabilitation Act of 1973 (29 U.S.C. 701 et seq.), except that such 
services may be limited in type, scope, or amount in accordance with 
regulations of the Secretary designed to achieve the purpose of this 
subsection.". 
(b) The amendment made by subsection (a) shall apply with respect 
to services rendered on or after October 1,1981. 
42 u s e 423. 
42 u s e 402. 
"Vocational 
rehabilitation 
services." 
Effective date. 
42 u s e 422 note. 
ELIMINATION OF CHILD S INSURANCE BENEFITS IN THE CASE OP 
CHILDREN AGE 18 THROUGH 22 WHO ATTEND POSTSECONDARY SCHOOLS 
SEC. 2210. (a)(1) Section 202(d) of the Social Security Act is amended 42 use 402. 
in paragraphs (1)(B), (lXE)(ii), (l)(F)(i), (1)(G)(III), (6)(D)(i), (6)(E)(i), 
(7)(A) (three places), (7XB), and (7XD), by striking out "full-time 
student" each place it appears and inserting in lieu thereof "full-time 
elementary or secondary school student". 
(2XA) Section 202(d) of such Act is further amended in paragraphs 
(7)(A) (two places), (7XB) (three places), and (7XD), by striking out 
"educational institution" each place it appears and inserting in lieu 
thereof "elementary or secondary school'. 
(B) Section 202(dX7XA) of such Act is further amended by striking 
out "institutions involved" and inserting in lieu thereof "schools 
involved". 
(3) Subparagraph (C) of section 202(d)(7) of such Act is amended to Definitions. 
read as follows: 
"(C)(i) An 'elementary or secondary school' is a school which 
provides elementary or secondary education, respectively, as 
determined under the law of the State or other jurisdiction in 
which it is located. 
"(ii) For the purpose of determining whether a child is a 'full-
time elementary or secondary school student' or 'intends to 
continue to be in full-time attendance at an elementary or 
secondary school', within the meaning of this subsection, there 
shall be disregarded any education provided, or to be provided, 
beyond grade 12.". 
(4) Section 202(dX7)(D) of such Act is further amended by striking 
out "degree from a four-year college or university" and inserting in 
lieu thereof "diploma or equivalent certificate from a secondary 
school (as defined in subparagraph (CXi))". 
(5)(A) Section 202(d) of such Act is further amended in paragraphs 
(IXBXi), (l)(FXii), (1XG)(IV), (6XD)(ii), (6XEXii), and (7XD) by striking 
out "22" each place it appears in each of those paragraphs and 
inserting in lieu thereof "19". 
(B) Section 202(dX6)(A) of such Act is amended to read as follows: 
95 STAT. 842 
PUBLIC LAW 97-35—AUG. 13, 1981 
"(AXi) is a full-time elementary or secondary school student 
and has not attained the age of 19, or (ii) is under a disability (as 
42 use 423. 
defined in section 223(d)) and has not attained the age of 22, or". 
Effective date. 
(b) Except as provided in subsection (c), the amendments made by 
42 use 402 note, gubgection (a) shall apply to child's insurance benefits under section 
42 use 402. 
202(d) of the Social Security Act for months after July 1982. 
42 use 402 note. 
(c)(1) Notwithstanding the provisions of section 202(d) of the Social 
Security Act (as in effect prior to or after the amendments made by 
subsection (a)), any individual who— 
(A) has attained the age of 18; 
(B) is not under a disability (as defined in section 223(d) of such 
Act); 
(C) is entitled to a child's insurance benefit under such section 
202(d) for August 1981; and 
(D) is a full-time student at a postsecondary school, college, or 
university that is an educational institution (as such terms are 
defined in section 202(d)(7) (A) and (C) of such Act as in effect 
prior to the amendments made by subsection (a)) for any month 
prior to May 1982; 
shall be entitled to a child's benefit under section 202(d) of such Act in 
accordance with the provisions of such section as in effect prior to the 
amendments made by subsection (a) for any month after July 1981 
and prior to August 1985 if such individual would be entitled to such 
child's benefit for such month under such section 202(d) if subsections 
(a) and (b) of this section had not been enacted, but such benefits shall 
be subject to the limitations set forth in this subsection. 
(2) No benefit described in paragraph (1) shall be paid to an 
individual to whom paragraph (1) applies for the months of May, 
June, July, and August, beginning with benefits otherwise payable 
for May 1982. 
(3) The amount of the monthly benefit payable under paragraph (1) 
to an individual to whom paragraph (1) applies for any month after 
July 1982 (prior to deductions on account of work required by section 
203 of such Act) shall not exceed the amount of the benefit to which 
such individual was entitled for August 1981 (prior to deductions on 
42 use 403. 
account of work required by section 203 of such Act), less an 
amount— 
(A) during the months after July 1982 and before August 1983, 
equal to 25 percent of such benefit for August 1981; 
(B) during the months after July 1983 and before August 1984, 
equal to 50 percent of such benefit for August 1981; and 
(C) during the months after July 1984 and before August 1985, 
equal to 75 percent of such benefit for August 1981. 
(4) Any individual to whom the provisions of paragraph (1) apply 
and whose entitlement to benefits under paragraph (1) ends after 
July 1982 shall not subsequently become entitled, or reentitled, to 
benefits under paragraph (1) or under section 202(d) of the Social 
Security Act as in effect after the amendments made by subsection (a) 
unless he meets the requirements of section 202(d)(l)(B)(ii) of that Act 
as so in effect. 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 843 
TITLE XXIII—PUBLIC ASSISTANCE 
PROGRAMS 
Subtitle A—Aid to Families With Dependent Children; 
Child Support Enforcement 
CHAPTER 1—AID TO FAMILIES WITH DEPENDENT 
CHILDREN 
DISREGARDS FROM EARNED INCOME FOR AFDC 
SEC. 2301. Section 402(a)(8) of the Social Security Act is amended to 42 use 602. 
read as follows: 
"(8)(A) provide that, with respect to any month, in making the 
determination under paragraph (7), the State agency— 
Post, p. 844. 
"(i) shall disregard all of the earned income of each 
dependent child receiving aid to families with dependent 
children who is (as determined by the State in accordance 
with standards prescribed by the Secretary) a full-time 
student or a part-time student who is not a full-time 
employee attending a school, college, or university, or a 
course of vocational or technical training designed to fit him 
for gainful employment; 
"(ii) shall disregard from the earned income of any child or 
relative applying for or receiving aid to families with de-
pendent children, or of any other individual (living in the 
same home £is such relative and child) whose needs are taken 
into account in making such determination, the first $75 of 
the total of such earned income for such month (or such 
lesser amount as the Secretary may prescribe in the case of 
an individual not engaged in full-time employment or not 
employed throughout the month); 
"(iii) shall disregard from the earned income of any child, 
relative, or other individual specified in clause (ii), an 
amount equal to expenditures for care in such month for a 
dependent child, or an incapacitated individual living in the 
same home as the dependent child, receiving aid to families 
with dependent children and requiring such care for such 
month, to the extent that such amount (for each such 
dependent child or incapacitated individual) does not exceed 
$160 (or such lesser amount as the Secretary may prescribe 
in the case of an individual not engaged in full-time employ-
ment or not employed throughout the month); and 
"(iv) shall disregard from the earned income of any child 
or relative receiving aid to families with dependent children, 
or of any other individual (living in the same home as such 
relative and child) whose needs are taken into account in 
making such determination, an amount equal to the first $30 
of the total of such earned income not already disregarded 
under the preceding provisions of this paragraph plus one-
third of the remainder thereof (but excluding, for purposes of 
this subparagraph, earned income derived from participa-
tion on a project maintained under the programs established 
by section 432(bX2) and (3)); and 
42 use 632. 
"(B) provide that (with respect to any month) the State 
agency— 
95 STAT. 844 
PUBLIC LAW 97-35—AUG. 13, 1981 
"(i) shall not disregard, under clause (ii), (iii), or (iv) of 
subparagraph (A), any earned income of any one of the 
persons specified in subparagraph (A)(ii) if such person— 
"(I) terminated his emplojnnent or reduced his earned 
income without good cause within such period (of not 
less than thirty days) preceding such month as may be 
prescribed by the Secretary; 
"(II) refused without good cause, within such period 
preceding such month as may be prescribed by the 
Secretary, to accept employment in which he is able to 
engage which is offered through the public employment 
offices of the State, or is otherwise offered by an 
employer if the offer of such employer is determined by 
the State or local agency administering the State plan, 
after notification by the employer, to be a bona fide offer 
of en^lo3niient; or 
"(in) failed without good cause to make a timely 
report (as prescribed by the State plan pursuant to 
paragraph (14)) to the State agency of earned income 
received in such month; and 
"(iiXD shall not disregard, under subparagraph (A)(iv), any 
earned income of any of the persons specified in subpara-
graph (AXii), if, with respect to such month, the income of 
the persons so specified was in excess of their need, as 
determined by the State agency pursuant to paragraph (7) 
(without regard to subparagraph (AXiv) of this paragraph), 
unless the persons received aid under the plan in one or 
more of the four months preceding such month and subpara-
graph (AXiv) has not already been applied to their income for 
four consecutive months while they were receiving aid under 
the plan; and 
"(II) in the case of the earned income of a person with 
respect to whom subparagraph (AXiv) has been applied for 
four consecutive months, shall not apply the provisions of 
subparagraph (AXiv) for so long as he continues to receive 
aid under the plan and shall not apply such provisions to any 
month thereafter until the expiration of an additional period 
of twelve consecutive months during which he is not a 
recipient of such aid;". 
DETERMINATION OF INCOME AND RESOURCES FOR AFDC 
42 use 602. 
SEC. 2302. Section 402(aX7) of the Social Security Act is amended to 
read as follows: 
"(7) except as may be otherwise provided in paragraph (8) or 
(31), provide that the State agency— 
"(A) shall, in determining need, take into consideration 
any other income and resources of any child or relative 
claiming aid to families with dependent children, or of any 
other individual (living in the same home as such child and 
relative) whose needs the State determines should be consid-
ered in determining the need of the child or relative claim-
ing such aid; 
(B) shall determine ineligible for aid any family the 
combined value of whose resources (reduced by any obliga-
tions or debts with respect to such resources) exceeds $1,000 
or such lower amount as the State may determine, but not 
including as a resource for purposes of this subparagraph a 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 845 
home owned and occupied by such child, relative, or other 
individual and so much of the family member's ownership 
interest in one automobile as does not exceed such amount 
as the Secretary may prescribe; and 
"(C) may, in the case of a family claiming or receiving aid 
under this part for any month, take into consideration as 
income (to the extent the State determines appropriate, as 
specified in such plan, and notwithstanding any other provi-
sion of law)— 
"(i) an amount not to exceed the value of the family's 
monthly allotment of food stamp coupons, to the extent 
such value duplicates the amount for food included in 
the maximum amount that would be payable under the 
State plan to a family of the same composition with no 
other income; and 
"(ii) an amount not to exceed the value of any rent or 
housing subsidy provided to such family, to the extent 
such value duplicates the amount for housing included 
in the maximum amount that would be payable under 
the State plan to a family of the same composition with 
no other income;". 
INCOME LIMIT FOR AFDC ELIGIBILITY 
SEC. 2303. Section 402(a) of the Social Security Act is amended by 42 use 602. 
inserting before paragraph (19) the following new paragraph: 
"(18) provide that no family shall be eligible for aid under the 
plan for any month if, for that month, the total income of the 
family (other than payments under the plan), without applica-
tion of paragraph (8), exceeds 150 percent of the State's standard Ante, p. 843. 
of need for a family of the same composition;". 
TREATMENT OF INCOME IN EXCESS OF THE STANDARD OF NEED; LUMP 
SUM PAYMENTS 
SEC. 2304. Section 402(a) of the Social Security Act is amended by 
inserting after paragraph (16) the following new paragraph: 
"(17) provide that if a person specified in paragraph (8)(A) (i) or 
(ii) receives in any month an amount of income which, together 
with all other income for that month not excluded under para-
graph (8), exceeds the State's standard of need applicable to the 
family of which he is a member— 
"(A) such amount of income shall be considered income to 
such individual in the month received, and the family of 
which such person is a member shall be ineligible for aid 
under the plan for the whole number of months that equals 
(i) the sum of such amount and all other income received in 
such month, not excluded under paragraph (8), divided by (ii) 
the standard of need applicable to such family, and 
"(B) any income remaining (which amount is less than the 
applicable monthly standard) shall be treated as income 
received in the first month following the period of ineligibil-
ity specified in subparagraph (A);". 
TREATMENT OF EARNED INCOME ADVANCE AMOUNT UNDER AFDC 
SEC. 2305. Section 402(d)(1) of the Social Security Act is amended to 
read as follows: 
95 STAT. 846 
PUBLIC LAW 97-35-AUG. 13, 1981 
"(1) For purposes of this part, an individual's 'income' shall also 
include, to the extent and under the circumstances prescribed by the 
Secretary, an amount (which shall be treated as earned income for 
purposes of this part) equal to the earned income advance amount 
26 use 3507. 
(under section 3507(a) of the Internal Revenue Code of 1954) that is 
(or, upon the filing of an earned income eligibility certificate, would 
be) payable to such individual.". 
INCOME OF STEPPARENTS LIVING WITH DEPENDENT CHILD 
42 use 602. 
SEC. 2306. (a) Section 402(a) of the Social Security Act is amended— 
(1) by striking out "and" at the end of paragraph (29); 
(2) by striking out the period at the end of paragraph (30) and 
inserting in lieu thereof"; and"; and 
(3) by adding after paragraph (30) the following new para-
graph: 
"(31) provide that, in making the determination for any month 
Ante, p. 844. 
under paragraph (7), the State agency shall take into considera-
tion so much of the income of the dependent child's stepparent 
living in the same home as such child as exceeds the sum of (A) 
the first $75 of the total of such stepparent's earned income for 
such month (or such lesser amount as the Secretary may pre-
scribe in the case of an individual not engaged in fulltime 
employment or not employed throughout the month), (B) the 
State's standard of need under such plan for a family of the same 
composition as the stepparent and those other individuals living 
in the same household as the dependent child and claimed by 
such stepparent as dependents for purposes of determining his 
Federal personal income tax liability but whose needs are not 
taken into account in making the determination under para-
graph (7), (C) amounts paid by the stepparent to individuals not 
living in such household and claimed by him as dependents for 
purposes of determining his Federal personal income tax 
liability, and (D) payments by such stepparent of alimony or child 
support with respect to individuals not living in such 
household.". 
42 use 612. 
(b) Section 412(b) of the Social Security Act is amended by striking 
out "does not include any such relative" and inserting in lieu thereof 
"does not include a stepparent whose income is taken into considera-
Supra. 
tion under section 402(a)(31) (regardless of whether such income 
exceeds the sum specified in such section) or any other such relative". 
COMMUNITY WORK EXPERIENCE PROGRAMS 
42 use 609. 
SEC. 2307. (a) Section 409 of the Social Security Act is amended to 
read as follows: 
"COMMUNITY WORK EXPERIENCE PROGRAMS 
"SEC. 409. (a)(1) Any State which chooses to do so may establish a 
community work experience program in accordance with this section. 
The purpose of the community work experience program is to provide 
experience and training for individuals not otherwise able to obtain 
employment, in order to assist them to move into regular employ-
ment. Community work experience programs shall be designed to 
improve the employability of participants through actual work expe-
rience and training and to enable individuals employed under com-
munity work experience programs to move promptly into regular 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 847 
public or private employment. The facilities of the State public 
employment offices may be utilized to find employment opportunities 
for recipients under this program. Community work experience 
programs shall be limited to projects which serve a useful public 
purpose in fields such as health, social service, environmental protec-
tion, education, urban and rural development and redevelopment, 
welfare, recreation, public facilities, public safety, and day care. To 
the extent possible, the prior training, experience, and skills of a 
recipient shall be utilized in making appropriate work experience 
assignments. A community work experience program established 
under this section shall provide— 
"(A) appropriate standards for health, safety, and other condi-
tions applicable to the performance of work; 
"(B) that the program does not result in displacement of 
persons currently employed, or the filling of established unfilled 
position vacanies; 
"(C) reasonable conditions of work, taking into account the 
geographic region, the residence of the participants, and the 
proficiency of the participants; 
"(D) that participEuits will not be required, without their 
consent, to travel an unreasonable distance from their homes or 
remain away from their homes overnight; 
"(E) that the maximum number of hours in any month that a 
participant may be required to work is that number which equals 
the amount of aid payable with respect to the family of which 
such individual is a member under the State plan approved 
under this part, divided by the greater of the Federal or the 
applicable State minimum wage; and 
'(F) that provision will be made for transportation and other 
costs, not in excess of an amount established by the Secretary, 
reasonably necessary and directly related to participation in the 
program. 
"(2) Nothing contained in this section shall be construed as author-
izing the payment of aid under this part as compensation for work 
performed, nor shall a participant be entitled to a saliary or to any 
other work or training expense provided under any other provision of 
law by reason of his participation in a program under this section. 
"(3) Nothing in this part or part C, or in any State plan approved 42 use 630. 
under this part, shall be construed to prevent a State from operating 
(on such terms and conditions and in such cases as the State may find 
to be necessary or appropriate, whether or not such terms, conditions, 
and cases are consistent with section 402(aX19) or part (O) a commu- 42 use 602. 
nitv work experience program in accordance with this section. 
' (b)(1) Each recipient of aid under the plan who is registered under Aid recipients, 
section 402(aX19) shall participate, upon referral by the State agency, 
in a community work experience program unless such recipient is 
currently employed for no fewer than 80 hours a month and is 
earning an amount not less than the applicable minimum wage for 
such employment. 
"(2) In addition to an individual described in paragraph (1), the 
State agency may also refer, for participation in programs under this 
section, an individual who would be required to register under section 
402(aX19XA) but for the exception contained in clause (v) of such Post, p. 854. 
section (but only if the child for whom the parent or relative is caring 
is not under the age of three and child care is available for such child), 
or in clause (iii) of such section. 
"(3) The chief executive officer of the State shall provide coordina-
tion between a community work experience program operated pursu-
95 STAT. 848 
PUBLIC LAW 97-35—AUG. 13, 1981 
ant to this section and the work incentive program operated pursuant 
42 use 630. 
to part C so as to insure that job placement will have priority over 
participation in the community work experience program, and that 
individuals eligible to participate in both such programs are not 
denied aid under the State plan on the grounds of failure to partici-
pate in one such program if they are actively and satisfactorily 
participating in the other. The chief executive officer of the State 
may provide that part-time participation in both such programs may 
be required where appropriate. 
Post, p. 854. 
"(c) The provisions of section 402(a)(19KF) shall apply to any 
individual referred to a community work experience program who 
fails to participate in such program in the same manner as they apply 
to an individual to whom section 402(a)(19) applies. 
"(d) In the case of any State which makes expenditures in the form 
described in subsection (a) under its State plan approved under 
section 402, expenditures for the proper and efficient administration 
of the State plan, for purposes of section 403(aK3), may not include the 
cost of making or acquiring materials or equipment in connection 
with the work performed under a program referred to in subsection 
(a) or the cost of supervision of work under such program, and may 
include only such other costs attributable to such programs as are 
permitted by the Secretary.". 
42 use 603. 
(b) Section 403(aK3) of such Act is amended by inserting before the 
semicolon at the end thereof the following: ", or which is a service 
provided in connection with a community work experience program 
Ante, p. 846, 
or work Supplementation program under section 409 or 414". 
p''^^ , 
(c) Section 204(c)(2) of the Social Security Amendments of 1967 
?2 ulc 609 note. ^P^blic Law 90-248) is repealed. 
PROVIDING JOBS AS ALTERNATIVE TO AFDC 
SEC. 2308. Part A of title IV of the Social Security Act is amended 
by adding at the end thereof the following new section: 
"WORK SUPPLEMENTATION PROGRAM 
4
2 use 614. 
"SEC. 414. (a) It is the purpose of this section to allow a State to 
institute a work supplementation program under which such State, 
to the extent such State determines to be appropriate, may make jobs 
available, on a voluntary basis, as an alternative to aid otherwise 
provided under the State plan approved under this part. 
42 use 606. 
"(b)(1) Notwithstanding the provisions of section 406 or any other 
provision of law. Federal funds may be paid to a State under this part, 
subject to the provisions of this section, with respect to expenditures 
incurred in operating a work supplementation program under this 
section. 
42 use 630. 
"(2) Nothing in this part or part C, or in any State plan approved 
under this part, shall be construed to prevent a State from operating 
(on such terms and conditions and in such cases as the State may find 
to be necessary or appropriate, whether or not such terms, conditions, 
42 use 602. 
and cases are consistent with section 402(a)(19) or part C) a work 
supplementation program in accordance with this section. 
(3) Notwithstanding section 402(a)(23) or any other provision of 
law, a State may adjust the levels of the standards of need under the 
State plan as the State determines to be necessary and appropriate 
for cariying out a work supplementation program under this section. 
"(4) iVotwithstanding section 402(a)(1) or any other provision of law, 
a State operating a work supplementation program under this 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 849 
section may provide that the needs standards in effect in those areas 
of the State in which such program is in operation may be different 
from the needs standards in effect in the areas in which such program 
is not in operation, and such State may provide that the needs 
standards for categories of recipients of aid may vary among such 
categories as the State determines to be appropriate on the basis of 
abiUty to participate in the work supplementation program. 
"(5) Notwithstanding any other provision of law, a State may make 
further adjustments in the amounts of aid paid under the plan to 
different categories of receipients (as determined under paragraph 
(4)) in order to offset increases in benefits from needs related 
programs (other than the State plan approved under this part) as the 
State determines to be necessary and appropriate to further the 
purposes of the work supplementation program. 
"(6) Notwithstanding section 402(aX8) or any other provision of law. Ante, p. 843. 
a State operating a work supplementation program under this 
section may reduce or eliminate the amount of earned income to be 
disregarded under the State plan as the State determines to be 
necessary and appropriate to further the purposes of the work 
supplementation program. 
"(c)(1) A work supplementation program operated by a State under Work 
this section shall provide that any individual who is an eligible supplementation 
individual (as determined under paragraph (2)) may choose to take a P'^'^S^^™ 
supplemented job (as defined in paragraph (3)) to the extent supple-
mented jobs are available under the program. Payments by the State 
to individuals or to employers under the program shall be expendi-
tures incurred by the State for aid to families with dependent 
children, except as limited by subsection (d). 
"(2) For purposes of this section, an eligible individual is an 
individual who is in a category which the State determines shall be 
eligible to participate in the work supplementation program, and 
who would, at the time of his placement in such job, be eligible for 
assistance under the State plan if such State did not have a work 
supplementation program in effect and had not altered its State plan 
accordingly, as such State plan was in effect in May 1981, or as 
modified thereafter as required by Federal law. 
"(3) For purposes of this section, a supplemented job is— 
"(A) a job position provided to an eligible individual by the 
State or local agency administering the State plan under this 
part; 
"(B) a job position provided to an eligible individual by a public 
or nonprofit entity for which all or part of the wages are paid by 
such State or local agency; or 
"(C) a job position provided to an eligible individual by a 
proprietary entity involving the provision of child day care 
services for which all or part of the wages are paid by such State 
or local agency, but only if such entity does not claim a credit for 
any part of the wages paid to such eligible individual under 
section 40 of the Internal Revenue Code of 1954 (relating to credit 26 USC 40. 
for expenses of the work incentive program) or section 44B of 
such Code (relating to credit for employment of certain new 26 use 44B. 
employees). 
A State may provide or subsidize any job position under the program 
as such State determines to be appropriate, but acceptance of any 
such position shall be voluntary. 
"(d) The amount of the Federal payment to a State under section 
403 for any quarter for expenditures incurred in operating a work 42 use 603. 
95 STAT. 850 
PUBLIC LAW 97-35—AUG. 13, 1981 
supplementation program shall not exceed an amount equal to the 
difference between— 
42 use 603. 
"(1) the amount which would have been paid under section 403 
to such State for such quarter under the State plan if it did not 
have a work supplementation program in effect and had not 
altered its State plan accordingly, as such State plan was in effect 
in May 1981, or as modified thereafter as required by Federal 
law; and 
"(2) the amount paid to such State under section 403 for such 
quarter exclusive of the amount so paid for such quarter for the 
work supplementation program. 
"(e)(1) Nothing in this section shall be construed as requiring a 
State or local agency administering the State plan to provide em-
ployee status to any eligible individual to whom it provides a job 
position under the work supplementation program, or with respect to 
whom it provides all or part of the wages paid to such individual by 
another entity under such program. 
"(2) Nothing in this section shall be construed as requiring such 
State or local agency to provide that eligible individuals filling job 
positions provided by other entities under such program be provided 
employee status by such entity during the first 13 weeks during 
which they fill such position. 
"(3) Wages paid under a work supplementation program shall be 
considered to be earned income for purposes of any provision of law. 
"(f) Any work supplementation program operated by a State shall 
be administered by— 
"(1) the agency designated to administer or supervise the 
42 use 602. 
administration of the State plan under section 402(a)(3); or 
"(2) the agency (if any) designated to administer the commu-
Ante, p. 846. 
nity work experience program under section 409. 
"(g) Any State which chooses to operate a work supplementation 
program under this section may choose to provide that any individual 
who participates in such program, and any child or relative of such 
individual (or other individual living in the same household as such 
individual) who would be eligible for aid under the State plan 
approved under this part if such State did not have a work supple-
mentation program, shall be considered individuals receiving aid 
under the State plan approved under this part for purposes of 
eligibility for medical assistance under the State plan approved 
42 use 1396. 
under title XIX. 
"(h) No individual receiving a grant under the State plan shall be 
excused, by reason of the fact that such State has a work supplemen-
42 use 630. 
tation program, from any requirement of this part or part C relating 
to work requirements.". 
WORK INCENTIVE DEMONSTRATION PROGRAM 
SEC. 2309. Part C of title IV of the Social Security Act is amended by 
adding at the end thereof the following new section: 
"WORK INCENTIVE DEMONSTRATION PROGRAM 
42 use 645. 
"SEC. 445. (a) Notwithstanding any other provision of this part and 
42 use 601. 
part A of this title, any State may elect as an alternative to the work 
incentive program otherwise provided in this part, and subject to the 
provisions of this section, to operate a work incentive demonstration 
program for the purpose of demonstrating single agency administra-
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 851 
State program 
plan. 
42 u s e 601. 
tion of the work-related objectives of this Act, and to receive pay-
ments under the provisions of this section. 
"(b)(1) Not later than sixty days following the date of the enactment 
of this section, the Governor of a State which desires to operate a 
work incentive demonstration program under this section shall 
submit to the Secretary of Health and Human Services a letter of 
application stating such intent. Accompanying the letter of applica-
tion shall be a State program plan which must— 
"(A) provide that the agency conducting the demonstration 
program within the State shall be the single State agency which 
administers or supervises the administration of the State plan 
under part A of this title; 
"(B) provide that all persons eligible for or receiving assistance 
under the aid to families with dependent children program shall 
be eligible to participate in, and sh^ll be required to participate 
in, the work incentive demonstration program, subject to the 
same criteria for participation in such demonstration program as 
are in effect under this part and part A during the month before 
the month in which the demonstration program commences; 
"(C) provide that the criteria for participation in the work 
incentive demonstration program shall be uniform throughout 
the State; 
"(D) provide a statement of the objectives which the State 
expects to meet through operation of a work incentive demon-
stration program, with emphasis on how the State expects to 
maximize client placement in nonsubsidized private sector em-
ployment; 
' (E) describe the techniques to be used to achieve the objectives 
of the work incentive demonstration program, which may in-
clude but shall not be limited to: maximum periods of participa-
tion, job training, job find clubs, grant diversion to either public 
or private sector employers, services contracts with State em-
ployment services, prime sponsors under the Comprehensive 
Employment and Training Act of 1973, or private placement 29 USC 801 note, 
agencies, targeted jobs tax credit outreach campaigns, and per-
formance-based placement incentives; and 
"(F) set forth the format and frequency of reporting of informa-
tion regarding operation of the work incentive demonstration 
program. 
"(2) A State's application to participate in the work incentive 
demonstration program shall be deemed approved unless the Secre-
tary of Health and Human Services notifies the State in writing of 
disapproval within forty-five days of the date of application. The 
Secretary of Health and Human Services shall set forth the reasons 
for disapproval and provide an opportunity for resubmission of the 
plan within forty-five days of the receipt of the notice of disapproval. 
An application shall not be finally disapproved unless the Secretary 
of Health and Human Services determines that the State's program 
plan would be less effective than the requirements set forth in this 
title, other than this section. 
"(3) The Secretary of Health and Human Services shall furnish 
copies of approved plans, statistical reports, and evaluation reports to 
the Secretary of Labor. 
"(c) Subject to the statement of objectives and description of 
techniques to be used in implementing its work incentive demonstra-
tion program, as set forth in its program plan, a State shall be free to 
design a program which best addresses its individual needs, makes 
best use of its available resources, and recognizes its labor market 
Disapproval 
notification. 
Copies to Labor 
Secretary. 
95 STAT. 852 
PUBLIC LAW 97-35—AUG. 13, 1981 
Program 
duration. 
42 use 601, 630. 
Evaluations by 
HHS Secretary. 
Funding. 
conditions. Other than criteria for participation in the State's work 
incentive demonstration project, which shall be uniform throughout 
the State, the components of the program may vary by geographic 
area or by political subdivision. 
"(d) A State's work incentive demonstration program, if initially 
approved, shall be in force for a three-year period. During this period, 
the State may elect to use up to six months for planning purposes. 
During such planning period, all requirements of part A and this part 
C shall remain in full force and effect, 
"(e) The Secretary of Health and Human Services shall conduct two 
evaluations of a State's work incentive demonstration program. The 
first evaluation shall be conducted at the conclusion of the first 
twelve months of operation of the demonstration program. The 
second evaluation shall be conducted at the conclusion of the demon-
stration program. Both evaluations shall compare placement rates 
during the demonstration program with placement rates achieved 
during a number of previous years, to be determined by the Secretary 
of Health and Human Services. 
"(f)(1) For each year of its demonstration program, a State which is 
operating such program shall be funded in an amount equal to its 
initial annual 1981 allocation under the work incentive program set 
forth in this part, plus any other Federal funds which the State may 
properly receive under any statute for establishing work programs 
for recipients of aid to families with dependent children. 
"(2) Such funds shall only be used by the State for administering 
and operating its work incentive demonstration program. These 
funds shall not be used for direct grants of assistance under the aid to 
families with dependent children program. 
"(g) Earnings derived from participation in a State's work incentive 
demonstration program shall not result in a determination of finan-
cial ineligibility for assistance under the aid to families with depend-
ent children program.". 
EFFECT OF PARTICIPATION IN A STRIKE ON ELIGIBILITY FOR AFDC 
42 use 602. 
SEC. 2310. Section 402(a) of the Social Security Act is amended by 
inserting after paragraph (20) the following new paragraph: 
"(21) provide— 
"(A) that, for purposes of this part, participation in a strike 
shall not constitute good cause to leave, or to refuse to seek 
or accept employment; and 
"(B)(i) that aid to families with dependent children is not 
payable to a family for any month in which any caretaker 
relative with whom the child is living is, on the last day of 
such month, participating in a strike, and (ii) that no 
individual's needs shall be included in determining the 
amount of aid payable for any month to a family under the 
plan if, on the last day of such month, such individual is 
participating in a strike;". 
42 use 606. 
AGE UMIT OF DEPENDENT CHILD 
SEC. 2311. Section 406(a)(2) of the Social Security Act is amended to 
read as follows: "(2) who is (A) under the age of eighteen, or (B) at the 
option of the State, under the age of nineteen and a full-time student 
a secondary school (or in the equivalent level of vocational or 
m 
technical training), if, before he attains age nineteen, he may reason-
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 853 
ably be expected to complete the program of such secondary school (or 
such training);". 
LIMITATION ON AFDC TO PREGNANT WOMEN 
SEC. 2312. (a) Section 406(b) of the Social Security Act is amended 42 use 606. 
by striking out "dependent children" the second place it appears in 
the matter that precedes clause (1) and inserting in lieu thereof 
"dependent children, or, at the option of the State, a pregnant woman 
but only if it has been medically verified that the child is expected to 
be born in the month such payments are made or within the three-
month period following such month of payment, and who, if such 
child had been born and was living with her in the month of payment, 
would be eligible for aid to families with dependent children", 
(b) Section 406 of such Act is amended by adding at the end thereof 
the following new subsection: 
"(g)(1) Notwithstanding the provisions of subsection (b), the term "Aid to families 
'aid to families with dependent children' does not mean any— with dependent 
"(A) amount paid to meet the needs of an unborn child; or ^ ^ ^^" 
"(B) amount paid (or by which a payment is increased) to meet 
the needs of a woman occasioned by or resulting from her 
pregnancy, unless, as has been medically verified, the woman's 
child is expected to be born in the month such payments are 
made (or increased) or within the three-month period following 
such month of pajmient. 
"(2) Notwithstanding paragraph (1), a State may provide that for 
purposes of title XIX a pregnant woman shall be deemed to be a 42 use 1396. 
recipient of aid to families with dependent children under this part if 
she would be eligible for such aid if such child had been born and was 
living with her in the month of payment, and such pregnancy has 
been medically verified.". 
AID TO FAMIUES WITH DEPENDENT CHILDREN BY REASON OF 
UNEMPLOYMENT OF A PARENT 
SEC. 2313. (a) Section 407 of the Social Security Act is amended as 42 use 607. 
follows: 
(1) the heading is amended to read "DEPENDENT CHILDREN OF 
UNEMPLOYED PARENTS"; 
(2) subsection (a) is amended by striking out "his father" and 
inserting in lieu thereof "the parent who is the principal 
earner"; 
(3) subsection (b)(1) is amended— 
(A) by striking out "such child's father" in subparagraph 
(A) and inserting in lieu thereof "whichever of such child's 
parents is the principal earner", and 
(B) by striking out "father" in subparagraph (B) and 
inserting in lieu thereof "parent"; 
(4) subsection (b)(2) is amended— 
(A) by striking out "fathers" in subparagraph (A) and 
inserting in lieu thereof "unemployed parents ', and 
(B) by striking out "father" in subparagraph (C) (i) and (ii) 
and in subparagraph (D) and inserting in lieu thereof 
"parent described in paragraph (1)(A)"; 
(5) subsection (c) is amended by striking out "father" both 
times it appears and inserting in lieu thereof "parent"; 
(6) subsection (d) is amended— 
(A) by striking out "and" at the end of paragraph (2); 
95 STAT. 854 
PUBLIC LAW 97-35—AUG. 13, 1981 
(B) by striking out the period at the end of paragraph (3) 
and inserting in lieu thereof "; and"; and 
(C) by adding at the end thereof the following new para-
graph: 
Definition. 
"(4) the phrase 'whichever of such child's parents is the 
principal earner', in the case of any child, means whichever 
parent, in a home in which both parents of such child are living, 
earned the greater amount of income in the 24-month period the 
last month of which immediately precedes the month in which 
an application is filed for aid under this part on the basis of the 
unemployment of a parent, for each consecutive month for which 
the family receives such aid on that basis."; and 
(7) subsection (e) is amended by striking out "fathers" and 
inserting in lieu thereof "parents". 
94 Stat. 460. 
(b) Section 402(a)(19)(A) of such Act is amended— 
42 use 602. 
(1) ijy striking out "mother" in clause (v) and inserting in lieu 
thereof "parent"; 
(2) by striking out "mother or other female caretaker of a child, 
if the father or another adult male relative" in clause (vi) and 
inserting in lieu thereof "parent or other caretaker of a child who 
is deprived of parental support or care by reason of the death, 
continued absence from the home, or physical or mental incapac-
ity of a parent, if another adult relative"; 
(3)(A) by striking out "or" at the end of clause (vi); 
(B) by striking out the semicolon at the end of clause (vii) and 
inserting in lieu thereof "; or"; and 
(C) by adding at the end thereof the following new clause: 
' (viii) the parent of a child who is deprived of parental 
support or care by reason of the unemployment of a parent, 
if the other parent (who is the principal earner, as defined in 
42 use 607. 
section 407(d)) is not excluded by the preceding clauses of 
this subparagraph;"; and 
(4) in the matter following the numbered clauses— 
(A) by striking out "her option" and inserting in lieu thereof 
"his or her option"; 
(B) by striking out "if she so desires" and inserting in lieu 
thereof "if he or she so desires"; 
(C) by striking out "to her" and inserting in lieu thereof "to 
him or her"; and 
(D) by striking out "she should decide" and inserting in lieu 
thereof "he or she should decide". 
94 Stat. 461. 
(c)(1) Section 402(a)(19)(F) of such Act is amended by redesignating 
42 use 602. 
clauses (ii) through (iv) as clauses (iii) through (v), respectively, and by 
inserting after clause (i) the following new clause: 
"(ii) if the parent who has been designated as the principal 
earner, for purposes of section 407, makes such refusal, aid will 
be denied to all members of the family;". 
42 use 607. 
(2) Section 407(b)(2)(C)(i) of such Act is amended by striking out "not 
registered" and inserting in lieu thereof "not currently registered". 
WORK REQUIREMENTS FOR AFDC RECIPIENTS 
42 use 602. 
SEC. 2314. (a) Section 402(a)(19)(A)(i) of the Social Security Act is 
amended to read as follows: 
"(i) a child who is under age 16 or attending, full-time, an 
elementary, secondary, or vocational (or technical) school;", 
(b) Section 402(a)(19)(A)(v) of such Act (as amended by section 
2313(b)(1) of this Act) is amended to read as follows: 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 855 
"(v) the parent or other relative of a child under the age of six 
who is personally providing care for the child with only very brief 
and infrequent absences from the child;". 
RETROSPECTIVE BUDGETING AND MONTHLY REPORTING 
SEC. 2315. (a) Section 402(a) of the Social Security Act is amended 42 use 602. 
by inserting after paragraph (12) the following new paragraphs: 
"(13) provide that— 
"(A) except as provided in subparagraph (B), the State 
agency (i) will determine a family s eligibility for aid for a 
month on the basis of the family's income, composition, 
resources, and other similar relevant circumstances during 
such month, and (ii) will determine the amount of such aid 
on the basis of the income and other relevant circumstances 
in the first or, at the option of the State but only where the 
Secretary determines it to be appropriate, second month 
preceding such month; and 
"(B) in the case of the first month, or at the option of the 
State but only where the Secretary determines it to be 
appropriate, the first and second months, in a period of 
consecutive months for which aid is payable, the State 
agency will determine the amount of aid on the basis of the 
family's income and other relevant circumstances in such 
first or second month; 
"(14)(A) provide that the State agency will require each family 
to which it furnishes aid to families with dependent children (or 
to which it would provide such aid but for paragraph (22) or (32)) 
to report, as a condition to the continued receipt of such aid (or to 
continuing to be deemed to be a recipient of such aid), each 
month to the State agency on— 
"(i) the income received, family composition, and other 
relevant circumstances during the prior month; and 
"(ii) the income and resources it expects to receive, or any 
changes in circumstances affecting continued eligibility or 
benefit amount, that it expects to occur, in that month (or in 
future months); 
except that with the prior approval of the Secretary the State 
may select categories of recipients who may report at specified 
less frequent intervals upon the State's showing to the satisfac-
tion of the Secretary that to require individuals in such catego-
ries to report monthly would result in unwarranted expenditures 
for administration of this paragraph; and 
"(B) that, in addition to whatever action may be appropriate 
based on other reports or information received by the State 
agency, the State agency will take prompt action to adjust the 
amount of assistance payable, as may be appropriate, on the 
basis of the information contained in the report (or upon the 
failure of the family to furnish a timely report), and will give an 
appropriate explanatory notice, concurrent with its action, to the 
family;", 
(b) Section 403(a) of such Act is amended by adding at the end 42 use 603. 
thereof the following sentence: "No payment shall be made under 
this subsection with respect to amounts paid to supplement or 
otherwise increase the amount of aid to families with dependent 
children found payable in accordance with section 402(a)(13) if such Supra. 
amount is determined to have been paid by the State in recognition of 
89-194 0—82 
56:QL3 
95 STAT. 856 
PUBLIC LAW 97-35—AUG. 13, 1981 
the current or anticipated needs of a family (other than with respect 
to the first or first and second months of ehgibility).". 
PROHIBITION AGAINST PAYMENT OF AID IN AMOUNTS BELOW TEN 
DOLLARS 
SEC. 2316. Section 402(a) of the Social Security Act (as amended by 
section 2306 of this Act) is amended— 
(1) by striking out "and" at the end of paragraph (30); 
(2) by striking out the period at the end of paragraph (31) and 
inserting in lieu thereof "; and"; and 
(3) by adding after paragraph (31) the following new para-
graph: 
"(32) provide that no payment of aid shall be made under the 
plan for any month if the amount of such payment, as deter-
mined in accordance with the applicable provisions of the plan 
and of this part, would be less than $10, but an individual with 
respect to whom a payment of aid under the plan is denied solely 
by reason of this paragraph is deemed to be a recipient of aid but 
shall not be eligible to participate in a community work experi-
ence program.". 
REMOVAL OF UMIT ON RESTRICTED PAYMENTS IN A STATE'S AFDC 
PROGRAM 
42 use 603. 
SEC 2317. (a) Section 403(a) of the Social Security Act is amended 
by striking out the first unnumbered paragraph following paragraph 
(5). 
42 use 606. 
(b) Section 406(b) of such Act is amended by adding at the end 
thereof the following new sentence: "Payments of the type described 
in clause (2) shall not be subject to the requirements of clauses (A) 
through (E) of such clause (2), when they are made in the manner 
described in clause (2) at the request of the family member to whom 
payment would otherwise be made in an unrestricted manner.". 
ADJUSTMENT FOR INCORRECT PAYMENTS 
42 use 602. 
SEC. 2318. Section 402(a) of the Social Security Act is amended by 
Ante, p. 852. 
inserting after paragraph (21) the following new paragraph: 
"(22) provide that the State agency will promptly take all 
necessary steps to correct any overpayment or underpayment of 
aid under the State plan, and, in the case of— 
"(A) an overpayment to an individual who is a current 
recipient of such aid, recovery will be made by repayment by 
the individual or by reducing the amount of any future aid 
payable to the family of which he is a member, except that 
such recovery shall not result in the reduction of aid payable 
for anv month, such that the aid, when added to such 
family s liquid resources and to its income (without applica-
tion of paragraph (8)), is less than 90 percent of the amount 
payable under the State plan to a family of the same 
composition with no other income (and, in the case of an 
individual to whom no payment is made for a month solely 
by reason of recovery of an overpayment, such individual 
shall be deemed to be a recipient of aid for such month); 
"(B) an overpayment to any individual who is no longer 
receiving aid under the plan, recovery shall be made by 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 857 
appropriate action under State law against the income or 
resources of the individual or the family; and 
"(C) an underpayment, the corrective payment shall be 
disregarded in determining the income of the family, and 
shall be disregarded in determining its resources in the 
month the corrective payment is made and in the following 
month;". 
REDUCED FEDERAL MATCHING OF STATE AND LOCAL AFDC TRAINING 
COSTS 
SEC. 2819. (a) Section 403(a)(3)(A) of the Social Security Act, as in 42 use 603. 
effect in the fifty States and the District of Columbia, is repealed. 
(b) Section 403(a)(3)(A)(iii) of such Act, as in effect in Puerto Rico, 42 use 603 note. 
Guam, and the Virgin Islands, is repealed. 
(c) The first sentence of section 403(d)(1) of such Act is amended by 94 Stat. 462. 
striking out all that precedes "with respect to" and inserting in lieu 
thereof "Notwithstanding any provision of subsection (aX3), the 
applicable rate under such subsection shall be 90 per centum". 
(d) The repeals made by this section shall apply to expenditures 42 use 603 note. 
made after September 30,1981. 
ELIGIBILITY OF ALIENS FOR AFDC 
SEC. 2320. (a) Section 402(a) of the Social Security Act (as amended 
by section 2316 of this Act) is further amended— 
(1) by striking out "and" at the end of paragraph (31) ; 
(2) by striking out the period at the end of paragraph (32) and 
inserting in lieu thereof *; and"; and 
(3) by adding immediately after paragraph (32) the following 
new paragraph: 
"(33) provide that in order for any individual to be considered a 
dependent child, a caretaker relative whose needs are to be taken 
into account in making the determination under paragraph (7), 
or any other person whose needs should be taken into account in 
making such a determination with respect to the child or 
relative, such individual must be either (A) a citizen, or (B) an 
alien lawfully admitted for permanent residence or otherwise 
permanently residing in the United States under color of law 
(including any alien who is lawfully present in the United States 
as a result of the application of the provisions of section 207(c) of 
the Immigration and Nationality Act (or of section 203(a)(7) of 94 Stat. 103. 
such Act prior to April 1,1980), or as a result of the application of | USC 1157. 
the provisions of section 208 or 212(d)(5) of such Act).'\ 
94 Stat 105 107 
(b)(1) Section 402(aX7) of such Act (as amended by section 2302 of g USe 1158,' 
this Act) is further amended by inserting "and section 415" after 1182. 
"paragraph (31)". 
(2) Part A of title IV of such Act (as amended by section 2308 of this 
Act) is further amended by adding at the end thereof the following 
new section: 
"ATTRIBUTION OF SPONSOR'S INCOME AND RESOURCES TO ALIEN 
"SEC. 415. (a) For purposes of determining eligibility for and the 42 use 615. 
amount of benefits under a State plan approved under this part for an 
individual who is an alien described in clause (B) of section 402(a)(33), Supra. 
the income and resources of any person who (as a sponsor of such 
individual's entry into the United States) executed an affidavit of 
95 STAT. 858 
PUBLIC LAW 97-35—AUG. 13, 1981 
support or similar agreement with respect to such individual, and the 
income and resources of the sponsor's spouse, shall be deemed to be 
the unearned income and resources of such individual (in accordance 
with subsections (b) and (c)) for a period of three years after the 
individual's entry into the United States, except that this section is 
not applicable if such individual is a dependent child and such 
sponsor (or such sponsor's spouse) is the parent of such child. 
"(b)(1) The amount of income of a sponsor (and his spouse) which 
shall be deemed to be the unearned income of an alien for any month 
shall be determined as follows: 
"(A) the total amount of earned and unearned income of such 
sponsor and such sponsor's spouse (if such spouse is living with 
the sponsor) shall be determined for such month; 
"(B) the amount determined under subparagraph (A) shall be 
reduced by an amount equal to the sum o
f
— 
"(i) the lesser of (I) 20 percent of the total of any amounts 
received by the sponsor and his spouse in such month as 
wages or salary or as net earnings from self-employment, 
plus the full amount of any costs incurred by them in 
producing self-employment income in such month, or (II) 
$175; 
"(ii) the cash needs standard established by the State 
under its plan for a family of the same size and composition 
as the sponsor and those other individuals living in the same 
household as the sponsor who are claimed by him as depend-
ents for purposes of determinig his Federal personal income 
tax liability but whose needs are not taken into account in 
Ante, p. 844. 
making a determination under section 402(a)(7); 
"(iii) any amounts paid by the sponsor (or his spouse) to 
individuals not living in such household who are claimed by 
him as dependents for purposes of determining his Federal 
personal income tax liability; and 
"(iv) any payments of alimony or child support with 
respect to individuals not living in such household. 
"(2) The amount of resources of a sponsor (and his spouse) which 
shall be deemed to be the resources of an alien for any month shall be 
determined as follows: 
"(A) the total amount of the resources (determined as if the 
sponsor were applying for aid under the State plan approved 
under this part) of such sponsor and such sponsor's spouse (if 
such spouse is living with the sponsor) shall be determined; and 
"(B) the amount determined under subparagraph (A) shall be 
reduced by $1,500. 
Sponsor 
"(c)(1) Any individual who is an alien shall, during the period of 
information and 
three years after entry into the United States, in order to be eligible 
documentation. 
^ 
- j j 
a. . 
^ 
j
j 
ii • 
j. i. 
• j i 
for aid under a State plan approved under this part, be required to 
provide to the State agency administering such plan such informa-
tion and documentation with respect to his sponsor as may be 
necessary in order for the State agency to make any determination 
required under this section, and to obtain any cooperation from such 
sponsor necessary for any such determination. Such alien shall also 
be required to provide to the State agency such information and 
documentation as it may request and which such alien or his sponsor 
provided in support of such alien's immigration application. 
"(2) The Secretary shall enter into agreements with the Secretary 
of State and the Attorney General whereby any information availa-
ble to them and required in order to make any determination under 
this section will be provided by them to the Secretary (who may, in 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 859 
turn, make such information available, upon request, to a concerned 
State agency), and whereby the Secretary of State and Attorney 
General will inform any sponsor of an alien, at the time such sponsor 
executes an affidavit of support or similar agreement, of the require-
ments imposed by this section. 
"(d) Any sponsor of an alien, and such alien, shall be jointly and 
severally liable for an amount equal to any overpayment of aid under 
the State plan made to such alien during the period of three years 
after such alien's entry into the United States, on account of such 
sponsor's failure to provide correct information under the provisions 
of this section, except where such sponsor was without fault, or where 
good cause of such failure existed. Any such overpayment which is 
not repaid to the State or recovered in accordance with the proce-
dures generally applicable under the State plan to the recoupment of 
overpayments shall be withheld from any subsequent payment to 
which such alien or such sponsor is entitled under any provision of 
this Act. 
"(e)(1) In any case where a person is the sponsor of two or more 
alien individuals who are living in the same home, the income and 
resources of such sponsor (and his spouse), to the extent they would be 
deemed the income and resources of any one of such individuals 
under the preceding provisions of this section, shall be divided into 
two or more equal shares (the number of shares being the same as the 
number of such alien individuals) and the income and resources of 
each such individual shall be deemed to include one such share. 
"(2) Income and resources of a sponsor (and his spouse) which are 
deemed under this section to be the income and resources of any alien 
individual in a family shall not be considered in determining the need 
of other family members except to the extent such income or 
resources are actually available to such other members. 
"(f) The provisions of this section shall not apply with respect to 
any alien who is— 
"(1) admitted to the United States as a result of the application, 
prior to April 1, 1980, of the provisions of section 203(a)(7) of the 
Immigration and Nationality Act; 
"(2) admitted to the United States as a result of the application, 
after March 31, 1980, of the provisions of section 207(c) of such 
Act; 
"(3) paroled into the United States as a refugee under section 
212(d)(5) of such Act; 
"(4) granted political asylum by the Attorney General under 
section 208 of such Act; or 
"(5) a Cuban and Haitian entrant, as defined in section 501(e) of 
the Refugee Education Assistance Act of 1980 (Public Law 
96-422).". 
(c) The amendments made by subsection (a) shall be effective on the 
date of the enactment of this Act. The amendments made by subsec-
tion (b) shall be effective with respect to individuals applying for aid 
to families with dependent children under any approved State plan 
for the first time after September 30,1981. 
Overpayment 
liability. 
8 u s e 1153. 
94 Stat. 103. 
8 u s e 1157. 
94 Stat. 107. 
8 u s e 1182. 
94 Stat. 105. 
8 u s e 1158. 
94 Stat. 1809. 
8 u s e 1522 note. 
Effective dates. 
42 u s e 615 note. 
EFFECTIVE DATE 
SEC. 2321. (a) Except as otherwise specifically provided in the 42 use 602 note. 
preceding sections of this chapter or in subsection (b), the provisions 
of this chapter and the amendments and repeals made by this chapter 
shall become effective on October 1,1981. 
95 STAT. 860 
PUBLIC LAW 97-35—AUG. 13, 1981 
42 u s e 601. 
"Session of a 
State's 
legislature." 
(b) If a State agency administering a plan approved under part A of 
title IV of the Social Security Act demonstrates, to the satisfaction of 
the Secretary of Health and Human Services, that it cannot, by 
reason of State law, comply with the requirements of an amendment 
made by this chapter to which the effective date specified in subsec-
tion (a) applies, the Secretary may prescribe that, in the case of such 
State, the amendment will become effective beginning with the first 
month beginning after the close of the first session of such State's 
legislature ending on or after October 1, 1981. For purposes of the 
preceding sentence, the term "session of a State's legislature" in-
cludes any regular, special, budget, or other session of a State 
legislature. 
CHAPTER 2—CHILD SUPPORT ENFORCEMENT 
COLLECTION OF PAST-DUE CHILD AND SPOUSAL SUPPORT FROM FEDERAL 
TAX REFUNDS 
SEC. 2331. (a) Part D of title IV of the Social Security Act is 
amended by adding at the end thereof the following new section: 
COLLECTION OF PAST-DUE SUPPORT FROM FEDERAL TAX REFUNDS 
42 use 664. 
"SEC. 464. (a) Upon receiving notice from a State agency adminis-
tering a plan approved under this part that a named individual owes 
past-due support which has been assigned to such State pursuant to 
42 use 602. 
section 402(a)(26), the Secretary of the Treasury shall determine 
whether any amounts, as refunds of Federal taxes paid, are payable 
to such individual (regardless of whether such individual filed a tax 
return as a married or unmarried individual). If the Secretary of the 
Treasury finds that any such amount is payable, he shall withhold 
from such refunds an amount equal to the past-due support, and pay 
such amount to the State agency (together with notice of the 
individual's home address) for distribution in accordance with section 
42 use 657. 
457(b)(3). 
Regulations. 
"(b) The Secretary of the Treasury shall issue regulations, ap-
proved by the Secretary of Health and Human Services, prescribing 
the time or times at which States must submit notices of past-due 
support, the manner in which such notices must be submitted, and 
the necessary information that must be contained in or accompany 
the notices. The regulations shall specify the minimum amount of 
past-due support to which the offset procedure established by subsec-
tion (a) may be applied, and the fee that a State must pay to 
reimburse the Secretary of the Treasury for the full cost of applying 
the offset procedure, and provide that the Secretary of the Treasury 
will advise the Secretary of Health and Human Services, not less 
frequently than annually, of the States which have furnished notices 
of past-due support under subsection (a), the number of cases in each 
State with respect to which such notices have been furnished, the 
amount of support sought to be collected under this subsection by 
each State, and the amount of such collections actually made in the 
case of each State. 
"Past-due 
"(c) As used in this part the term 'past-due support' means the 
support." 
amount of a delinquency, determined under a court order, or an order 
of an administrative process established under State law, for support 
and maintenance of a child, or of a child and the parent with whom 
the child is living.". 
42 use 654. 
(b) Section 454 ofsuch Act is amended— 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 861 
(1) by striking out "and" at the end of paragraph (16); 
(2) by striking out the period at the end of paragraph (17) and 
inserting in lieu thereof "; and"; and 
(3) by adding at the end thereof the following new paragraph: 
"(18) provide that the State has in effect procedures necessary 
to obtain payment of past-due support from overpayments made 
to the Secretary of the Treasury as set forth in section 464, and Anti, p. 860. 
take all steps necessary to implement and utilize such proce-
dures.", 
(c) Section 6402 of the Internal Revenue Code of 1954 is amended— 26 USC 6402. 
(1) by striking out in subsection (a) thereof "shall refund" and 
inserting in lieu thereof "shall, subject to subsection (c), refund"; 
and 
(2) by adding at the end thereof the following new subsection: 
"(c) OFFSET OF PAST-DUE SUPPORT AGAINST OVERPAYMENTS.—The 
amount of any overpayment to be refunded to the person making the 
overpayment shall be reduced by the amount of any past-due support 
(as defined in section 464(c) of the Social Security Act) owed by that 
person of which the Secretary has been notified by a State in 
accordance with section 464 of the Social Security Act. The Secretary 
shall remit the amount by which the overpayment is so reduced to the 
State to which such support has been assigned and notify the person 
making the overpayment that so much of the overpayment as was 
necessary to satisfy his obligation for past-due support has been paid 
to the State. This subsection shall be applied to an overpayment prior 
to its being credited to a person's future liability for an internal 
revenue tax.", 
COLLECTION OF SUPPORT FOR CERTAIN ADULTS 
SEC. 2332. (a) Section 451 of the Social Security Act is amended by 42 USC 651. 
striking out "children" and inserting in lieu thereof "children and 
the spouse (or former spouse) with whom such children are living" 
and by striking out "child support" and inserting in lieu thereof 
"child and spousal support". 
(b)(1) Section 452(a) of such Act is amended— 
42 USC 652. 
(A) in paragraph (1), by inserting "and support for the spouse 
(or former spouse) with whom the absent parent's child is living" 
after "child support"; 
(B) in paragraph (7), by inserting "and spousal" after "child"; 
and 
(C) in paragraph (10)(C), by inserting "(with separate identifica-
tion of the number in which collection of spousal support was 
involved)" after "child support cases". 
(2) Section 452(b) of such Act is amended— 
(A) by inserting ", including any support obligation with 
respect to the parent who is living with the child and receiving 
aid under the State plan approved under part A," after "assigned 42 USC 601. 
to the State" in the first sentence; 
(B) by striking out "court order" in the second sentence and 
inserting in lieu thereof "court or administrative order"; and 
(C) by striking out "United States" in the second sentence and 
inserting in lieu thereof "Secretary of the Treasury"; and 
(D) by inserting immediately after the second sentence the 
following new sentence: "All reimbursements shall be credited to 
the appropriation accounts which bore all or part of the costs 
involved in making the collections.". 
95 STAT. 862 
PUBLIC LAW 97-35-AUG. 13, 1981 
42 use 653. 
(c) Section 453(c)(1) of such Act is amended by striking out "child 
support" and inserting in lieu thereof "child and spousal support". 
42 use 654. 
(d) Section 454 of such Act is amended— 
(1) by striking out "CHILD SUPPORT" in the heading and insert-
ing in lieu thereof "CHILD AND SPOUSAL SUPPORT"; 
(2) by striking out "child support" in the matter preceding 
paragraph (1) and inserting in lieu thereof "child and spousal 
support ; 
(3) in paragraph (4)(B), by striking out the comma immediately 
following the first parenthetical phrase and inserting in lieu 
thereof "and, at the option of the State, from such parent for his 
spouse (or former spouse) receiving aid to families with depend-
ent children (but only if a support obligation has been established 
with respect to such spouse),'; 
(4) in paragraph (5), by striking out "child support payments" 
and inserting in lieu thereof "support payments and by striking 
out "collected for a child" and inserting in lieu thereof collected 
for an individual"; 
(5) in paragraph (9)(C), by striking out "of a child or children" 
and inserting in lieu thereof "of the child or children or the 
parent of such child or children"; 
(6) in paragraph (11), by striking out "child"; and 
(7) in paragraph (16), by striking out "child" each place it 
appears. 
42 use 657. 
(e) Section 457 of such Act is amended— 
(1) by striking out "child" in the portion of subsection (b) that 
precedes paragraph (1); and 
(2) by striking out "child" each place it appears in subsection 
(c). 
42 use 660. 
(f) The heading of section 460 of such Act is amended by striking out 
"CHILD". 
26 use 6305. 
(g) Section 6305(a)(4) of the Internal Revenue Code of 1954, (relating 
to collection of certain liability) is amended by striking out "court 
order" and inserting in lieu thereof "court or administrative order". 
COST OF COLLECTION AND OTHER SERVICES FOR NON-AFDC FAMILIES 
42 use 654. 
SEC. 2333. (a) Section 454(6) of the Social Security Act is amended— 
(1) by striking out "such services" in clause (B) and inserting in 
lieu thereof "services under the State plan (other than collection 
of support)"; and 
(2) by amending clause (C) to read as follows: "(C) the State will 
retain, but only if it is the State which makes the collection, the 
fee imposed under State law as required under paragraph (19);". 
(b) Section 454 of such Act (as amended by section 2331(b) of this 
Act) is further amended— 
(1) by striking out "and" at the end of paragraph (17); 
(2) by striking out the period at the end of paragraph (18) and 
inserting in lieu thereof "; and"; and 
(3) by adding at the end thereof the following new paragraph: 
"(19) provide that a fee shall be imposed on the individual who 
owes a child or spousal support obligation, in accordance with 
State law, with respect to all such child and spousal support 
obligations for which collection is made by the State agency 
under this part on behalf of an individual not otherwise eligible 
for collection services (as determined for purposes of paragraph 
(6)) in an amount equal to 10 percent of the amount so owed (and 
for purposes of this part, no part of the amount collected shall be 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 863 
considered to be a fee collected except amounts which exceed the 
actual amount of 
support owed).", 
(c) Section 453(a) of such Act is amended by adding at the end 4
2 use 653. 
thereof the following new sentence: "In determining the total 
amounts expended by any State during a quarter, for purposes of 
this 
subsection, there shall be excluded an amount equal to the total of 
any fees collected or other income resulting from services provided 
under the plan approved under this part.". 
CHILD SUPPORT OBUGATIONS NOT DISCHARGED BY BANKRUPTCY 
SEC. 2334. (a) Section 456 of the Social Security Act is amended by 4
2 use 656. 
adding at the end thereof the following new subsection: 
"(b) A debt which is a child support obligation assigned to a State 
under section 402(aX26) is not released by a discharge in bankruptcy 4
2 use 602. 
under title 11, United States Code.". 
(b) Section 523(aX5XA) of title 11, United States Code, is amended 
by inserting before the semicolon the following: "(other than debts 
assigned pursuant to section 402(aX26) of the Social Security Act)". 
(c) The amendments made by this section shall become effective on Effective date. 
the date of 
the enactment of 
this Act. 
^
2 use 6
5
6 note. 
CHILD SUPPORT INTERCEPT OF UNEMPLOYMENT BENEFITS 
SEC. 2335. (a) Section 454 of the Social Security Act (as amended by 
section 2333(b) of this Act) is amended by strimng out "and" at the 
end of paragraph (18), by striking out the period at the end of 
paragraph (19) and inserting in lieu thereof "; and", and by adding at 
the end thereof the following new paragraph: 
"(20) provide that the agency administering the plan— 
"(A) shall determine on a periodic basis, 
from 
information 
supplied pursuant to section 508 of the Unemployment 
Compensation Amendments of 1976, whether any individ- 2
9 use 4
9
b
. 
uals receiving compensation under the State's unemploy- ^
^ ^^^ ^^^^ 
ment compensation law (including amounts payable pursu-
ant to any agreement under any Federal unemployment 
compensation law) owe child support obligations which are 
being enforced by such agency, and 
"(B) shall enforce any such child support obligations which 
are owed by such an individual but are not being met— 
"(i) through an agreement with such individual to 
have specified amounts withheld from compensation 
otherwise payable to such individual and by submitting 
a cop^ of any such agreement to the State agency 
administering the unemployment compensation law, or 
"(ii) in the absence of such an agreement, bv bringing 
legal process (as defined in section 462(e) of this Act) to 4
2 use 662. 
require the withholding of amounts 
from 
such compen-
sation.". 
(bXD Subsection (e) of section 303 of the Social Security Act is 4
2 use 503. 
amended by redesignating paragraphs (2) and (3) as paragraphs (3) 
and (4), respectively, and by inserting after paragraph (1) the follow-
ing new paragraph: 
"(2XA) The State agency charged with the administration of the 
State law— 
"(i) shall require each new applicant for unemployment com-
pensation to disclose whether or not such applicant owes child 
95 STAT. 864 
PUBLIC LAW 97-35—AUG. 13, 1981 
Ante, p. 863. 
42 u s e 662. 
' 'Unemployment 
compensation." 
Ante, p. 863. 
Effective date. 
42 u s e 503 note. 
support obligatons (as defined in the last sentence of this subsec-
tion), 
"(ii) shall notify the State or local child support enforcement 
agency enforcing such obligations, if any applicant discloses 
under clause (i) that he owes child support obligations and he is 
determined to be eligible for unemployment compensation, that 
such applicant has been so determined to be eligible, 
"(iii) shall deduct and withhold from any unemployment 
compensation otherwise payable to an individual— 
"(I) the amount specified by the individual to the State 
agency to be deducted and withheld under this clause, 
"(11) the amount (if any) determined pursuant to an 
agreement submitted to the State agency under section 
454(20)(B)(i) of this Act, or 
"(III) any amount otherwise required to be so deducted and 
withheld from such unemployment compensation through 
legal process (as defined in section 462(e)), and 
"(iv) shall pay any amount deducted and withheld under clause 
(iii) to the appropriate State or local child support enforcement 
agency. 
Any amount deducted and withheld under clause (iii) shall for all 
purposes be treated as if it were paid to the individual as unemploy-
ment compensation and paid by such individual to the State or local 
child support enforcement agency in satisfaction of his child support 
obligations. 
"(B) For purposes of this paragraph, the term 'unemployment 
compensation' means any compensation payable under the State law 
(including amounts payable pursuant to agreements under any 
Federal unemployment compensation law). 
"(C) Each State or local child support enforcement agency shall 
reimburse the State agency charged with the administration of the 
State unemployment compensation law for the administrative costs 
incurred by such State agency under this paragraph which are 
attributable to child support obligations being enforced by the State 
or local child support enforcement agency.". 
(2) Paragraph (3) of section 303(e) of such Act (as redesignated by 
paragraph (1)) is amended by striking out "paragraph (1)" and 
inserting in lieu thereof "paragraph (1) or (2)". 
(3) The last sentence of paragraph (1) of such section 303(e) is 
amended by striking out "the preceding sentence" and inserting in 
lieu thereof "this subsection". 
(c) The amendments made by this section shall take effect on the 
date of the enactment of this Act, except that such amendments shall 
not be requirements under section 454 or 303 of the Social Security 
Act before October 1,1982. 
EFFECTIVE DATE 
42 use 651 note. 
SEC. 2336. (a) Except as otherwise specifically provided in the 
preceding sections of this chapter or in subsection (b), the provisions 
of this chapter and the amendments and repeals made by this chapter 
shall become effective on October 1,1981. 
(b) If a State agency administering a plan approved under part D of 
42 use 651. 
title IV of the Social Security Act demonstrates, to the satisfaction of 
the Secretary of Health and Human Services, that it cannot, by 
reason of State law, comply with the requirements of an amendment 
made by this chapter to which the effective date specified in subsec-
tion (a) applies, the Secretary may prescribe that, in the case of such 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 865 
State, the amendment will become effective beginning with the first 
month beginning after the close of the first session of such State's 
legislature ending on or after October 1, 1981. For purposes of the 
preceding sentence, the term "session of a State's legislature" in-
cludes any regular, special, budget, or other session of a State 
legislature. 
Subtitle B—Supplemental Security Income Benefits 
RETROSPECTIVE ACCOUNTING 
SEC. 2341. (a) Section 1611(c) of the Social Security Act is amended 
to read as follows: 
"(c)(1) An individual's eligibility for a benefit under this title for a 
month shall be determined on the basis of the individual's (and 
eligible spouse's, if any) income, resources, and other relevant charac-
teristics in such month, and, except as provided in paragraph (2), the 
amount of such benefit shall be determined for such month on the 
basis of income and other characteristics in the first or, if the 
Secretary so determines, second month preceding such month. Eligi-
bility for and the amount of such benefits shall be redetermined at 
such time or times as may be provided by the Secretary. 
"(2) The amount of such benefit for the month in which application 
for such benefits is filed or, if the Secretary so determines, for such 
month and the following month, and for any month following a 
month of ineligibility for such benefits (or, if the Secretary so 
determines, such month and the following month) shall be deter-
mined on the basis of the individual's (and eligible spouse's, if any) 
income and other relevant circumstances in such month. 
"(3) For purposes of this subsection, an application shall be effec-
tive as of the first day of the month in which it is filed. 
"(4) The Secretary may waive the limitations specified in subpara-
graphs (A) and (B) of subsection (eXD on an individual's eligibility and 
benefit amount for a month (to the extent either such limitation is 
applicable by reason of such individual's presence throughout such 
month in a hospital, extended care facility, nursing home, or interme-
diate care facility) if such waiver would promote the individual's 
removal from such institution or facility. Upon waiver of such 
limitations, the Secretary shall apply, to the month preceding the 
month of removal, or, if the Secretary so determines, the two months 
preceding the month of removal, the benefit rate that is appropriate 
to such individual's living arrangement subsequent to his removal 
from such institution or facility.". 
(b) Section 1612(b)(3) of such Act is amended— 
(1) by striking out "calendar quarter" each place it appears 
and inserting in lieu thereof "month"; 
(2) by striking out "such quarter" each place it appears and 
inserting in lieu thereof "such month"; 
(3) by striking out "$60" and inserting in lieu thereof "$20"; 
and 
(4) by striking out "$30" and inserting in lieu thereof "$10". 
(c)(1) "The amendments made by this section shall be effective with 
respect to months after the first calendar quarter which ends more 
than five months after the month in which this Act is enacted. 
(2) The Secretary of Health and Human Services may, under 
conditions determined by him to be necessary and appropriate, make 
a transitional payment or payments during the first two months for 
which the amendments made by this section are effective. A transi-
42 u s e 1382. 
Limitations 
waiver. 
42 u s e 1382a. 
Effective date. 
42 u s e 1382 
note. 
Transitional 
payments. 
95 STAT. 866 
PUBLIC LAW 97-35—AUG. 13, 1981 
tional payment made under this section shall be deemed to be a 
payment of supplemental security income benefits. 
42 u s e 1382e 
note. 
42 u s e 1382e. 
42 u s e 1382g. 
Effective date. 
42 u s e 1382e 
note. 
42 u s e 1383. 
42 u s e 1382e. 
87 Stat. 155. 
Investigation. 
Effective date. 
42 u s e 1383 
note. 
EUGIBILITY OF SSI RECIPIENTS FOR FOOD STAMPS 
SEC. 2342. (a) Section 8(d) of Public Law 93-233 is amended to read 
as follows: 
"(d) Upon the request of a State, the Secretary shall find, for 
purposes of the provisions specified in subsection (c), that the level of 
such State's supplementary pajmients of the type described in section 
1616(a) of the Social Security Act has been specifically increased for 
any month so as to include the bonus value of food stamps (and that 
such State meets the applicable requirements of subsection (c)(1)) i
f
— 
"(1) the Secretary has found (under this subsection or subsec-
tion (c), as in effect in December 1980) that such State's supple-
mentary payments in December 1980 were increased to include 
the bonus value of food stamps; and 
"(2) such State continues without interruption to meet the 
requirements of section 1618 of such Act for each month after the 
month referred to in paragraph (1) and up to and including the 
month for which the Secretary is making the determination.". 
(b) The amendment made by subsection (a) shall become effective 
July 1,1981. 
PAYMENT TO STATES WITH RESPECT TO CERTAIN UNNEGOTIATED CHECKS 
SEC. 2343. (a) Section 1631 of the Social Security Act is amended by 
adding at the end thereof the following new subsection: 
"Payment to States With Respect to Certain Unnegotiated Checks 
"(iXD The Secretary of the Treasury shall, on a monthly basis, 
notify the Secretary of all benefit checks issued under this title which 
include amounts representing State supplementary payments as 
described in paragraph (2) and which have not been presented for 
payment within one hundred and eighty days after the day on which 
they were issued. 
"(2) The Secretary shall from time to time determine the amount 
representing the total of the State supplementary payments made 
pursuant to agreements under section 1616(a) of this Act and under 
section 212(b) of Public Law 93-66 which is included in all checks 
payable to individuals entitled to benefits under this title but not 
presented for payment within one hundred and eighty days after the 
day on which they were issued, and shall pay each State (or credit 
each State with) an amount equal to that State's share of all such 
amount. Amounts not paid to the States shall be returned to the 
appropriation from which they were originally paid. 
"(3) The Secretary, upon notice from the Secretary of the Treasury 
under paragraph (1), shall notify any State having an agreement 
described in paragraph (2) of all such benefit checks issued under that 
State's agreement which were not presented for payment within one 
hundred and eighty days after the day on which they were issued. 
"(4) The Secretary shall, to the maximum extent feasible, investi-
gate the whereabouts and eligibility of the individuals whose benefit 
checks were not presented for payment within one hundred and 
eighty days after the day on which they were issued.". 
(b) The amendment made by subsection (a) shall become effective 
October 1,1982. 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 867 
FUNDING OF REHABILITATION SERVICES FOR SSI RECIPIENTS 
SEC. 2344. Effective October 1, 1981, section 1615(d) of the Social 42 use I382d. 
Security Act is amended— 
(1) by striking out "is authorized to pay to" and inserting in 
lieu thereof "is authorized to reimburse'; 
(2) by inserting "for" before "the costs incurred"; and 
(3) by striking out "individuals referred for such services 
pursuant to subsection (a)" and inserting in lieu thereof "individ-
uals who are referred for such services pursuant to subsection (a) 
if such services result in their performance of substantial gainful 
activity which lasts for a continuous period of nine months. The 
determination of the amount of costs to be reimbursed under this 
subsection shall be made by the Commissioner of Social Security 
in accordance with criteria determined by him in the same 
manner as under section 222(d)(1)". 
42 use 422. 
Subtitle C—Block Grants for Social Services 
|?"?^^^'^T?. 
Block Grant Act. 
SHORT TITLE 
SEC. 2351. This subtitle may be cited as the "Social Services Block 42 use 1305 
Grant Act". 
"°te-
TITLE XX BLOCK GRANTS 
SEC. 2352. (a) Title XX of the Social Security Act is amended to read 
as follows: 
"TITLE XX—BLOCK GRANTS TO STATES FOR SOCIAL 
SERVICES 
"PURPOSES OF TITLE; AUTHORIZATION OF APPROPRIATIONS 
"SEC. 2001. For the purposes of consolidating Federal assistance to 42 use 1397. 
States for social services into a single grant, increasing State flexibil-
ity in using social service grants, and encouraging each State, as far 
as practicable under the conditions in that State, to furnish services 
directed at the goals of— 
"(1) achieving or maintaining economic self-support to prevent, 
reduce, or eliminate dependency; 
"(2) achieving or maintaining self-sufficiency, including reduc-
tion or prevention of dependency; 
"(3) preventing or remedying neglect, abuse, or exploitation of 
children and adults unable to protect their own interests, or 
preserving, rehabilitating or reuniting families; 
"(4) preventing or reducing inappropriate institutional care by 
providing for community-based care, home-based care, or other 
forms of less intensive care; and 
"(5) securing referral or admission for institutional care when 
other forms of care are not appropriate, or providing services to 
individuals in institutions, 
there are authorized to be appropriated for each fiscal year such sums 
as may be necessary to carry out the purposes of this title. 
"PAYMENTS TO STATES 
"SEC. 2002. (aXD Each State shall be entitled to payment under this 42 use 1397a. 
title for each fiscal year in an amount equal to its allotment for such 
95 STAT. 868 
PUBLIC LAW 97-35—AUG. 13, 1981 
Services. 
Expenditures. 
26 u s e 501. 
Technical 
assistance. 
42 use 1397b. 
fiscal year, to be used by such State for services directed at the goals 
set forth in section 2001, subject to the requirements of this title. 
"(2) For purposes of paragraph (1)— 
"(A) services which are directed at the goals set forth in section 
2001 include, but are not limited to, child care services, protective 
services for children and adults, services for children and adults 
in foster care, services related to the management and mainte-
nance of the home, day care services for adults, transportation 
services, family planning services, training and related services, 
employment services, information, referral, and counseling serv-
ices, the preparation and delivery of meals, health support 
services and appropriate combinations of services designed to 
meet the special needs of children, the aged, the mentally 
retarded, the blind, the emotionally disturbed, the physically 
handicapped, and alcoholics and drug addicts; and 
"(B) expenditures for such services may include expenditures 
for— 
"(i) administration (including planning and evaluation); 
"(ii) personnel training and retraining directly related to 
the provision of those services (including both short- and 
long-term training at educational institutions through 
grants to such institutions or by direct financial assistance to 
students enrolled in such institutions); and 
"(iii) conferences or workshops, and training or retraining 
through grants to nonprofit organizations within the mean-
ing of section 501(cX3) of the Internal Revenue Code of 1954 
or to individuals with social services expertise, or through 
financial 
assistance to individuals participating in such 
conferences, workshops, and training or retraining (and this 
clause shall apply with respect to all persons involved in the 
delivery of such services). 
"(b) The Secretary shall make pajnnents in accordance with section 
203 of the Intergovernmental Cooperation Act of 1968 (42 U.S.C. 4213) 
to each State from its allotment for use under this title. 
"(c) Payments to a State from its allotment for any fiscal year must 
be expended by the State in such fiscal year or in the succeeding fiscal 
year. 
"(d) A State may transfer up to 10 percent of its allotment under 
section 2003 for any fiscal year for its use for that year under other 
provisions of Federal law providing block grants for support of health 
services, health promotion and disease prevention activities, or low-
income home energy assistance (or any combination of those activi-
ties). Amounts allotted to a State under any provisions of Federal law 
referred to in the preceding sentence and transferred by a State for 
use in carrying out the purposes of this title shall be treated as if they 
were paid to the State under this title but shall not affect the 
computation of the State's allotment under this title. The State shall 
inform the Secretary of any such transfer of funds. 
"(e) A State may use a portion of the amounts described in 
subsection (a) for the purpose of purchasing technical assistance from 
public or private entities if the State determines that such assistance 
is required in developing, implementing, or administering programs 
funded under this title. 
"ALLOTMENTS 
"SEC. 2003. (a) The allotment for any fiscal year to each of the 
jurisdictions of Puerto Rico, Guam, the Virgin Islands, and the 
Northern Mariana Islands shall be an amount which bears the same 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 869 
ratio to the amount specified in subsection (c) as the amount which 
was specified for allocation to the particular jurisdiction involved for 
the fiscal year 1981 under section 2002(a)(2XC) of this Act (as in effect 
prior to the enactment of this section) bore to $2,900,000,000. 
"0^) The allotment for any fiscal year for each State other than the 
jurisdictions of Puerto Rico, Guam, the Virgin Islands, and the 
Northern Mariana Islands shall be an amount which bears the same 
ratio to— 
"(1) the amount specified in subsection (c), reduced by 
"(2) the total amount allotted to those jurisdictions for that 
fiscal year under subsection (a), 
as the population of that State bears to the population of all the 
States as determined by the Secretary (on the basis of the most recent 
data available from the Department of Commerce) and promulgated 
(subject to subsection (d)) prior to the first day of the third month of 
the preceding fiscal year. 
"(c) The amount specified for purposes of subsections (a) and (b) 
shall be— 
"(1) $2,400,000,000 for the fiscal year 1982; 
"(2) $2,450,000,000 for the fiscal year 1983; 
"(3) $2,500,000,000 for the fiscal year 1984; 
"(4) $2,600,000,000 for the fiscal year 1985; and 
"(5) $2,700,000,000 for the fiscal year 1986 or any succeeding 
fiscal year. 
"(d) The determination and promulgation required by subsection 
(b) with respect to the fiscal year 1982 shall be made as soon as 
possible after the enactment of the Omnibus Budget Reconciliation 
Act of 1981. 
"STATE ADMINISTRATION 
"SEC. 2004. Prior to expenditure by a State of payments made to it 
under section 2002 for any fiscal year, the State shall report on the 
intended use of the payments the State is to receive under this title, 
including information on the types of activities to be supported and 
the categories or characteristics of individuals to be served. The 
report shall be transmitted to the Secretary and made public within 
the State in such manner as to facilitate comment by any person 
(including any Federal or other public agency) during development of 
the report and after its completion. The report shall be revised 
throughout the year as may be necessary to reflect substantial 
changes in the activities assisted under this title, and any revision 
shall be subject to the requirements of the previous sentence. 
94 Stat. 525. 
42 u s e 1397a. 
Ante, p. 357. 
Public report. 
42 u s e 1397c. 
UMITATIONS ON USE OF GRANTS 
"SEC. 2005. (a) Except as provided in subsection Ob), grants made 42 use I397d. 
under this title may not be used by the State, or by any other person 
with which the State makes arrangements to carry out the purposes 
of this title— 
"(1) for the purchase or improvement of land, or the purchase, 
construction, or permanent improvement (other than minor 
remodeling) of any building or other facility; 
"(2) for the provision of cash payments for costs of subsistence 
or for the provision of room and board (other than costs of 
subsistence during rehabilitation, room and board provided for a 
short term as an integral but subordinate part of a social service, 
or temporary emergency shelter provided as a protective serv-
ice); 
95 STAT. 870 
PUBLIC LAW 97-35—AUG. 13, 1981 
Waiver. 
"(3) for payment of the wages of any individual as a social 
service (other than payment of the wages of welfare recipients 
employed in the provision of child day care services); 
"(4) for the provision of medical care (other than family 
planning services, rehabilitation services, or initial detoxifica-
tion of an alcoholic or drug dependent individual) unless it is an 
integral but subordinate part of a social service for which grants 
may be used under this title; 
"(5) for social services (except services to an alcoholic or drug 
dependent individual or rehabilitation services) provided in and 
by employees of any hospital, skilled nursing facility, intermedi-
ate care facility, or prison, to any individual living in such 
institution; 
"(6) for the provision of any educational service which the 
State makes generally available to its residents without cost and 
without regard to their income; 
"(7) for any child day care services unless such services meet 
applicable standards of State and local law; or 
"(8) for the provision of cash payments as a service (except as 
otherwise provided in this section). 
"(b) The Secretary may waive the limitation contained in subsec-
tion (a) (1) and (4) upon the State's request for such a waiver if he finds 
that the request describes extraordinary circumstances to justify the 
waiver and that permitting the waiver will contribute to the State's 
ability to carry out the purposes of this title. 
42 u s e 1397e. 
Copies. 
Unexpended 
funds. 
REPORTS AND AUDITS 
"SEC. 2006. (a) Each State shall prepare reports on its activities 
carried out with funds made available (or transferred for use) under 
this title. Reports shall be in such form, contain such information, 
and be of such frequency (but not less often than every two years) as 
the State finds necessary to provide an accurate description of such 
activities, to secure a complete record of the purposes for which funds 
were spent, and to determine the extent to which funds were spent in 
a manner consistent with the reports required by section 2004. The 
State shall make copies of the reports required by this section 
available for public inspection within the State and shall transmit a 
copy to the Secretary. Copies shall also be provided, upon request, to 
any interested public agency, and each such agency may provide its 
views on these reports to the Congress. 
"(b) Each State shall, not less often than every two years, audit its 
expenditures from amounts received (or transferred for use) under 
this title. Such State audits shall be conducted by an entity independ-
ent of any agency administering activities funded under this title, in 
accordance with generally accepted auditing principles. Within 30 
days following the completion of each audit, the State shall submit a 
copy of that audit to the legislature of the State and to the Secretary. 
Each State shall repay to the United States amounts ultimately 
found not to have been expended in accordance with this title, or the 
Secretary may offset such amounts against any other amount to 
which the State is or may become entitled under this title. 
"(c) For other provisions requiring States to account for Federal 
grants, see section 202 of the Intergovernmental Cooperation Act of 
1968 (42 U.S.C. 4212). 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 871 
CHILD DAY CARE SERVICES 
"SEC. 2007. (a) Subject to subsection (b), sums granted by a State to 
a qualified provider of child day care services (as defined in subsec-
tion (c)) to assist such provider in meeting its work incentive program 
expenses (as defined in subsection (c)) with respect to individuals 
employed in jobs related to the provision of child day care services in 
one or more child day care facilities of such provider, shall be deemed 
for purposes of section 2002 to constitute expenditures made by the 
State in accordance with the provisions of this title for the provision 
of child day care services. 
"(b) The provisions of subsection (a) shall not be applicable with 
respect to any grant made to a particular qualified provider of child 
day care services to the extent that (as determined by the Secretary) 
such grant is or will be used to pay wages to any employee at an 
annual rate in excess of $6,000, in the case of a public or nonprofit 
private provider, or at an annual rate in excess of $5,000, or to pay 
more than 80 percent of the wages of any employee, in the case of any 
other provider. 
"(c) For purposes of this subsection— 
"(1) the term 'qualified provider of child day care services', 
when used in reference to a recipient of a grant by a State, 
includes a provider of such services only if, of the total number of 
children receiving such services from such provider in the 
facility with respect to which the grant is made, at least 20 
percent thereof have some or all of the costs for the child day care 
services so furnished to them by such provider paid for under a 
program conducted pursuant to this title; and 
"(2) the term 'work incentive program expenses' means ex-
penses of a qualified provider of child day care services which 
constitute work incentive program expenses as defined in section 
50B(a)(l) of the Internal Revenue Code of 1954, or which would 
constitute work incentive program expenses as so defined if the 
provider were a taxpayer entitled to a credit (with respect to the 
wages involved) under section 40 of such Code.". 
(b) Section 1101(a)(1) of such Act is amended by adding at the end 
thereof the following new sentence: "Such term when used in title XX 
also includes the Virgin Islands, American Samoa, the Northern 
Mariana Islands, and the Trust Territory of the Pacific Islands.". 
Grants to 
qualified 
provider. 
42 u s e 1397f. 
Definitions. 
26 u s e SOB. 
26 u s e 40. 
42 u s e 1301. 
Ante, p. 867. 
CONFORMING AMENDMENTS TO THE SOCIAL SECURITY ACT 
SEC. 2353. (a)(1) Section 3(a) of the Social Security Act is amended— 
(A) by amending paragraph (4) to read as follows: 
"(4) in the case of any State, an amount equal to the sum of the 
following proportions of the total amounts expended during such 
quarter as found necessary by the Secretary of Health and 
Human Services for the proper and efficient administration of 
the State plan— 
"(A) 75 per centum of so much of such expenditures as are 
for the training (including both short- and long-term train-
ing at educational institutions through grants to such insti-
tutions or by direct financial assistance to students enrolled 
in such institutions) of personnel employed or preparing for 
employment by the State agency or by the local agency 
administering the plan in the political subdivision; plus 
"(B) one-half of the remainder of such expenditures."; and 
(B) by striking out paragraph (5). 
42 u s e 303. 
-194 0—82 
57 : QL3 
95 STAT. 872 
PUBLIC LAW 97-35—AUG. 13, 1981 
42 use 303. 
(2) Section 3(c) of such Act is repealed. 
42 use 602 note. 
(b)(1) Sections 402(aX5), 402(a)(13), 402(a)(14), 402(aX15) 403(aX3), 
403(e), and 406(d) of such Act as in effect with respect to Puerto Rico, 
Guam, and the Virgin Islands are repealed. 
42 use 602 note. 
(2) Sections 402(aX5), 402(aX15), and 403(aX3) of such Act as they 
apply to the fifty States and the District of Columbia shall be 
applicable to Puerto Rico, Guam, and the Virgin Islands. 
42 use 603 note. 
(3) Section 248(b) of the Social Security Amendments of 1967 (Public 
Law 90-248) is repealed. 
42 use 602. 
(c) Section 402(aX15) of such Act is amended— 
(1) by striking out "as part of the program of the State for the 
provision of services under title XX"; and 
(2) by striking out "or clause (14)". 
42 use 603. 
(d) Section 403(a)(3) of such Act is amended by striking out "service 
described in section 2002(aXl)" and inserting in lieu thereof "service 
described in section 2002(a)". 
42 use 1203. 
(eXD Section 1003(a) of such Act is amended— 
(A) by amending paragraph (3) to read as follows: 
"(3) in the case of any State, an amount equal to the sum of the 
following proportions of the total amounts expended during such 
quarter as found necessary by the Secretary of Health and 
Human Services for the proper and efficient administration of 
the State plan— 
"(A) 75 per centum of so much of such expenditures as are 
for the training (including both short- and long-term train-
ing at educational institutions through grants to such insti-
tutions or by direct financial assistance to students enrolled 
in such institutions) of personnel employed or preparing for 
employment by the State agency or by the local agency 
administering the plan in the political subdivision; plus 
"(B) one-half of the remainder of such expenditures."; and 
(B) by striking out paragraph (4). 
(2) Section 1003(c) of such Act is repealed. 
42 use 1308. 
(f) Section 1108(a) of such Act is amended in the matter preceding 
paragraph (1) to read as follows: 
"(a) The total amount certified by the Secretary of Health and 
Human Services under titles I, X, XlV, and XVI, and under parts A 
42 use 301, 
and E of title IV (exclusive of any amounts on account of services and 
601^670^^' ^^^^' i*®"^s *° which subsection (b) applies)—". 
94 Stat. 501. 
fe) 
Section 1115(a) of such Act is amended— 
42 use 1315. 
(1) in the matter preceding paragraph (1), by striking out "XIX, 
or XX" and inserting in lieu thereof "or XIX"; 
(2) in paragraph (1), by striking out "1902, 2002, 2003, or 2004" 
and inserting in lieu thereof "or 1902"; and 
(3) in paragraph (2)— 
(A) by striking out "1903, or 2002" and inserting in lieu 
thereof "or 1903^ and 
(B) by striking out "or expenditures with respect to which 
payment shall be made under section 2002,". 
42 use 1316. 
(h) Section 1116 of such Act is amended— 
(1) in subsections (aXD and 0)), by striking out "XIX, or XX" 
and inserting in lieu thereof "or XIX"; 
(2) in subsection (aX3), by striking out "1904, or 2003" and 
inserting in lieu thereof "or 1904"; and 
(3) in subsection (d), by striking out "XIX, XX" and inserting in 
lieu thereof "or XIX". 
42 use i320a-3. 
(i) Section 1124(a) of such Act is amended— 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 873 
(1) in paragraph (1), by striking out "XIX and XX" each place it 
appears and inserting in lieu thereof "and XIX"; and 
(2) in paragraph (2)— 
(A) by inserting "or" after the semicolon at the end of 
subparagraph (B); 
(B) by striking out "; or" at the end of subparagraph (C) 
and inserting in lieu thereof a period; and 
(C) by striking out subparagraph (D). 
(j) Section 1126(a) of such Act is amended by striking out "XIX, and 
XX" and inserting in lieu thereof "and XIX". 
(k) Section 1128(a) of such Act is amended— 
(1) in paragraph (2XA), by striking out "or title XX,"; and 
(2) in paragraph (2)(B), bv striking out "or title XX". 
(IXD Section 1403(a) of such Act is amended— 
(A) by amending paragraph (3) to read as follows: 
"(3) in the case of any State, an amount equal to the sum of the 
following proportions of the total amounts expended during such 
quarter as found necessary by the Secretary of Health and 
Human Services for the proper and official administration of the 
State plan— 
"(A) 75 per centum of so much of such expenditures as are 
for the training (including both short- and long-term train-
ing at educational institutions through grants to such insti-
tutions or by direct financial assistance to students enrolled 
in such institutions) of personnel employed or preparing for 
employment by the State agency or by the local agency 
administering the plan in the political subdivision; plus 
"(B) one-half of the remainder of such expenditures."; and 
(B) by striking out paragraph (4). 
(2) Section 1403(c) of such Act is repealed. 
(m)(l) Section 1601 of such Act is amended— 
(A) by inserting "and" before "(b)" the first time it appears; 
and 
(B) by striking out "and (c)" and all that follows through "self-
care,". 
(2) Section 1603(a) of such Act is amended— 
(A) by inserting "and" after the semicolon at the end of 
paragraph (2)(B); 
(B) by amending paragraph (4) to read as follows: 
"(4) in the case of any State, an amount equal to the sum of the 
following proportions of the total amounts expended during such 
quarter as found necessary by the Secretary of Health and 
Human Services for the proper and efficient administration of 
the State plan— 
"(A) 75 per centum of so much of such expenditures as are 
for the training (including both short- and long-term train-
ing at educational institutions through grants to such insti-
tutions or by direct financial assistance to students enrolled 
in such institutions) of personnel employed or preparing for 
employment by the State agency or by the local agency 
administering the plan in the political subdivision: plus 
"(B) one-half of the remainder of such expenditures. ; and 
(C) by striking out paragraph (5). 
(3) Section 1603(c) of such Act is repealed. 
(n) Section 1616(eX2) of such Act is amended by striking out ", as a 
part of the services program planning procedures established pursu-
ant to section 2004 of this Act,'. 
(o) Section 1619 of such Act is amended— 
42 use 1320a-5. 
94 Stat. 2619. 
42 use 1320a-7. 
42 use 1353. 
42 use 1381 
note. 
42 use 1383 
note. 
42 use 1382e. 
94 Stat. 445. 
42 use 1382h. 
95 STAT. 874 
PUBLIC LAW 97-35—AUG. 13, 1981 
94 Stat. 446. 
42 u s e 13821. 
42 u s e 607. 
Ante, p. 846. 
42 u s e 671. 
42 u s e 1397a 
note. 
42 u s e 1397 
note. 
(1) by striking out "titles XIX and XX" each place it appears 
and inserting in lieu thereof "title XIX", and 
(2) by striking out "title XIX or XX" and inserting in lieu 
thereof "title XIX". 
(p) Section 1620(c) of such Act is amended by striking out the 
matter following the end of paragraph (7). 
(q) Section 407(d)(1) of such Act is amended by striking out "a 
community work and training program under section 409 or any 
other work and training program subject to the limitations in section 
409, or" and inserting in lieu thereof "a community work experience 
program under section 409, or". 
(r) Section 471(aX10) of such Act is amended by striking out 
"standards referred to in section 2003(d)(lXF)" and inserting in lieu 
thereof "standards in effect in the State with respect to child day care 
services under title XX". 
(s) Section 3(f) of the Social Security Amendments of 1974 (Public 
Law 93-647) is repealed. 
EFFECTIVE DATE 
SEC. 2354. Except as otherwise explicitly provided, the provisions of 
this subtitle, and the repeals and amendments made by this subtitle, 
shall become effective on October 1,1981. 
42 u s e 1397 
note. 
Ante, p. 867. 
Report to 
eongress. 
STUDY OF STATE SOCIAL SERVICE PROGRAMS 
SEC. 2355. The Secretary of Health and Human Services shall 
conduct a study to identify criteria and mechanisms which may be 
useful for the States in assessing the effectiveness and efficiency of 
the State social service programs carried out with funds made 
available under title XX of the Social Security Act. The study shall 
include consideration of Federal incentive payments as an option in 
rewarding States having high performance social service programs. 
The Secretary shall report the results of such study to the Congress 
within one year after the date of the enactment of this Act. 
TITLE XXIV—UNEMPLOYMENT 
COMPENSATION 
26 u s e 3304 
note. 
EUMINATION OF NATIONAL TRIGGER 
SEC. 2401. (a) GENERAL RULE.—Paragraphs (1) and (2) of section 
203(a) of the Federal-State Extended Unemployment Compensation 
Act of 1970 are amended to read as follows: 
"(1) shall begin with the third week after the first week for 
which there is a State 'on' indicator; and 
"(2) shall end with the third week after the first week for which 
there is a State 'off indicator.". 
O
t
)
) TECHNICAL AMENDMENTS.— 
(1) Section 203 of such Act is amended by striking out subsec-
tion (d) and by redesignating subsections (e) and (f) as subsections 
(d) and (e), respectively. 
(2) Subparagraph (B) of section 203(b)(1) of such Act is amended 
by striking out "by reason of a State 'on' indicator". 
(3) Paragraph (2) of section 2030b) of such Act is amended by 
striking out "(or all the States)". 
(4) Subsection (e) of section 203 of such Act (as redesignated by 
paragraph (D) is amended— 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 875 
(A) by striking out "subsections (d) and (e)" in paragraph 
(1) and inserting in lieu thereof "subsection (d)", 
(B) by striking out "all State agencies (or, in the case of 
subsection (e), by the State agency)" in paragraph (1)(A) and 
inserting in lieu thereof "the State agency", and 
(C) by striking out paragraphs (2) and (3) andinserting in 
lieu thereof the following: 
"(2) Determinations under subsection (d) shall be made by the State 
agency in accordance with regulations prescribed by the Secretary.". 
(5) Subsection (a) of section 204 of such Act is amended— 
(A) by striking out paragraph (3), and 
(B) by redesignating paragraph (4) as paragraph (3). 
(c) EFFECTIVE DATES.—The amendments made by this section shall 
apply to weeks beginning after the date of the enactment of this Act. 
26 u s e 3304 
note. 
26 u s e 3304 
note. 
CLAIMS FOR EXTENDED OR ADDITIONAL COMPENSATION NOT INCLUDED 
IN DETERMINING RATE OF INSURED UNEMPLOYMENT 
SEC. 2402. (a) GENERAL RULE.—Subparagraph (A) of section 
203(e)(1) of the Federal-State Extended tJnemployment Compensa-
tion Act of 1970 (as redesignated by section 2401(b)(1) of this Act) is 
amended by striking out "individuals filing claims" and inserting in 
lieu thereof "individuals filing claims for regular compensation". 
(b) EFFECTIVE DATE.—The amendment made by subsection (a) shall 
applv for purposes of determining whether there are State "on" or 
"off indicators for weeks beginning after the date of the enactment 
of this Act. For purposes of making such determinations for such 
weeks, such amendment shall be deemed to be in effect for all weeks 
whether beginning before, on, or after such date of enactment. 
26 u s e 3304 
note. 
26 u s e 3304 
note. 
CHANGE IN STATE TRIGGER FOR EXTENDED COMPENSATION 
SEC. 2403. (a) GENERAL RULE.—Subsection (d) of section 203 of the 
Federal-State Extended Unemployment Compensation Act of 1970 
(as redesignated by section 2401(b)(1) of this Act) is amended— 
(1) in paragraph (1)(B), by striking out "4" and inserting in lieu 
thereof "5"; and 
(2) in the matter following paragraph (2), by striking out "the 
figure '4' contained in subparagraph (B) thereof were '5"' and 
inserting in lieu thereof "the figure *5' contained in subpara-
graph (B) thereof were '6"'. 
(b) EFFECTIVE DATE.—The amendments made by subsection (a) 
shall apply to weeks beginning after September 25,1982. 
26 u s e 3304 
note. 
QUAUFYING REQUIREMENT FOR EXTENDED COMPENSATION 
SEC. 2404. (a) GENERAL RULE.—Subsection (a) of section 202 of the 
Federal-State Extended Unemployment Compensation Act of 1970 is 
amended by redesignating paragraph (5) as paragraph (6) and insert-
ing after paragraph (4) the following: 
"(5) Notwithstanding the provisions of paragraph (2), an indi-
vidual shall not be eligible for extended compensation unless, in 
the base period with respect to which the individual exhausted 
all rights to regular compensation under the State law, the 
individual had 20 weeks of full-time insured employment, or the 
equivalent in insured wages. For purposes of this paragraph, the 
equivalent in insured wages shall be earnings covered by the 
State law for compensation purposes which exceed 40 times the 
26 u s e 3304 
note. 
95 STAT. 876 
PUBLIC LAW 97-35—AUG. 13, 1981 
individual's most recent weekly benefit amount or 1 ^ times the 
individual's insured wages in that calendar quarter of the base 
period in which the individual's insured wages were the highest 
(or one such quarter if his wages were the same for more than 
one such quarter). The State shall by law provide which one of 
the foregomg methods of measuring employment and earnings 
shall be used in that State.". 
26 use 3304 
(b) CONFORMING AMENDMENT.—Section 202(aX6) of such Act (as 
note. 
redesignated bjj subsection (a)) is amended— 
(1) by striking out "paragraphs (3) and (4)" and inserting in lieu 
thereof "paragraphs (3), (4), and (5)"; and 
(2) by inserting "extended compensation or" before "sharable 
regular compensation". 
26 use 3304 
(c) EFFECTIVE DATE.—The amendments made by this section shall 
"°^® 
apply with respect to extended compensation and sharable regular 
compensation payable for weeks which begin after September 25, 
1982. 
EUGIBILITy REQUIREMENTS FOR EX-SERVICEMEMBERS 
SEC. 2405. (a) GENERAL RULE.—Section 8521(aKlXB) of title 5, 
United States C!ode, is amended to read as follows: 
"(B) with respect to that service, the individual— 
"(i) was dischai^ed or released under honorable condi-
tions; 
"(ii) did not resign or voluntarily leave the service; and 
"(iii) was not released or discharged for cause as defined by 
the Department of Defense;". 
5 use 8521 note. 
(b) EFFECTIVE DATE.—The amendment made by subsection (a) shall 
apply with respect to terminations of service on or after July 1,1981, 
but only in the case of weeks of unemployment beginning after the 
date of the enactment of this Act. 
AOJUSTBdENTS TO PROVISIONS WHICH INCREASE FEDERAL UNEMPLOYMENT 
TAX IN STATES WTTH OUTSTANDING LOANS 
SEC. 2406. (a) LIMITATIONS ON CREDIT REDUCTION IN CERTAIN 
26 use 3302. 
CASES.—Section 3302 of the Internal Revenue Code of 1954 (relating 
to credits against unemployment tax) is amended by adding at the 
end thereof the following new subsection: 
"(f) LIMITATION ON CREDIT REDUCTION.— 
"(1) LIMITATION.—In the case of any Stjite which meets the 
requirements of paragraph (2) with respect to any taxable year 
beginning before January 1,1988, the reduction under subsection 
(cK2) in credits otherwise applicable to taxpayers subject to the 
unemployment compensation law of such State shall not exceed 
the greater of— 
"(A) the reduction which was in efTect with respect to such 
State under subsection (cX2) for the preceding taxable year, 
or 
"(B) 0.6 percent of the wages paid by the taxpayer during 
such taxaole year which are attributable to such State. 
"(2) REQUIREMENTS.—The requirements of this paragraph are 
met by anv State with respect to any taxable year if the 
S»:n*etary of Labor determines (on or before November 10 of such 
taxable year) that— 
"(A) no State action was taken during the 12-month period 
ending on September 30 of such taxable year (excluding any 
£u^on required under State law as in effect prior to the date 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 877 
of the enactment of this subsection) which has resulted or 
will result in a reduction in such State's unemployment tax 
effort (as defined by the Secretary of Labor in regulations), 
"(B) no State action was taken during the 12-month period 
ending on September 30 of such taxable year (excluding any 
action required under State law as in effect prior to the date 
of the enactment of this subsection) which has resulted or 
will result in a net decrease in the solvency of the State 
unemployment compensation system (as defined by the 
Secretary of Labor in regulations), 
"(C) the State unemployment tax rate for the taxable year 
equals or exceeds the average benefit cost ratio for calendar 
years in the 5-calendar year period ending with the last 
calendar year before the taxable year, and 
"(D) the outstanding balance for such State of advances 
under title XII of the Social Security Act on September 30 of 42 USC 1321. 
such taxable year was not greater than the outstanding 
balance for such State of such advances on September 30 of 
the third preceding taxable year (or, for purposes of applying 
this subparagraph to taxable year 1983, September 30,1981). 
The requirements of subparagraphs (C) and (D) shall not apply to 
taxable years 1981 and 1982. 
"(3) CREDIT REDUCTIONS FOR SUBSEQUENT YEARS.—If the credit 
reduction under subsection (cX2) is limited by reason of para-
graph (1) of this subsection for any taxable year, for purposes of 
applying subsection (c)(2) to subsequent taxable years (including 
years after 1987), the taxable year for which the credit reduction 
was so limited (and January 1 thereof) shall not be taken into 
account. 
"(4) STATE UNEMPLOYMENT TAX RATE.—For purposes of this 
subsection— 
"(A) IN GENERAL.—The State unemployment tax rate for 
any taxable year is the percentage obtained by dividing— 
"(i) the total amount of contributions paid into the 
State unemployment fund with respect to such taxable 
year, by 
"(ii) the total amount of the remuneration subject to 
contributions under the State unemployment compensa-
tion law with respect to such taxable year (determined 
without regard to any limitation on the amount of wages 
subject to contribution under the State law). 
"(B) TREATMENT OF ADDITIONAL TAX UNDER THIS CHAP-
TER.— 
"(i) TAXABLE YEAR 1983.—In the case of taxable year 
1983, any additional tax imposed under this chapter 
with respect to any State by reason of subsection (c)(2) 
shall be treated as contributions paid into the State 
unemployment fund with respect to such taxable year. 
"(ii) TAXABLE YEAR 1984.—In the case of taxable year 
1984, any additional tax imposed under this chapter 
with respect to einy State by reason of subsection (cX2) 
shall (to the extent such additional tax is attributable to 
a credit reduction in excess of 0.6 of wages attributable 
to such State) be treated as contributions paid into the 
State unemployment fund with respect to such taxable 
year. 
"(5) BENEFIT COST RATIO.—For purposes of this subsection— 
95 STAT. 878 
PUBLIC LAW 97-35—AUG. 13, 1981 
"(A) IN GENERAL.—The benefit cost ratio for any calendar 
year is the percentage determined by dividing— 
"(i) the sum of the total of the compensation paid 
under the State unemployment compensation law 
during such calendar year and any interest paid during 
such calendar year on advances made to the State under 
42 use 1321. 
title XII of the Social Security Act, by 
"(ii) the total amount of the remuneration subject to 
contributions under the State unemployment compensa-
tion law with respect to such calendar year (determined 
without regard to any limitation on the amount of 
remuneration subject to contribution under the State 
law). 
"(B) REIMBURSABLE BENEFITS NOT TAKEN INTO ACCOUNT.— 
For purposes of subparagraph (A), compensation shall not be 
taken into account to the extent— 
"(i) the State is entitled to reimbursement for such 
compensation under the provisions of any Federal law, 
or 
"(ii) such compensation is attributable to services 
performed for a reimbursing employer. 
"(C) REIMBURSING EMPLOYER.—The term 'reimbursing em-
ployer' means any governmental entity or other organiza-
tion (or group of governmental entities or any other organi-
zations) which makes reimbursements in lieu of contribu-
tions to the State unemployment fund. 
"(D) SPECIAL RULES FOR YEARS BEFORE 1985.— 
"(i) TAXABLE YEAR 1983.—For purposes of determining 
whether a State meets the requirements of paragraph 
(2)(C) for taxable year 1983, only regular compensation 
(as defined in section 205 of the Federal-State Extended 
26 use 3304 
Unemployment Compensation Act of 1970) shall be 
"°^® 
taken into account for purposes of determining 
the 
benefit ratio for any preceding calendar year 
before 
1982. 
"(ii) TAXABLE YEAR 1984.—For purposes of determin-
ing whether a State meets the requirements of para-
graph (2)(C) for taxable year 1984, only regular compen-
sation (as so defined) shall be taken into account for 
purposes of determining the benefit ratio for any preced-
ing calendar year before 1981. 
"(E) ROUNDING.—If any percentage determined under 
subparagraph (A) is not a multiple of .1 percent, such 
percentage shall be reduced to the nearest multiple of .1 
percent. 
"(6) REPORTS.—The Secretary of Labor may, by regulations, 
require a State to furnish such information at such time and in 
such manner as may be necessary for purposes of this subsection. 
"(7) DEFINITIONS AND SPECIAL RULES.—The definitions and 
special rules set forth in subsection (d) shall apply to this 
subsection in the same manner as they apply to subsection (c).". 
26 use 3302 
(b) EFFECTIVE DATE.—The amendment made by subsection (a) shall 
^°^^- 
apply to taxable years beginning after December 31,1980. 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 879 
INTEREST ON LOANS MADE TO STATE UNEMPLOYMENT FUNDS 
SEC. 2407. (a) GENERAL RULE.—Section 1202 of the Social Security 
Act is amended by adding at the end thereof the following new 42 use 1322. 
subsection: 
"QoXD Except as otherwise provided in this subsection, each State 
shall pay interest on any advance made to such State under section 
1201. Interest so payable with respect to periods during any calendar 42 USC 1321. 
year shall be at the rate determined under paragraph (4) for such 
calendar year. 
"(2) No interest shall be required to be paid under paragraph (1) 
with respect to any advance made during any calendar vear i
f
— 
"(A) such advance is repaid in full before the close or Septem-
ber 30 of the calendar year in which the advance was made, and 
"(B) no other advance was made to such State under section 
1201 during such calendar year and after the date on which the 
repayment of the advance was completed. 
"(3)(A) Interest payable under paragraph (1) which was attribut-
able to periods during any fiscal year shall be paid by the State to the 
Secretary of the Treasury not later than the first day of the following 
fiscal year. If interest is payable under paragraph (1) on any advance 
(hereinafter in this subparagraph referred to as the 'first advance') by 
reason of another advance made to such State after September 30 of 
the calendar year in which the first advance was made, interest on 
such first advance attributable to periods before such September 30 
shall be paid not later than the day after the date on which the other 
advance was made. 
"(B) Notwithstanding subparagraph (A), in the case of any advance 
made during the last 5 months of any fiscal year, interest on such 
advance attributable to periods during such fiscal year shall not be 
required to be paid before the last day of the succeeding taxable year. 
Any interest the time for payment of which is deferred by the 
preceding sentence shall bear interest in the same manner as if it 
were an advance made on the day on which it would have been 
required to be paid but for this subparagraph. 
' (4) The interest rate determined under this paragraph with 
respect to any calendar year is a percentage (but not in excess of 10 
percent) determined by dividing— 
"(A) the aggregate amount credited under section 904(e) to 42 USC 1104. 
State accounts on the last day of the last calendar quarter of the 
immediately preceding calendar year, by 
"(B) the aggregate of the average daily balances of the State 
accounts for such quarter as determined under section 904(e). 
"(5) Interest required to be paid under paragraph (1) shall not be 
paid (directly or indirectly) by a State from amounts in its unemploy-
ment fund. If the Secretary of Labor determines that any State action 
results in the paying of such interest directly or indirectly (by an 
equivalent reduction in State unemployment taxes or otherwise) 
from such unemployment fund, the Secretary of Labor shall not 
certify such State's unemployment compensation law under section 
3304 of the Internal Revenue Code of 1954. Such noncertification 26 USC 3304. 
sjhall be made in accordance with section 3304(c) of such Code. 
"(6)(A) For purposes of paragraph (2), any voluntary repayment 
shall be applied against advances made under section 1201 on the last 
made first repaid basis. Any other repayment of such an advance 
shall be applied against advances on a first made first repaid basis. 
"(B) For purposes of this paragraph, the term 'voluntary repay- "Voluntary 
ment' means any repayment made under subsection (a). 
repayment." 
95 STAT. 880 
PUBLIC LAW 97-35—AUG. 13, 1981 
"(7) This subsection shall only apply to advances made on or after 
April 1,1982, and before January 1,1988." 
(b) TECHNICAL AMENDMENTS.— 
42 use 1321. 
(1) Paragraph (1) of section 1201 of the Social Security Act is 
amended by striking out "without interest" and inserting in lieu 
thereof "with interest to the extent provided in section 12020))". 
42 use 1322. 
(2) Section 1202 of such Act is amended by striking out "SEC. 
1202." and inserting in lieu thereof "SEC. 1202. (a)". 
CERTIFICATION OF STATE UNEMPLOYMENT LAWS; EFFECTIVE DATES 
SEC. 2408. (a) GENERAL RULE.—Section 3304(c) of the Internal 
26 use 3304. 
Revenue Code of 1954 is amended by striking out the last two 
sentences and inserting in lieu thereof the following: "On October 31 
of any taxable year, the Secretary of Labor shall not certify any State 
which, after reasonable notice and opportunity for hearing to the 
State agency, the Secretary of Labor finds has failed to amend its law 
so that it contains each of the provisions required by law to be 
included therein (including provisions relating to the Federal-State 
26 use 3304 
Extended Unemployment Compensation Act of 1970 (or any amend-
"°*®- 
ments thereto) as required under subsection (aXlD), or has, with 
respect to the twelve-month period ending on such October 31, failed 
to comply substantially with any such provision.". 
26 u s e 3304 
03) TRANSITIONAL RuLES.— 
(1) Except as otherwise provided in paragraph (2)— 
(A) The amendments made by sections 2401 and 2402 shall 
be required to be included in State unemployment compen-
sation laws for purposes of certifications under section 
3304(c) of the Internal Revenue Code of 1954 on October 31 of 
any taxable year after 1980; and 
(B) the amendments made by sections 2403 and 2404 shall 
be required to be included in such laws for purposes of such 
certifications on October 31 of any taxable year after 1981. 
(2)(A) In the case of any State the legislature of which— 
(i) does not meet in a session which begins after the 
date of the enactment of this Act and prior to September 
1.1981, and 
(ii) if in session on the date of the enactment of this 
Act, does not remain in session for a period of at least 25 
calendar days, 
the date "1980" in paragraph (1)(A) shall be deemed to be 
"1981". 
(B) In the case of any State the legislature of which— 
(i) does not meet in a session which begins after the 
date of the enactment of this Act and prior to September 
1.1982, and 
(ii) if in session on the date of the enactment of this 
Act, does not remain in session for a period of at least 25 
the date "1981" in paragraph (1)(B) shall be deemed to be "1982". 
note. 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 881 
TITLE XXV—TRADE ADJUSTMENT 
ASSISTANCE 
Subtitle A—Adjustment Assistance for Workers 
GROUP EUGIBILITY REQUIREMENTS FOR ADJUSTMENT ASSISTANCE 
SEC. 2501. Section 222 of the Trade Act of 1974 (19 U.S.C. 2272) is 
amended— 
(1) by amending paragraph (3) by striking out "contributed 
importantly to" and inserting in lieu thereof "were a substantial 
cause of, and by striking out "to such decline" and inserting in 
lieu thereof "of such decline"; and 
(2) by amending the last sentence to read as follows: 
"For purposes of paragraph (3), the term 'substantial cause* means a 
cause which is important and not less than any other cause.". 
BENEFIT INFORMATION TO WORKERS 
SEC. 2502. Subchapter A of chapter 2 of title II of the Trade Act of 
1974 is amended by adding at the end thereof the following new 
section: 
"SEC. 225. BENEFIT INFORMATION TO WORKERS. 
19 USC 2275. 
"The Secretary shall provide full information to workers about the 
benefit allowances, training, and other employment services avail-
able under this chapter and about the petition and application 
procedures, and the appropriate filing dates, for such allowances, 
training and services. The Secretary shall provide whatever assist-
ance is necessary to enable groups of workers to prepare petitions or 
applications for program benefits. The Secretary shall make every 
effort to insure that cooperating State agencies fully comply with the 
agreements entered into under section 239(a) and shall periodically 19 USC 2311. 
review such compliance. The Secretary shall inform the State Board 
for Vocational Education or equivalent agency and other public or 
private agencies, institutions, and employers, as appropriate, of each 
certification issued under section 223 and of projections, if available, 19 USC 2273. 
of the needs for training under section 236 as a result of such Post, p. 885. 
certification.". 
QUALIFYING REQUIREMENTS FOR WORKERS 
SEC. 2503. Section 231 of the Trade Act of 1974 (19 U.S.C. 2291) is 
amended to read as follows: 
"SEC. 231. QUALIFYING REQUIREMENTS FOR WORKERS. 
"(a) Payment of a trade readjustment allowance shall be made to 
an adversely affected worker covered by a certification under sub-
chapter A who files an application for such allowance for any week of 19 USC 2271. 
unemployment which begins more than 60 days after the date on 
which the petition that resulted in such certification was filed under 
section 221, if the following conditions are met: 
"(1) Such worker's total or partial separation before his appli-
cation under this chapter occurred— 
"(A) on or after the date, as specified in the certification 
under which he is covered, on which total or partial separa-
tion began or threatened to begin in the adversely affected 
employment. 
95 STAT. 882 
PUBLIC LAW 97-35—AUG. 13, 1981 
"(B) before the expiration of the 2-year period beginning 
19 use 2273. 
on the date on which the determination under section 223 
was made, and 
* 
'(C) before the termination date (if any) determined pursu-
ant to section 223(d). 
"(2) Such worker had, in the 52-week period ending with the 
week in which such total or partial separation occurred, at least 
26 weeks of employment at wages of $30 or more a week in 
adversely affected employment with a single firm or subdivision 
of a firm, or, if data with respect to weeks of employment with a 
firm are not available, equivalent amounts of employment com-
puted under regulations prescribed by the Secretary. For the 
purposes of this paragraph, any week in which such worker— 
"(A) is on employer-authorized leave for purposes of vaca-
tion, sickness, injury, maternity, or inactive duty or active 
duty military service for traininjpf, 
"(B) does not work because of a disability that is compen-
sable under a workmen's compensation law or plan of a 
State or the United States, or 
"(C) had his employment interrupted in order to serve as a 
full-time representative of a labor organization in such firm 
or subdivision, 
shall be treated as a week of employment at wages of $30 or more, 
but not more than the following number of weeks may be treated 
as such weeks of employment under this sentence: 
"(i) 3 weeks if no weeks described in subparagraph (B) 
occurred during the 52-week period concerned. 
"(ii) 7 weeks if all are weeks described in subpara-
graph (B). 
"(iii) 7 weeks in the case of weeks described in subpar-
agraphs (B) and (A) or (C), or both, except that not more 
than 3 of such weeks may be other than weeks described 
in subparagraph (B). 
"(3) Such worker— 
"(A) was entitled to (or would be entitled to if he applied 
therefor) unemployment insurance for a week within the 
benefit period (i) in which such total or partial separation 
took place, or (ii) which began (or would have begun) by 
reason of the filing of a claim for unemployment insurance 
by such worker after such total or partial separation; 
"(B) has exhausted all rights to any unemployment insur-
ance to which he was entitled (or would be entitled if he 
applied therefor); and 
(C) does not have an unexpired waiting period applicable 
to him for any such unemployment insurance. 
"(4) Such worker, with respect to such week of unemployment, 
would not be disqualified for extended compensation payable 
under the Federal-State Extended Unemployment Compensa-
26 use 3304 
tion Act of 1970 by reason of the work acceptance and job search 
^A% 
ORKO 
requirements in section 202(a)(3) of such Act. 
M btat. 4Jb5«. 
UQ^^ jf ^jjg Secretary determines with respect to any labor market 
area that— 
"(1) a high level of unemployment exists, 
"(2) suitable employment opportunities are not available, and 
"(3) there are facilities available for the provision of training 
Post, p. 885. 
under section 236 in new or related job classifications, 
the Secretary may, in accordance with such regulations as he shall 
prescribe, require all adversely affected workers who were totally Or 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 883 
partially separated in such area and for whom such training is 
approved under section 236— 
"(A) to accept such training, or 
"(B) to search actively for work outside such area, 
whichever the worker may choose; except that no worker may be 
required (i) to accept training or undertake a job search under this 
subsection until after the first 8 weeks of his eligibility for trade 
readjustment allowances has expired, or (ii) to accept, or to partici-
pate in, such training for a period longer than the remaining period 
to which he is entitled to such allowances. For purposes of this 
subsection, the term 'labor market area' has the same meaning as is 
given such term in the Introduction to the Directory of Important 
Labor Areas, 1980 edition, published by the Department of Labor; 
except that for any portion of any State which is not included within 
that term in such Introduction, the county or counties in which that 
portion is located shall be treated as the applicable labor market 
area.". 
AMOUNT OF TRADE READJUSTMENT ALLOWANCES 
SEC. 2504. (a) Section 232 of the Trade Act of 1974 (19 U.S.C. 2292) is 
amended— 
(1) by amending subsection (a) to read as follows: 
"(a) Subject to subsections (b) and (c), the trade readjustment 
allowance payable to an adversely affected worker for a week of total 
unemployment shall be an amount equal to the most recent weekly 
benefit amount of the unemployment insurance payable to the 
worker for a week of total unemployment preceding the worker's first 
exhaustion of unemployment insurance (as determined for purposes 
of section 231(aX3XB)) reduced (but not below zero) by— 
"(1) any training allowance deductible under subsection (c); 
and 
"(2) income that is deductible from unemployment insurance 
under the disqualifying income provisions of the applicable State 
law or Federal unemployment insurance law."; 
(2) by striking out subsections (c), (e) and (f); 
(3) by redesignating subsection (d) as subsection (c); and 
(4) by amending subsection (c) (as redesignated by paragraph 
(3))-
(A) by striking out "unemployment insurance, or" and 
"subsection (c) or (e) or to" in the first sentence thereof, and 
(B) by striking out "the unemployment insurance, or" in 
the second sentence thereof. 
(b) Any reference in any law to subsection (d) of section 232 of the 
Trade Act of 1974 shall be considered a reference to subsection (c) 
thereof. 
Post, p. 885. 
"Labor market 
area." 
Ante, p. 881. 
19 u s e 2292 
note. 
TIME UMITATIONS ON TRADE READJUSTMENT ALLOWANCES 
SEC. 2505. (a) Section 233 of the Trade Act of 1974 (19 U.S.C. 2293) is 
amended to read as follows: 
"SEC. 233. LIMITATIONS ON TRADE READJUSTMENT ALLOWANCES. 
"(a)(1) The maximum amount of trade readjustment allowances 
payable with respect to the period covered by any certification to an 
adversely affected worker shall be the amount which is the product of 
52 multiplied by the trade readjustment allowance payable to the 
worker for a week of total unemployment (as determined under 
95 STAT. 884 
PUBLIC LAW 97-35—AUG. 13, 1981 
Ante, p. 883. 
section 232(a)), but such product shall be reduced by the total sum of 
the unemployment insurance to which the worker was entitled (or 
would have been entitled if he had applied therefor) in the worker's 
Ante, p. 881. 
first benefit period described in section 231(a)(3)(A). 
"(2) A trade readjustment allowance shall not be paid for any week 
after the 52-week period beginning with the first week following the 
first week in the period covered by the certification with respect to 
which the worker has exhausted (as determined for purposes of 
section 231(a)(3)(B)) all rights to that part of his unemployment 
insurance that is regular compensation. 
"(3) Notwithstanding paragraph (1), in accordance with regulations 
prescribed by the Secretary, payments may be made as trade read-
justment allowances for up to 26 additional weeks in the 26-week 
period following the last week of entitlement to trade readjustment 
allowances otherwise payable under this chapter in order to assist the 
adversely affected worker to complete training approved for the 
Post, p. 885. 
worker under section 236. Payments for such additional weeks may 
be made only for weeks in such 26-week period during which the 
individual is engaged in such training and has not been determined 
under section 236(c) to be failing to make satisfactory progress in the 
training. 
"(b) A trade readjustment allowance may not be paid for an 
additional week specified in subsection (a)(3) if the adversely affected 
worker who would receive such allowance did not make a bona fide 
application to a training program approved by the Secretary under 
section 236 within 210 days after the date of the worker's first 
certification of eligibility to apply for adjustment assistance issued by 
the Secretary, or, if later, within 210 days after the date of the 
worker's total or partial separation referred to in section 231(a)(1). 
"(c) Amounts payable to an adversely affected worker under this 
part shall be subject to such adjustment on a week-to-week basis as 
19 use 2292. 
may be required by section 232(b). 
"(d) Notwithstanding any other provision of this Act or other 
Federal law, if the benefit year of a worker ends within an extended 
benefit period, the number of weeks of extended benefits that such 
worker would, but for this subsection, be entitled to in that extended 
benefit period shall be reduced (but not below zero) by the number of 
weeks for which the worker was entitled, during such benefit year, to 
trade readjustment allowances under this part. For purposes of this 
paragraph, the terms 'benefit year' and 'extended benefit period' 
shall have the same respective meanings given to them in the 
Federal-State Extended Unemployment Compensation Act of 1970.". 
(b) Section 204(a)(2) of the Federal-State Extended Unemployment 
94 Stat. 2656. 
Compensation Act of 1970 (26 U.S.C. 3304 note) is amended— 
(1) by striking out "or" at the end of clause (A); and 
(2) by inserting before the period at the end thereof the 
following: ", or (C) paid for any week with respect to which such 
benefits are not payable by reason of section 233(d) of the Trade 
Act of 1974". 
TRAINING AND OTHER EMPLOYMENT SERVICES 
SEC. 2506. Subchapter B of chapter 2 of title II of the Trade Act of 
1974 is further amended— 
(1) by amending the center heading for part II of such sub-
chapter to read as follows: 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 885 
"PART II—TRAINING, OTHER EMPLOYMENT SERVICES, AND 
ALLOWANCES"; 
(2) by amending subsections (a) and (b) of section 236 to read as 19 use 2296 
follows: 
"(a)(1) If the Secretary determines that— 
"(A) there is no suitable employment (which may include 
technical and professional emplo5niient) available for a worker, 
"(B) the worker would benefit from appropriate training, 
"(C) there is a reasonable expectation of employment following 
completion of such training, 
"(D) training approved by the Secretary is available to the 
worker from either governmental agencies or private sources 
(which may include area vocational education schools, as defined 
in section 195(2) of the Vocational Education Act of 1963, and 20 use 2461 
employers), and 
"(E) the worker is qualified to undertake and complete such 
training, 
the Secretary may approve such training for the worker. Upon such 
approval, the worker shall be entitled to have payment of the costs of 
such training paid on his behalf by the Secretary. Insofar as possible, 
the Secretary shall provide or assure the provision of such training on 
the job, which shall include related education necessary for the 
acquisition of skills needed for a position within a particular occupa-
tion. 
"(2) A worker may not be determined to be ineligible or disqualified 
for unemployment insurance or program benefits under this sub-
chapter because the individual is in training approved under para-
graph (1), because of leaving work which is not suitable employment 
to enter such training, or because of the application to any such week 
in training of provisions of State law or Federal unemployment 
insurance law relating to availability for work, active search for 
work, or refusal to accept work. The Secretary shall submit to the 
Congress a quarterly report regarding the amount of funds expended 
during the quarter concerned to provide training under paragraph (1) 
and the anticipated demand for such funds for any remaining 
quarters in the fiscal year concerned. 
"(3) For purposes of this subsection the term 'suitable employment* 
means, with respect to a Worker, work of a substantially equal or 
higher skill level than the worker's past adversely affected employ-
ment, and wages for such work at not less than 80 percent of the 
worker's average weekly wage. 
"(b) The Secretary may, where appropriate, authorize supple-
mental assistance necessary to defray reasonable transportation and 
subsistence expenses for separate maintenance when training is 
provided in facilities which are not within commuting distance of a 
worker's regular place of residence. The Secretary may not 
authorize— 
"(1) payments for subsistence that exceed whichever is the 
lesser of (A) the actual per diem expenses for subsistence, or (B) 
payments at 50 percent of the prevailing per diem allowance rate 
authorized under the Federal travel regulations, or 
"(2) payments for travel expenses exceeding the prevailing 
mileage rate authorized under the Federal travel regulations.', 
and 
(3) by striking out the following: 
Report to 
Congress. 
"Suitable 
employment. 
95 STAT. 886 
PUBLIC LAW 97-35—AUG. 13, 1981 
"PART HI—JOB SEARCH AND RELOCATION ALLOWANCES". 
INCREASED JOB SEARCH ALLOWANCES 
SEC. 2507. Section 237 of the Trade Act of 1974 (19 U.S.C. 2297) is 
amended as follows: 
(1) Subsection (a) thereof is amended to read as follows: 
"(a) Any adversely affected worker covered by a certification under 
1
9 use 2271. 
subchapter A of this chapter may file an application with the 
Secretary for a job search allowance. Such allowance, if granted, shall 
provide reimbursement to the worker of 90 percent of the cost of 
necessary job search expenses as prescribed by regulations of the 
Secretary; except that— 
"(1) such reimbursement may not exceed $600 for any worker, 
and 
"(2) reimbursement may not be made for subsistence and 
transportation expenses at levels exceeding those allowable 
Ante, p. 885. 
under section 236(b) (1) and (2).". 
(2) Subsection (b) thereof is amended— 
(A) by amending paragraph (1) to read as follows: 
"(1) to assist an adversely affected worker who has been totally 
separated in securing a job within the United States;"; and 
(B) by amending paragraph (3) to read as follows: 
"(3) where the worker has filed an application for such allow-
ance with the Secretary before— 
"(A) the later o
f
— 
"(i) the 365th day after the date of the certification 
under which the worker is eligible, or 
"(ii) the 365th day after the date of the worker's last 
total separation; or 
"(B) the 182d day after the concluding date of any training 
received by the worker, if the worker was referred to such 
training by the Secretary.". 
INCREASED RELOCATION ALLOWANCES 
SEC 2508. Section 238 of the Trade Act of 1974 (19 U.S.C. 2298) is 
amended— 
(1) by amending subsection (a)— 
(A) by striking out "who has been totally separated"; and 
(B) by striking out the period and inserting in lieu thereof 
the following: ", if such worker files such application 
before— 
"(1) the later o
f
— 
"(A) the 425th day after the date of the certification, or 
"(B) the 425th day after the date of the worker's last total 
separation; or 
"(2) the 182(1 day after the concluding date of any training 
received by such worker, if the worker was referred to such 
training by the Secretary."; 
(2) by amending subsection O
t
>
) by striking out the period at the 
end of paragraph (2) and inserting in lieu thereof ", and", and by 
adding at the end thereof the following: 
"(3) is totally separated firom emplo3mient at the time reloca-
tion commences."; 
(3) by amending subsection (c) to read as follows: 
"(c) A relocation mlowance shall not be granted to such worker 
unless his relocation occurs within 182 days after the filing of the 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 887 
application therefor or (in the case of a worker who has been referred 
to training by the Secretary) within 182 days after the conclusion of 
such training."; and 
(4) by amending subsection (d)— 
(A) by amending paragraph (1) to read as follows: 
"(1) 90 percent of the reasonable and necessary expenses 
(including, but not limited to, subsistence and transportation 
expenses at levels not exceeding those allowable under section 
236(b) (1) and (2)) specified in regulations prescribed by the Ante, p. 885. 
Secretary, incurred in transporting a worker and his family, if 
any, and household effects, and", and 
(B) by striking out "$500" in paragraph (2) and inserting in 
lieu thereof "$600". 
FRAUD AND RECOVERY OF OVERPAYMENTS 
SEC. 2509. Section 243 of the Trade Act of 1974 (19 U.S.C. 2315) is 
amended to read as follows: 
"SEC. 
2
4
3
. 
FRAUD 
AND 
RECOVERY 
OF 
OVERPAYMENTS. 
"(a)(1) If a cooperating State agency, the Secretary, or a court of 
competent jurisdiction determines that any person has received any 
payment under this chapter to which the person was not entitled, 
including a payment referred to in subsection (b), such person shall be 
liable to repay such amount to the State agency or the Secretary, as 
the case may be, except that the State agency or the Secretary may 
waive such repayment if such agency or the Secretary determines, in 
accordance with guidelines prescribed by the Secretary, that— 
"(A) the payment was made without fault on the part of such 
individual, and 
"(B) requiring such repayment would be contrary to equity and 
good conscience. 
"(2) Unless an overpayment is otherwise recovered, or waived 
under paragraph (1), the State agency or the Secretary shall recover 
the overpayment by deductions from any sums payable to such 
person under this chapter, under any Federal unemployment com-
pensation law administered by the State agency or the Secretary, or 
under any other Federal law administered by the State agency or the 
Secretary which provides for the payment of assistance or an allow-
ance with respect to unemployment, and, notwithstanding any other 
provision of State law or Federal law to the contrary, the Secretary 
may require the State agency to recover any overpayment under this 
chapter by deduction from any unemployment insurance payable to 
such person under the State law, except that no single deduction 
under this paragraph shall exceed 50 percent of the amount other-
wise payable. 
"(b) If a cooperating State agency, the Secretary, or a court of 
competent jurisdiction determines that an individual— 
"(1) knowingly has made, or caused another to make, a false 
statement or representation of a material fact, or 
"(2) knowingly has failed, or caused another to fail, to disclose 
a material fact, 
and as a result of such false statement or representation, or of such 
nondisclosure, such individual has received any payment under this 
chapter to which the individual was not entitled, such individual 
shall, in addition to any other penalty provided by law, be ineligible 
for any further payments under this chapter. 
9-194 0—82 
58:QL3 
95 STAT. 888 
PUBLIC LAW 97-35—AUG. 13, 1981 
"(c) Except for overpayments determined by a court of competent 
jurisdiction, no repayment may be required, and no deduction may be 
made, under this section until a determination under subsection (a)(1) 
by the State agency or the Secretary, as the case may be, has been 
made, notice of the determination and an opportunity for a fair 
hearing thereon has been given to the individual concerned, and the 
determination has become final. 
"(d) Any amount recovered under this section shall be returned to 
the Treasury of the United States.". 
AUTHORIZATION OF APPROPRIATIONS 
SEC. 2510. Section 245 of the Trade Act of 1974 (19 U.S.C. 2317) is 
amended to read as follows: 
"SEC. 245. AUTHORIZATION OF APPROPRIATIONS. 
"There are authorized to be appropriated to the Department of 
Labor, for each of fiscal years 1982 and 1983, such sums as may be 
necessary to carry out the purposes of this chapter.". 
DEFINITIONS 
SEC. 2511. Section 247 of the Trade Act of 1974 (19 U.S.C. 2319) is 
amended— 
(1) by repealing paragraphs (3) and (7); 
(2) by amending paragraph (12) to read as follows: 
"(12) The term 'unemployment insurance' means the unem-
ployment compensation payable to an individual under any 
State law or Federal unemployment compensation law, includ-
5 use 8501 et 
ing chapter 85 of title 5, United States Code, and the Railroad 
*^9- 
Unemployment Insurance Act. The terms 'regular compensa-
45 ubc dbT. 
tion', additional compensation', and 'extended compensation* 
have the same respective meanings that are given them in 
section 205 (2), (3), and (4) of the Federal-State Extended Unem-
ployment Compensation Act of 1970 (26 U.S.C. 3304 note)."; 
(3) by amending paragraph (14) to read as follows: 
"(14) The term 'week of unemployment' means a week of total, 
part-total, or partial unemployment £is determined under the 
applicable State law or Federal unemployment insurance law."; 
and 
(4) by adding at the end thereof the following: 
"(15) The term 'benefit period' means, with respect to an 
individual— 
"(A) the benefit year and any ensuing period, as deter-
mined under applicable State law, during which the indi-
vidual is eligible for regular compensation, additiongJ com-
pensation, or extended compensation, or 
"(B) the equivalent to such a benefit year or ensuing 
period provided for under the applicable Federal unemploy-
ment insurance law.". 
EXTENSION OF ADJUSTMENT ASSISTANCE 
94 Stat. 1746. 
SEC. 2512. Section 285 of the Trade Act of 1974 (19 U.S.C. 2395) is 
19 use note 
amended by striking out "shall terminate on September 30, 1982." 
Pp^/VoplnVi 
^^^ inserting in lieu thereof "chapters 2 and 3 shall terminate on 
2341 
September 30, 1983. Chapter 4 shall terminate on September 30, 
19 use 2371. 
1982.". 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 889 
CONFORMING AMENDMENTS 
SEC. 2513. (aXl) Subsection (c) of 
section 224 of 
the Trade Act of 1974 
(19 U.S.C. 2274(c)) is repealed. 
(2) The section heading for such section 224 is amended by striking 
out "; ACTION WHERE THERE IS AFFIRMATIVE FINDING". 
(b) Section 241 of such Act of 1974 (19 U.S.C. 2313) is amended by 
striking out the last sentence in subsection (a), and by striking out 
"and credited to Adjustment Assistance Trust Fund" in subsection 
(b). 
(c) Section 246 of such Act of 1974 (19 U.S.C. 2318) is repealed. Repeal. 
(d) The table of contents to such Act of 1974 is amended— 
(1) by striking out"; action where there is affirmative finding" 
in the reference to section 224; 
(2) by inserting after the reference to section 224 the following: 
"Sec. 225. Benefit information to workers."; 
(3) by striking out "Time limitations" in the reference to 
section 233 and inserting in lieu thereof "Limitations"; 
(4) by amending the center heading to part II of 
subchapter B of 
title II to read as follows: 
"PART II—TRAINING, OTHER EMPLOYIAENT SERVICES AND ALLOWANCES"; 
(5) by repealing the following: 
"PART ni—JOB SEARCH AND RELOCATION ALLOWANCES"; 
(6) by amending section 239 by striking out "who apply for i9 use 23ii. 
payments under this chapter" in subsection (a); 
(7) by striking out "Recovery" in the reference to section 243 
and inserting in lieu thereof "Fraud and recovery"; 
(8) by amending the reference to section 245 to read as follows: 
"Sec. 245. Authorization of appropriations."; 
and 
(9) by striking out the reference to section 246. 
EFFECTIVE DATES AND TRANSITIONAL PROVISIONS 
SEC. 2514. (aXl) Except as provided in paragraph (2), this subtitle 
shall take effect on the date of 
the enactment of 
this Act. 
(2)(A) The amendments made by section 2501 shall apply with i9 use 2291 
respect to all petitions for certification filed under section 2^1 of the "° ® 
Trade Act of 1974 on or after the 180th day after the date of the i9 use 2271. 
enactment of 
this Act. 
(B) The amendments made by sections 2503, 2504, 2505, and 2511 
shall apply with respect to trade readjustment allowances p»rable for 
weeks of unemployment which b^in after September 30, 1981. 
(C) The amendments made by sections 2506, 2507, and 2508 shall 
take effect with respect to determinations r^arding training and 
applications for allowances under sections 236, 237, and 238 of the 
"n^de Act of 1974 that are made or filed after September 30, 1981. 
(DKi) Except as otherwise provided in clause (ii), the provisions of 
sections 233(d) and 236(aX2) of the Trade Act of 1974 (as amended by Ante, pp. 883, 
this Act), and the provisions of section 204(aX2)(C) of the Federal- ^
^
^ 
State Extended Unemployment Compensation Act of 1970 (as added Ante, p. 884. 
by this Act) shall apply to State unemployment compensation laws 
for purposes of certifications under section 3304(c) of the Internal 
Revenue Code of 1954 on October 31, of any taxable year after 1981. 26 use 3304. 
95 STAT. 890 
PUBLIC LAW 97-35—AUG. 13, 1981 
(ii) In the case of any State the legislature of which— 
(I) does not meet in a session which begins after the date of the 
enactment of this Act and prior to September 1, 1982, and 
(II) if in session on the date of the enactment of this Act, does 
not remain in session for a period of at least 25 calendar days, 
the date "1981" in clause (i) shall be deemed to be "1982". 
19 u s e 2291 
(b) An adversely affected worker who is receiving or is entitled to 
"°*® 
receive payments of trade readjustment allowances under chapter 2 
19 use 2271. 
of the Trade Act of 1974 for weeks of unemployment beginning before 
October 1,1981, shall be entitled to receive— 
(1) with respect to weeks of unemployment beginning before 
October 1, 1981, payments of trade readjustment allowances 
determined under such chapter 2 without regard to the amend-
ments made by this subtitle; and 
(2) with respect to weeks of unemployment beginning after 
September 30, 1981, payments of trade readjustment allowances 
as determined under such chapter 2 as amended by this subtitle, 
except that the maximum amount of trade readjustment 
allowances payable to such an individual for such weeks of 
unemployment shall be an amount equal to the product of the 
trade readjustment allowance payable to the individual for a 
Ante, p. 883. 
week of total unemployment (as determined under section 232(a) 
as so amended) multiplied by a factor determined by subtracting 
from fifty-two the sum of^ 
(A) the number of weeks preceding the first week which 
begins after September 30, 1981, and which are within the 
period covered by the same certification under such chapter 
2 as such week of unemployment, for which the individual 
was entitled to a trade readjustment allowance or unemploy-
ment insurance, or would have been entitled to such allow-
ance or unemployment insurance if he had applied therefor, 
and 
(B) the number of weeks preceding such first week that are 
19 use 2292. 
deductible under section 232(d) (as in effect before the 
amendments made by section 2504); 
except that the amount of trade readjustment allowances pay-
able to an adversely affected worker under this paragraph shall 
be subject to adjustment on a week-to-week basis as may be 
required by section 232(b). 
Subtitle B—Adjustment Assistance for Firms 
TECHNICAL ASSISTANCE 
SEC. 2521. Section 253 of the Trade Act of 1974 (19 U.S.C. 2343) is 
amended to read as follows: 
"SEC. 253. TECHNICAL ASSISTANCE. 
"(a) The Secretary may provide a firm, on terms and conditions as 
the Secretary determines to be appropriate, with such technical 
assistance as in his judgment will carry out the purposes of this 
chapter with respect to the firm. The technical assistance furnished 
under this chapter may consist of one or more of the following: 
"(1) Assistance to a firm in preparing its petition for certifica-
19 use 2341. 
tion of eligibility under section 251 of this chapter. 
"(2) Assistance to a certified firm in developing a proposal for 
its economic adjustment. 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 891 
"(8) Assistance to a certified firm in the implementation of 
such a proposal. 
"(b)(1) The Secretary shall furnish technical assistance under this 
chapter through existing agencies and through private individuals, 
firms, or institutions (including private consulting services), or by 
grants to intermediary organizations (including Trade Adjustment 
Assistance Centers). 
"(2) In the case of assistance furnished through private individuals, 
firms, or institutions (including private consulting services), the 
Secretary may share the cost thereof (but not more than 75 percent of 
such cost may be borne by the United States). 
"(3) The Secretary may make grants to intermediary organizations 
in order to defray up to 100 percent of administrative expenses 
incurred in providing such technical assistance to a firm.". 
UMITATION ON PROVISION OF DIRECT LOANS 
SEC. 2522. Section 254(c) of the Trade Act of 1974 (19 U.S.C. 2344(c)) 
is amended to read as follows: 
"(c) No direct loan may be provided to a firm under this chapter if 
the firm can obtain loan funds from private sources (with or without a 
guarantee) at a rate no higher than the maximum interest per 
annum that a participating financial institution may establish on 
guaranteed loans made pursuant to section 7(a) of the Small Business 
Act.". 
Ante, p. 767. 
CONDITIONS FOR FINANCIAL ASSISTANCE 
SEC. 2523. Section 255 of the Trade Act of 1974 (19 U.S.C. 2345) is 
amended— 
(1) by amending subsection (b) to read as follows: 
"(b)(1) The rate of interest on direct loans made under this chapter 
shall be— 
"(A) a rate determined by the Secretary of the Treasury taking 
into consideration the current average market yield on outstand-
ing marketable obligations of the United States with remaining 
periods of maturity that are comparable to the average maturi-
ties of such loans, adjusted to the nearest one-eighth of 1 percent, 
plus 
"(B) an amount adequate in the judgment of the Secretary of 
Commerce to cover administrative costs and probable losses 
under the program. 
"(2) The Secretary may not guarantee any loan under this chapter 
if— 
"(A) the rate of interest on either the portion to be guaranteed, 
or the portion not to be guaranteed, is determined by the 
Secretary to be excessive when compared with other loans 
bearing Federal guarantees and subject to similar terms and 
conditions, and 
"(B) the interest on the loan is exempt from Federal income 
taxation under section 103 of the Internal Revenue Code of 
1954."; 
26 use 103. 
(2) by amending subsection (c)— 
(A) by amending the first sentence to read as follows: "The 
Secretary shall make no loan or guarantee of a loan under 
section 254(bXl) having a maturity in excess of 25 years or 
the useful life of the fixed assets (whichever period is 
shorter), including renewals and extensions; and shall make 
no loan or guarantee of a loan under section 254(b)(2) having 
95 STAT. 892 
PUBLIC LAW 97-35—AUG. 13, 1981 
a maturity in excess of 10 years, including extensions and 
renewals. , 
(B) b3^ amending the second sentence by striking out 
"limitation" and inserting in lieu thereof "limitations , and 
(C) by amending para^^h (2) by inserting "or servicing" 
immediately after 'liquidation"; 
(3) by amending subsection (d)— 
(A) by inserting "(1)" immediately after "(d)"; and 
(B) by adding at the end thereof the following: 
"(2) For anv direct loan made, or any loan guaranteed, under the 
authority of this chapter, the Secretary may enter into arrangements 
for the servicing, including foreclosure, of such loans or evidences of 
indebtedness on terms which are reasonable and which protect the 
financial interests of 
the United States."; and 
(4) by amending subsection (e) to read as follows: 
"(e) The following conditions apply with respect to any loan 
guaranteed under this chapter: 
"(1) No guarantee may be made for an amount which exceeds 
90 percent of 
the outstanding balance of the unpaid principal and 
interest on the loan. 
"(2) The loan may be evidenced by multiple obligations for the 
guaranteed and nonguaranteed portions of 
the loan. 
"(3) The guarantee agreement shall be conclusive evidence of 
the eligibility of any obligation guaranteed thereunder for such 
guarantee, and the validity of any guarantee agreement shall be 
incontestable, except for fraud or misrepresentation by the 
holder.". 
AUTHORIZATION OP APPROPRIATIONS 
SEC. 2524. Section 256(b) of the Trade Act of 1974 (19 U.S.C. 2346(b)) 
is amended— 
(1) by striking out "firms," and inserting in lieu thereof "firms 
(including, but not limited to, the payment of principal, interest, 
and reasonable costs incident to default on loans guaranteed by 
the Secretary under the authority of this chapter), ; and 
(2) by adding at the end thereof the following new sentence: 
"Direct loans and commitments to guarantee loans may be made 
under this chapter during any fiscsd year only to such extent and 
in such amounts as are provided in advance in appropriation 
Acts.". 
ADMINISTRATION OF FINANCIAL ASSISTANCE 
SEC. 2525. Section 257 of the Trade Act of 1974 (19 U.S.C. 2347) is 
amended by adding at the end thereof the following new subsections: 
"(d) To the extent the Secretary deems it appropriate, and consist-
ent with the provisions of section 552(bX4) and section 552b(cX4) of 
title 5, United States Code, that portion of any record, material or 
data received by the Secretary in connection with an^ application for 
financial assistance under tms chapter which contams trade secrets 
or commercial or financial information regarding the operation or 
competitive jposition of any business shall be deemed to be privileged 
or confidential within the meaning of those provisions. 
"(e) Direct loans made, or loans guaranteed, under this chapter for 
the acquisition or development of 
real property or other capital assets 
shall ordinarily be secui^ by a first lien on the assets to be financed 
and shsdl be fully amortized. To the extent that the Secretary finds 
that exceptions to these standards are necessary to achieve the 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 893 
objectives of this chapter, he shall develop appropriate criteria for the 
protection of the interests of the United States.". 
REPEAL OF TRANSITIONAL PROVISIONS 
SEC. 2526. Section 263 of the Trade Act of 1974 (19 U.S.C. 2353) is 
repealed. 
ASSISTANCE TO INDUSTRIES 
SEC. 2527. Chapter 3 of title II of the Trade Act of 1974 is amended 19 USC 2355. 
by adding at the end thereof the following: 
"SEC. 265. ASSISTANCE TO INDUSTRIES. 
"(a) The Secretary may provide technical assistance, on such terms 
and conditions as the Secretary deems appropriate, for the establish-
ment of industrywide programs for new product development, new 
process development, export development, or other uses consistent 
with the purposes of this chapter. Such technical assistance may be 
provided through existing agencies, private individuals, firms, uni-
versities and institutions, and by grants, contracts, or cooperative 
agreements to associations, unions, or other nonprofit industry orga-
nizations in which a substantial number of firms have been certified 
as eligible to apply for adjustment assistance under section 251. 19 USC 2341. 
"(b) Expenditures for technical assistance under this section may 
be up to $2,000,000 annually per industry and shall be made under 
such terms and conditions as the Secretary deems appropriate.". 
CONFORMING AMENDMENTS 
SEC. 2528. The table of contents of the Trade Act of 1974 is 
amended— 
(1) by striking out the reference to section 263; and 
(2) by inserting after the reference to section 264 the following: 
"Sec. 265. Assistance to industries.". 
EFFECTIVE DATE 
SEC. 2529. (a) Subject to subsection (b), the amendments made by 
this subtitle shall take effect on the date of the enactment of this Act. 
(b) Applications for adjustment assistance under chapter 3 of title 
II of the Trade Act of 1974 which the Secretary of Commerce accepted 
for processing before the date of the enactment of this Act shall 
continue to be processed in accordance with the requirements of such 
chapter as in effect before such date of enactment. 
TITLE XXVI—LOW-INCOME HOME 
ENERGY ASSISTANCE 
SHORT TITLE 
SEC. 2601. This title may be cited as the "Low-Income Home Energy 
Assistance Act of 1981". 
19 USC 2343 
note. 
Low-Income 
Home Energy 
Assistance Act of 
1981. 
42 USC 8621 
note. 
HOME 
ENERGY 
GRANTS 
AUTHORIZED 
SEC. 2602. (a) The Secretary of Health and Human Services is 42 USC 8621. 
authorized to make grants, in accordance with the provisions of this 
95 STAT. 894 
PUBLIC LAW 97-35—AUG. 13, 1981 
Appropriation 
authorization. 
42 u s e 8622. 
Ante, p. 511. 
title, to States to assist eligible households to meet the costs of home 
energy. 
(b) There is authorized to be appropriated to carry out the purposes 
of this title $1,875,000,000 for each of the fiscal years 1982,1983, and 
1984. 
DEFINITIONS 
SEC. 2603. As used in this title: 
(1) The term "energy crisis intervention" means weather-
related and supply shortage emergencies. 
(2)(A) The term "household" means all individuals who occupy 
a housing unit. 
(B) For purposes of subparagraph (A), 1 or more rooms shall be 
treated as a housing unit when occupied as a separate living 
quarters. 
(3) The term "home energy" means a source of heating or 
cooling in residential dwellings. 
(4) The term "poverty level" means, with respect to a house-
hold in any State, the income poverty guidelines for the nonfarm 
population of the United States as prescribed by the Office of 
Management and Budget (and as adjusted annually pursuant to 
section 673(2) of this Act) as applicable to such State. 
(5) The term "Secretary" means the Secretary of Health and 
Human Services. 
(6) The term "State" means each of the several States and the 
District of Columbia. 
(7) The term "State median income" means the State median 
income promulgated by the Secretary in accordance with proce-
dures established under section 2002(aX6) of the Social Security 
Act (as such procedures were in effect on the day before the date 
of the enactment of this Act) and adjusted, in accordance with 
regulations prescribed by the Secretary, to take into account the 
number of individuals in the household. 
42 u s e 8623. 
Allotment 
percentage. 
Post, p. 902. 
STATE ALLOTMENTS 
SEC. 2604. (a)(1)(A) Except as provided in subparagraph (B), the 
Secretary shall, from that percentage of the amount appropriated 
under section 2602(b) for each fiscal year which is remaining after the 
amount of allotments for such fiscal year under subsection QaW) is 
determined by the Secretary, allot to each State an amount equal to 
such remaining percentage multiplied by the State's allotment 
percentage. 
(B) From the sums appropriated therefor, if for any period a State 
has a plan which is described in section 2605(c)(1), the Secretary shall 
pay to such State an amount equal to 100 percent of the expenditures 
of such State made during such period in carrying out such plan, 
including administrative costs (subject to the provisions of section 
2605(bX9XB)), with respect to households described in section 
2605(bX2). 
(2XA) For purposes of paragraph (1), a State's allotment percentage 
is the percentage which the amount the State was eligible to receive 
for fiscal year 1981 under the allotment formulas of the Home Energy 
Assistance Act of 1980 bears to the total amount available for 
allotment under such formulas. 
(B) For purposes of subparagraph (A), the allotment formulas of the 
Home Energy Assistance Act of 1980 shall be treated as including the 
rules provided by, and the rules referred to in, section 101(j) of the 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 895 
joint resolution entitled "Joint resolution making further continuing 
appropriations for the fiscal year 1981, and for other purposes', 
approved December 16, 1980 (Public Law 96-536; 94 Stat. 3168), 
except that such allotment formulas shall not include the reallot-
ment procedures established in section 260.108 of title 45, Code of 
Federal Regulations (relating to reallotment of funds under the low-
income energy assistance program). 
(3) If the sums appropriated for any fiscal year for making grants 
under this title are not sufficient to pay in full the total amount 
allocated to a State under paragraph (1) for such fiscal year, the 
amount which all States will receive under this title for such fiscal 
year shall be ratably reduced. 
(b)(1) The Secretary shall apportion not less than one-tenth of 1 
percent, and not more than one-half of 1 percent, of the amounts 
appropriated for each fiscal year to carry out this title on the basis of 
need among the Commonwealth of Puerto Rico, Guam, American 
Samoa, the Virgin Islands, the Northern Mariana Islands, and the 
Trust Territory of the Pacific Islands. The Secretary shall determine 
the total amount to be apportioned under this paragraph for any 
fiscal year (which shall not exceed one-half of 1 percent) after 
evaluating the extent to which each jurisdiction specified in the 
preceding sentence requires assistance under this paragraph for the 
fiscal year involved. 
(2) Each jurisdiction to which paragraph (1) applies may receive Grants 
grants under this title upon an application submitted to the Secre-
tary containing provisions which describe the programs for which 
assistance is sought under this title, and which are consistent with 
the requirements of section 2605. 
(c) Of the funds available to each State under subsection (a), a 
reasonable amount based on data from prior years shall be reserved 
by each State for energy crisis intervention. 
(d)(1) If, with respect to any State, the Secretary— 
(A) receives a request from the governing organization of an 
Indian tribe within the State that assistance under this title be 
made directly to such organization; and 
(B) determines that the members of such tribe would be better 
served by means of grants made directly to provide benefits 
under this title; 
the Secretary shall reserve from amounts which would otherwise be 
paid to such State from amounts allotted to it under this title for the 
fiscal year involved the amount determined under paragraph (2). 
(2) The amount determined under this paragraph for a fiscal year is 
the amount which bears the same ratio to the amount which would 
(but for this subsection) be allotted to such State under this title for 
such fiscal year (other than by reason of section 2607(b)(2)) as the 
number of Indian households described in subparagraphs (A) and (B) 
of section 2605(b)(2) in such State with respect to which a determina-
tion under this subsection is made bears to the number of all 
households described in subparagraphs (A) and (B) of section 
2605(b)(2) in such State. 
(3) The sums reserved by the Secretary on the basis of a determina-
tion under this subsection shall be granted to— 
(A) the tribal organization serving the individuals for whom 
such a determination has been made; or 
(B) in any case where there is no tribal organization serving an 
individual for whom such a determination has been made, such 
other entity as the Secretary determines has the capacity to 
provide assistance pursuant to this title. 
Apportionment 
percentages. 
Energy crisis 
intervention, 
reserved funds. 
95 STAT. 896 
PUBLIC LAW 97-35—AUG. 13, 1981 
Plan, submittal 
to Secretary. 
Transfer of 
allotment. 
42 use 1397. 
Ante, p. 535. 
42 use 701. 
(4) In order for a tribal organization or other entity to be eligible for 
an amount under this subsection for a fiscal year, it shall submit to 
the Secretary a plan (in lieu of being under the State's plan) for such 
fiscal year which meets such criteria as the Secretary may by 
regulations prescribe. 
(e) At the option of a State, any portion of such State's allotment 
under this title may be reserved by the Secretary for the purpose of 
making direct payments to households described in section 
2605(b)(2)(A)(ii) (taking into account the application of section 2605(i)), 
for low-income energy assistance in accordance with guidelines 
issued by the Secretary. 
(f) A State may transfer up to 10 percent of its allotment under this 
section for any fiscal year for its use for such fiscal year under other 
provisions of Federal law providing block grants for— 
(1) support of activities under subtitle B of title VI (relating to 
community services block grant program); 
(2) support of activities under title XX of the Social Security 
Act; or 
(3) support of preventive health services, alcohol, drug, and 
mental health services, and primary care under title XIX of the 
Public Health Service Act, and maternal and child health serv-
ices under title V of the Social Security Act; 
or any combination of the activities described in paragraphs (1), (2), 
and (3). Amounts allotted to a State under any provisions of Federal 
law referred to in the preceding sentence and transferred by a State 
for use in carrying out the purposes of this title shall be treated as if 
they were paid to the State under this title but shall not affect the 
computation of the State's allotment under this title. The State shall 
inform the Secretary of any such transfer of funds. 
APPUCATIONS AND REQUIREMENTS 
42 use 8624. 
SEC. 2605. (a)(1) Each State desiring to receive an allotment for any 
fiscal year under this title shall submit an application to the Secre-
tary. Each such application shall be in such form as the Secretary 
shall require. Each such application shall contain assurances by the 
chief executive officer of the State that the State will meet the 
conditions enumerated in subsection (b). 
Hearings. 
(2) After the expiration of the first fiscal year for which a State 
receives funds under this title, no funds shall be allotted to such State 
for any fiscal year under this title unless such State conducts public 
hearings with respect to the proposed use and distribution of funds to 
be provided under this title for such fiscal year. 
State 
(b) As part of the annual application required by subsection (a), the 
agreements. 
chief executive officer of each State shall certify that the State agrees 
to— 
(1) use the funds available under this title for the purposes 
described in section 2602(a) and otherwise in accordance with the 
requirements of this title, and agrees not to use such funds for 
any payments other than payments specified in this subsection; 
(2) make payments under this title only with respect to— 
(A) households in which 1 or more individuals are 
receiving— 
(i) aid to families with dependent children under the 
State's plan approved under part A of title IV of the 
42 use 601. 
Social Security Act (other than such aid in the form of 
42 use 608. 
foster care in accordance with section 408 of such Act); 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 897 
(ii) supplemental security income payments under 
title XVI of the Social Security Act; 
42 use 1381. 
(iii) food stamps under the Food Stamp Act of 1977; or 7 use 2011 note. 
(iv) payments under section 415, 521, 541, or 542 of 
title 38, United States Code, or under section 306 of the 
Veterans' and Survivors' Pension Improvement Act of 
1978; or 
38 u s e 521 note. 
(B) households with incomes which do not exceed the 
greater of— 
(i) an amount equal to 150 percent of the poverty level 
for such State; or 
(ii) an amount equal to 60 percent of the State median 
income; 
(3) conduct outreach activities designed to assure that eligible 
households, especially households with elderly individuals or 
handicapped individuals, or both, are made aware of the assist-
ance available under this title, and any similar energy-related 
assistance available under subtitle B of title VI (relating to Ante, p. 511. 
community services block grant program) or under any other 
provision of law which carries out programs which were adminis-
tered under the Economic Opportunity Act of 1964 before the 42 use 2701 
date of the enactment of this Act; 
^°^-
(4) coordinate its activities under this title with similar and 
related programs administered by the Federal Government and 
such State, particularly low-income energy-related programs 
under subtitle B of title VI (relating to community services block 
grant program), under the supplemental security income pro-
gram, under part A of title IV of the Social Security Act, under 42 use 601. 
title XX of the Social Security Act, under the low-income weath- 42 use 1397. 
erization assistance program under title IV of the Energy Con-
servation and Production Act, or under any other provision of 42 use 6851. 
law which carries out programs which were administered under 
the Economic Opportunity Act of 1964 before the date of the f
^ ^SC 2701 
enactment of this Act; 
(5) provide, in a manner consistent with the efficient and 
timely payment of benefits, that the highest level of assistance 
will be furnished to those households which have the lowest 
incomes and the highest energy costs in relation to income, 
taking into account family size; 
(6) to the extent it is necessary to designate local administra-
tive agencies in order to carry out the purposes of this title, give 
special consideration, in the designation of such agencies, to any 
local public or private nonprofit agency which was receiving 
Federal funds under any low-income energy assistance program 
or weatherization program under the Economic Opportunity Act 
of 1964 or any other provision of law on the day before the date of 
the enactment of this Act, except that— 
(A) the State shall, before giving such special considera-
tion, determine that the agency involved meets progrsun and 
fiscal reauirements established by the State; and 
(B) if there is no such agency because of any change in the 
assistance furnished to programs for economically disadvan-
taged persons, then the State shall give special consideration 
in the designation of IOCEQ administrative agencies to any 
successor agency which is operated in substantially the same 
manner as the predecessor agency which did receive funds 
for the fiscal jrear preceding the fiscal year for which the 
determination is made; 
note. 
95 STAT. 898 
PUBLIC LAW 97-35—AUG. 13, 1981 
(7) if the State chooses to pay home energy suppliers directly, 
establish procedures to— 
(A) notify each participating household of the amount of 
assistance paid on its behalf; 
(B) assure that the home energy supplier will charge the 
eligible household, in the normal billing process, the differ-
ence between the actual cost of the home energy and the 
amount of the payment made by the State under this title; 
(C) assure that the home energy supplier will provide 
assurances that any agreement entered into with a home 
energy supplier under this paragraph will contain provisions 
to assure that no household receiving assistance under this 
title will be treated any differently because of such assist-
ance under applicable provisions of State law or public 
regulatory requirements; and 
(D) assure that any home energy supplier receiving direct 
payments agrees not to discriminate, either in the cost of the 
goods supplied or the services provided, against the eligible 
household on whose behalf payments are made; 
(8) provide assurances that the State will treat owners and 
renters equitably under the program assisted under this title; 
(9) provide that— 
(A) in each fiscal year, the State may use for planning and 
administering the use of funds available under this title an 
amount not to exceed 10 percent of its allotment under this 
title for such fiscal year; and 
(B) the State will pay from non-Federal sources the re-
maining costs of planning and administering the program 
assisted under this title and will not use Federal funds for 
such remaining costs; 
Audit. 
(10) provide that such fiscal control and fund accounting 
procedures will be established as may be necessary to assure the 
proper disbursal of and accounting for Federal funds paid to the 
State under this title, including procedures for monitoring the 
assistance provided under this title, and provide that at least 
every year the State shall prepare an audit of its expenditures of 
amounts received under this title and amounts transferred to 
carry out the purposes of this title; 
(11) permit and cooperate with Federal investigations under-
taken in accordance with section 2608; 
(12) provide for public participation in the development of the 
plan described in subsection (c); and 
(13) provide an opportunity for a fair administrative hearing to 
individuals whose claims for assistance under the plan described 
in subsection (c) are denied or are not acted upon with reeisonable 
promptness. 
The Secretary may not prescribe the manner in which the States will 
comply with the provisions of this subsection. 
(c)(1) As part of the annual application required in subsection (a), 
the chief executive officer of each State shall prepare and furnish to 
the Secretary a plan which contains provisions describing how the 
State will carry out the assurances contained in subsection (b). The 
chief executive officer may revise any plan prepared under this 
paragraph and shall furnish the revised plan to the Secretary. 
Public 
(2) Each plan prepared under paragraph (1) shall be made available 
inspection. 
for 
public inspection within the State involved in such a manner as 
will facilitate review of, and comment upon, such plan. 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 899 
(d) Whenever the Secretary determines that a waiver of any 
requirement in subsection (b) is necessary to assist in promoting the 
objectives of this title, the Secretary may waive such requirement to 
the extent and for the period the Secretary finds necessary to enable 
the State involved to carry out the program under the plan. 
(e) Each audit required by subsection (b)(10) shall be conducted by 
an entity independent of any agency administering activities or 
services carried out under this title and shall be conducted in 
accordance with generally accepted accounting principles. Within 30 
days after the completion of each audit, the chief executive officer of 
the State shall submit a copy of such audit to the legislature of the 
State and to the Secretary. 
if) Notwithstanding any other provision of law, the amount of any 
home energy assistance payments or allowances provided to an 
eligible household under this title shall not be considered income or 
resources of such household (or any member thereof) for any purpose 
under any Federal or State law, including any law relating to 
taxation, food stamps, public assistance, or welfare programs. 
(g) The State shall repay to the United States amounts found not to 
have been expended in accordance with this title or the Secretary 
may offset such amounts against any other amount to which the 
State is or may become entitled under this title. 
(h) The Comptroller General of the United States shall, from time 
to time, evaluate the expenditures by States of grants under this title 
in order to assure that expenditures are consistent with the provi-
sions of this title and to determine the effectiveness of the State in 
accomplishing the purposes of this title. 
(i) A household which is described in subsection (b)(2)(A) solely by 
reason of clause (ii) thereof shall not be treated as a household 
described in subsection (b)(2) if the eligibility of the household is 
dependent upon— 
(1) an individual whose annual supplemental security income 
benefit rate is reduced pursuant to section 1611(e)(1) of the Social 
Security Act by reason of being in an institution receiving 
payments under title XIX of the Social Security Act with respect 
to such individual; 
(2) an individual to whom the reduction specified in section 
1612(a)(2)(A)(i) of the Social Security Act applies; or 
(3) a child described in section 1614(f)(2) of the Social Security 
Act who is living together with a parent, or the spouse of a 
parent, of the child. 
(j) In verifying income eligibility for purposes of subsection (b)(2)(B), 
the State may apply procedures and policies consistent with proce-
dures and policies used by the State agency administering programs 
under part A of title IV of the Social Security Act, under title XX of 
the Social Security Act, under subtitle B of title VI of this Act 
(relating to community services block grant program), under any 
other provision of law which carries out programs which were 
administered under the Economic Opportunity Act of 1964 before the 
date of the enactment of this Act, or under other income assistance or 
service programs (as determined by the State). 
(k) Not more than 15 percent of the greater of— 
(1) the funds allotted to a State under this title for any fiscal 
year; or 
(2) the funds available to such State under this title for such 
fiscal year; 
may be used by the State for low-cost residential weatherization or 
other energy-related home repair for low-income households. 
Waiver 
Repayment to 
Keps 
U.S. 
Grant 
expenditures, 
evaluation. 
42 use 1382. 
42 use 1396. 
42 use 1382a. 
42 use 1382c. 
42 u s e 601. 
42 use 1397. 
42 use 2701 
note. 
95 STAT. 900 
PUBLIC LAW 97-35—AUG. 13, 1981 
(1)(1) Any State may use amounts provided under this title for the 
purpose of providing credits against State tax to energy suppliers who 
supply home energy at reduced rates to low-income households. 
(2) Any such credit provided by a State shall not exceed the amount 
of the loss of revenue to such supplier on account of such reduced 
rate. 
(3) Any certification for such tax credits shall be made by the State, 
but such State may use Federal data available to such State with 
respect to recipients of supplemental security income benefits if 
timely delivery of benefits to households described in subsection (b) 
and suppliers will not be impeded by the use of such data. 
42 use 8625. 
42 use 6101 
note. 
29 use 794. 
Noncompliance. 
42 use 2000d. 
eivil action. 
NONDISCRIMINATION PROVISIONS 
SEC. 2606. (a) No person shall on the ground of race, color, national 
origin, or sex be excluded from participation in, be denied the benefits 
of, or be subjected to discrimination under, any program or activity 
funded in whole or in part with funds made available under this title. 
Any prohibition against discrimination on the basis of age under the 
Age Discrimination Act of 1975 or with respect to an otherwise 
qualified handicapped individual as provided in section 504 of the 
Rehabilitation Act of 1973 also shall apply to any such program or 
activity. 
Ot)) Whenever the Secretary determines that a State that has 
received a payment under this title has failed to comply with 
subsection (a) or an applicable regulation, he shall notify the chief 
executive officer of the State and shall request him to secure 
compliance. If within a reasonable period of time, not to exceed 60 
days, the chief executive officer fails or refuses to secure compliance, 
the Secretary is authorized to (1) refer the matter to the Attorney 
General with a recommendation that an appropriate civil action be 
instituted; (2) exercise the powers and functions provided by title VI 
of the Civil Rights Act of 1964, the Age Discrimination Act of 1975, or 
section 504 of the Rehabilitation Act of 1973, as may be applicable; or 
(3) take such other action as may be provided by law. 
(c) When a matter is referred to the Attorney General pursuant to 
subsection Ot)), or whenever he has reason to believe that the State is 
engaged in a pattern or practice in violation of the provisions of this 
section, the Attorney General may bring a civil action in any 
appropriate United States district court for such relief as may be 
appropriate, including injunctive relief. 
PAYMENTS TO STATES 
42 use 8626. 
SEC. 2607. (a) From its allotment under section 2604, the Secretary 
shall make payments to each State in accordance with section 203 of 
42 use 4213. 
the Intergovernmental Cooperation Act of 1968, for use under this 
title. 
eonditions. 
(b)(1) If— 
(A) the Secretary determines that, as of September 1 of any 
fiscal year, an amount allotted to a State under section 2604 for 
any fiscal year will not be used by such State during such fiscal 
year; 
(B) the Secretary— 
(i) notifies the chief executive officer of such State; and 
(ii) publishes a timely notice in the Federal Register; 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 901 
that, after the 30-day period beginning on the date of the notice 
to such chief executive officer, such amount may be reallotted; 
and 
(C) the State does not request, under paragraph (2), that such 
amount be held available for such State for the following fiscal 
year; 
then such amount shall be treated by the Secretary for purposes of 
this title as an amount appropriated for the following fiscal year to be 
allotted under section 2604 for such following fiscal year. 
(2XA) Any State may request that an amount allotted to such State 
for a fiscal year be held available for such State for the following 
fiscal year. Any amount so held available for the following fiscal year 
shall not be taken into account in computing the allotment jof such 
State for such fiscal year under this title. 
(B) No amount may be held available under this paragraph for a 
State from a prior fiscal year to the extent such amount exceeds 25 
percent of the amount allotted to such State for such prior fiscal year. 
For purposes of the preceding sentence, the amount allotted to a 
State for a fiscal year shall be determined without regard to any 
amount held available under this paragraph for such State for such 
fiscal year from the prior fiscal year. 
(3) During the 30-day period described in paragraph (1)(B), com-
ments may be submitted to the Secretary. After considering such 
comments, the Secretary shall notify the chief executive officer of the 
State of any decision to reallot funds, and shall publish such decision 
in the Federal Register. 
WITHHOLDING 
SEC. 2608. (a)(1) The Secretary shall, after adequate notice and an 
opportunity for a hearing conducted within the affected State, 
withhold funds from any State which does not utilize its allotment 
substantially in accordance with the provisions of this title and the 
assurances such State provided under section 2605. 
(2) The Secretary shall respond in an expeditious and speedy 
manner to complaints of a substantial or serious nature that a State 
has failed to use funds in accordance with the provisions of this title 
or the assurances provided by the State under section 2605. For 
purposes of this paragraph, a violation of any one of the assurances 
contained in section 2605(b) that constitutes a disregard of such 
assurance shall be considered a serious complaint. 
(b)(1) The Secretary shall conduct in several States in each fiscal 
year investigations of the use of funds received by the States under 
this title in order to evaluate compliance with the provisions of this 
title. 
(2) Whenever the Secretary determines that there is a pattern of 
complaints from any State in any fiscal year, he shall conduct an 
investigation of the use of funds received under this title by such 
State in order to ensure compliance with the provisions of this title. 
(3) The Comptroller General of the United States may conduct an 
investigation of the use of funds received under this title by a State in 
order to ensure compliance with the provisions of this title. 
(c) Pursuant to an investigation conducted under subsection (b), a 
State shall make appropriate books, documents, papers, and records 
available to the Secretary or the Comptroller Gieneral of the United 
States, or any of their duly authorized representatives, for examina-
tion, copying, or mechanical reproduction on or off the premises of 
the appropriate entity upon a reasonable request therefor. 
Publication in 
Federal 
Register. 
Notice and 
hearing. 
42 u s e 8627. 
Records, 
availability. 
Data. 
42 u s e 8629. 
95 STAT. 902 
PUBLIC LAW 97-35—AUG. 13, 1981 
(d) In conducting any investigation under subsection (b), the Secre-
tary may not request any information not readily available to such 
State or require that any information be compiled, collected, or 
transmitted in any new form not already available. 
LIMITATION ON USE OF GRANTS FOR CONSTRUCTION 
42 use 8628. 
SEC. 2609. Grants made under this title may not be used by the 
State, or by any other person with which the State makes arrange-
ments to carry out the purposes of this title, for the purchase or 
improvement of land, or the purchase, construction, or permanent 
improvement (other than low-cost residential weatherization or other 
energy-related home repairs) of any building or other facility. 
STUDIES 
SEC. 2610. (a) The Secretary, after consultation with the Secretary 
of Energy, shall provide for the collection of data, including— 
(1) information concerning home energy consumption; 
(2) the cost and type of fuels used; 
(3) the type of fuel used by various income groups; 
(4) the number and income levels of households assisted by this 
title; and 
(5) any other information which the Secretary determines to be 
reasonably necessary to carry out the provisions of this title. 
(b) The Secretary shall submit an annual report to the Congress 
containing a summary of data collected under subsection (a). 
REPEALER 
SEC. 2611. Effective October 1, 1981, the Home Energy Assistance 
Act of 1980 is repealed. 
TITLE XXVII—NATIONAL HEALTH SERV-
ICE CORPS; HEALTH PROFESSIONS EDU-
CATION; NURSE TRAINING 
REFERENCE 
SEC. 2700. Except as otherwise specifically provided, whenever in 
this title an amendment or repeal is expressed in terms of an 
amendment to, or a repeal of, a section or other provision, the 
reference shall be considered to be made to a section or other 
42 use 201 note, provision of the Public Health Service Act. 
CHAPTER 1-NATIONAL HEALTH SERVICE CORPS 
Report to 
eongress. 
42 u s e 8601 
note. 
REVISION AND EXTENSION OF NATIONAL HEALTH SERVICE CORPS 
SEC. 2701. (a) Section 331(a)(1) (42 U.S.C. 254d(a)(l)) is amended to 
read as follows: "(1) shall consist of— 
"(A) such officers of the Regular and Reserve Corps of the 
Service as the Secretary may designate, 
"(B) such civilian employees of the United States as the 
Secretary may appoint, and 
"(C) such other individuals who are not employees of the 
United States, 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 903 
(such officers, employees, and individuals hereinafter in this subpart 
referred to as 'Corps members'), and". 
(b) Section 331(b) is amended by striking out "shall" and inserting 42 use 254d. 
in lieu thereof "may". 
(c) The first sentence of section 331(c) is amended by inserting 
"(including individuals considering entering into a written agree-
ment pursuant to section 338C)" after "positions in the Corps". 
(d)(1) Section 331(d)(1) is amended by inserting after "each member 
of the Corps" the following: "(other than a member described in 
subsection (a)(1)(C))". 
(2) Section 331(d)(1)(A) is amended by striking out "shall" and 
inserting in lieu thereof "may". 
(3) Section 331(d)(1)(B) is amended by striking out "shall" and 
inserting in lieu thereof "may". 
(4) Section 331(d) is further amended by adding at the end the 
following: 
"(3) A member of the Corps described in subparagraph (C) of 
subsection (a)(1) shall when assigned to an entity under section 333 be 
subject to the personnel system of such entity, except that such 
member shall receive during the period of assignment the income 
that the member would receive if the member was a member of the 
Corps described in subparagraph (B) of such subsection.". 
(e) Section 331(g) is amended to read as follows: 
"(g)(1) The Secretary shall, by rule, prescribe conversion provisions 
applicable to any individual who, within a year after completion of 
service as a member of the Corps described in subsection (a)(1)(C), 
becomes a commissioned officer in the Regular or Reserve Corps of 
the Service. 
"(2) The rules prescribed under paragraph (1) shall provide that in 
applying the appropriate provisions of this Act which relate to 
retirement, any individual who becomes such an officer shall be 
entitled to have credit for any period of service as a member of the 
Corps described in subsection (a)(1)(C).". 
(f)(1) Section 331(h)(1) is amended by striking out "Health, Educa-
tion, and Welfare" and inserting in lieu thereof "Health and Human 
Services". 
(2) Section 331(h)(2) is amended by striking out "section 751" and 
inserting in lieu thereof "section 338A". 
(3) Section 331(h)(3) is amended by inserting "Commonwealth of 
the" before "Northern Mariana Islands". 
DESIGNATION OF HEALTH MANPOWER SHORTAGE AREAS 
SEC. 2702. (a) Section 332(a)(1)(A) (42 U.S.C. 254e(a)(l)) is amended 
by inserting before the comma at the end thereof "and which is not 
reasonably accessible to an adequately served area". 
(b) Section 332(h) is amended by striking out "shall" and inserting 
in lieu thereof "may". 
(c) Effective October 1, 1981, the Secretary of Health and Human 42 USC 254e 
Services shall— 
^°^^-
(1) evaluate the criteria used under section 332(b) of the Public Criteria, 
Health Service Act to determine if the use of the criteria has evaluation. 
resulted in areas which do not have a shortage of health 
professions personnel being designated as health manpower 
shortage areas; and 
(2) consider different criteria (including the actual use of 
health professions personnel in an area by the residents of an 
area taking into account their health status and indicators of an 
-194 O—82 
59:QL3 
95 STAT. 904 
PUBLIC LAW 97-35—AUG. 13, 1981 
unmet demand and the likelihood that such demand would not 
be met in two years) which may be used to designate health 
manpower shortage areas. 
Report to 
Not later than November 30,1982, the Secretary shall report to the 
Cbngress. 
Congress the results of the activities undertaken under this subsec-
tion. 
42 use 254e. 
(c) Section 332(e) is amended by inserting "(1)" before "Prior" and 
by adding at the end thereof the following: 
Notice. 
"(2) Prior to the designation of a health manpower shortage area 
under this section, the Secretary shall, to the extent practicable, give 
written notice of the proposed designation of such area to appropriate 
public or private nonprofit entities which are located or have a 
demonstrated interest in such area and request comments from such 
entities with respect to the proposed designation of such area.". 
ASSIGNMENT OF CORPS PERSONNEL 
SEC. 2703. (a) Section 333(a)(1)(D) (42 U.S.C. 254f[a)(l)(D)) is 
amended— 
(1) by striking out beginning with "in the case of through 
"which has expired,"; 
(2) by striking out "continued need" in clause (i) and inserting 
in lieu thereof need and demand"; 
(3) by inserting "intended" before "use of Corps members" in 
clause (i); 
(4) by striking out "previously" before "assigned to the area" in 
clause (i) and inserting in lieu thereof "to be"; 
(5) by striking out "fiscal management by the entity with 
respect to Corps members previously assigned" in clause (i) and 
, 
inserting in lieu thereof "the fiscal management capability of the 
nj- entity to which Corps members would be assigned"; 
(6) by striking out "continued need" in clause (iiXD and 
inserting in lieu thereof "need and demand"; 
(7) by striking out "has been" in clause (iiXII) and inserting in 
lieu thereof "will be": 
(8) by striking out previously" in clause (ii)(II); 
(9) by striking out continued" in clause (ii)(IV) and inserting 
in lieu thereof'Unsuccessful"; 
(10) by striking out "has been" in clause (ii)(V) and inserting in 
lieu thereof "is a reasonable prospect of; and 
(11) by striking out "previously in clause (ii)(V). 
(b)(1) Paragraph (1) of subsection (a) of section 333 is amended by 
adding after and below subparagraph (D) the following: "An applica-
tion for sissignment of a Corps member to a health manpower 
shortage area shall include a demonstration by the applicant that the 
area or population group to be served by the applicant has a shortage 
of personal health services and that the Corps member will be located 
so that the member will provide services to the greatest number of 
gersons residing in such area or included in such population group, 
uch a demonstration shall be made on the basis of the criteria 
prescribed by the Secretary under section 332(b) and on additional 
criteria which the Secretary shall prescribe to determine if the area 
or population group to be served by the applicant has a shortage of 
personal health services.". 
(2) Subsection (a) of section 333 is amended by adding at the end the 
following: 
"(3) In approving applications for assignment of members of the 
Corps the Secretary shall not discriminate against applications from 
Health 
manpower 
shortage area, 
assignment. 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 905 
Assignment 
approval. 
Ante, p. 902. 
Amount. 
entities which are not receiving Federal financial assistance under 
this Act". 
(c) Section 333(c) is amended by striking out paragraph (2) and by 42 use 254f. 
redesignating paragraphs (3) and (4) as paragraphs (2) and (3), 
respectively. 
(d) Effective October 1,1981, section 333 is amended by redesignat-
ing subsections (d) through (h) as subsections (e) through (i), respec-
tively, and by adding after subsection (c) the following new 
subsection: 
"(d)(1) The Secretary may not approve an application for the 
assignment of a member of the Corps described in subparagraph (C) of 
section 331(aXl) to an entity unless the application of the entity 
contains assurances satisfactory to the Secretary that the entity (A) 
has sufficient financial resources to provide the member of the Corps 
with an income of not less than the income to which the member 
would be entitled if the member was a member described in subpara-
graph (B) of section 331(aXl), or (B) would have such 
financial 
resources if a grant was made to the entity under paragraph (2). 
"(2)(A) If in approving an application of an entity for the assign- Grants. 
ment of a member of the Corps described in subparagraph (C) of 
section 331(a)(1) the Secretary determines that the entity does not 
have sufficient financial resources to provide the member of the 
Corps with an income of not less than the income to which the 
member would be entitled if the member was a member described in 
subparagraph (B) of section 331(a)(1), the Secretary may make a grant 
to the entity to assure that the member of the Corps assigned to it will 
receive during the period of assignment to the entity such an income. 
"(B) The amount of any grant under subparagraph (A) shall be 
determined by the Secretary. Payments under such a grant may be 
made in advance or by way of reimbursement, and at such intervals 
and on such conditions, as the Secretary finds necessary. No grant 
may be made unless an application therefor is submitted to and 
approved by the Secretary. Such an application shall be in such form, 
submitted in such manner, and contain such information, as the 
Secretary shall by regulation prescribe.". 
(e)(1) Section 333(gXl) (as redesignated by subsection (d) of this 
section) is amended 
(A) by striking out "shall" and inserting in lieu thereof "may"; 
(B) by striking out "or have a demonstrated interest"; and 
(C) by adding at the end thereof the following: "Assistance 
provided under this paragraph may include assistance to an 
entity in (A) analyzing the potentisd use of health professions 
personnel in defined health services delivery areas by the resi-
dents of such areas, (B) determining the need for such personnel 
in such areas, (C) determining the extent to which such areas will 
have a financial base to support the practice of such personnel 
and the extent to which additional financial resources are 
needed to adequately support the practice, and (D) determining 
the types of inpatient and other health services that should be 
provided by such personnel in such areas.". 
(2) Section 333(gX2) (as redesignated by subsection (d) of this 
section) is amended by striking out "shall" and inserting in lieu 
thereof "may" and by striking out "or have a demonstrated interest". 
(3) Section 333(g)(3) (as redesignated by subsection (d) of this 
section) is amended by striking out "shall" and inserting in lieu 
thereof "may". 
(4) Section 333(g) (as redesignated by subsection (d) of this section) is 
further amended by adding at the end the following: 
95 STAT. 906 
PUBLIC LAW 97-35—AUG. 13, 1981 
Agreements 
with qualified 
entities. 
"Qualified 
entity." 
42 use 254f. 
"(4)(A) The Secretary shall undertake to demonstrate the improve-
ments that can be made in the assignment of members of the Corps to 
health manpower shortage areas and in the delivery of health care by 
Corps members in such areas through coordination with States, 
political subdivisions of States, agencies of States and political 
subdivisions, and other public and nonprofit private entities which 
have expertise in the planning, development, and operation of cen-
ters for the delivery of primary health care. In carrying out this 
subparagraph, the Secretary shall enter into agreements with quali-
fied entities which provide that if^ 
"(i) the entity places in effect a program for the planning, 
development, and operation of centers for the delivery of primary 
health care in health manpower shortage areas which reason-
ably addresses the need for such care in such areas, and 
"(ii) under the program the entity will perform the functions 
described in subparagraph (B), 
the Secretary will assign under this section members of the Corps in 
accordance with the program. 
"(B) For purposes of subparagraph (A), the term 'qualified entity' 
means a State, political subdivision of a State, an agency of a State or 
political subdivision, or other public or nonprofit private entity 
operating solely within one State, which the Secretary determines is 
able— 
"(i) to analyze the potential use of health professions personnel 
in defined health services delivery areas by the residents of such 
areas; 
"(ii) to determine the need for such personnel in such areas and 
to recruit, select, and retain health professions personnel (includ-
ing members of the National Health Service Corps) to meet such 
need; 
"(iii) to determine the extent to which such areas will have a 
financial base to support the practice of such personnel and the 
extent to which additional financial resources are needed to 
adequately support the practice; 
"(iv) to determine the types of inpatient and other health 
services that should be provided by such personnel in such areas; 
"(v) to assist such personnel in the development of their 
clinical practice and fee schedules and in the management of 
their practice; 
"(vi) to assist in the planning and development of facilities for 
the delivery of primary health care; and 
"(vii) to assist in establishing the governing bodies of centers 
for the delivery of such care and to assist such bodies in defining 
and carrying out their responsibilities.". 
(f) Section 333(h) (as redesignated by subsection (d) of this section) is 
amended by striking out "shall" and inserting in lieu thereof "may". 
(g) Section 333(i) (as redesignated by subsection (d) of this section) is 
amended by striking out "or dentistry" and inserting in lieu thereof 
"dentistry, or any other health profession". 
COST SHARING 
SEC. 2704. (a)(1) Section 334(a) (42 U.S.C. 254g(a)) is amended by 
inserting "for the assignment of a member of the Corps" after 
"section 333". 
(2) Subparagraphs (A) and (B) of section 334(a)(3) are amended to 
read as follows: 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 907 
"(A) an amount calculated by the Secretary to reflect the Average salary 
average salary (including amounts paid in accordance with and allowances. 
section 331(d)) and allowances of comparable Corps members for 42 use 254d. 
a calendar quarter (or other period); 
"(B) that portion of an amount calculated by the Secretary to 
reflect the average amount paid under the Scholarship Program 
to or on behalf of comparable Corps members that bears the same 
ratio to the calculated amount as the number of days of service 
provided by the member during that quarter (or other period) 
bears to the number of days in his period of obligated service 
under the Program* and". 
(3) Section 334(a)(3)(C) is amended (A) by inserting "or a grant 42 use 254g. 
under section 333(d)(2)" after "section 335(c)', and (B) by inserting "or 
grant" after "such loan" each time it occurs. 
(4) Section 334(b) is amended by adding at the end the following: 
"(4) In determining whether to grant a waiver under paragraph (1) 
or (2), the Secretary shall not discriminate against a public entity.". 
(b) Section 334(e) is amended by striking out "this subpart" and 
inserting in lieu thereof "sections 331 through 335 and section 337". 
PROVISION OF HEALTH SERVICES BY CORPS MEMBERS 
SEC. 2705. (a) Clause (2) of section 335(a) (42 U.S.C. 254h(a)) is 
amended to read as follows: "(2) in a manner which is cooperative 
with other health care providers serving such health manpower 
shortage area.". 
(b) The first sentence of section 335(c) is amended— 
(1) by inserting "and" before "(3)"; and 
(2) by striking out "; and (4) establishing appropriate continu-
ing education programs". 
PREPARATION FOR PRACTICE 
SEC. 2706. (a) Section 336 (42 U.S.C. 254i) is redesignated as section 
336A. 
(b) Subpart II of part D of title III is amended by inserting after 
section 335 (42 U.S.C. 254h) the following new section: 
PREPARATION FOR PRACTICE 
"SEC. 336. (a) The Secretary may make grants to and enter into 
contracts with public and private nonprofit entities for the conduct of 
programs which are designed to prepare individuals subject to a 
service obligation under the National Health Service Corps scholar-
ship program to effectively provide health services in the health 
manpower shortage area to which they are assigned. 
"(b) No grant may be made or contract entered into under subsec-
tion (a) unless an application therefor is submitted to and approved 
by the Secretary. Such an application shall be in such form, submit-
ted in such manner, and contain such information, as the Secretary 
shall by regulation prescribe.". 
42 use 254h-l. 
NATIONAL ADVISORY COUNCIL 
SEC. 2707. (a) Section 337(a) (42 U.S.C. 254j) is amended to read as 
follows: 
"(a) There is established a council to be known as the National 
Advisory Council on the National Health Service Corps (hereinafter 
in this section referred to as the 'Council'). The Council shall be 
Establishment. 
Membership. 
95 STAT. 908 
PUBLIC LAW 97-35—AUG. 13, 1981 
composed of not more than 15 members appointed by the Secretary. 
Consultation 
The Council shall consult with, advise, and make recommendations 
with Secretary, 
to, the Secretary with respect to his responsibilities in carrying out 
this subpart, and shall review and comment upon regulations pro-
mulgated by the Secretary under this subpart.". 
42 use 254j. 
(b) The last sentence of section 337(bXl) is amended by inserting 
"not" before "be reappointed". 
AUTHORIZATION OF APPROPRIATIONS 
SEC. 2708. (a) Section 338(a) (42 U.S.C. 254k) is amended— 
(1) by striking out "and" after "1979;"; and 
(2) by inserting before the period a semicolon and the following: 
"$110,000,000 for the fiscal year ending September 30, 1982; 
^.. $120,000,000 for the fiscal year ending September 30, 1983; and 
'^ 
$130,000,000 for the fiscal year ending September 30, 1984". 
(b) Section 338(b) is amended by striking out "this subpart" and 
inserting in lieu thereof "sections 331 through 335, section 336A, and 
section 337". 
NATIONAL HEALTH SERVICE CORPS SCHOLARSHIP PROGRAM 
^LV^9. 
SEC. 2709. (a) Sections 751,752,753,754,755,756, and 757 (42 U.S.C. 
254Z-254r. 
294t-294y-l) are redesignated as sections 338A, 338B, 338C, 338D, 
338E, 338F, and 338G, respectively. 
42 use 254/. 
(b)(1) Section 338A(a) (as redesignated by subsection (a) of this 
section) is amended by inserting "clinical psychologists," after "phar-
macists,". 
(2) Section 338A(c)(l) (as redesignated by subsection (a) of this 
section) is amended by striking out section 754" and inserting in lieu 
thereof "section 338D". 
(3) Section 338A(c)(2) (as redesignated by subsection (a) of this 
subsection) is amended by inserting "information respecting meeting 
a service obligation through private practice under an agreement 
under section 338C and" after "(2)". 
(4) Section 338A(fKlXAXii) (as redesignated by subsection (a) of this 
section) is amended by striking out "subpart II of part D of title III" 
and inserting in lieu thereof "sections 331 through 335 and section 
337". 
(5) Section 338A(f)(2) (as redesignated by subsection (a) of this 
section) is amended by striking out "subpart II of part D of title III" 
and inserting in lieu thereof 'Sections 331 through 335 and sections 
337 and 338". 
(6) Section 338A(f)(3) (as redesignated by subsection (a) of this 
section) is amended by striking out section 754" and inserting in lieu 
thereof "section 338D". 
(7) Subsection (j) of section 338A (as redesignated by subsection (a) 
o f t i l l s SGCtion) IS rfiDGS-lGQ 
42 use 254m. 
(cXl) Section 338B(a) (as redesignated by subsection (a) of this 
section) is amended— 
(A) by striking out "section 753" and inserting in lieu thereof 
"section 338C"; and 
(B) by striking out "section 751" and inserting in lieu thereof 
"section 338A". 
(2) Paragraphs (1) through (4) of section 338B0t)) (as redesignated by 
subsection (a) of this section) are amended to read as follows: 
"(b)(1) If an individual is required under subsection (a) to provide 
service as specified in section 338A(f)(l)(B)(iv) (hereinaifter in this 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 909 
Obligated 
service, 
eligibility. 
Civilian 
employee, 
designation. 
subsection referred to as 'obligated service'), the Secretary shall, not 
later than ninety days before the date described in paragraph (5), 
determine if the individual shall provide such service— 
"(A) as a member of the Corps who is a commissioned officer in 
the Regular or Reserve Corps of the Service or who is a civilian 
employee of the United States, or 
(B) as a member of the Corps who is not such an officer or 
employee, 
and shall notify such individual of such determination. 
"(2) If the ^cretary determines that an individual shall provide 
obligated service as a member of the Corps who is a commissioned 
officer in the Service or a civilian employee of the United States, the 
Secretary shall, not later than sixty days before the date described in 
paragraph (5), provide such individual with sufficient information 
regarding the advantages and disadvantages of service as such a 
commissioned officer or civilian employee to enable the individual to 
make a decision on an informed basis. To be eligible to provide 
obligated service as a commissioned officer in the Service, an individ-
ual shall notify the Secretary, not later than thirty days before the 
date described in paragraph (5), of the individual's desire to provide 
such service as such an officer. If an individual qualifies for an 
appointment as such an officer, the Secretary shall, as soon as 
possible after the date described in paragraph (5), appoint the 
individual as a commissioned officer of the Regular or Reserve Corps 
of the Service and shall designate the individual as a member of the 
Corps. 
"(3) If an individual provided notice by the Secretary under 
paragraph (2) does not qualify for appointment as a commissioned 
officer in the Service, the Secretary shall, as soon as possible after the 
date described in paragraph (5), appoint such individual as a civilian 
employee of the United States and designate the individual as a 
member of the Corps. 
"(4) If the Secretary determines that an individual shall provide 
obligated service as a member of the Corps who is not an employee of 
the United States, the Secretary shall, as soon as possible after the 
date described in paragraph (5), designate such individual as a 
member of the Corps to provide such service.". 
(3) Section 338B(c)(l) (as redesignated by subsection (a) of this 42 USC 254m. 
section) is amended by striking out "or as a member of the Corps" and 
inserting in lieu thereof "or is designated as a member of the Corps 
under subsection (bX3) or (bX4)". 
(4) Section 338B(c)(2) (as redesignated by subsection (a) of this 
section) is amended by striking out section 753" and inserting in lieu 
thereof "section 338C''. 
(5XA) The first sentence of section 338B(d) (as redesignated by 
suljsection (a) of this section) is amended by striking out "subpart II of 
part D of title III" and inserting in lieu thereof "sections 331 through 
335 and sections 337 and 338". 
(B) The second sentence of such section is amended by inserting 
after "written contract" the following: "and if such individual is an 
officer in the Service or a civilian employee of the United States". 
(6) Section 338B(e) (as redesignated by subsection (a) of this section) 
is amended to read as follows: 
"(e) Notwithstanding any other provision of this title, service of an 
individual under a National Research Service Award awarded under 
subparagraph (A) or (B) of section 472(aXl) shall be counted against 42 USC 289M. 
the period of obligated service which the individual is required to 
perform under the Scholarship Program.". 
95 STAT. 910 
PUBLIC LAW 97-35—AUG. 13, 1981 
42 use 254n. 
42 use 1395n. 
42 use 1395J. 
42 use 1396. 
Breach of 
contract. 
U.S. equipment 
and other 
property, sale. 
(d)(1) Section 338C(a) (as redesignated by subsection (a) of this 
section) is amended— 
(A) by inserting a comma and "to the extent permitted bv, and 
consistent with, the requirements of applicable State law, after 
"shall"; 
(B) by striking out "section 752(a)" and inserting in lieu thereof 
"section 338B(a) or under section 225 (as in effect on September 
30,1977); and 
(C) by striking out "which has a priority for the assignment of 
Corps members under section 333(c)" in paragraph (2). 
(2) Section 338C(b)(l)(B) (as redesignated by subsection (a) of this 
subsection) is amended (A) by inserting "(i)" oefore "shall not", and 
(B) by inserting before the semicolon a comma and the following: 
"and (ii) shall agree to accept an assignment under section 
18420t>)(3)(B)(ii) of such Act for all services for which payment may be 
made under part B of title XVIII of such Act and enter into an 
appropriate agreement with the State agency which administers the 
State plan for medical assistance under title XIX of such Act to 
provide services to individuals entitled to medical assistance under 
the plan". 
(3) Section 338C (as redesignated by subsection (a) of this section) is 
further amended by adding at the end thereof the following new 
subsections: 
"(c) If an individual breaches the contract entered into under 
section 338A by failing (for any reason) to begin his service obligation 
in accordance with an agreement entered into under subsection (a) or 
to complete such service obligation, the Secretary may permit such 
individual to perform such service obligation as a member of the 
Corps. 
"(d) The Secretary may pay an individual who has entered into an 
agreement with the Secretary under subsection (a) an amount to 
cover all or part of the individual's expenses reasonably incurred in 
transporting himself, his family, and his possessions to the location of 
his private clinical practice. 
"(e)(1) The Secretary may make such arrangements as he deter-
mines are necessary for the individual for the use of equipment and 
supplies and for the lease or acquisition of other equipment and 
supplies. 
(2) Upon the expiration of the written agreement under subsec-
tion (a), the Secretary may (notwithstanding any other provision of 
law) sell to the individual who has entered into an agreement with 
the Secretary under subsection (a), equipment and other property of 
the United States utilized by such individual in providing health 
services. Sales made under this subsection shall be made at the fair 
market value (as determined by the Secretary) of the equipment or 
such other property, except that the Secretary may make such sales 
for a lesser value to the individual if he determines that the 
individual is financially unable to pay the full market value. 
"(f) The Secretary may, out of appropriations authorized under 
section 338, pay to individuals participating in private practice under 
this section the cost of such individual's malpractice insurance and 
"(1)(A) $10,000 in the first year of obligated service; 
"(B) $7,500 in the second year of obligated service; 
"(C) $5,000 in the third year of obligated service; and 
"(D) $2,500 in the fourth year of obligated service; or 
"(2) an amount determined by subtracting such individual's 
net income before taxes from the income the individual would 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 911 
have received as a member of the Corps for each such year of 
obligated service. 
"(g) The Secretary shall, upon request, provide to each individual Technical 
released from service obligation under this section technical assist- assistance. 
ance to assist such individual in fulfilling his or her agreement under 
this section.". 
(e)(1) Section 338D (as redesignated by subsection (a) of this section) 42 USC 254o. 
is amended by striking out subsection (a) and redesignating subsec-
tions (b), (c), and (d) as subsections (a), (b), and (c), respectively. 
(2) Section 338D(a) (as redesignated by subsection (a) of this section 
and paragraph (1) of this subsection) is amended— 
(A) by striking out "section 751" and inserting in lieu thereof 
"section 338A"; 
(B) by striking out "or" at the end of paragraph (2); 
(C) by inserting "or" at the end of paragraph (3); and 
(D) by inserting after paragraph (3) the following new para-
graph: 
"(4) fails to accept payment, or instructs the educational 
institution in which he is enrolled not to accept payment, in 
whole or in part, of a scholarship under such contract,". 
(3) Section 338D(b) (as redesignated by subsection (a) of this section 
and paragraph (1) of this subsection) is amended— 
(A) by striking out "(c) I f in the first sentence and inserting in 
lieu thereof "(bXD Except as provided in paragraph (2), if; 
(B) by striking out "(for any reason)" in the first sentence and 
inserting in lieu thereof "(for any reason not specified in subsec-
tion (a) or section 338F(b))"; 
(C) by striking out "section 752 or 753" in the first sentence and 
inserting in lieu thereof "section 338B or 338C"; 
(D) by striking out "section 752" in the first sentence and 
inserting in lieu thereof "section 338B"; 
(E) by striking out "section 753" in the first sentence and 
inserting in lieu thereof "section 338C"; 
(F) by inserting in the second sentence "(or such longer period 
beginning on such date as specified by the Secretary for good 
cause shown)" after "written contract"; and 
(G) by adding at the end the following: 
"(2) If an individual is released under section 753 from a service Ante, p. 908. 
obligation under section 225 (as in effect on September 30,1977) 42 use 234. 
and if the individual does not meet the service obligation 
incurred under section 753, subsection (f) of such section 225 shall 
apply to such individual in lieu of paragraph (1) of this 
subsection.". 
(4XA) Section 338D(cX2) (as redesignated by subsection (a) of this 
section and paragraph (1) of this subsection) is amended by inserting 
"partial or total" before "waiver". 
(B) Section 735(cXl) (42 U.S.C. 294h(cXl)) is amended— 
"(i) by striking out "clauses (A) and (B) of; and 
"(ii) by striking out "section 753" each place it appears and 
inserting in lieu thereof "section 338C". 
(f)(1) The section heading for section 338E (as redesignated by 42USC254p. 
subsection (a) of this section) is amended by striking out "grants" and 
inserting in lieu thereof "loans". 
(2) Section 338E(a) (as redesignated by subsection (a) of this section) 
is amended— 
(A) by inserting a comma and "out of appropriations author-
ized under section 338," after "The Secretary may"; 
(B) by inserting "or one loan" after "grant"; 
95 STAT. 912 
PUBLIC LAW 97-35—AUG. 13, 1981 
42 use 254p. 
Ante, p. 908. 
42 use 254q. 
Appropriation 
authorization. 
Ante, p. 908. 
42 use 254m 
note. 
42 use 294r. 
(C) by striking out "(other than an individual who has entered 
into an agreement under section 338C)"; and 
(D) by inserting "at least two years o f after "completed" in 
paragraph (1). 
(3) Section 338E(a)(2)(A) (as redesignated by subsection (a) of this 
section) is amended by striking out "and described in paragraphs (1) 
and (2) of section 338C(a)". 
(4) Section 338E(aX2XB) (as redesignated by subsection (a) of this 
section) is amended by striking out section 753(bXl)" and inserting 
in lieu thereof "section 338C(bXl)". 
(5) Section 338E(b) (as redesignated by subsection (a) of this section) 
is amended by inserting "or loan" after "grant". 
(6) Section 338E(c) (as redesignated by subsection (a) of this section) 
is amended by inserting "or loan" after "grant" and by adding at the 
end thereof the following new sentence: "The Secretary shall, by 
regulation, set interest rates and repayment terms for loans under 
this section.". 
(7) The second sentence of section 338E(d) (as redesignated by 
subsection (a) of this section) is amended to read as follows: "If within 
60 days after the date of giving such notice, such individual is not 
practicing his profession in accordance with the agreement under 
such subsection and has not provided assurances satisfactory to the 
Secretary that he will not knowingly violate such agreement again, 
the United States shall be entitled to recover from such individual— 
"(1) in the case of an individual who has received a grant under 
this section, an amount determined under section 338D(c), except 
that in applying the formula contained in such section "<^" shall 
be the sum of the amount of the grant made under subsection (a) 
to such individual and the interest on such amount which would 
be payable if at the time it was paid it was a loan bearing interest 
at the maximum legal prevailing rate, "t" shall be the number of 
months that such individual agreed to practice his profession 
under such agreement, and "s" shall be the number of months 
that such individual practices his profession in accordance with 
such agreement; and 
"(2) in the case of an individual who has received a loan under 
this section, the full amount of the principal and interest owed by 
such individual under this section. . 
(gXD Section 338F(a) (as redesignated by subsection (a) of this 
section) is amended by inserting before the last sentence the follow-
ing new sentence: "For the fiscal year ending September 30,1982, and 
each of the two succeeding fiscal years, there are authorized to be 
appropriated such sums as may be necessary to make 550 new 
scholarship awards in accordance with section 338A(d) in each such 
fiscal year and to continue to make scholarship awards to students 
who have entered into written contracts under the Scholarship 
Program before October 1,1984. 
(2) The last sentence of such section is amended by— 
(A) striking out "1981" and inserting in lieu thereof "1985", 
and 
(B) striking out "1980" and inserting in lieu thereof "1984". 
(h) The amendments made by paragraphs (2), (3), and (5XB) of 
subsection (c) shall apply with respect to contracts entered into under 
the National Health Service Corps scholarship program under sub-
part III of part C of title VII of the Public Health Service Act after the 
date of the enactment of this Act. An individual who before such date 
has entered into such a contract and who has not begun the period of 
obligated service required under such contract shall be given the 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 913 
opportunity to revise such contract to permit the individual to serve 
such period as a member of the National Health Service Corps who is 
not an employee of the United States. 
CHAPTER 2—HEALTH PROFESSIONS EDUCATION 
UMITATION OF USE OF APPROPRIATIONS 
SEC. 2715. Section 700 (42 U.S.C. 292) is repealed. 
Repeal. 
DEFINITIONS 
SEC. 2716. (a) Section 701(2) (42 U.S.C. 292a(2)) is amended to read as 
follows: 
"(2) The term 'nonprofit' refers to the status of an entity owned 
and operated by one or more corporations or associations no part 
of the net earnings of which inures, or may lawfully inure, to the 
benefit of any private shareholder or individual.". 
(b) Section 701(4) is amended— 
(1) by striking out "a school which" and inserting in lieu 
thereof "an accredited public or nonprofit private school in a 
State that"; and 
(2) by adding at the end thereof the following: "The term 
'graduate program in health administration' means an accred-
ited graduate program in a public or nonprofit private institution 
in a State that provides training leading to a graduate degree in 
health administration or an equivalent degree.". 
(c) Section 701 is further amended— 
(1) by redesignating paragraphs (5), (6), (7), (8), (9), and (10) as 
paragraphs (6), (7), (8), (9), (11), and (12), respectively; 
(2) by inserting after paragraph (4) the following new para-
graph: 
"(5) The term 'accredited', when applied to a school of medi-
cine, osteopathy, dentistry, veterinary medicine, optometry, po-
diatry, pharmacy, or public health, or a graduate program in 
health administration, means a school or program that is accred-
ited by a recognized body or bodies approved for such purpose by 
the Secretary of Education, except that a new school or program 
that, by reason of an insufficient period of operation, is not, at the 
time of application for a grant or contract under this title, 
eligible for accreditation by such a recognized body or bodies, 
shall be deemed accredited for purposes of this title, if the 
Secretary of Education finds, after consultation with the appro-
priate accreditation body or bodies, that there is reasonable 
assurance that the school or program will meet the accreditation 
standards of such body or bodies prior to the beginning of the 
academic year following the normal graduation date of the first 
entering class in such school or program."; and 
(3) by inserting after paragraph (9) the following new para-
graph: 
"(10) The term 'school of allied health' means a public or 
nonprofit private junior college, college, or university— 
"(A) which provides, or can provide, programs of education 
in a discipline of allied health leading to a baccalaureate or 
associate degree (or an equivalent degree of either) or to a 
more advanced degree; 
"(B) which provides training for not less than a total of 
twenty persons in the allied health curricula; 
95 STAT. 914 
PUBLIC LAW 97-35—AUG. 13, 1981 
"(C) which includes or is affiliated with a teaching hospi-
tal; and 
"(D) which is accredited by a recognized body or bodies 
approved for such purposes by the Secretary of Education, or 
which provides to the Secretary satisfactory assurance by 
such accrediting body or bodies that reasonable progress is 
being made toward accreditation.". 
42 use 292a. 
(d) Section 701(11) (as redesignated by subsection (c)(1) of this 
section) is amended by inserting "the Commonwealth o f before "the 
Northern Mariana Islands,". 
(e) Section 701(12) (as redesignated by subsection (c)(1) of this 
section) is amended by striking out "Department of Health, Educa-
tion, and Welfare" and inserting in lieu thereof "Department of 
Health and Human Services". 
ADVANCE FUNDING 
SEC. 2717. Section 703 (42 U.S.C. 292c) is amended— 
(1) by striking out "(a)", and 
(2) by striking out subsection (b). 
RECORDS AND AUDITS 
SEC. 2718. The second sentence of section 705(a)(42 U.S.C. 292e(a)) is 
repealed. 
Report. 
42 u s e 296. 
Reports to 
eongress. 
HEALTH PROFESSIONS DATA 
SEC. 2719. (a) Section 708(a) (42 U.S.C. 292h(a)) is amended by 
inserting "chiropractors, clinical psychologists," after "medical tech-
nologists,". 
(b) Subsections (c) and (d) of section 708 are amended to read as 
follows: 
"(c) Any school, program, or training center receiving funds under 
this title or title VIII shall submit an annual report to the Secretary. 
Such report shall contain such information as is necessary to assist 
the Secretary in carrying out this section and evaluating the efficacy 
of these programs in addressing national health priorities. The 
Secretary shall not require the collection or transmittal of any 
information under this subsection that is not readily available to 
such school, program, or training center. Information provided pur-
suant to this subsection shall be collected or transmitted only to the 
extent permitted under subsection (e). 
"(d) The Secretary shall submit to Congress on October 1,1983, and 
biennially thereafter, the following reports: 
"(1) A comprehensive report regarding the status of health 
personnel according to profession, including a report regarding 
the anal5rtic and descriptive studies conducted under this section. 
"(2) A comprehensive report regarding applicants to, and 
students enrolled in, programs and institutions for the training 
of health personnel, including descriptions and analyses of stu-
dent indebtedness, student need for financial assistance, finan-
cial resources to meet the needs of students, student career 
choices such as practice specialty and geographic location and 
the relationship, if any, between student indebtedness and career 
choices.". 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 915 
SHARED SCHEDULED RESIDENCY TRAINING POSITIONS 
SEC. 2720. (a) Section 709 (42 U.S.C. 292i) is repealed, 
(b) Sections 710 (42 U.S.C. 292j) and 711 (42 U.S.C. 292k) are 
redesignated as sections 709 and 710, respectively. 
Repeal. 
PAYMENT UNDER GRANTS 
SEC. 2721. Section 709 (as redesignated by section 2720(b) of this 
Act) is amended to read as follows: 
42 u s e 292j. 
APPLICATIONS, PAYMENTS, AND ASSURANCES UNDER GRANTS 
"SEC. 709. (a) Grants made under this title may be paid (1) in 
advance or by way of reimbursement, (2) at such intervals and on 
such conditions as the Secretary may find necessary, and (3) with 
appropriate adjustments on account of overpayments or underpay-
ments previously made. 
"(b) No grant may be made or contract entered into under this title 
unless an application therefor has been submitted to and approved by 
the Secretary. Such application shall be in such form, submitted in 
such manner, and contain such information, as the Secretary shall by 
regulation prescribe. 
(c) Whenever in this title an applicant is required to provide 
assurances to the Secretary, or an application is required to contain 
assurances or be supported by assurances, the Secretary shall deter-
mine before approving the application that the assurances provided 
are made in good faith. 
"(d) The Secretary may provide technical assistance for the purpose 
of carrying out any program or purpose under this title.". 
TUITION AND OTHER EDUCATIONAL COSTS 
SEC. 2722. Section 710 (as redesignated by section 2720(b) of this 
Act) is amended to read as follows: 
42 u s e 292k. 
DIFFERENTIAL TUITION AND FEES 
"SEC. 710. The Secretary may not enter into a contract with, or 
make a grant, loan guarantee, or interest subsidy payment under this 
title or title VIII, to or for the benefit of, any school, program, or 
training center if the tuition levels or educational fees at such school, 
program, or training center are higher for certain students solely on 
the basis that such students are the recipients of traineeships, loans, 
loan guarantees, service scholarships, or interest subsidies from the 
Federal Government.". 
42 u s e 296. 
CONSTRUCTION ASSISTANCE FOR CONVERSIONS 
SEC. 2723. (a) Section 720(a) (42 U.S.C. 293(a)) is amended by adding 
at the end the following: 
"(3) The Secretary may make grants to schools providing the first 2 
years of education leading to the degree of doctor of medicine to assist 
in the construction of the teaching facilities which the schools require 
to become schools of medicine.". 
(b) Subsection (b) of such section is amended to read as follows: 
"(b) For the purpose of grants under subsection (a)(3), there are 
authorized to be appropriated $5,000,000 for the fiscal year ending 
September 30,1983, to remain available until expended.". 
Grants to 
schools. 
Appropriation 
authorization. 
95 STAT. 916 
PUBLIC LAW 97-35—AUG. 13, 1981 
(c) Section 721(b)(1) (42 U.S.C. 293a(b)) is amended (1) by inserting 
after "(1)" the following: "To be eligible to apply for a grant under 
Ante, p. 915. 
section 720(a)(3) the applicant must be a public or nonprofit school 
providing the first 2 years of education leading to the degree of doctor 
of medicine and be accredited by a recognized body or bodies ap-
proved for such purpose by the Secretary of Education.", and (2) by 
striking out "under this part" and inserting in lieu thereof "under 
paragraph (1) or (2) of section 720(a)". 
(d) Subsection 721(g)(1) is amended by striking out "section 
720(a)(2)" and inserting in lieu thereof "paragraph (2) or (3) of section 
720(a)". 
(e) Subsection (a) of section 722 (42 U.S.C. 293b(a)) is amended by 
adding at the end the following: 
"(3) The amount of any grant under section 720(a)(3) shall be such 
amount as the Secretary determines to be appropriate after obtaining 
advice from the Council, except that no grant for any project may 
exceed 80 percent of the necessary costs of construction, as deter-
mined by the Secretary.". 
(f) Section 723(a) (42 U.S.C. 293c(a)) is amended by striking out 
"section 720(a)(1)" and inserting in lieu thereof "paragraph (1) or (3) 
of section 720(a)". 
REPEAL OF ENROLLMENT INCREASE REQUIREMENT 
SEC. 2724. (a) Paragraph (2) of section 721(c) (42 U.S.C. 293a(c)(2)) is 
amended (1) by inserting "and" after "the facility,", and (2) by 
striking out ", and (D)" and all that follows in that paragraph and 
inserting in lieu thereof a semicolon. 
note ^^ ^^^^ 
^^ "^^^ Secretary of Health and Human Services shall unilaterally 
release all recipients of grants, loan guarantees, and interest subsi-
42 use 293,293f. dies under sections 720(a) and 726 (as such sections were in effect 
prior to October 1, 1981) from any contractual obligation to fulfill 
enrollment increases incurred pursuant to such sections or under 
regulations published to implement such sections. 
42 use 293a 
(c) The amendment made by subsection (a) shall apply with respect 
"°**- 
to any entity which received a grant, loan guarantee, or interest 
subsidy under section 720 or section 726 irrespective of the date of the 
grant, loan guarantee, or interest subsidy. 
LOAN GUARANTEES AND INTEREST SUBSIDIES 
42 use 298f. 
SEC. 2725. (a) Section 7260)) (42 U.S.C. 293i(b)) is amended (1) by 
inserting "before October 1, 1981," after "loan has been made", and 
(2) by striking out ", during the period beginning July 1, 1971, and 
ending with the close of September 30,1980,". 
(b) The second sentence of section 726(e) is amended by striking out 
"and" after "1979," and by inserting before the period a comma and 
"and $4,300,000 for the fiscal year ending September 30, 1982, and 
each of the next 2 fiscal years". 
Repeal. 
(c) Section 726(g) is repealed. 
SCOPE AND DURATION OF FEDERAL LOAN INSURANCE PROGRAM 
SEC. 2726. (a)(1) The first sentence of section 728(a) (42 U.S.C. 
294a(a)) is amended by striking out "and" after "1979;" and by 
inserting before the period a semicolon and "and $200,000,000 for the 
fiscal year ending September 30,1982; $225,000,000 for the fiscal year 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 917 
ending September 30, 1983; and $250,000,000 for the fiscal year 
ending September 30,1984". 
(2) The last sentence of such subsection is amended by striking out 
"1982" and inserting in lieu thereof "1987". 
(b) Section 728(c) is amended to read as follows: 
42 use 294a. 
"(c)(1) Subject to paragraph (2), the Student Loan Marketing 
Association, established under part B of title IV of the Higher 
Education Act of 1965, is authorized to make advances on the security 20 USC 1071. 
of, purchase, service, sell, consolidate, or otherwise deal in loans 
which are insured by the Secretary under this subpart, except that if 
any loan made under this subpart is included in a consolidated loan 
pursuant to the authority of the Association under part B of title IV 
of the Higher Education Act of 1965, the interest rate on such 
consolidated loan shall be set at the weighted average interest rate of 
all loans offered for consolidation and the resultant per centum shall 
be rounded downward to the nearest one-eighth of 1 per centum, 
except that the interest rate shall be no less than the applicable 
interest rate of the guaranteed student loan program established 
under part B of title IV of the Higher Education Act of 1965. In the 
case of such a consolidated loan, the borrower shall be responsible for 
any interest which accrues prior to the beginning of the repayment 
period of the loan, or which accrues during a period in which 
principal need not be paid (whether or not such principal is in fact 
paid) by reason of any provision of the Higher Education Act of 1965. 20 USC lOOl 
Special allowances payable with respect to consolidated loans made ^°^-
by the Association pursuant to the terms of this subsection— 
"(A) shall be computed in accordance with section 438(b)(2)(A) 
of the Higher Education Act of 1965, and 
Ante, p. 454. 
"(B) shall be reduced (i) by subtracting 7 percent from the 
weighted average interest rate of a loan computed according to 
this subsection, and (ii) by subtracting the resultant remainder 
from such special allowance. 
"(2) No loan insured by the Secretary under this subpart may be 
included in a consolidated loan pursuant to the authority of the 
Student Loan Marketing Association under part B of title IV of the 
Higher Education Act of 1965 if as a result of such inclusion the 
Federal Government becomes liable for any greater payment of 
principal or interest under the provisions of section 439(o) of the 
Higher Education Act of 1965 than the Federal Government would 94 Stat. 1430. 
have been liable for had no consolidation occurred.". 
^" ^°^ 1087-2. 
UMITATIONS 
SEC. 2727. Section 729(a) (42 U.S.C. 294b(a)) is amended to read as 
follows: 
"LIMITATIONS ON INDIVIDUAL FEDERALLY INSURED LOANS AND ON 
FEDERAL LOAN INSURANCE 
"SEC. 729. (a) The total of the loans made to a student in any 
academic year or its equivalent (as determined by the Secretary) 
which may be covered by Federal loan insurance under this subpart 
may not exceed $20,000 in the case of a student enrolled in a school of 
medicine, osteopathy, dentistry, veterinary medicine, optometry, or 
podiatry, and $12,500 in the case of a student enrolled in a school of 
pharmacy, public health, or chiropi'actic, or a graduate program in 
health administration or clinical psychology. The aggregate insured 
unpaid principal amount for all such insured loans made to any 
95 STAT. 918 
PUBLIC LAW 97-35—AUG. 13, 1981 
borrower shall not at any time exceed $80,000 in the case of a 
borrower who is or was a student enrolled in a school of medicine, 
osteopathy, dentistry, veterinary medicine, optometry, or podiatry, 
and $50,000 in the case of a borrower who is or was a student enrolled 
in a school of pharmacy, public health, or chiropractic, or a graduate 
program in health administration or clinical psychology. The annual 
insurable limit per student shall not be exceeded by a line of credit 
under which actual payments by the lender to the borrower will not 
be made in any year in excess of the annual limit.". 
ELIGIBILITY OF STUDENT BORROWERS AND TERMS OF FEDERALLY 
INSURED LOANS 
94 Stat. 3192. 
SEC. 2728. (a)(1) Section 731(a)(1)(A) (42 U.S.C. 294d(a)(l)(A)) is 
amended by striking out clause (iii) and redesignating clauses (iv) and 
(v) as clauses (iii) and (iv), respectively. 
(2) Clause (iii) of such section (as redesignated by paragraph (1) of 
this subsection) is amended by striking out "and 
before "other 
reasonable educational expenses" and by inserting "and reasonable 
living expenses," after "and laboratory expenses,". 
(b) Section 731(a)(2) is amended— 
(1) by striking out "15 vears" in subparagraph (B) and inserting 
in lieu thereof "25 years ; 
(2) by striking out "23 years" in such subparagraph and 
inserting in lieu thereof "33 years"; 
(3) by striking out "installments of principal need not be paid, 
but interest shall accrue and be paid in subparagraph (C) and 
inserting in lieu thereof "installments of principal and interest 
need not be paid, but interest shall accrue"; 
(4) by striking out "three years" in subparagraph (C)(ii) and 
inserting in lieu thereof "four years"; 
(5) by striking out "the 15-year period or the 23-year period" in 
subparagraph (C) and inserting in lieu thereof "the 25-year 
period or the 33-year period"; 
(6) by inserting "except as provided in subparagraph (C)" after 
"period of the loan" in subparagraph (D); 
(7) by striking out "otherwise payable (i) before the beginning 
of the repayment period, (ii) during any period described in 
subparagraph (C), or (iii) during any other period of forbearance 
of payment of principal," in subparagraph (D); 
(8) by inserting "for the purposes of calculating a repayment 
schedule" before the semicolon in subparagraph (D); 
(9) by redesignating subparagraphs (E) and (F) as subpara-
graphs (F) and (G), respectively; and 
(10) bv inserting after subparagraph (D) the following: 
(E) offers, in accordance with criteria prescribed by 
regulation by the Secretary, a schedule for repayment of 
principal and interest under which payment of a portion of 
the principal and interest otherwise payable at the begin-
' 
^
^ ning of the repayment period (as defined in such regulations) 
is deferred until a later time in the period;". 
(c) Section 731(c) is amended by inserting before the period a 
comma and "except as provided in section 731(a)(2)(C)". 
CERTIFICATE OF FEDERAL LOAN INSURANCE 
SEC. 2729. Section 732 (42 U.S.C. 294e) is amended by adding at the 
end thereof the following new subsection: 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 919 
"(0 Nothing in this section shall be construed to preclude the 
lender and the borrower, by mutual agreement, from consolidating 
all of the borrower's debts into a single instrument, except that the 
portion of such debt that is insured under this subpart shall not be 
consolidated on terms less favorable to the borrower than if no 
consolidation had occurred and no loan under this subpart may be 
consolidated with any other loan if, as a result of such consolidation, 
the Federal Government becomes liable for any payment of principal 
or interest under the provisions of section 439(o) of the Higher 
Education Act of 1965.". 
9
4 Stat. 1430. 
DEFAULTS 
^^ USC 1087-2. 
SEC. 2730. Section 733(g) (42 U.S.C. 294f(g)) is amended to read as 
follows: 
"(g) A debt which is a loan insured under the authority of this 
subpart may be released by a discharge in bankruptcy under title 11, 
United States Code, only if such discharge is granted— 
"(1) after the expiration of the 5-year period beginning on the 
first date, as specified in subparagraphs (B) and (C) of section 
731(a)(2), when repayment of such loan is required; 
Ante, p. 918. 
"(2) upon a finding by the Bankruptcy Court that the nondis-
charge of such debt would be unconscionable; and 
"(3) upon the condition that the Secretary shall not have 
waived the Secretary's rights to apply subsection (f) to the 
borrower and the discharged debt.". 
DEFINITIONS; STUDENT ASSISTANCE 
SEC. 2731. (a) Section 737(1) (42 U.S.C. 294j(l)) is amended to read as 
follows: 
"(1) The term 'eligible institution' means, with respect to a fiscal 
year, a school of medicine, osteopathy, dentistry, veterinary medi-
cine, optometry, podiatry, pharmacy, public health or chiropractic, or 
a graduate program in health administration or clinical psy-
chology.". 
(b) Section 737 is further amended by striking out paragraph (2), by 
redesignating paragraphs (3) and (4) as paragraphs (4) and (5), 
respectively, and by inserting after paragraph (1) (as amended by 
subsection (a) of this section) the following new paragraphs: 
"(2) The term 'school of chiropractic' means a school which pro-
vides training leading to a degree of doctor of chiropractic or an 
equivalent degree and which is accredited in the manner described in 
section 701(5). 
Ante, p. 913. 
"(3) The term 'graduate program in clinical psychology' means a 
graduate program in a public or nonprofit private institution in a 
State which provides training leading to a doctoral degree in clinical 
psychology or an equivalent degree and which is accredited in the 
manner described in section 701(5).". 
ELIGIBLE STUDENTS 
SEC. 2732. Subpart I of part C of title VII is amended by inserting 
after section 737 the following new section: 
"DETERMINATION OF ELIGIBLE STUDENTS 
"SEC. 737A. For purposes of determining eligible students under 42 use 294j-i. 
this part, in the case of a public school in a State that offers an 
accelerated, integrated program of study combining undergraduate 
9-194 O—82 
60 : QL3 
95 STAT. 920 
PUBLIC LAW 97-35—AUG. 13, 1981 
premedical education and medical education leading to advanced 
entry, by contractual agreement, into an accredited four-year school 
of medicine which provides the remaining training leading to a 
degree of doctor of medicine, whenever in this part a provision refers 
to a student at a school of medicine, such reference shall include onlv 
a student enrolled in any of the last four years of such accelerated, 
integrated program of study.". 
EUGIBIUTY OP INSTTTUnONS 
42 use 294/. 
SEC. 2733. (a) Section 739(a) (42 U.S.C. 294k(a)) is amended— 
(1) by striking out "and" at the end of 
paragraph (2); 
(2) by striking out "whether" in paragraph (3) and inserting in 
lieu thereof "whenever"; 
(3) by striking out the period at the end of paragraph (3) and 
inserting in lieu thereof a semicolon and "and"; and 
(4) by adding at the end thereof the following new paragraph: 
"(4) the collection of information from the borrower, lender, or 
eligible institution to assure compliance with the provisions of 
42 use 294d. 
section 731.". 
(b) Section 739(b) is amended to read as follows: 
Records. 
"(b) The Secretary shall require an eligible institution to record, 
and make available to the lender and to the Secretary upon request, 
the name, address, posteraduate destination, and ottier reasonable 
identifying information for each student of 
such institution who has a 
loan insured under this subpart.". 
AUTHORIZATIONS 
SEC. 2734. (a) The first sentence of section 742(a) (42 U.S.C. 294o(a)) 
is amended by striking out "and" after "1979," and by inserting 
before the period a comma and $12,000,000 for the fiscal year ending 
September 30,1982, $13,000,000 for the fiscal year ending September 
30, 1983, and $14,000,000 for the fiscal year ending September 30, 
1984". 
Repeal. 
(b) The second sentence of 
section 742(a) is repealed. 
: V . INTEREST RATE 
SEC. 2735. Section 741(e) (42 U.S.C. 294n(e)) is amended by striking 
out "7" and inserting in lieu thereof "9". 
DISTRIBUTION OF ASSETS FROM LOAN FUNDS 
SEC. 2736. Section 743 (42 U.S.C. 294p) is amended by striking out 
"1983" each place it appears and inserting in lieu thereof "1987". 
EXTENSION OF SCHOLARSHIPS FOR STUDENTS OF EXCEPTIONAL 
FINANCIAL NEED 
SEC. 2737. (a) Section 758(d) (42 U.S.C. 294z(d)) is amended (1) by 
striking out "and" after "1979,", and (2) by inserting before the period 
a comma and the following: "$6,000,()00 for the fiscal year ending 
September 30,1982, $6,500,000 for the fiscal year ending September 
30, 1983, and $7,000,000 for the fiscal year ending September 30, 
1984". 
(b) Section 758(c) is amended (1) by striking out "distribute grants 
under this section among all schools of the health professions, but 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 921 
shall", and (2) by striking out "such grants" and inserting in lieu 
thereof "grants under subsection (a)". 
DEPARTMENTS OF FAMILY MEDICINE 
SEC. 2738. (a) Section 780(a) (42 U.S.C. 295g(a)) is amended by 
striking out "and maintain" and by inserting in lieu thereof a comma 
and "maintain, or improve". 
(b) Section 780(b)(1)(D) is amended— 
(1) by striking out "have control over" and inserting in lieu 
thereof "have control over (or in the case of a school of osteop-
athy, have control over or be closely affiliated with)"; and 
(2) by striking out "twelve" and inserting in lieu thereof 
"nine". 
(c) Section 780(c) is amended (1) by striking out "and" after "1979,", 
and (2) by inserting after "1980" a comma and the following: 
"$10,000,000 for the fiscal year ending September 30, 1982, 
$10,500,000 for the fiscal year ending September 30, 1983, and 
$11,000,000 for the fiscal year ending September 30,1984". 
AREA HEALTH EDUCATION CENTERS 
SEC. 2739. (a) Section 781(c)(2) (42 U.S.C. 295g-l(c)(2)) is amended by 
adding a new sentence after the sentence at the end thereof to read as 
follows: "The Secretary may waive, for good cause shown, all or part 
of the requirement of paragraph (2) as it applies to a medical or 
osteopathic school participating in an area health education center 
program if another such school participating in the same program 
meets the requirement of that paragraph.". 
(b) Section 781(d)(2)(C) is amended by inserting "a rotating osteo-
pathic internship or" after "conduct". 
(c) Section 781(d)(2)(E) is amended by striking out "support serv-
ices" and inserting in lieu thereof "educational support services". 
(d) Section 781(g) is amended (1) by striking out "and" after "1979,", 
and (2) by inserting a comma before the period and the following: 
"$21,000,000 for the fiscal year ending September 30, 1982, 
$22,500,000 for the fiscal year ending September 30, 1983, and 
$24,000,000 for the fiscal year ending September 30,1984,". 
(e)(1) Effective October 1, 1981, subsection (a) of section 781 is 
amended to read as follows: 
"SEC. 781. (a)(1) The Secretary shall enter into contracts with 
schools of medicine and osteopathy for the planning, development, 
£ind operation of area health education center programs. 
"(2) The Secretary shall enter into contracts with schools of 
medicine and osteopathy, which have previously received Federal 
financial assistance for an area health education center program 
under section 802 of the Health Professions Educational Assistance 
Act of 1976 in fiscal year 1979, or under this section to carry out under f
^ ^SC 295g-
area health education center programs— 
"(A) projects to improve the distribution, supply, quality, 
utilization, and efficiency of health personnel in the health 
services delivery system; 
"(B) projects to encourage the regionalization of educational 
responsibilities of the health professions schools; and 
"(C) projects designed to prepare, through preceptorships and 
other programs, individuals subject to a service obligation under 
the National Health Service Corps scholarship program to effec-
note. 
95 STAT. 922 
PUBLIC LAW 97-35—AUG. 13, 1981 
Repeal. 
42 u s e 295g-l. 
42 u s e 295g-l 
note, 295f-4. 
"Area health 
education center 
program." 
tively provide health services in health manpower shortage 
areas.". 
(2) The first sentence of subsection (e) is repealed. 
(8) Subsection (e) is amended by adding after paragraph (3) the 
following: "The Secretary may vest in entities which have received 
contracts under section 802 of the Health Professions Educational 
Assistance Act of 1976, section 774 as in effect before October 1,1977, 
or under subsection (a) of this section for area health education 
centers programs title to any property acquired on behalf of the 
United States by that entity (or furnished to that entity by the United 
States) under that contract.". 
(4) The first sentence of subsection (f) is amended to read as follows: 
"For purposes of this section, the term 'area health education center 
program means a program which is organized as provided in subsec-
tion (b) £uid under which the participating medical and osteopathic 
schools and the area health education centers meet the requirements 
of subsections (c) and (d).". 
(5) Subsection (g) of such section is amended by adding at the end 
the following: "The Secretary may obligate not more than 10 percent 
of the amount appropriated under this subsection for any fiscal year 
for contracts under subsection (a)(2).". 
Ante, p. 913. 
PHYSICIAN ASSISTANTS 
SEC. 2740. (a) Section 783(e) (42 U.S.C. 295g-3(e)) is amended (1) by 
striking out "and" after "1979,", and (2) by inserting after "1980" a 
comma and the following: "$5,000,000 for the fiscal year ending 
September 30, 1982, $5,500,000 for the fiscal year ending Septem-
ber 30, 1983, and $6,000,000 for the fiscal year ending September 30, 
1984". 
(b) Section 783(c) is amended by striking out "830" and inserting in 
lieu thereof "822". 
(cXl) Subsection (a) of section 783 is amended to read as follows: 
"(a) The Secretary may make grants to and enter into contracts 
with public or nonprofit private schools of medicine and osteopathy 
and other public or nonprofit private entities to meet the costs of 
projects to plan, develop, and operate or maintain programs for the 
training of physician assistants (as defined in section 701(7)).". 
(2) The heading for section 783 is amended to read as follows: 
PROGRAMS FOR PHYSICIAN ASSISTANTS . 
(d) Section 783 is amended by striking out subsection (d) and by 
redesignating subsection (e) as subsection (d). 
GENERAL INTERNAL MEDICINE AND GENERAL PEDIATRICS 
SEC. 2741. (a) Section 784(a) (42 U.S.C. 295g-4(a)) is amended— 
(1) by inserting ", public or private nonprofit hospital, or any 
other public or private nonprofit entity' after "osteopathy'; 
(2) by striking out "and" after the semicolon in paragraph (1); 
(3) by striking out the period at the end of paragraph (2) and 
inserting in lieu thereof a semicolon and "and"; and 
(4) by adding at the end thereof the following new paragraphs: 
"(3) to plan, develop, and operate a program for the training of 
physicians who plan to teach in a general internal medicine or 
general pediatrics training program; and 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 923 
"(4) which provide financial assistance (in the form of trainee-
ships and fellowships) to physicians who are participants in any 
such program and who plan to teach in a general internal 
medicine or general pediatrics training program.", 
(b) Section 784(b) (42 U.S.C. 295g-4(b)) is amended (1) by striking out 
"and" after "1979,", and (2) by inserting after "1980" a comma and 
the following: "$17,000,000 for the fiscal year ending September 30, 
1982, $18,000,000 for the fiscal year ending September 30, 1983, and 
$20,000,000 for the fiscal year ending September 30,1984". 
FAMILY MEDICINE AND GENERAL PRACTICE OF DENTISTRY 
SEC. 2742. (a) Section 786(d) (42 U.S.C. 295g-6(d)) is amended— 
(1) by striking out "and" after "1979,"; 
(2) by inserting after "1980" a comma and the following: 
"$32,000,000 for the fiscal year ending September 30, 1982, 
$34,000,000 for the fiscal year ending September 30, 1983, and 
$36,000,000 for the fiscal year ending September 30, 1984"; and 
(3) by adding at the end thereof the following new sentence: "In 
making grants and entering into contracts under this section 
with amounts appropriated under this subsection for the fiscal 
years ending September 30, 1982, September 30, 1983, and 
September 30, 1984, the Secretary shall give priority to grants 
and contracts for residency or internship programs under para-
graphs (1) and (2) of subsection (a)." 
(b) Section 786(a)(1) is amended by striking out "a continuing 
education program or". 
(c) Section 786 is amended by striking out subsection (c) and by 
redesignating subsection (d) as subsection (c). 
ASSISTANCE TO INDIVIDUALS FROM DISADVANTAGED BACKGROUNDS 
SEC. 2743. Effective with respect to fiscal years beginning after 
September 30, 1981, section 787 (42 U.S.C. 295g-7) is amended— 
(1) by inserting "allied health," after "pharmacy," in subsec-
tion (a)(1), and 
(2) by amending subsection (b) to read as follows: 
"(b) There are authorized to be appropriated for grants and Appropriation 
contracts under subsection (a)(1), $20,000,000 for the fiscal year authorization. 
ending September 30, 1982, $21,500,000 for the fiscal year ending 
September 30, 1983, and $23,000,000 for the fiscal year ending 
September 30, 1984. Not less than 80 percent of the funds appropri-
ated in any fiscal year shall be obligated for grants or contracts to 
institutions of higher education and not more than 5 percent of such 
funds may be obligated for grants and contracts having the primary 
purpose of informing individuals about the existence and general 
nature of health careers." 
CONVERSION AND CURRICULUM GRANTS 
SEC. 2744. (a)(1) Subsections (a) and (b) of section 788 (42 U.S.C. 
295g-8) are repealed. 
(2) Notwithstanding the amendment made by paragraph (1), a 
school which received a grant under section 788(a) of the Public 
Health Service Act for the fiscal year ending September 30,1981, may 42 use 295g-8 
continue to receive grants under such section (as in effect on the day "°**-
before the date of the enactment of this Act) for each year such school 
is a new school as determined under such section. For purposes of 
95 STAT. 924 
PUBLIC LAW 97-35—AUG. 13, 1981 
Grants. 
Eligibility 
requirements. 
Appropriation 
authorization. 
42 u s e 295g-8. 
42 u s e 254e. 
making such grants, there are authorized to be appropriated such 
sums as may be necessary. 
(b) Subsection (c) of such section is redesignated as subsection (a) 
and effective with respect to fiscal years beginning after September 
30,1981, is amended to read as follows: 
"(a)(1) The Secretary may make grants to schools which provide the 
first two years of education leading to the degree of doctor of medicine 
to assist the schools in accelerating the date they will become schools 
of medicine. 
"(2) The amount of a grant under paragraph (1) to a school shall be 
equal to the product of $25,000 and the number of full-time, third-
year students which the Secretary estimates will enroll in the school 
in the school year beginning in the fiscal year in which such grant is 
made. Estimates by the Secretary under this paragraph of the 
number of full-time, third-year students to be enrolled in the school 
may be made on assurances provided by the school. 
' (3) To be eligible to apply for a grant under paragraph (1), the 
applicant must be a public or nonprofit school providing the first two 
years of education leading to the degree of doctor of medicine and be 
accredited by a recognized body or bodies approved for such purpose 
by the Secretary of Education.'. 
(c) Subsection (d) of such section is redesignated as subsection (b) 
and is amended— 
(1) by inserting "dentistry," before "optometry" in paragraph 
(6), 
(2) by striking out "and" at the end of paragraph (20), 
(3) by striking out the period at the end of paragraph (21) and 
inserting in lieu thereof a semicolon, and 
(4) by adding at the end the following: 
"(22) training of health professionals in the diagnosis, treat-
ment, and prevention of diabetes and other severe chronic 
diseases and their complications; 
"(23) dental education, the training of expanded function 
dental auxiliaries, and dental team practice; and 
"(24) training of allied health personnel.". 
(d) Subsections (f) and (g) of such section are repealed. 
(e) Subsection (e) of such section is redesignated as subsection (f) 
and effective with respect to fiscal years beginning after September 
30,1981, is amended to read as follows: 
"(f) For purposes of this section, there are authorized to be appro-
priated $6,000,000 for the fiscal year ending September 30, 1982; 
$6,500,000 for the fiscal year ending September 30, 1983; and 
$7,000,000 for the fiscal year ending September 30,1984.". 
(f) Section 788 is amended by inserting after subsection (b) (as 
redesignated by subsection (c) of this section) the following new 
subsections: 
"(c)(1) The Secretary may make grants to and enter into contracts 
with schools of medicine, osteopathy, dentistry, veterinary medicine, 
optometry, podiatry, pharmacy, or other appropriate public or non-
profit private entities to assist in meeting the costs of planning, 
establishing, and operating projects to provide support services to 
health professionals practicing in health manpower shortage areas 
designated under section 332. Such support services may include 
continuing education, relief services, specialist referral services, and 
placement of students in a preceptorial relationship with the 
practitioner. 
"(2) No grant may be made to or contract entered into with an 
entity under paragraph (1)— 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 925 
"(A) unless the entity agrees to provide support services to any 
physician, dentist, veterinarian, optometrist, podiatrist, or phar-
macist (as appropriate to the category of health professionals 
proposed to be served by the grant or contract) who requests such 
services within the health manpower shortage area proposed to 
be served, including any member of the National Health Service 
Corps; 
"(B) to carry out activities required to be carried out under 
section 781; or 
42 use 295g-i. 
"(C) unless the amount of the award under this section is 
matched by a no less than equal amount from non-Federal 
sources. 
"(3) Not more than 15 percent of funds available to carry out this 
subsection may be used by the Secretary to fund eligible recipients to 
carry out research relating to the support needs of practitioners in 
health manpower shortage areas, nor shall more than 30 percent of 
such funds be used to provide continuing education. 
"(d) The Secretary may make grants to and enter into contracts 
with schools of medicine or osteopathy or other appropriate public or 
nonprofit private entities to assist in meeting the costs of such schools 
or entities of providing projects to— 
"(1) plan, develop, and establish courses, or expand or 
strengthen instruction in geriatric medicine; and 
"(2) establish new affiliations with nursing homes, chronic and 
acute disease hospitals, ambulatory care centers, and senior 
centers in order to provide students with clinical training in 
geriatric medicine. 
"(e) The Secretary may make grants to and enter into contracts 
with schools of podiatry to assist in meeting the costs to such schools 
of providing projects to— 
"(1) recruit students who reside in areas having shortages of 
podiatric manpower, as determined by the Secretary; and 
"(2) to operate clinical training programs at public or nonprofit 
entities located in such areas.". 
FINANCIAL DISTRESS; ADVANCED FINANCIAL DISTRESS 
SEC. 2745. Title VI is amended by inserting after section 788 the 
following new sections: 
"FINANCIAL DISTRESS GRANTS 
"SEC. 788A. (a) The Secretary may make grants to, and enter into 42 use 295g-8a. 
contracts with, a school of medicine, osteopathy, dentistry, veterinary 
medicine, optometry, pharmacy, podiatry, or public health that is in 
serious financial distress for the purposes of assisting such school to— 
"(1)(A) meet the costs of operation if such school's financial 
status threatens its continued operation; or 
"(B) meet applicable accreditation requirements if such school 
has a special need to be Eissisted in meeting such requirements; 
and 
"(2) carry out appropriate operational, managerial, and finan-
cial reforms. 
"(b) Any grant or contract under this section may be made upon 
such terms and conditions as the Secretary determines to be reason-
able and necessary, including requirements that the school agree to— 
95 STAT. 926 
PUBLIC LAW 97-35—AUG. 13, 1981 
"(1) disclose any financial information or data necessary to 
determine the sources or causes of such school's 
financial 
distress; 
"(2) conduct a comprehensive cost analysis study in coopera-
tion with the Secretary; and 
"(3) carry out appropriate operational, managerial, and finan-
cial reforms including the securing of increased financial support 
from non-Federal sources. 
"(c) No school may receive a grant under this section if such school 
has previously received support for three or more years under this 
Ante, p. 923. 
section or under section 788(b) (as such section was in effect prior to 
October 1,1981).". 
"ADVANCED FINANCIAL DISTRESS ASSISTANCE 
42 use 295g-8b. 
"SEC. 788B. (a) The Secretary may enter into a multiyear contract 
with a school of medicine, osteopathy, dentistry, veterinary medicine, 
optometry, podiatry, or pharmacy to provide financial assistance to 
such school to meet incurred or prospective costs of operation if the 
Secretary determines that payment of such costs is essential to 
remove the school from serious and long-standing financial instabil-
ity. To be eligible for a contract under this section, a school must have 
Ante, p. 925. 
previously received financial support under section 788A or under 
Ante, p. 923. 
section 788(b) (as such section was in effect prior to October 1, 1981) 
for a period of not less than three years. 
"(b) No school may enter into a contract under this section unless— 
"(1) the school has submitted to the Secretary a plan providing 
for the school to achieve financial solvency within five years and 
has agreed to carry out such plan; 
"(2) such plan includes securing increased financial support 
from non-Federal sources; 
"(3) such plan has been reviewed by a panel selected by the 
Secretary and consisting of three experts in the field of financial 
management who are not directly affiliated with the school or 
the Federal Government; and 
"(4) the Secretary determines, after consultation with such 
panel, that such plan has a reasonable likelihood of achieving 
success. 
"(c) The panel described in subsection (b)(3) shall be appointed by 
the Secretary within thirty days after the date of receipt of the 
school's plan and shall be dissolved no later than forty-five days after 
the panel's recommendation has been transmitted to the Secretary. 
Members of the panel shall be entitled to receive the daily equivalent 
of the annual rate of basic pay in effect for grade GS-18 of the 
5 use 5332 note. General Schedule for each day (including traveltime) during which 
they perform duties. 
"(d) Any contract under this section may be entered into upon such 
terms and conditions as the Secretary determines to be reasonable 
and necessary, including requirements that the school agree to— 
"(1) disclose any financial information or data necessary to 
determine the sources or causes of such school's 
financial 
distress; 
"(2) conduct a comprehensive cost analysis study in coopera-
tion with the Secretary; and 
"(3) carry out appropriate operational, managerial, and finan-
cial reforms including the securing of increased financial support 
from non-Federal sources. 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 927 
"(e) Pursuant to the approved plan in subsection (b), funds received 
under this section may be used to pay short-term or long-term debts 
of such school, meet accreditation requirements, or meet other costs, 
payment of which is essential to the continued operation of the 
institution or to permit such institution to achieve financial solvency 
within the period of the contract. 
"(f) No school may receive support under this section for more than 
five years. No contract may be entered into under this section, or 
continued, in a fiscal year in which the school receives support under 
section 788A. 
Ante, p. 925. 
"(g) An application for a contract under this section shall contain 
or be supported by assurances that the applicant will, in carrying out 
its function as a school of medicine, osteopathy, dentistry, veterinary 
medicine, optometry, pharmacy, or podiatry, as the case may be, 
expend during the fiscal year for which such contract is sought, an 
amount of funds from non-Federal sources (other than funds for 
construction and any contract under this section) at least as great as 
the average annual amount of funds from non-Federal sources 
expended by such applicant in the preceding two years. 
(h) For the purpose of entering into contracts to carry out this 
section and section 788A, there are authorized to be appropriated 
$10,000,000 for the fiscal year ending September 30,1982, and each of 
the succeeding two fiscal years. Of the amounts appropriated under 
the preceding sentence, not more than $2,000,000 shall be available 
under section 788A. Funds provided under this section shall remain 
available until expended without regard to any fiscal year 
limitation.". 
PUBLIC HEALTH AND HEALTH ADMINISTRATION 
SEC. 2746. (a)(1) Section 770(eX4) (42 U.S.C. 295f(e)(4)) is amended by 
striking out "and" after "1979," and by inserting after "1980," the 
following: "$6,500,000 for the fiscal year ending September 30, 1982, 
$7,000,000 for the fiscal year ending September 30, 1983, and 
$7,500,000 for the fiscal year ending September 30,1984,". 
(2) Section 771(e) (42 U.S.C. 295g(e)) is amended by striking out ", in 42 use 295f-l. 
addition to the requirements of subsection (a)," and by adding at the 
end thereof the following sentence: "The requirements of subsection 
(a)(1) shall not apply to schools of public health.". 
a))(l) Section 791(d) (42 U.S.C. 295h(d)) is amended by striking out 
"and" after "1979," and by inserting before the period the following: 
", $1,500,000 for the fiscal year ending September 30,1982, $1,750,000 
for the fiscal year ending September 30,1983, and $2,000,000 for the 
fiscal year ending September 30,1984". 
(2) Section 749 (42 U.S.C. 249s) is inserted after section 791, |2USC294s, 
redesignated as section 791A, and amended in subsection (c) (A) by ^^^"-i^-
striking out "and" after "1979;", and (B) by inserting before the 
period a semicolon and the following: "and $500,000 for the fiscal year 
ending September 30,1982, and the next two fiscal years". 
(c) Section 792 (42 U.S.C. 295h-l) is repealed. 
Repeal. 
(d) Section 748 (42 U.S.C. 294r) is inserted after section 791A, 42 USC 295h-i. 
redesignated as section 792, and amended (1) bv striking out "749" in 295h-lb 
subsection (a)(2) and inserting in lieu thereof '791A", (2) by striking 
out "postbaccalaureate" in subsection 0))(3XA)(i) and inserting in lieu 
thereof "baccalaureate", (3) by striking out "and" after "1979;" in 
subsection (c), and (4) by inserting before the period in such subsec-
tion a semicolon and the following: "$3,000,000 for the fiscal year 
ending September 30, 1982; $3,500,000 for the fiscal year ending 
95 STAT. 928 
PUBLIC LAW 97-35—AUG. 13, 1981 
42 u s e 295h-2. 
September 30,1983; and $4,000,000 for the fiscal year ending Septem-
ber 30,1984". 
(e) Part C of title VII is amended by striking out "Subpart III— 
Traineeships for Students in Schools, Public Health and Other 
Graduate Programs". 
(f) Section 793 (42 U.S.C. 295h-3) entitled "statistics and annual 
report" is redesignated as section 794 and the following new section is 
inserted after section 792: 
Grants. 
42 u s e 295h-lc. 
Eligibility. 
Appropriation 
authorization. 
42 u s e 292h 
note. 
TRAINING IN PREVENTIVE MEDICINE 
"SEC. 793. (a) The Secretary may make grants to and enter into 
contracts with schools of medicine, osteopathy, and public health to 
meet the costs of projects— 
"(1) to plan and develop new residency training programs and 
to maintain or improve existing residency training programs in 
preventive medicine; and 
"(2) to provide financial assistance to residency trainees en-
rolled in such programs. 
"Ot>)(l) The amount of any grant under subsection (a) shall be 
determined by the Secretary. No grant may be made under subsec-
tion (a) unless an application therefor is submitted to and approved 
by the Secretary. Such an application shall be in such form, submit-
ted in such manner, and contain such information, as the Secretary 
shall by regulation prescribe. 
"(2) To be eligible for a grant under subsection (a), the applicant 
must demonstrate to the Secretary that it has or will have available 
full-time faculty members with training and experience in the fields 
of preventive medicine and support from other faculty members 
trained in public health and other relevant specialties and 
disciplines. 
"(c) For the purpose of grants under subsection (a), there are 
authorized to be appropriated $1,000,000 for the fiscal year ending 
September 30,1982, and $1,500,()00 for the fiscal year ending Septem-
ber 30, 1983, and $2,000,000 for the fiscal year ending September 30, 
1984.".^ :,,a:iy:i?vr>b.,-
PHYSICIAN STUDY 
SEC. 2747. (a) The Secretary of Health and Human Services shall 
arrange, in accordance with subsection (c), for a study to determine— 
(1) the implications of the increase in the supply of physicians 
and the projected distribution of the increased number of physi-
cians in the various medical specialties for— 
(A) the cost of health care, 
(B) the distribution of all physicians by geographic area, 
and 
(C) the quality of health care; and 
(2) the implications of the patterns of payments of physicians 
by Federal and other public and private third-party payers 
(including differences in the levels of payments to physicians in 
various medical specialties and geographic areas and differences 
in the amount of payments which support post-graduate training 
programs in such specialties) for— 
(A) the distribution of physicians in the various medical 
specialties, 
(B) the cost of health care, 
,j^., 
. (C) the distribution of physicians by geographic area, and 
/ " , 
" (D) the quality of health care. 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 929 
(b) An interim report on such study shall be completed not later Report. 
than March 30,1983. Such interim report shall include an analysis of 
the most effective means of providing financial assistance to graduate 
medical education in the United States in general internal medicine, 
general pediatrics, and family medicine, with particular attention to 
identifying ways of reducing or eliminating the need for special 
Federal financial assistance for such programs. A final report of such 
study shall be completed not later than September 30, 1984. Both 
reports shall be submitted to the Secretary, the Committee on Labor 
and Human Resources of the Senate, and the Committee on Energy 
and Commerce of the House of Representatives. 
(cXD The Secretary shall enter into a contract with the Institute of 
Medicine of the National Academy of Sciences to conduct the study 
described in subsection (a). If the Institute of Medicine is unwilling to 
enter into a contract to conduct such study, then the Secretary shall 
enter into a contract with another appropriate nonprofit private 
entity to conduct such study and prepare and submit the reports 
thereon as provided in subsection (b). 
(2) The authority of the Secretary to enter into a contract under 
paragraph (1) shall be effective for any fiscal year only to such extent 
or in such amounts as are provided in advance by appropriation Acts. 
CHAPTER 3—NURSE TRAINING 
Reports; 
submittal to 
congressional 
committee. 
Study alternate, 
report. 
REPEAL OP ENROLLMENT INCREASE REQUIREMENT 
SEC. 2751. The Secretary may waive the enforcement of assurances 
given by any school under section 802(bX2XD) (42 U.S.C. 296a(bX2XD)). 
FINANCIAL DISTRESS GRANTS 
SEC. 2752. Section 815(c) (42 U.S.C. 296j(c)) is amended by striking 
out "and" after "1977," and by inserting before the period a comma 
and "$3,000,000 for the fiscal year ending September 30, 1982, 
$2,000,000 for the fiscal year ending September 30, 1983, and 
$1,000,000 for the fiscal year ending September 30,1984". 
Waiver. 
42 u s e 296a 
note. 
SPECIAL PROJECTS 
SEC. 2753. (aXD Section 820(a) (42 U.S.C. 296k(a)) is amended (A) by 
striking out paragraphs (1), (2), and (8), (B) by inserting "or" at the 
end of paragraph (6), (C) by striking out the semicolon and "or" at the 
end of paragraph (7) and inserting in lieu thereof a period, and (D) by 
redesignating paragraphs (3), (4), (5), (6), and (7) as paragraphs (1), (2), 
(3), (4), and (5), respectively. 
(2) Notwithstanding the amendment made by paragraph (1) of this 
subsection and paragraph (2) of subsection Ot)), an entity which 
received a grant or contract under section 820(a) of the Public Health 
Service Act for the fiscal year ending September 30,1981, for a project 
described in paragraph (1), (2), or (8) of such section (as in effect when 
it received the grant or contract) may receive one additional grant or 
contract under such section for such project, 
(b) Section 820(d) is amended— 
(1) by striking out "and" after "1978,", and by inserting after 
"1980'*^ a comma and the following: "$10,000,000 for the fiscal 
year ending September 30, 1982, $10,500,000 for the fiscal year 
ending September 30, 1983, and $11,000,000 for the fiscal year 
' ending September 30,1984"; and 
42 u s e 296k 
note. 
42 u s e 296k. 
95 STAT. 930 
PUBLIC LAW 97-35—AUG. 13, 1981 
(2) by amending the last sentence to read as follows: "Of the 
funds appropriated under this subsection for any fiscal year 
beginning after September 30, 1981, not less than 20 percent of 
the funds shall be obligated for payments under grants and 
contracts for special projects described in subsection (a)(1), not 
less than 20 percent of the funds shall be obligated for payments 
under grants and contracts for special projects described in 
' ' " 
subsection (a)(4), and not less than 10 percent of the funds shall 
be obligated for payments under grants and contracts for special 
projects described in subsection (aX5).". 
ADVANCED NURSE TRAINING 
42 use 296/. 
SEC. 2754. (a) Section 821(aXl) (42 U.S.C. 2961(a)(1)) is amended by 
striking out "to each" and inserting in lieu thereof "to teach . 
(b) Section 821(b) is amended (1) by striking out "and" after "1978,", 
and (2) by inserting after "1980" a comma and the following: 
"$14,000,000 for the fiscal year ending September 30, 1982, 
$15,000,000 for the fiscal year ending September 30, 1983, and 
$16,000,000 for the fiscal year ending September 30,1984". 
(c) Section 821(a) is amended (1) by striking out "(1)" after "(a)", and 
(2) by redesignating subparagraphs (A), (B), and (C) as paragraphs (1), 
(2), and (3), respectively. 
NURSE PRACTITIONER PROGRAMS 
SEC. 2755. (a) Section 822(b)(1) (42 U.S.C. 296m(b)(l)) is amended by 
striking out "who are residents of a health manpower shortage area 
42 use 254e. 
(designated under section 332)" and inserting in lieu thereof a period 
and the following: "In considering applications for a grant or contract 
under this subsection, the Secretary shall give special consideration 
to applications for traineeships to train individuals who are residents 
of health manpower shortage areas designated under section 332.". 
Ob)(l) Section 822(bX3) is amended by inserting before the period the 
following: "for a period equal to one month for each month for which 
the recipient receives such a traineeship". 
(2) Section 822(b) is amended by adding after paragraph (3) the 
following: 
Repayments. 
"(4)(A) If, for any reason, an individual who received a traineeship 
under paragraph (1) fails to complete a service obligation under 
paragraph (3), such individual shall be liable for the payment of an 
amount equal to the cost of tuition and other education expenses and 
other payments paid under the traineeship, plus interest at the 
maximum legal prevailing rate. 
"(B) When an individual who received a traineeship is academ-
ically dismissed or voluntarily terminates academic training, such 
individual shall be liable for repayment to the Government for an 
amount equal to the cost of tuition and other educational expenses 
paid to or for such individual from Federal funds plus any other 
payments which were received under the traineeship. 
(C) Any amount which the United States is entitled to recover 
under subparagraph (A) or (B) shall, within the three-year period 
beginning on the date the United States becomes entitled to recover 
such amount, be paid to the United States. 
Waiver or 
"(D) The Secretary shall by regulation provide for the waiver or 
suspension. 
suspension of any obligation under subparagraph (A) or (B) applicable 
to any individual whenever compliance by such individual is impossi-
ble or would involve extreme hardship to such individual and if 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 931 
enforcement of such obligation with respect to any individual would 
be against equity and good conscience.". 
(c) Section 822(e) is amended (1) by striking out "and" after "1978,", 42 use 296m. 
and (2) by inserting after "1980" a comma and the following: 
"$12,000,000 for the fiscal year ending September 30, 1982, 
$13,000,000 for the fiscal year ending September 30, 1983, and 
$14,000,000 for the fiscal year ending September 30,1984". 
TRAINEESHIPS 
SEC. 2756. Section 830(b) (42 U.S.C. 297(b)) is amended— 
(1) by striking out "and" after "1978,", and by inserting after 
"1980'*^ a comma and the following: "$10,000,000 for the fiscal 
year ending September 30, 1982, $10,500,000 for the fiscal year 
ending September 30, 1983, and $11,000,000 for the fiscal year 
ending September 30,1984"; and 
(2) by adding at the end the following: "Not less than 25 
percent of the funds appropriated under this subsection for any 
fiscal year shall be obligated for traineeships described in subsec-
tion (a)(1)(A), except that if the obligation of that amount of the 
funds appropriated under this subsection will prevent the con-
tinuation of a traineeship to an individual who received a 
traineeship under subsection (a) for the fiscal year ending Sep-
tember 30, 1981, the Secretary shall reduce the amount to be 
obligated for traineeships described in subsection (aXlXA) by 
such amount as may be necessary for the continuation of trainee-
ships first awarded in such fiscal year. Priority in the award of 
traineeships under subsection (aXl)(C) shall go to nurse midwife 
trainees.". 
STUDENT LOANS 
SEC. 2757. (a) Section 835(bX4) (42 U.S.C. 297a(bX4)) is amended by 
striking out ", and that while the agreement remains in effect no 
such student who has attended such school before October 1, 1980, 
shall receive a loan from a loan fund established under section 204 of 
the National Defense Education Act of 1958". 
20 use 424. 
(b) Section 836(bX5) (42 U.S.C. 297b(bX5)) is amended by striking out 
"3" and inserting in lieu thereof "6". 
(c) Section 837 (42 U.S.C. 297c) is amended (1) by striking out "and" 
after "1978,", (2) bv inserting after "September 30, 1980^' a comma 
and the following: '$14,000,000 for the fiscal year ending September 
30, 1982, $16,000,000 for the fiscal year ending September 30, 1983, 
and $18,000,000 for the fiscal year ending September 30,1984", (3) by 
striking out "1981" in the second sentence and inserting in lieu 
thereof "1985", (4) by striking out "October 1,1980" and inserting in 
lieu thereof "October 1, 1984", and (5) by adding at the end the 
following: "Of the amount appropriated under the first sentence for 
the fiscal year ending September 30, 1982, and the two succeeding 
fiscal years, not less than $1,000,000 shall be obligated in each such 
fiscal year for loans from student loan funds established under 
section 835 to individuals who are qualified to receive such loans and 
who, on the date they receive the loan, have not been employed on a 
full-time basis or been enrolled in any educational institution on a 
full-time basis for at least seven years. A loan to such an individual 
may not exceed $500 for any academic year.". 
(d) Section 839 (42 U.S.C. 297e) is amended by striking out "1983" 
each place it occurs and inserting in lieu thereof "1987". 
95 STAT. 932 
PUBLIC LAW 97-35—AUG. 13, 1981 
Repeal. 
SCHOLARSHIPS 
SEC. 2758. (a) Section 845(b) (42 U.S.C. 297j(b)) is amended by 
striking out "and for each of the two succeeding fiscal years". 
(b) Section 845(cXlXB) is amended by striking out ", and for each of 
the two succeeding fiscal years". 
(c) Section 846 (42 U.S.C. 297k) is repealed. 
GENERAL PROVISIONS 
SEC. 2759. (a) Section 851(a) (42 U.S.C. 298(a)) is amended by 
striking out "and the Commissioner of Education, both of whom shall 
be ex officio members" and inserting in lieu thereof "and an ex officio 
member". 
(b)(1) Section 853(2) (42 U.S.C. 298b(2)) is amended by inserting "in a 
State" before the period. 
(2) Section 853(6) is amended by striking out "Commissioner" each 
place it appears and inserting in lieu thereof "Secretary". 
(c) Section 856 (42 U.S.C. 298b-3) is amended by striking out 
"Health, Education, and Welfare" and inserting in lieu thereof 
"Health and Human Services". 
CHAPTER 
4—SURGEON 
GENERAL 
Appointment. 
•; 
; ; ; 
SURGEON GENERAL 
SEC. 2765. (a) The first sentence of section 211(aXl) of the Public 
Health Service Act (42 U.S.C. 212(aXl)) is amended (1) by striking out 
"shall be retired on" and inserting in lieu thereof "shall, if he applies 
for retirement, be retired on or after", and (2) by amending the last 
sentence to read as follows: "This paragraph does not permit or 
require the involuntary retirement of any individual because of the 
age of the individual.". 
(bXD Section 204 of the Public Health Service Act (42 U.S.C. 205) is 
amended by striking out the second sentence and inserting in lieu 
thereof the following: "The Surgeon General shall be appointed from 
individuals who (1) are members of the Regular Corps, and (2) have 
specialized training or significant experience in public health 
programs.". 
PUBLIC LAW 97-35—AUG. 13, 1981 
95 STAT. 933 
(2) The third sentence of such section 204 is amended to read as 42 use 205. 
follows: "Upon the expiration of such term, the Surgeon General, 
unless reappointed, shall revert to the grade and number in the 
Regular or Reserve Corps that he would have occupied had he not 
served as Surgeon General.". 
(c) The first sentence of section 2070>)(1) of the Public Health 
Service Act (42 U.S.C, 209(bXl)) is amended by inserting "(other than 
an appointment under section 204)" after "no such appointment". 
Approved August 13, 1981. 
LEGISLATIVE HISTORY—H.R. 3982 (S. 1377): 
HOUSE REPORTS: No. 97-158, vols. I-III (Comm. on the Budget) and No. 97-208, bks. 
1, 2 (C!omm. of Conference). 
SENATE REPORT No. 97-139 accompanying S. 1377 (Comm. on the Budget). 
CONGRESSIONAL RECORD, Vol. 127 (1981): 
June 22-25, S. 1377 considered and passed Senate. 
June 25, 26, considered and passed House. 
July 13, considered and passed Senate, amended, ^n lieu of S. 1377. 
July 31, House and Senate agreed to conference report.