Omnibus Budget Reconciliation Act of 1993
PL 103-66 (H.R.2264), enacted 08/10/1993

107 STAT. 312 
PUBLIC LAW 103-66—AUG. 10, 1993 
Public Law 103-66 
103d Congress 
An Act 
Aug. 10, 1993 
To provide for reconciliation pursiiant to section 7 of the conciirrent resolution 
[H.R. 2264] 
on the budget for 
fiscal 
year 1994. 
Be it enacted 
by the Senate 
and House of Representatives 
of 
Omnibus Budget the United States of America in Congress 
assembled. 
Reconciliation 
Act of 1993. 
SECTION 1. SHORT TITLE. 
This Act may be cited as the "Omnibus Budget Reconciliation 
Act of 1993". 
SEC. 2. TABLE OF CONTENTS. 
The table of contents is as follows: 
TITLE I—AGRICULTURE AND RELATED PROVISIONS 
TITLE 11—ARMED SERVICES PROVISIONS 
TITLE III—BANKING AND HOUSING PROVISIONS 
TITLE IV—STUDENT LOANS AND ERISA PROVISIONS 
TITLE V—TRANSPORTATION AND PUBLIC WORKS PROVISIONS 
TITLE VI—COMMUNICATIONS UCENSING AND SPECTRUM ALLOCATION 
PROVISIONS 
TITLE VII—NUCLEAR REGULATORY COMMISSION PROVISIONS 
TITLE VIII—PATENT AND TRADEMARK OFFICE PROVISIONS 
TITLE K—MERCHANT MARINE PROVISIONS 
TITLE X—NATURAL RESOURCES PROVISIONS 
TITLE XI—CIVIL SERVICE AND POST OFFICE PROVISIONS 
TITLE XII—VETERANS' AFFAIRS PROVISIONS 
TITLE XIII—REVENUE, HEALTH CARE, HUMAN RESOURCES, INCOME SE-
CURITY, CUSTOMS AND TRADE PROVISIONS, FOOD STAMP PROGRAM, 
AND TIMBER SALE PROVISIONS 
TITLE XIV—BUDGET PROCESS PROVISIONS 
R
S
S
m
a
t
l
o
n 
TITLE I—AGRICULTURAL PROGRAMS 
Act of 1993. 
SEC. 1001. SHORT TITLE AND TABLE OF CONTENTS. 
7 use 1421 note. 
(a) SHORT TITLE.—This title may be cited as the "Agricultural 
Reconciliation Act of 1993". 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 313 
(b) TABLE OF CONTENTS.—The table of contents of this title 
is as follows: 
Sec. 1001. Short title and table of contents. 
Subtitle A—Commodity Programs 
Sec. 1101. Upland cotton program. 
Sec. 1102. Wheat program. 
Sec. 1103. Feed grain program. 
Sec. 1104. Rice program. 
Sec. 1105. Dairy program. 
Sec. 1106. Tobacco program. 
Sec. 1107. Sugar program. 
Sec. 1108. Oilseeds program. 
Sec. 1109. Peanut program. 
Sec. 1110. Honey program. 
Sec. 1111. Wool and mohair program. 
Subtitle B—Rural Electrification 
Sec. 1201. Refinancing and prepajrment of FFB loans. 
Subtitle C—^Agricultural Trade 
Sec. 1301. Acreage reduction requirements. 
Sec. 1302. Market promotion program. 
Subtitle D—^Miscellaneotis 
Sec. 1401. Admission, entrance, and recreation fees. 
Sec. 1402. Environmental conservation acreage reserve program amendments. 
Sec. 1403. Federal crop insurance. 
Subtitle A—Commodity Programs 
SEC. 
1
1
0
1
. 
UPLAND 
COTTON 
PROGRAM. 
(a) IN GENERAL.—Section 103B of the Agricultural Act of 1949 
(7 U.S.C. 1444-2) is amended— 
(1) in the section heading, by striking '4996" and inserting 
"1997"; 
(2) in subsections (aXD, (bXD, (cXlXA), (cXlXBXii), and 
(o), by striking "1995" each place it appears and inserting 
"1997 • 
(3) in subparagraphs (BXi), (DXi), (EXi), and (FXi) of sub-
section (aX5), by striking "1996" each place it appears and 
inserting "1998"; 
(4) in subsection (cXlXD)— 
(A) in the subparagraph heading, by striking "50/92 
PROGRAM" and inserting "50/85 P
R
O
G
R
A
M
"
; 
(B) by inserting after "8 percent" both places it appears 
the following: "for each of the 1991 through 1993 crops, 
and 15 percent for each of the 1994 through 1997 crops 
(except as provided in clause (vXII)),"; and 
(C) in clause (v)— 
(i) by striking "(v) PREVENTED PLANTING.—W and 
inserting the following: 
"(v) PREVENTED PLANTING AND REDUCED YIELDS.— 
"(I) 1991 THROUGH 1993 CROPS.—In the case 
of each of the 1991 through 1993 crops of upland 
cotton, if"; and 
(ii) by adding at the end the following new 
subclause: 
"(II) 1994 T
H
R
O
U
G
H 1997 CROPS.—In the case 
of each of the 1994 through 1997 crops of upland 
107 STAT. 314 
PUBLIC LAW 103-66—AUG. 10, 1993 
cotton, producers on a farm shall be eligible to 
receive deficiency payments as provided in clause 
(iii) if an acreage limitation program under sub-
section (e) is in effect for the crop and— 
"(aa) the producers have been determined 
by the Secretary (in accordance with section 
503(c)) to be prevented from planting the crop 
or have incurred a reduced yield for the crop 
(due to a natural disaster) and the producers 
elect to devote a portion of the mtiximum pay-
ment acres for upland cotton (as calculated 
imder subparagraph (CXii)) equal to more 
than 8 percent of the upland cotton acreage, 
to conservation uses; or 
"(bb) the producers elect to devote a por-
tion of the msiximum payment acres for upland 
cotton (as calculated under subparagraph 
(CXii)) equal to more than 8 percent of the 
upland cotton acreage, to alternative crops as 
provided in subparagraph (E)."; and 
(5) in subsection (eXlXD), by inserting after "30 percent" 
the following: "for each of the 1991 through 1994 crops, 29y2 
percent for each of the 1995 and 1996 crops, and 29 percent 
for the 1997 crop". 
(b) PROVISIONS NECESSARY TO THE OPERATION OF THE PRO-
GRAM.— 
(1) DEFICIENCY AND LAND DIVERSION PAYMENTS.—Section 
114 of the Agricultural Act of 1949 (7 U.S.C. 1445j) is amended 
by striking "1995" each place it appears in subsections (aXD 
and (c) and inserting "1997". 
(2) ACREAGE BASE AND YIELD SYSTEM.—Title V of such 
Act (7 U.S.C. 1461 et seq.) is amended— 
(A) in section 503 (7 U.S.C. 1463)— 
(i) in subsection (cX3)— 
(I) by striking "0/92 or 50/92"; and 
(II) by striking "1995" and inserting "1997"; 
and 
(ii) in subsection (hX2XA), by striking "1995" each 
place it appears and inserting "1997"; 
(B) in paragraphs (1) and (2) of section 505(b) (7 U.S.C. 
1465(b)), by striking "1995" each place it appears and 
inserting "1997"; and 
(C) in section 509 (7 U.S.C. 1469), by striking "1995" 
and inserting "1997". 
(3) PAYMENT LIMITATIONS.—The Food Security Act of 1985 
(Public Law 99-198; 99 Stat. 1354) is amended— 
(A) in paragraphs (1)(A), (IXB), and (2)(A) of section 
1001 (7 U.S.C. 1308), by striking "1995" each place it 
appears and inserting "1997"; and 
(B) in section lOOlC(a) (7 U.S.C. 1308-3(a)), by striking 
"1995" both places it appears and inserting "1997". 
SEC. 1102. WHEAT PROGRAM. 
Section 107B(cXlXE) of the Agricultural Act of 1949 (7 U.S.C. 
1445h-3a(cXlXE)) is amended— 
(1) in the subparagraph heading, by striking "0/92 PRO-
G
R
A
M
" and inserting "0/85 P
R
O
G
R
A
M
"
; 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 315 
(2) in clause (i), by inserting after "8 percent" both places 
it appears the following: "for each of the 1991 through 1993 
crops, and 15 percent for each of the 1994 through 1997 crops 
(except as provided in clause (vii)),"; and 
(3) by adding at the end of the subparagraph the following 
new clause: 
"(vii) EXCEPTIONS TO O/SS.—In the case of each 
of the 1994 through 1997 crops of wheat, producers 
on a farm shall be eligible to receive deficiency pay-
ments as provided in clause (ii) if an acreage limitation 
program under subsection (e) is in efiPect for the crop 
and— 
"(IXaa) the producers have been determined 
by the Secretary (in accordance with section 503(c)) 
to be prevented from planting the crop or have 
incurred a reduced yield for the crop (due to a 
natural disaster); and 
"(bb) the producers elect to devote a portion 
of the maximum payment acres for wheat (as cal-
culated under subparagraph (CXii)) equal to more 
than 8 percent of the wheat acreage, to conserva-
tion uses; or 
"(II) the producers elect to devote a portion 
of the maximum payment acres for wheat (as cal* 
culated under subparagraph (CXii)) equal to more 
than 8 percent of tne wheat acreage, to alternative 
crops as provided in subparagraph (F).". 
SEC. 1103. FEED GRAIN PROGRAM. 
Section 105B(cXlXE) of the Agricultural Act of 1949 (7 U.S.C. 
1444£(cXlXE)) is amended— 
(1) in the subparagraph heading, by striking "0/92 PRO-
GRAM" and inserting "0/85 PROGRAM"; 
(2) in clause (i), by inserting £ifter "8 percent" both places 
it appears the following: "for each of the 1991 through 1993 
crops, and 15 percent for each of the 1994 through 1997 crops 
(except as provided in clause (vii)),"; and 
(3) by adding at the end of the subparagraph the following 
new clause: 
"(vii) EXCEPTIONS TO O/SS.-In the case of each 
of the 1994 through 1997 crops of feed grains, produc-
ers on a farm shall be eligible to receive deficiency 
pajonents as provided in clause (ii) if an acreage limita-
tion program under subsection (e) is in effect for the 
crop and— 
"(IXaa) the producers have been determined 
by the Secretary (in accordance with section 503(c)) 
to be prevented from planting the crop or have 
incurred a reduced yield for the crop (due to a 
natural disaster); and 
"(bb) the producers elect to devote a portion 
of the maximiun payment acres for feed grains 
(as calculated under subparagraph (CXii)) equal 
to more than 8 percent of the feed grain acreage, 
to conservation uses; or 
"(II) the producers elect to devote a portion 
of the maximum payment acres for feed grains 
107 STAT. 316 
PUBLIC LAW 103-66—AUG. 10, 1998 
(as calculated under subparagraph (C)(ii)) equal 
to more than 8 percent oi the feed grain acreage, 
to alternative crops as provided in subparagraph 
(F).". 
SEC. 1104. RICE PROGRAM. 
Section lOlB(cXlXD) of the Agricultural Act of 1949 (7 U.S.C. 
1441-2(cXl)(D)) is amended— 
(1) in the subparagraph heading, by striking "50/92 PRO-
GRAM" and inserting "50/85 PROGRAM ; 
(2) in clause (i), by inserting after "8 percent" both places 
it appears the following: "for each of the 1991 through 1993 
crops, and 15 percent for each of the 1994 through 1997 crops 
(except as provided in clause (vXII)),"; and 
(3) in clause (v)— 
(A) by striking "(v) PREVENTED PLANTING.—ir and 
inserting the following: 
"(v) PREVENTED PLANTING AND REDUCED YIELDS.— 
"(I) 1991 THROUGH 1993 CROPS.—In the case 
of each of the 1991 through 1993 crops of rice, 
ir;and 
(B) by adding at the end the following new subclause: 
"(II) 1994 THROUGH 1997 CROPS.—In the case 
of each of the 1994 through 1997 crops of rice, 
producers on a farm shall be eligible to receive 
deficiency pa3nnents as provided in clause (iii) if 
an acreage limitation program under subsection 
(e) is in enect for the crop and— 
"(aa) the producers have been determined 
by the Secretary (in accordance with section 
503(c)) to be prevented from planting the crop 
or have incurred a reduced jdeld for the crop 
(due to a natural disaster) and the producers 
elect to devote a portion of the maximum pay-
ment acres for rice (as calculated under 
subparagraph (CXii)) equal to more than 8 
percent of the rice acreage, to conservation 
uses; or 
"(bb) the producers elect to devote a por-
tion of the maximum pajonent acres for rice 
(as calculated under subparagraph (CXii)) 
equal to more than 8 percent of the rice acre-
age, to alternative crops as provided in 
subparagraph (E).". 
SEC. 1105. DAIRY PROGRAM. 
(a) IN GENERAL.—Section 204 of the Agricultural Act of 1949 
(7 U.S.C. 1446e) is amended— 
(1) in the section heading, by striking "1996" and inserting 
(2) in subsections (a), (b), (dXl)(A), (dX2XA), (d)(3), (gXD, 
and (k), by striking "1995" each place it appears and inserting 
"1996"; 
(3) in subsection (c)(3)— 
(A) in the first sentence of subparagraph (A), by strik-
ing "The Secretary" and inserting "Subject to subparagraph 
(B), the Secretary*; 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 317 
(B) by redesignating subparagraph (B) as subpara-
graph (C); and 
(C) by inserting after subparagraph (A) the following 
new subparagraph: 
"(B) GUIDELINES.—^In the case of purchases of butter 
and nonfat dry milk that are made by the Secretary under 
this section on or after the date of enactment of the Omni-
bus Budget Reconciliation Act of 1993, in allocating title 
rate of price support between the purchase prices of butter 
and nonfat dry milk iinder this paragraph, the Secretary 
may not— 
"(i) offer to purchase butter for more than $0.65 
per pound; or 
"(ii) offer to purchase nonfat dry milk for less 
than $1,034 per pound."; 
(4) in subsection (hX2)— 
(A) by striking ''and" at the end of subparagraph (A); 
(B) by striking the period at the end of subparagraph 
(B) and inserting "; and"; and 
(C) by adding at the end the following new subpara-
graph: 
"(C) during each of calendar years 1996 and 1997, 
10 cents per hundredweight of milk marketed, which rate 
shall be adjusted on or before May 1 of the respective 
calendar year in the msuiner provided in subparagraph 
(B)."; and 
(5) in subsection (gX2), by striking "1994" and inserting 
"1996". 
(b) PROVISIONS NECESSARY TO THE OPERATION OF THE PRO-
GRAM.—Section 101(b) of the Agriculture and Food Act of 1981 
(7 U.S.C. 608c note) is amended by striking "1995" and inserting 
"1996". 
(c) REDUCTION IN PRICE RECEIVED.— 
'
^ use i446e 
(1) DEFINITIONS.—As used in this subsection: 
"°'*-
(A) BOVINE GROWTH HORMONE.—^The term "bovine 
growth hormone" means a synthetic growth hormone pro-
duced through the process of recombinant DNA techniques 
that is intended for use in bovine animals. 
(B) DATE OF APPROVAL.—The term "date of approval" 
means the date the Food and Drug Administration, pursu-
ant to authority under section 512 of the Federal Food, 
Drug, and Cosmetic Act (21 U.S.C. 360b), first approves 
an application with respect to the use of bovine growth 
hormone. 
(2) REDUCTION IN PRICE RECEIVED.—In order to offset the 
economic effects of the sale of bovine growth hormone, the 
Secret£ury of Agriculture shall decrease the amount of the reduc-
tion in price received by producers specified in subparagraph 
(B) or (C) (as appropriate) of section 204(hX2) of the Agricul-
tural Act of 1949 (7 U.S.C. 1446e(hX2)) by 10 percent during 
the period beginning on the date of approval and ending 90 
days after the date of approval and, during the period, it 
shall be unlawful for a person to sell bovine growth hormone 
for commercial agricultural purposes. 
107 STAT. 318 
PUBLIC LAW 103-66—AUG. 10, 1993 
Business and 
industry. 
Exports and 
imports. 
7 u s e 1314i. 
SEC. 1106. TOBACCO PROGRAM. 
(a) DOMESTIC MARKETING ASSESSMENT.—^Part I of subtitle B 
of title III of the Agricultural Adjustment Act of 1938 (7 U.S.C. 
1311 et seq.) is amended by adding at the end the following new 
section: 
•^EC. 320C. DOMESTIC MARKETING ASSESSMENT. 
"(a) CERTIFICATION.—A domestic manufacturer of cigarettes 
shall certify to the Secretary, for each calendar year, the percentage 
of the quantity of tobacco used by the maniifacturer to produce 
cigarettes during the year that is produced in the United States. 
"(b) PENALTIES.— 
"(1) IN GENERAL.—Subject to subsection (f), a domestic 
manufacturer of cigarettes that has failed, as determined by 
the Secretary after notice and opportunity for a hearing, to 
use in the manufacture of cigarettes during a calendar year 
a quantity of tobacco grown in the United States that is at 
least 75 percent of the total quantity of tobacco used by the 
manufacturer, or to comply with subsection (a), shall be subject 
to the requirements of subsections (c), (d), and (e). 
"(2) FAILURE TO CERTIFY.—For purposes of this section, 
if a manufacturer fails to comply with subsection (a), the manu-
facturer shall be presumed to have used only imported tobacco 
in the manufacture of cigarettes produced by the manufacturer. 
"(3) REPORTS AND RECORDS.— 
"(A) IN GENERAL.—^The Secretary shall require manu-
facturers of domestic cigarettes to make such reports and 
maintain such records as are necessary to carry out this 
section. If the reports £ind records are insufiicient, the 
Secretary may request other persons to provide supple-
mental information. 
"(B) EXAMINATIONS.—^For the purpose of ascertaining 
the correctness of any report or record required under 
this section, or of obtaining further information required 
under this section, the Secretary and the Office of Inspector 
General may examine such records, books, and other mate-
rials as the Secretary has reason to believe may be relevant. 
In the case of a manufacturer of domestic cigarettes, the 
Secretary may charge a fee to the manufacturer to cover 
the reasonable costs of any such examination. 
"(C) PENALTIES.—^Any person who fails to provide 
information required under this paragraph or who provides 
false information under this paragraph shall be subject 
to section 1001 of title 18, United States Code. 
"(D) CONFIDENTIALITY.—Section 320A(c) shall apply to 
information submitted by manufacturers of domestic ciga-
rettes and other persons under this paragraph. 
"(E) DISCLOSURE.—Notwithstanding any other provi-
sion of law, information on the percentage or quantity 
of domestic or imported tobacco in cigarettes or on the 
voliune of cigarette production that is submitted under 
this section shall be exempt from disclosure under section 
552 of title 5, United States Code. 
"(c) DOMESTIC MARKETING ASSESSMENT.— 
"(1) IN GENERAL.—^A domestic manufacturer of cigarettes 
described in subsection (b) shall remit to the Commodity Credit 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 319 
Corporation a nonrefundable marketing assessment in accord-
ance with this subsection. 
"(2) AMOUNT.—^The amount of an assessment imposed on 
a manufacturer imder this subsection shall be determined by 
multipl3ring— 
"(A) the quantity by which the quantity of imported 
tobacco used by the manufacttirer to produce cigarettes 
during a preceding calendar year exceeds 25 percent of 
the quantity of all tobacco used by the manufacturer to 
produce cigarettes during the preceding calendar year; by 
"(B) the difference between— 
"(i) Vz of the simi of— 
"(I) the average price per pound received by 
domestic producers for Burley tobacco during the 
preceding calendar year; and 
"(II) the average price per pound received by 
domestic producers for Flue-cured tobacco during 
the preceding calendar year; and 
"(ii) the average price per pound of unmanufac-
tured imported tobacco during the preceding calendar 
year, as aetermined by the Secretary. 
"(3) COLLECTION.—An assessment imposed under this sub-
section shall b e ^ 
"(A) collected by the Secretary and transmitted to the 
Commodity Credit (Corporation; and 
"(B) enforced in the same manner as provided in section 
320B. 
"(d) PURCHASE OF BURLEY TOBACCO.— 
"(1) IN GENERAL.—A domestic manufacturer of cigarettes 
described in subsection (b) shall purchase from the inventories 
of the producer-owned cooperative marketing associations for 
Burley tobacco described in section 320B(aX2), at the applicable 
list price published by the association, the quantity of tobacco 
described in paragraph (2). 
"(2) QUANTITY.—Subject to paragraph (3), the quantity of 
Burley tobacco required to be purchased by a manufacturer 
during a calendar year under this subsection shall equal ¥2 
of the quantity of imported tobacco used by the manufacturer 
to produce cigarettes during the preceding calendar year that 
exceeds 25 percent of the quantity of all tobacco used by the 
manufactiirer to produce cigarettes diudng the preceding cal-
endar year. 
"(3) LIMITATION.—^If the total quantity of Burley tobacco 
required to be purchased by all maniifacturers under paragraph 
(2) would reduce the inventories of the producer-owned coopera-
tive marketing associations for Burley tobacco to less than 
the reserve stock level for Burley tobacco, the Secretary shall 
reduce the quantity of tobacco required to be purchased by 
manufacturers under paragraph (2), on a pro rata basis, to 
ensure that the inventories will not be less than the reserve 
stock level for Burley tobacco. 
"(4) NONCOMPLIANCE.—If a manufacturer fails to piirchase 
from the inventories of the producer-owned cooperative market-
ing associations the quantity of Burley tobacco required luider 
this subsection, the manufacturer shall be subject to a penalty 
of 75 percent of the average market price (calculated to the 
nearest whole cent) for Burley tobacco for the immediately 
107 STAT. 320 
PUBLIC LAW 103-66—AUG. 10, 1993 
preceding year on the quantity of tobacco as to which the 
failure occurs. 
"(5) PURCHASE REQUIREMENTS.—Tobacco purchased by a 
mantdacturer under this subsection shall not be included in 
determining the quantity of tobacco purchased by the manufac-
turer under section 320B. 
"(e) PURCHASE OF FLUE-CURED TOBACCO.— 
"(1) IN GENERAL.—^A domestic manufacturer of cigarettes 
described in subsection (b) shsdl purchase from the inventories 
of the producer-owned cooperative marketing association for 
Flue-cured tobacco described in section 320B(aX2), at the 
applicable list price published by the association, the quantity 
of tobacco described in paragraph (2). 
"(2) QUANTITY.—Subject to paragraph (3), the quantity of 
Flue-cured tobacco required to be purchased by a manufacturer 
during a calendar year under tms subsection shall equal V
2 
of the quantity of imported tobacco used by the manufacturer 
to produce cigarettes during the preceding calendar year that 
exceeds 25 percent of the quantity of all tobacco used by the 
manufacturer to produce cigarettes during the preceding cal-
endar year. 
"(3) LIMITATION.—^If the total quantity of Flue-cured tobacco 
required to be purchased by all manufacturers under paragraph 
(2) would reduce the inventories of the producer-owned coopera-
tive marketing association for Flue-cured tobacco to less than 
the reserve stock level for Flue-cured tobacco, the Secretary 
shall reduce the quantity of tobacco required to be purchased 
by manufacturers under paragraph (2), on a pro rata basis, 
to ensure that the inventories will not be less than the reserve 
stock level for Flue-cured tobacco. 
"(4) NONCOMPLIANCE.—^If a manufacturer fails to purchase 
from the inventories of the producer-owned cooperative market-
ing association the quantity of Flue-cured tobacco required 
under this subsection, the manufacturer shall be subject to 
a penalty of 75 percent of the average market price (calculated 
to the nearest whole cent) for Flue-cured tobacco for the imme-
diately preceding year on the quantity of tobacco as to which 
the failure occurs. 
"(5) PURCHASE REQUIREMENTS.—Tobacco purchased by a 
manufacturer under this subsection shall not be includea in 
determining the quantity of tobacco purchased by the manufac-
turer under section 320B. 
"(f) CROP LOSSES DUE TO DISASTERS.— 
"(1) IN GENERAL.—^If the Secretary, in consultation with 
producer-owned cooperative marketing associations, determines 
that because of drought, insect or disease infestation, or other 
natural disaster, or other condition beyond the control of 
producers, the total quantity of a crop of domestic Burley 
tobacco or Flue-cured tobacco Uiat is harvested and suitable 
for marketing is substantially less than the expected yield 
for the crop, and that pool inventories for the kind of tobacco 
involved have been depleted, effective for the calendar year 
following the year in which the crop loss occurs, the Secretory 
mav reduce the minimum percentoge of domestic 
tobacco 
speci-
fied in subsection (a) to a percentoge below 75 percent, as 
determined by the Secreterv, that reflects the reduced availabil-
ity of domestic supplies of tne kind of 
tobacco 
involved. 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 321 
**(2) DETERMINATION OF EXPECTED YIELD.—For purposes of 
paragraph (1), the Secretary shall determine the expected yield 
for a crop of Burley tobacco or Flue-cured tobacco by taking 
into consideration— 
"(A) the total acreage planted to the crop (including 
acreage that the producers were prevented from planting 
because of a condition referred to in paragraph (1)); and 
''(B) normal farm jdelds established for the crop. 
**(3) DEADUNE FOR DETERMINATIONS.—The Secretary shall 
make determinations under paragraph (1) about crop losses 
and announce the reduced percentage of the domestic tobacco 
pool not later than November 30 of the year in which the 
applicable crop of Burley tobacco or Flue-cured tobacco is har-
vested.", 
(b) BUDGET DEFICIT ASSESSMENT.— 
(1) IN GENERAL.—Section 106 of the Agricultural Act of 
1949 (7 U.S.C. 1445) is amended by adding at the end the 
following new subsection: 
"(hXD Effective only for each of the 1994 through 1998 crops 
of tobacco, an importer of tobacco that is produced outside the 
United States shall remit to the Commodity Credit Corporation 
a nonrefundable marketing assessment in an amount equal to the 
product obtained by multiplying— 
"(A) the number of poimds of tobacco that is imported 
by the importer; by 
"(B) the sum o
f
—
• 
"(i) the per pound marketing assessment imposed on 
purchasers of domestic Burley tobacco pursuant to sub-
section (g); and 
"(ii) the per poimd marketing assessment imposed on 
purchasers of domestic Flue-cured tobacco pursuant to sub-
section (g). 
"(2) An assessment imposed under this subsection shall be 
paid by the importer. 
"(3)(A) The importer shall remit the assessment at such time 
and in such manner as may be prescribed by the Secretary. 
"(B) If the importer fails to comply with subparagraph (A), 
the importer shall be liable, in addition, for a marketing penalty 
at a rate equal to 37.5 percent of the sum of the average market 
price (calculated to the nearest whole cent) of Flue-cured and Burley 
tobacco for the immediately preceding year on the quantity of 
tobacco as to which the failure occurs. 
"(C) This subsection shall be enforced in the same manner 
as subparagraphs (B) and (C) of paragraph (1), and paragraphs 
(2) and (3), of section 106A(h). 
"(4) Any penalty collected by the Secretary under this sub-
section shall be deposited for use by the Commodity Credit Corpora-
tion.". 
(2) 
IMPORTER ASSESSMENTS FOR NO NET COST TOBACCO 
FUND.—Section 106A of such Act (7 U.S.C. 1445-1) is 
amended— 
(A) in subsection (c), by inserting "and importers" after 
"purchasers"; 
(B) in subsection (dXlXA)— 
(i) by striking "and" at the end of clause (i); and 
(ii) by inserting after clause (ii) the following new 
clause: 
107 STAT. 322 
PUBLIC LAW 103-66—AUG. 10, 1993 
"(iii) each importer of Flue-cured or Burley tobacco 
shall pay to the appropriate association, for deposit 
in tiie Fund of the association, an assessment, in an 
amount that is equal to the product obtained by 
multiplying— 
"(I) the number of pounds of tobacco that is 
imported by the importer; by 
"(II) the siun of the amoimt of per pound pro-
ducer contributions and purchaser assessments 
that are payable by domestic producers and pur-
chasers of Flue-cured and Burley tobacco under 
clauses (i) and (ii); and"; 
(C) in subsection (d)(2)— 
(i) by inserting "or importer^ after "or purchaser"; 
(ii) by striking "and" at the end of subparagraph 
(B); 
(iii) by inserting "and" at the end of subparagraph 
(C); and 
(iv) by adding at the end the following new 
subparagraph: 
"(D) if the tobacco involved is imported by an importer, 
from the importer."; and 
(D) in subsection (hXl)— 
(i) by redesignating subparagraphs (B) and (C) 
as subpara^aphs (C) and (D), respectively; and 
(ii) by mserting after subparagraph (A) the follow-
ing new subparagraph: 
"(B) Each importer who fails to pay to the association an 
assessment as required by subsection (dX2) at such time and in 
such manner as may be prescribed by the Secretaiy, shall be 
Uable, in addition to any amoimt due, for a marketing penalty 
at a rate equal to 75 percent of the average market price (calculated 
to the nearest whole cent) for the respective kind of tobacco for 
the immediately preceding year on the quantity of tobacco as to 
which the failiu'e occurs.". 
(3) 
IMPORTER ASSESSMENTS TO NO NET COST TOBACCO 
ACCOUNT.—Section 106B of such Act (7 U.S.C. 1445-2) is 
amended— 
(A) in subsection (cXl), by striking "producers and 
purchasers" and inserting "producers, purchasers, and 
importers"; 
(B) in subsection (dXl)— 
(i) by designating the first and second sentences 
as subparagraphs (A) and (B), respectively; and 
(ii) by adding at the end the following new 
subparagraph: 
"(C) The Secretary shall also require (in lieu of anv requirement 
under section 106A(aXl)) that each importer of Flue-cured and 
Burley tobacco shall pay to the Corporation, for deposit in the 
Account of the association, an assessment, as determined under 
paragraph (2) and collected under paragraph (3), with respect to 
purchases of all such kinds of tobacco imported by the importer."; 
(C) in subsection (dX2), by adding at the end the follow-
ing new subparagraph: 
"(C) Ilie amount of the assessment to be paid by importers 
shall be an amount that is equal to the product obtained by 
multiplying— 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 323 
**(i) the number of pounds of tobacco that is imported by 
the importer; by 
''(ii) the sum of the amount of per pound producer and 
purchaser assessments that are payable by domestic producers 
and purchasers of the respective kind of tobacco luider this 
paragraph."; 
(D) in subsection (dX3), by adding at the end the follow-
ing new subparagraph: 
"(D) If Flue-cured or Burley tobacco is imported by an importer, 
any importer assessment required by subsection (d) shall be col-
lected from the importer."; and 
(E) in subsection (jXD— 
(i) by redesignating subparagraphs (B) and (C) 
as subparagraphs (C) and (D), respectively; and 
(ii) by inserting after subparagraph (A) the follow-
ing new subparagraph: 
"(B) Each importer who fails to pay to the Corporation an 
assessment as reqtured by subsection (d) at such time and in 
such manner as may be prescribed by the Secretary, shall be 
Uable, in addition to any amount due, to a marketing penalty 
at a rate equal to 75 percent of the average market price (calculated 
to the nearest whole cent) for the respective kind of tobacco for 
the immediately preceding year on the quantity of tobacco as to 
which the failure occurs.". 
(c) FEES FOR INSPECTING IMPORTED TOBACCO.—The second sen-
tence of section 213(d) of the Tobacco A4justment Act of 1983 
(7 U.S.C. 511r(d)) is amended by inserting before the period at 
the end the following: ", and which shall be comparable to fees 
and charges fixed and collected for services provided in connection 
with tobacco produced in the United States". 
(d) EXTENSION OF QUOTA REDUCTION FLOORS.— 
(1) BURLEY TOBACCO.—Section 319(cX3XCXii) of the Agri-
cultural Adjustment Act of 1938 (7 U.S.C. 1314e(cX3XCXii)) 
is amended— 
(A) by striking "1993" and inserting "1996"; and 
(B) by inserting before the period at the end the follow-
ing: ", except that, in the case of each of the 1995 and 
1996 crops of Burley tobacco, the Secretary may waive 
the requirements of this clause if the Secretary determines 
that the requirements would likely result in inventories 
of the producer-owned cooperative marketing associations 
for Burley tobacco described in section 320B(aX2) to exceed 
150 percent of the reserve stock level for Burley tobacco". 
(2) FLUE-CURED TOBACCO.—Section 317(aXlXCXii) of such 
Act (7 U.S.C. 1314c(aXlXCXii)) is amended— 
(A) by striking "1993" and inserting "1996"; and 
(B) by inserting before the period at the end the follow-
ing: ", except that, in the case of each of the 1995 and 
1996 crops of Flue-cured tobacco, the Secretary may waive 
the requirements of this clause if the Secretary determines 
that the requirements would likely result in inventories 
of the producer-owned cooperative marketing association 
for Flue-cured tobacco described in section 320B(aX2) to 
exceed 150 percent of the reserve stock level for Flue-
cured tobacco". 
107 STAT. 324 
PUBLIC LAW 103-66—AUG. 10, 1993 
SEC. 1107. SUGAR PROGRAM. 
(a) IN GENERAL.—Section 206 of the Agricultural Act of 1949 
(7 U.S.C. 1446g) is amended— 
(1) in the section heading, by striking "1995" and inserting 
"1997"; 
(2) in subsections (a), (c), (dXD, and (j), by striking "1995" 
each place it appears and inserting "1997"; and 
(3) in subsection (i)— 
(A) in paragraph (1), by striking "equal to" and all 
that follows through the period at the end and inserting 
the foUovdng: "equal to— 
"(A) in the case of marketings during each of fiscal 
years 1992 through 1994, 1.0 percent of the loan level 
established under subsection (b) per poimd of raw cane 
sugar (but not more than .18 cents per pound of raw 
cane sugar), processed by the processor from domestically 
produced sugarcane or sugarcane molasses, that has been 
marketed (including the transfer or delivery of the sugar 
to a refinery for further processing or marketing); and 
"(B) in the case of marketings during each of fiscal 
years 1995 through 1998, 1.1 percent of the loan level 
established under subsection (b) per pound of raw cane 
sugar (but not more than .198 cents per pound of raw 
cane sugar), processed by the processor from domestically 
produced sugarcane or sugarcane molasses, that has been 
marketed (including the transfer or delivery of the sugar 
to a refinery for further processing or marketing)."; 
(B) in paragraph (2), by striking "equal to" and all 
that follows through the period at the end and inserting 
the following: "equal t o ^ 
"(A) in the case of marketings during each of fiscal 
years 1992 through 1994, 1.0722 percent of the loan level 
established under subsection (b) per pound of beet sugar 
(but not more than .193 cents per pound of beet sugar), 
processed by the processor from domestically produced 
sugar beets or sugar beet molasses, that has been mar-
keted; and 
"(B) in the case of marketings during each of fiscal 
years 1995 through 1998, 1.1794 percent of the loan level 
established under subsection (b) per pound of beet sugar 
(but not more than .2123 cents per pound of beet sugar), 
processed by the processor from domestically produced 
sugar beets or sugar beet molasses, that has been mar-
keted."; and 
(C) by adding at the end the following new paragraph: 
"(6) EXCESS MARKETINGS.—In addition to the assessment 
required under paragraph (1) or (2), a processor who knowingly 
markets sugar in excess of the allocated allotment of the proc-
essor under section 359d of the Agricultural Adjustment Act 
of 1938 (7 U.S.C. 1359dd) shall pay an assessment in an amount 
that is double the applicable assessment required under para-
graph (1) or (2) per pound of sugar marketed. . 
(b) PROVISIONS NECESSARY TO THE OPERATION OF THE PRO-
GRAM.—Section 359b of the Agricultural Adjustment Act of 1938 
(7 U.S.C. 1359bb) is amended— 
(1) in subsection (aXD, by striking "1996" and inserting 
"1998"; and 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 325 
(2) in subsection (d)— 
(A) by striking paragraph (1) and inserting the follow-
ing new paragraph: 
"(1) IN GENERAL.—During any fiscal year or portion thereof 
for which marketing allotments have been established, no proc-
essor of sugar beets or sugarc£uie shall market a quantity 
of sugar in excess of the allocation established for such proc-
essor, except to enable another processor to fulfill an allocation 
established for such other processor or to faciUtate the expor-
tation of such sugar."; and 
(B) in paragraph (3), by inserting "knowingly" after 
"who" each place it appears. 
SEC. 1108. OILSEEDS PROGRAM. 
Section 205 of the Agricultural Act of 1949 (7 U.S.C. 14460 
is amended— 
(1) in subsection (c)— 
(A) in paragraph (1), by inserting after "$5.02 per 
bushel" the following: "for each of the 1991 through 1993 
crops and $4.92 per bushel for each of the 1994 through 
1997 crops"; and 
(B) in paragraph (2), by inserting after "$0,089 per 
poimd" the following: "for each of the 1991 through 1993 
crops and $0,087 per pound for each of the 1994 through 
1997 crops"; 
(2) in subsection (h), by striking "mature on the last day 
of the 9th month following the month the application for the 
loan is made." and inserting the following: "mature— 
"(1) in the case of each of the 1991 through 1993 crops, 
on the last day of the 9th month following tne month uie 
application for the loan is made; and 
"(2) in the case of each of the 1994 through 1997 crops, 
on the last day of the 9th month following the month Uie 
application for the loan is made, except that the loan mav 
not mature later than the last day of the fiscal year in which 
the application is made."; and 
(3) in subsection (m), by adding at the end the following 
newparagraph: 
(3) APPLICABILITY.—^This subsection shall apply only to 
each of the 1991 through 1993 crops of oilseeds.". 
SEC. 1109. PEANUT PROGRAM. 
(a) IN GENERAL.—Section 108B of the Agricultural Act of 1949 
(7 U.S.C. 1445C-3) is amended— 
(1) in the section heading, by striking "1995" and inserting 
"1997"; 
(2) in subsections (aXD, (aX2), (bXD, (gXD, and (h), bv 
striking "1995" each place it appears and inserting "1997 ; 
and 
(3) in subsection (g)— 
(A) in paragraph (1), by inserting after "1 percent" 
both places it appears the following: "for each of the 1991 
through 1993 crops, 1.1 percent for each of the 1994 and 
1995 crops, 1.15 percent for the 1996 crop, and 1.2 percent 
for the 1997 crop,*; and 
(B) in paragraph (2XA), by striking clauses (i) and 
(ii) and inserting the following new clauses: 
107 STAT. 326 
PUBLIC LAW 103-66—AUG. 10, 1993 
''(i) collect from the producer a marketing assess-
ment equal to the quantity of peanuts acquireid multi-
plied by— 
"(I) in the case of each of the 1991 through 
1993 crops, .5 percent of the applicable national 
average support rate; 
"(ID in the case of each of the 1994 and 1995 
crops, .55 percent of the applicable national aver-
age support rate; 
''(III) in the case of the 1996 crop, .6 percent 
of the applicable national average support rate; 
and 
"(TV) in the case of the 1997 crop, .65 percent 
of the applicable national average support rate; 
"(ii) pay, in addition to the amount collected under 
clause (i), a marketing assessment in an amount equal 
to the quantity of peanuts acquired mviltiplied by— 
"(1) in the case of eacn of the 1991 through 
1993 crops, .5 percent of the applicable national 
average support rate; and 
"(11) in the case of each of the 1994 through 
1997 crops, .55 percent of the applicable national 
average support rate; and". 
(b) ASSESSMENT UNDER PEANUT MARKETING AGREEMENT.—Sec-
tion 8b(bXl) of the Agricultural Adjustment Act (7 U.S.C. 
608b(bXl)), reenacted with amendments by the Agricvdtural 
Marketing Agreement Act of 1937, is amended— 
(1) by striking "and" at the end of subparagraph (A); 
(2) by striking the period at the end of subparagraph (B) 
and inserting "; and"; and 
(3) by adding at the end the following new subparagraph: 
"(C) any assessment (except with respect to any assessment 
for the indenmification of losses on rejected peanuts) imposed 
under the agreement shall— 
"(i) apply to peanut handlers (as defined by the Sec-
retaiy) wno have not entered into such an agreement with 
the Secretary in addition to those handlers who have 
entered into the agreement; and 
"(ii) be paid to the Secretary.". 
(c) PROVISIONS NECESSARY TO THE OPERATION OF THE PRO-
GRAM.—^Part VI of subtitle B of title III of the Agricultural A4iust-
ment Act of 1938 is amended— 
(1) in section 358-1 (7 U.S.C. 1358-1)— 
(A) in the section heading, by striking "199S" and insert-
ing "1997"; and 
(B) in subsections (aXD, (bXlXA), (bXlXB), (bX2XA), 
(bX2XC), (bX3XA), and (f), by striking "1995" each place 
it appears and inserting "1997 ; and 
(2) in section 358e (7 U.S.C. 1359a)— 
(A) in the section heading, by striking "i996" and insert-
ing "1997"; and 
(B) in subsection (i), by striking "1995" and inserting 
"1997". 
SEC. 1110. HONEY PROGRAM. 
Section 207 of the Agricultural Act of 1949 (7 U.S.C. 1446h) 
is amended— 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 327 
(1) by striking "1995" each place it appears in subsections 
(a), (cXD, and 0') and inserting "1998"; 
(2) in subsection (a), by striking "than 53.8 cents per 
pound." and inserting "than— 
"(1) 53.8 cents per pound for each of the 1991 through 
1993 crop years; 
"(2) 50 cents per pound for each of the 1994 and 1995 
crop years; 
"(3) 49 cents per pound for the 1996 crop year; 
"(4) 48 cents per pound for the 1997 crop year; and 
"(5) 47 cents per pound for the 1998 crop year."; 
(3) in subsection (eXl)— 
(A) by striking "and" at the end of subparagraph (C); 
and 
(B) by striking subparagraph (D) and inserting the 
following new subparagraphs: 
"(D) $125,000 in the 1994 crop year; 
"(E) $100,000 in the 1995 crop year; 
"(F) $75,000 in the 1996 crop year; and 
"(G) $50,000 in each of the 1997 and 1998 crop years."; 
and 
(4) in subsection (iXD, by striking "1995" and inserting 
"1993". 
SEC. 1111. WOOL AND MOHAIR PROGRAM. 
The National Wool Act of 1954 (7 U.S.C. 1781 et seq.) is 
amended— 
(1) in section 703 (7 U.S.C. 1782), by striking "1995" both 
places it appears in subsections (a) and (bX2) and inserting 
"1997"* 
(2) in section 704 (7 U.S.C. 1783)— 
(A) in subsection (bXD— 
(i) by striking "and" at the end of subparagraph 
(C);and 
(ii) by striking subparagraph (D) and inserting 
the following new subparagraphs: 
"(D) $125,000 for the 1994 marketing year; 
"(E) $100,000 for the 1995 marketing year; 
"(F) $75,000 for the 1996 marketing year; and 
"(G) $50,000 for the 1997 marketing year."; and 
(B) in subsection (c), by striking "through 1995" and 
inserting "and 1992"; and 
(3) in section 706 (7 U.S.C. 1785), by inserting after the 
second sentence the following new sentence: "In determining 
the net sales proceeds and national pajonent rates for shorn 
wool and shorn mohair, the Secretary shall not deduct market-
ing charges for commissions, coring, or grading.". 
Subtitle B—^Rural Electrification 
SEC. 1201. REFINANCING AND PREPAYMENT OF FFB LOANS. 
(a) IN GENERAL.—^Title III of the Rural Electrification Act of 
1936 (7 U.S.C. 931 et seq.) is amended by inserting after section 
306B (7 U.S.C. 936b) the following new section: 
69-194 O - 94 - 12 : QL. 3 Part 1 
107 STAT. 328 
PUBLIC LAW 103-66—AUG. 10, 1993 
7 use 936c 
"SEC. 306C. REFINANCING AND PREPAYMENT OF FFB LOANS. 
"(a) IN GENERAL.—^A borrower of a loan made by the Federal 
Financing Bank and guaranteed under section 306 may, at the 
option of the borrower, refinance or prepay the loan or an advance 
on the loan, or any portion of the loan or advance. 
"(b) PENALTY.— 
"(1) DETERMINATION OF PENALTY.—A penalty shall be 
assessed against a borrower that refinances or prepays a loan 
or loan advance, or any portion of a loan or advance, under 
this section. Except as provided in paragraph (2), the penalty 
shall be equal to the lesser of— 
"(A) the difference between the outstanding principal 
balance of the loan being refinanced and the present value 
of the loan discounted at a rate equal to the then ciirrent 
cost of funds to the Department of the Treasury for obliga-
tions of comparable maturity to the loan being refinanced 
or prepaid; 
"(B) 100 percent of the amount of interest for 1 year 
on the outstanding principal balance of the loan or loan 
advance, or any portion of the loan or advance, being 
refinanced, multiplied by the ratio that— 
"(i) the number of quarterly payment dates 
between the date of the refinancing or prepajrment 
and the maturity date for the loan advance; bears 
to 
"(ii) the number of quarterly pajrment dates 
between the first quarterly payment date that occurs 
12 years after the end of the year in which the amoiint 
being refinanced was advanced and the maturity date 
of the loan advance; and 
"(C)(i) the present value of 100 percent of the amount 
of interest for 1 year on the outstanding principal balance 
of the loan or loan advance, or any portion of the loan 
or advance, being refinanced or prepaid; plus 
"(ii) for the interval between the date of the refinancing 
or prepayment and the first quarterly payment date that 
occurs 12 years after the end of the year in which the 
amount being refinanced or prepaid was advanced, the 
present value of the difference between— 
"(I) each payment scheduled for the interval on 
the loan amoimt being refinanced or prepaid; and 
"(II) the pajrment amoimts that would be required 
during the interval on the amounts being refinanced 
or prepaid if the interest rate on the loan were equal 
to the then current cost of funds to the Department 
of the Treasury for obligations of comparable maturity 
to the loan being refinanced or prepaid. 
"(2) LIMITATION.— 
"(A) IN GENERAL.—Except as provided in subparagraph 
(B), the penalty provided oy paragraph (IXA) shall be 
required for refinancing or prepayment under this section. 
"(B) EXCEPTION.—In the case of a loan advanced under 
an agreement that permits the refinancing or prepajmient 
of the loan advance based on the payment of 1 year of 
interest on the outstanding principal balance of the loan 
advance, a borrower may, in lieu of the penalty required 
by paragraph (1)(A), pay a penalty as provided by— 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 329 
"(i) paragraph (1)(B), if the loan advance has 
reached the 12-year maturity reqmred under the loan 
agreement for the refinancing or prepayment; or 
"(ii) paragraph (1)(C), if the loan advance has not 
reached the 12-year maturity required under the loan 
agreement for the refinancing or prepayment. 
"(3) FINANCING OF PENALTY.— 
"(A) IN GENERAL.—In the case of a refinancing under 
this section, a borrower may, at the option of the borrower, 
meet the penalty requirements of paragraph (1) by— 
"(i) making a payment in the amount of the 
required penalty at the time of the refinancing; or 
"(ii) increasing the outstanding principal balance 
of the loan advance guaranteed by the Administrator 
that is being refinanced under this section by the 
amount of the penalty. 
"(B) INCREASED PRINCIPAL.—If a borrower meets the 
penalty requirements of paragraph (1) by increasing the 
outstanding principal balance of the loan advance that 
is being refinanced, the borrower shall make a payment 
at the time of the refinancing equal to 2.5 percent of 
the amount of the penalty that is added to the outstanding 
principal balance of the loan. 
"(c) LOAN TERMS AND CONDITIONS AFTER REFINANCING.— 
"(1) IN GENERAL.^^n the payment of a penalty as provided 
by subsection (b), the loan or loan advance, or any portion 
of the loan or advance, shall be refinanced at the interest 
rate described in paragraph (2) for a term selected by the 
borrower pursuant to paragraph (3), except that this paragraph 
shall not apply if the loan advance, or any portion of the 
advance, is prepaid by the borrower. 
"(2) INTEREST RATE.—^The interest rate on a loan refinanced 
under this section shall be determined to be equal to the 
then current cost of funds to the Department of the Treasury 
for obligations of comparable maturity to a term selected by 
the borrower pursuant to paragraph (3). 
"(3) LOAN TERM.—Subject to paragraph (4), the borrower 
of a loan that is refinanced under this section— 
"(A) shall select the term for which an interest rate 
shall be determined pursuant to paragraph (2); and 
"(B) at the end of the term (and any succeeding term 
selected by the borrower under this paragraph), may renew 
the loan for another term selected by the borrower. 
"(4) MAXIMUM TERM.—^The borrower may not select a term 
pursuant to paragraph (3) that ends after the maturity date 
set for the loan before the refinancing of the loan under this 
section. 
"(5) EXISTING LOANS.-—In the case of the refinancing of 
a loan of a borrower pursuant to this section and the inclusion 
of a penalty in the outstanding principal balance of the 
refinanced loan pursuant to subsection (bX3)— 
"(A) the refinancing and inclusion of the penalty shall 
not be subject to appropriations or limited by the amount 
provided during a fiscal year for new loans, loan guaran-
tees, or other credit activity; 
"(B) the request of the borrower for the refinancing 
under this section may not be denied or delayed; and 
107 STAT. 330 
PUBLIC LAW 103-66—AUG. 10, 1993 
"(C) the borrower may not be limited in the selection 
of any refinancing or prepayment option provided by this 
section to the borrower.". 
7 use 936c note. 
(b) REGULATIONS.—Not later than 45 days after the date of 
enactment of this section, the Administrator of the Rural Electrifica-
tion Administration shall issue interim final regulations to carry 
out the amendment made by subsection (a). 
Subtitle C—Agricultural Trade 
SEC. 1301. ACREAGE REDUCTION REQUIREMENTS. 
(a) IN GENERAL.—Section 1104 of the Omnibus Budget Rec-
onciliation Act of 1990 (7 U.S.C. 1445b-3a note) is amended— 
(1) in subsection (a), by striking paragraph (2) and inserting 
the following new paragraph: 
"(2) com under which the acreage planted to com for har-
vest on a farm would be limited to the com crop acreage 
base for the farm for the crop reduced by not less than IVT. 
percent."; and 
(2) in subsection (bX2), by striking "grain sorghum, and 
barley,". 
(b) READJUSTMENT OF SUPPORT LEVELS.—Section 1302 of such 
Act (7 U.S.C. 1421 note) is amended— 
(1) in subsection (b)— 
(A) by striking paragraph (1); and 
(B) by redesignating paragraphs (2) and (3) as para-
graphs (1) and (2), respectively; 
(2) in subsection (c), by striking "and other programs"; 
and 
(3) in subsection (d)— 
(A) in paragraph (1)— 
(i) by striking subparagraph (A); and 
(ii) by redesignating subparagraphs (B) and (C) 
as subparagraphs (A) and (B), respectively; 
(B) in paragraph (2), by striking "(A), (B), and (C)" 
and inserting "(A) and (B)"; and 
(C) in paragraph (3>— 
(i) by striking "measures specified in subparagraph 
(A) of paragraph (1) and"; and 
(ii) by striking "(B) or (C)" and inserting "(A) or 
(B)". 
SEC. 1302. MARKET PROMOTION PROGRAM. 
(a) REDUCTION OF FUNDING LEVEL.—Section 211(c)(1) of the 
Agricultural Trade Act of 1978 (7 U.S.C. 5641(c)(1)) is amended 
by striking "through 1995" and inserting "through 1993, and not 
less than $110,000,000 for each of the fiscal years 1994 through 
1997,". 
7 use 5623 note. 
(b) SECRETARIAL ACTIONS TO ACHIEVE SAVINGS.—^In order to 
enable the Secretary of Agriculture to achieve the savings required 
in the market promotion program established by section 203 of 
the Agricultural Trade Act of 1978 (7 U.S.C. 5623) as a result 
of the amendments made by this section: 
(1) UNFAIR TRADE PRACTICES.—Paragraph (2) of section 
7 use 5623. 
203(c) of such Act is amended to read as follows: 
"(2) UNFAIR TRADE PRACTICES.— 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 331 
"(A) REQUIREMENT.—Except as provided in subpara-
graph (B), the Secretary shall provide assistance under 
this section only to counter or ofTset the adverse efTects 
of a subsidy, import quota, or other unfair trade practice 
of a foreign country. 
"(B) 
EXCEPTION.—The Secretary shall waive the 
requirements of this paragraph in tne case of activities 
conducted by small entities operating through the regional 
State-related organizations.". 
(2) GUIDELINES.—The Secretary of Agriculture should 
implement changes in the market promotion program estab-
lisned by section 203 of such Act, beginning with fiscal year 
1994, in order to improve the effectiveness of the program 
and to meet the following objectives: 
(A) PRIORITY.—In providing assistance for branded pro-
motion, the Secretary should give priority to small-sized 
entities. 
(B) GRADUATION.—^The Secretary should not provide 
assistance under the program to promote a specific branded 
product in a single m a ^ e t for more than 5 years luiless 
the Secretary determines that further assistance is nec-
essary in order to meet the objectives of the program. 
(C) CONTRIBUTION LEVEL.— 
(i) IN GENERAL.—^The Secretary should require a 
minimum contribution level of 10 percent from an 
eligible trade organization that receives assistance for 
nonbranded promotion. 
(ii) INCREASES IN CONTRIBUTION LEVEL.—The Sec-
retary may increase the contribution level in any subse-
quent year that an eligible trade organization receives 
assistance for nonbranded promotion. 
(D) ADDITIONALITY.—^The Secretary should require 
each participant in the program to certify that any Federal 
funds received supplement, but do not supplant, private 
or third party participant funds or other contributions to 
program activities. 
(E) INDEPENDENT AUDITS.—If as a result of an evalua-
tion or audit of activities of a participant under the pro-
gram, the Secretary determines that a further review is 
justified in order to ensure compliance with the require-
ments of the program, the Secretary should require the 
participant to contract for an independent audit of the 
program activities, including activities of any subcontrac-
tor. 
(3) TOBACCO.—No funds made available imder the market 
promotion program may be used for activities to develop, main-
tain, or expand foreign markets for tobacco. 
(c) REGULATIONS.—Not later than 90 days after the date of 7 use 5623 note. 
enactment of this Act, the Secretary of Agriculture shall issue 
regulations to implement this section and the amendments made 
by this section. 
Subtitle D—^Miscellaneous 
SEC. 1401. ADMISSION, ENTRANCE, AND RECREATION FEES. 
16 USC 460/-6c. 
(a) DEFINITIONS.—^As used in this section: 
107 STAT. 332 
PUBLIC LAW 103-66—AUG. 10, 1993 
(1) AREA OF CONCENTRATED PUBLIC USE.—The term "area 
of concentrated public use" means an area administered by 
the Secretary that meets each of the following criteria: 
(A) The area is managed primarily for outdoor recre-
ation purposes. 
(B) Facilities and services necessary to accommodate 
heavy public use are provided in the area. 
(C) The area contains at least 1 major recreation attrac-
tion. 
(D) Public access to the area is provided in such a 
manner that admission fees can be efficiently collected 
at 1 or more centralized locations. 
(2) BOAT LAUNCHING FACIUTY.-The term "boat launching 
facility" includes any boat launching facility, regardless of 
whether specialized facilities or services, such as mechanical 
or hydraulic boat lifts or facilities, are provided. 
(3) CAMPGROUND.—^The term "campgroimd" means any 
campgroimd where a majority of the following amenities are 
provided, as determined by the Secretary: 
(A) Tent or trailer spaces. 
(B) Drinking water. 
(C) An access road. 
(D) Refuse containers. 
(E) Toilet faciUties. 
(F) The personal collection of recreation use fees by 
an employee or agent of the Secretary. 
(G) Reasonable visitor protection. 
(H) If campfires are permitted in the campground, 
simple devices for containing the fires. 
(4) SECRETARY.—^The term "Secretary" means the Secretary 
of Agriculture. 
(b) AUTHORITY TO IMPOSE FEES.—The Secretary may charge— 
(1) admission or entrance fees at national monuments, 
national volcanic monuments, national scenic areas, and areas 
of concentrated public use administered by the Secretary; and 
(2) recreation use fees at lands administered by the Sec-
retary in connection with the use of specialized outdoor recre-
ation sites, equipment, services, and faciUties, including visitors' 
centers, picnic tables, boat launching facilities, and camp-
grounds. 
(c) AMOUNT OF FEES.—^The amoimt of the admission, entrance, 
and recreation fees authorized to be imposed under this section 
shall be determined by the Secretary. 
SEC. 1402. ENVIRONMENTAL CONSERVATION ACREAGE RESERVE PRO-
GRAM AMENDMENTS. 
(a) ENVIRONMENTAL CONSERVATION ACREAGE RESERVE PRO-
GRAM*—Section 1230(b) of the Food Security Act of 1985 (16 U.S.C. 
3830(b)) is amended by striking "to place in" and all that follows 
through "acres". 
(b) CONSERVATION RESERVE PROGRAM.—Section 1231(d) of such 
Act (16 U.S.C. 3831(d)) is amended— 
(1) by striking "may" and inserting "shall"; 
(2) by striking "the amount of acres specified in section 
1230(b)" and inserting "a total of 38,000,000 acres during the 
1986 through 1995 calendar years"; and 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 333 
(3) by striking "each of calendar years 1994 and 1995* 
and inserting "the 1995 calendar year", 
(c) WETLANDS RESERVE PROGRAM.—Section 1237 of such Act 
(16 U.S.C. 3837) is amended— 
(1) by striking subsection (b) and inserting the following 
new subsection: 
"(b) MINIMUM ENROLLMENT.—The Secretary shall enroll into 
the wetlands reserve program— 
"(1) a total of not less than 330,000 acres by the end 
of the 1995 calendar year; and 
"(2) a total of not less than 975,000 acres during the 1991 
through 2000 calendar years."; and 
(2) in subsection (c), by striking "1995" and inserting 
"2000". 
SEC. 1403. FEDERAL CROP INSURANCE. 
(a) ACTUARIAL SOUNDNESS.—Section 506 of the Federal Crop 
Insurance Act (7 U.S.C. 1506) is amended by adding at the end 
the following new subsection: 
"(n) ACTUARIAL SOUNDNESS.—The Corporation shall take such 
actions as are necessary to improve the actuarial soundness of 
Federal multiperil crop insurance coverage made available under 
this title to achieve, on and after October 1, 1995, an overall 
projected loss ratio of not greater than 1.1, including— 
"(1) instituting appropriate requirements for documentation 
of the actual production history of insured producers to estab-
lish recorded or appraised jdelds for Federal crop insurance 
coverage that more accurately reflect the associated actuarial 
risk, except that the Corporation may not carry out this para-
graph in a manner that would prevent beginning farmers from 
obtaining adequate Federal crop insurance, as determined by 
the Corporation; 
"(2) establishing in counties, to the extent practicable, a 
crop insurance option based on area yields in a manner that 
allows an insured producer to qualify for an indemnity if a 
loss has occurred in a specified area in which the farm of 
the insured producer is located; 
"(3) establishing a database that contains the social security 
account and employee identification numbers of participating 
producers and using the numbers to identify insured producers 
who are high risk for actuarial purposes and insured producers 
who have not documented at least 4 years of production history, 
to assess the performance of insurance providers, and for other 
purposes permitted by law; and 
"(4) taking any other measures authorized by law to 
improve the actuarial soundness of the Federal crop insurance 
program while maintaining fai^ess and effective coverage for 
agricultural producers.". 
^ 
(b) CONFORMING AMENDMENTS.— 
(1) REINSURANCE.—Section 508(h) of such Act (7 U.S.C. 
1508(h)) is amended by striking the fifth sentence and inserting 
the following new sentence: 'The Corporation shall also pay 
operating and administrative costs to insurers of policies on 
which the Corporation provides reinsurance in an amount deter-
mined by the Corporation.". 
107 STAT. 334 
PUBLIC LAW 103-66—AUG. 10, 1993 
(2) AREA YIELD PLAN.—Section 508 of such Act (7 U.S.C. 
1508) is amended by adding at the end the following new 
subsection: 
"(n) AREA YIELD PLAN.— 
"(1) IN GENERAL.—^Notwithstanding anv other provision of 
this title, the Corporation may ofTer, only as an option to 
individual crop insurance coverage available under this Act, 
a crop insurance plan based on an area yield that allows 
an insured producer to qualify for an indemnity if a loss has 
occiured in an area, as specified by the Corporation, in which 
the farm of the producer is located. 
"(2) LEVEL OF COVERAGE.—^Under a plan offered under 
paragraph (1), an insured producer shall be allowed to select 
the level of production at which an indemnity will be paid 
consistent with terms and conditions established by the Cor-
poration.". 
(3) YIELD COVERAGE.—Section 508A of such Act (7 U.S.C. 
1508a) is amended— 
(A) in subsection (a)(1), by striking "may and inserting 
"shall"; and 
(B) in subsection (b)— 
(i) in paragraph (IXA)— 
(I) by striking *
*
A crop insurance contract" and 
all that follows through "producer—" and inserting 
"Under regulations issued by the Corporation, a 
crop insurance contract offered imder this title 
to an eligible insured producer of a commodity 
with respect to which the Corporation provides 
crop insurance coverage shall make available to 
the producer either—"; 
(II) by striking "or" at the end of clause (i); 
(III) in clause (ii)— 
(aa) by striking "5" and inserting "4 build-
ing to 10"; and 
(bb) by striking the period at the end and 
inserting ; or"; and 
(IV) by adding at the end the following new 
clause: 
"(iii) yield coverage based on— 
"(I) not less than 65 percent of the transitional 
yield of the producer (adjusted to reflect actual 
experience), as specified in regulations issued by 
the Corporation based on production history 
requirements; or 
"(II) the area yield under section 508(n) for 
the crop established under the program for the 
commodity involved."; 
(ii) in paragraph (IXB)— 
(I) by striking "two" and inserting "3"; and 
(II) by inserting after "subparagraph (A)" the 
following: ", where available (as determined by 
the Corporation),"; 
(iii) in paragraph (2)— 
(I) by striking "5" and inserting "4 building 
to 10"; and 
(II) by inserting after "previous crops," the 
following: "not less man 65 percent of the transi-
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 335 
tional yield of the producer (adjusted to reflect 
actual experience), or the area jdeld,"; and 
(iv) in paragraph (SXAXi), by inserting aPter "farm 
program jdeld" 
tiie 
following: ", not less than 65 percent 
of the transitional yield of the producer (adjusted to 
reflect actual experience), as specified in regulations 
issued by the Corporation based on production history 
requirements, or the area yield under section 508(n), 
whichever is applicable,". 
(c) EFFECTIVE DATE.— 
"
^ use isoe note. 
(1) IN GENERAL.—^Except as provided in paragraph (2), this 
section and the amendments made by this section shall b^me 
efiTective on October 1,1993. 
(2) REGULATIONS.—Not later than 30 days after the date 
of enactment of this Act, the Secretary of Agriculture shall 
publish, for public comment, proposed regulations to implement 
the amendments made by ttds section. 
TITLE n—ARMED SERVICES 
PROVISIONS 
SEC. 2001. LIMITATION ON COST-OF-LIVING ADJUSTMENTS FOR MIU-
TARYRETIKEES. 
Section 1401a(b) of title 10, United States Code, is amended— 
(1) in paragraph (2), by striking out "The Secretary^ and 
inserting in lieu thereof "Except as provided in paragraph (6), 
the Secretary"; and 
(2) by adding at the end the following new paragraph: 
"(6) SPECIAL RULES FOR PARAGRAPH (2) FOR FISCAL YEARS 
1994 THROUGH 1998.— 
"(A) FISCAL YEAR 1994.—In the case of an increase 
in the retired pay of a member or former member referred 
to in paragraph (2) that, pursuant to para^aph (1), 
becomes effective on December 1, 1993, the initial month 
for which such increase is payable as part of such retired 
pay shall (notwithstanding such December 1 effective date) 
be March 1994. 
"(B) FISCAL YEARS 1995 THROUGH 1998.—In the case 
of an increase in retired pay of a member or former member 
referred to in paragraph (2) that, pursuant to paragraph 
(1), becomes effective on December 1 of 1994, 1995, 1996, 
or 1997, the initial month for which such increase is pay-
able as part of such retired pay shall (notwithstanding 
such December 1 effective date) be September of the follow-
ing year. 
"(C) I
N
A
P
P
U
C
A
B
I
L
I
T
Y T
O D
I
S
A
B
I
L
I
T
Y RETIREES.—Sub-
paragraphs (A) and (B) do not apply with respect to the 
retired pay of a member retired under chapter 61 of this 
title.". 
107 STAT. 336 
PUBLIC LAW 103-66—AUG. 10, 1993 
TITLE III—BANKING AND HOUSING 
PROVISIONS 
SEC. 3001. NATIONAL DEPOSITOR PREFERENCE. 
(a) IN GENERAL.—Section ll(dXll) of the Federal Deposit 
Insurance Act (12 U.S.C. 1821(dXll)) is amended to read as follows: 
"(11) DEPOSITOR PREFERENCE.— 
"(A) IN GENERAL.—Subject to section 
5(eX2XC), 
amounts realized from the liquidation or other resolution 
of any insured depository mstitution by any receiver 
appointed for such mstitution shall be distributed to pay 
claims (other than secured claims to the extent of any 
such security) in the following order of priority: 
''(i) Administrative expenses oi the receiver, 
''(ii) Any deposit liability of the institution, 
"(iii) Any other general or senior liability of the 
institution (which is not a liability described in clause 
(iv) or (v)). 
"(iv) Any obligation subordinated to depositors or 
general creditors (which is not an obligation described 
m clause (v)). 
"(v) Any obUgation to shareholders or members 
arising as a result of their status as shareholders or 
members (including any depository institution holding 
company or any shareholder or creditor of such com-
pany). 
*(B) EFFECT ON STATE LAW.— 
"(i) IN GENERAL.—^The provisions of subparagraph 
(A) shall not supersede the law of any State except 
to the extent such law is inconsistent with the provi-
sions of such subparagraph, and then only to the extent 
of the inconsistency. 
"(ii) PROCEDURE FOR DETERMINATION OF INCONSIST-
ENCY.—^Upon the Corporation's own motion or upon 
the request of any person with a claim described in 
subparagraph (A) or any State which is submitted 
to the Corporation in accordance with procedures which 
the Corporation shall prescribe, the Corporation shall 
determine whether any provision of the law of any 
State is inconsistent with any provision of subpara-
graph (A) and the extent of any such inconsistency, 
"(iii) JUDICIAL REVIEW.—^The final determination 
of the (ISorporation under clause (ii) shall be subject 
to judicial review imder chapter 7 of title 5, United 
States Code. 
"(C) ACCOUNTING REPORT.—Any distribution by the 
Corporation in connection with any claim described in 
subparagraph (A)(v) shall be accompanied by the account-
ing report required under paragraph (15)(B).'*. 
(b) TECHNICAL AND CONFORMING AMENDMENTS.— 
(1) Section ll(c)(13) of the Federal Deposit Insurance Act 
(12 U.S.C. 1821(cX13)) is amended— 
(A) in subparagraph (A), by striking "subject to 
subparagraph (B),"; 
(B) by inserting "and" after the semicolon at the end 
of subparagraph (A); 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 337 
(C) by striking subparagraph (B); and 
(D) by redesignating subparagraph (C) as subpara-
graph (B). 
(2) Section ll(gX4) of the Federal Deposit Insurance Act 
(12 U.S.C. 1921(gX4)) is amended by striking "If the Corpora- 12 use I82i. 
tion" and inserting "Subject to subsection (dXll), if the Corpora-
tion". 
(c) EFFECTIVE DATE.—The amendments made by this section 12 use 1821 
shall apply with respect to insured depository institutions for which "
°
^
® 
a receiver is appointed after the date of the enactment of this 
Act. 
SEC. 
3002. 
TRANSFER 
OF 
FEDERAL 
RESERVE 
SURPLUSES. 
(a) IN GENERAL.—^The 1st undesignated paragraph of section 
7 of the Federal Reserve Act (12 U.S.C. 289) is amended to read 
as follows: 
"(a) DIVIDENDS AND SURPLUS FIWDS OF RESERVE BANKS.— 
"(1) STOCKHOLDER DIVIDENDS.— 
"(A) IN GENERAL.—^After all necessary expenses of a 
Federal reserve bank have been paid or provided for, the 
stockholders of the bank shall be entitled to receive an 
annual dividend of 6 percent on paid-in capital stock. 
"(B) DIVIDEND CUMULATIVE.—The entitlement to divi-
dends under subparagraph shall be cumulative. 
"(2) DEPOSIT OF NET EARNINGS IN SURPLUS FUND.—That 
portion of net earnings of each Federal reserve bank which 
remains after dividend claims under subparagraph (A) have 
been fully met shall be deposited in the surplus fund of the 
bank. 
"(3) PAYMENT TO TREASURY.—During fiscal years 1997 and 
1998, any amount in the surplus fund of any Federal reserve 
bank in excess of the amoiuit equal to 3 percent of the total 
paid-in capitcd and surplus of the member banks of such bank 
shall be transferred to the Board for transfer to the Secretarv 
of the Treasury for deposit in the general fund of the Treasury. . 
(b) ADDITIONAL TRANSFERS FOR FISCAL YEARS 1997 AND 1998.— 12 use 289 note. 
(1) IN GENERAL.—In addition to the amounts required to 
be transferred from the surplus funds of the Federal reserve 
banks pursuant to section 7(aX3) of the Federal Reserve Act, 
the Federal reserve banks shall transfer from such surplus 
funds to the Board of Governors of the Federal Reserve System 
for transfer to the Secretary of the Treasury for deposit in 
the general fund of the Treasury, a total amount of 
$106,000,000 in fiscal year 1997 and a total amount of 
$107,000,000 in fiscal year 1998. 
(2) ALLOCATION BY FED.—Of the total amount required 
to be paid by the Federal reserve banks under paragraph 
(1) for fiscal year 1997 or 1998, the Board of Governors of 
the Federal Reserve System shall determine the amount each 
such bank shall pay in such fiscal year. 
(3) REPLENISHMENT OF SURPLUS FUND PROHIBITED.—NO 
Federal reserve bank may replenish such bank's surplus fund 
by the amount of any transfer by such bank under paragraph 
(1) during fiscal years 1997 and 1998. 
(c) TECHNICAL AND CONFORMING AMENDMENTS.— 
(1) The penultimate undesignated paragraph of section 7 
of the Federal Reserve Act (12 U.S.C. 290) is amended by 
107 STAT. 338 
PUBLIC LAW 103-66—AUG. 10, 1993 
striking 'The net earnings derived" and inserting "(b) USE 
OF EARNINGS TRANSFERRED TO THE TREASURY.—The net earn-
ings derived". 
(2) The last undesignated paragraph of section 7 of the 
Federal Reserve Act (12 U.S.C. 531) is amended by striking 
"Federal reserve banks" and inserting "(c) EXEMPTION FROM 
TAXATION.—Federal reserve banks". 
SEC. 3003. USE OF RETURN DATA FOR INCOME VERIFICATION UNDER 
CERTAIN HOUSING ASSISTANCE PROGRAMS. 
Section 904 of the Stewart B. McKinney Homeless Assistance 
Amendments Act of 1988 (42 U.S.C. 3544) is amended as follows: 
(1) DEFINITION.—In subsection (a), by adding at the end 
the following: 
"(4) PROGRAM OF THE DEPARTMENT OF HOUSING AND URBAN 
DEVELOPMENT.—^The term 'program of the Department of Hous-
ing and Urban Development' includes Indian housing programs 
assisted under title II of the United States Housing Act of 
1937.". 
(2) CONSENT FORMS.—In subsection (b)— 
(A) in paragraph (1), by striking "and" at the end; 
(B) in paragraph (2), by striking the period at the 
end and inserting "; and"; 
(C) by inserting after paragraph (2) the following new 
paragraph: 
"(3) sign a consent form approved by the Secretary authoriz-
ing the Secretary to request the Commissioner of Social Security 
and the Secretary of the Treasury to release information pursu-
ant to section 6103(l)(7XDXix) of the Internal Revenue Code 
of 1986 with respect to such applicant or participant for the 
sole purpose of the Secretary verifjring income information 
pertinent to the applicant's or participant's eligibility or level 
of benefits."; and 
(D) in the last sentence, by striking "This" and insert-
ing the following: "Except as provided in this subsection, 
this". 
(3) APPLICANT, PARTICIPANT, AND PUBLIC HOUSING AGENCY 
PROTECTIONS.—In Subsection (cX2)— 
(A) in subparagraph (A>— 
(i) in the matter preceding clause (i)— 
(I) by inserting after "compensation law" the 
following: "or pursuant to section 6103(lX7XDXix) 
of the Internal Revenue Code of 1986 from the 
Commissioner of Social Security or the Secretary 
of the Treasiuy"; and 
(II) by inserting "(in the case of information 
obtained pursuant to such section 303(i))" before 
"representatives"; and 
(ii) in clause (ii), by inserting "or public housing 
agency" after "ownei^ each place it appears; and 
(B) in subparagraph (B), by inserting after "wages" 
each place it appears the following: ", other earnings or 
income,". 
(4) PENALTY.—In subsection (cX3)— 
(A) in subparagraph (A), by inserting "or section 
6103(lX7XDXix) of the Internal Revenue Code of 1986 with-
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 339 
out consent pursuant to subsection (b) of this section or" 
after "Social Security Act"; and 
(B) in the first sentence of subparagraph (B)— 
(i) by striking claiise (i) and inserting the following: 
"(i) a negligent or knowing disclosure of information 
referred to in this section, section 303(i) of the Social 
Security Act, or section 6103(lX7XDXix) of the Internal 
Revenue Code of 1986 about such person by an of&cer 
or employee of any public housing agency or owner 
(or employee thereof), which disclosure is not author-
ized by this section, such section 303(i), such section 
6103(lX7XDXix), or any regulation implementing this 
section, 
such 
section 
303(i), 
or such 
section 
6103(lX7XDXix), or for which consent, pursuant to sub-
section (b) of this section, has not been granted, or"; 
and 
(ii) in clause (ii), by inserting "such section 
6103(lX7XDXix)," after "303(i),". 
(5) CONFORMING AMENDMENT.—^The heading of subsection 
(c) of section 904 of the Stewart B. McKinnev Homeless Assist-
ance Amendments Act of 1988 is amended by striking "STATE 42 USC 3544. 
EMPLOYMENT". 
SEC. 3004. GNMA HEMIC GUARANTEE FEES. 
Section 306(gX3) of the National Housing Act (12 U.S.C. 
1721(gX3)) is amended by adding at the end the following new 
subpara^aph: 
"(E)(i) Notwithstanding subparagraphs (A) through (D), fees 
charged for the guarantee of, or commitment to guarantee, 
multiclass securities backed by a trust or pool of securities or 
notes guaranteed by the Association under this subsection, and 
other related fees shall be charged by the Association in an amount 
the Association deems appropriate. The Association shall take such 
action as may be necessary to reasonably assure that such portion 
of the benefit, resulting from the Association's multiclass securities 
program, as the Association determines is appropriate accrues to 
mortgagors who execute eligible mortgages after the date of the 
enactment of this subparagraph. 
"(ii) The Association shall provide for the initial implementation 
of the program for which fees are charged under the first sentence 
of clause (i) by notice published in the Federal Register. The notice 
shall be effective upon publication and shall provide an opportimity 
for public comment. Not later than 12 months after publication Regulations 
of the notice, the Association shall issue regulations for such pro-
gram based on the notice, comments received, and the experience 
of the Association in carrying out the program during such period. 
"(iii) The Association shall consult with persons or entities 
in such manner as the Association deems appropriate to ensure 
the efficient commencement and operation of the multiclass securi-
ties program. 
"(iv) No State or local law, and no Federal law (except Federal 
law enacted expressly in limitation of this clause after the effective 
date of this subparagraph) shall preclude or limit the exercise 
by the Association of its power to contract with persons or entities, 
and its rights to enforce such contracts, for the purpose of ensuring 
the efficient commencement and continued operation of the 
multiclass securities program.". 
Federal 
Register, 
publication. 
Effective date. 
107 STAT. 340 
PUBLIC LAW 103-66—AUG. 10, 1993 
12 use 1709 
SEC. 3005. MUTUAL MORTGAGE INSURANCE FUND PREMIUMa 
"^^' 
To improve the actuarial soundness of the Mutual Mortgage 
Insurance Fund under the National Housing Act, the Secretary 
of Housing and Urban Development shall mcrease the rate at 
which the Secretary earns the single premium payment collected 
at the time of insurance of a mortgage that is an obligation of 
such Fund (with respect to the rate in effect on the date of the 
enactment of this Act). In establishing such increased rate, the 
Secretary shall consider any current audit findings and reserve 
analyses and information regarding the expected average duration 
of mortgages that are obligations of such Fund and may consider 
any other information that the Secretary determines to be appro-
priate. 
TITLE IV—STUDENT LOAN AND ERISA 
PROVISIONS 
SEC. 4001. TABLE OF CONTENTS. 
The table oif contents for this title is as follows: 
TITLE IV—STUDENT LOAN AND ERISA PROVISIONS 
Sec. 4001. Table of contents. 
Subtitle A—^Direct Student Loan Provisions 
Sec. 4011. Short title; references. 
CHAPTER 1—FEDERAL DIRECT STUDENT LOAN PROGRAM 
Sec. 4021. Federal direct student loan program. 
CHAPTER 2—CONFORMING AMENDMENTS TO THE HIGHER EDUCATION ACT OF 1965 
Sec. 4041. Preserving loan access. 
Sec. 4042. Guaranty agency reserves. 
Sec. 4043. Terms of loans. 
Sec. 4044. Assignment of loans. 
Sec. 4045. Termination of guaranty agency agreements; assumption of guaranty 
agen(7 functions by the Secretary. 
Sec. 4046. Consolidation loans. 
Sec. 4047. Consolidation of programs. 
Subtitle B—Additional Savings from the Student Loan Programs 
Sec. 4101. Reduction of borrower interest rates. 
Sec. 4102. Redtiction in loan fees paid by students. 
Sec. 4103. Loan fees from lenders. 
Sec. 4104. Offset fee. 
Sec. 4105. Elimination of tax exempt floor. 
Sec. 4106. Reduction in interest rate for consolidation loans; rebate fee. 
Sec. 4107. Reinsurance fees and administrative cost allowance. 
Sec. 4108. Risk sharing. 
Sec. 4109. Fhjs loan disbursements. 
Sec. 4110. Secretary's equitable share. 
Sec. 4111. Reduction in the special allowance payment. 
Sec. 4112. Supplemental proclaims assistance. 
Subtitle C—Cost Sharing by States 
Sec. 4201. Cost sharing by States. 
Subtitle D—Group Health Plans 
Sec. 4301. Standards for group health plan coverage. 
PUBLIC LAW 103-66—AUG. 10, 1993 
Subtitle A—Direct Student Loan 
Provisions 
107 STAT. 341 
Student Loan 
Reform Act of 
1993. 
SEC. 4011. SHORT TITLE; REFERENCES. 
(a) SHORT TITLE.—This subtitle may be cited as the "Student 
Loan Reform Act of 1993". 
(b) REFERENCES.—^References in this subtitle and subtitles B 
and C to "the Act" are references to the Higher Education Act 
of 1965 (20 U.S.C. 1001 et seq.). 
CHAPTER 1—FEDERAL DIRECT STUDENT LOAN 
PROGRAM 
SEC. 4021. FEDERAL DIRECT STUDENT LOAN PROGRAM. 
Part D of title IV (20 U.S.C. 1087a) is amended to read as 
follows: 
"PART D—FEDERAL DIRECT STUDENT LOAN 
PROGRAM 
'^EC. 451. PROGRAM AUTHORITY. 
There are hereby made available, in accordance with the provi-
sions of this part, such sums as may be necessary to make loans 
to all eligible students (and the eligible parents of such students) 
in attendance at participating institutions of higher education 
selected by the Secretary, to enable such students to pursue their 
courses of study at such institutions during the period beginning 
July 1, 1994. Such loans shall be made by participating institutions, 
or consortia thereof, that have agreements with the Secretary to 
originate loans, or by alternative originators designated by the 
Secretary to make loans for students in attendance at participating 
institutions (and their parents). 
'^EC. 452. FUNDS FOR ORIGINATION OF DIRECT STUDENT LOANS. 
"(a) IN GENERAL.—^The Secretary shall provide, on the basis 
of the need and the eligibility of students at each participating 
institution, and parents of such students, for such loans, funds 
for student and parent loans under this partr— 
"(1) directly to an institution of higher education that has 
an agreement with the Secretary under section 454(a) to partici-
pate in the direct student loan programs under this part and 
that also has an agreement with the Secretary under section 
454(b) to originate loans under this part; or 
"(2) through an alternative originator designated by the 
Secretary to students (and parents of students) attending 
institutions of higher education that have an agreement with 
the Secretary under section 454(a) but that do not have an 
agreement with the Secretary under section 454(b). 
"(b) FEES FOR ORIGINATION SERVICES.— 
"(1) FEES FOR INSTITUTIONS.—The Secretary shall pay fees 
to institutions of higher education (or a consortium of such 
institutions) with agreements under section 454(b), in an 
amount established by the Secret€iry, to assist in meeting the 
costs of loan origination. Such fees— 
20 u s e 1001 
note. 
20 use 1087a. 
20 u s e 1087b. 
107 STAT. 342 
PUBLIC LAW 103-66—AUG. 10, 1993 
20 u s e 1087c. 
Contracts. 
"(A) shall be paid by the Secretary based on all the 
loans made under this part to a particular borrower in 
the same academic year; 
"(B) shall be subject to a sliding scale that decreases 
the per borrower amount of such fees as the number of 
borrowers increases; and 
"(CXi) for academic year 1994-1995, shall not exceed 
a program-wide average of $10 per borrower for all the 
loans made under this part to such borrower in the same 
academic year; and 
"(ii) for succeeding academic years, shall not exceed 
such average fee as the Secretary shall establish pursuant 
to relations. 
"(2) FEES FOR ALTERNATIVE ORIGINATORS.—The Secretaiy 
shall pay fees for loan origination services to alternative origi-
nators of loans made under this part in an amount established 
by the Secretary in accordance with the terms of the contract 
described in section 456(b) between the Secretary and each 
such alternative originator. 
"(c) No ENTITLEMENT TO PARTICIPATE OR ORIGINATE.—NO 
institution of higher education shall have a right to participate 
in the programs authorized by this part, to originate loans, or 
to perform any program function under this part. Nothing in this 
subsection shall be construed so as to limit the entitlement of 
an eligible student attending a participating institution (or the 
eligible parent of such student) to borrow under this part. 
"(d) DELIVERY OF LOAN FUNDS.—Loan funds shall be paid and 
delivered to an institution by the Secretary prior to the beginning 
of the pajntnent period established by the l^cretai^ in a manner 
that is consistent with payment and aelivery of basic grants under 
subpart 1 of part A of this title. 
"SEC. 453. SELECTION OF INSTITUTIONS FOR PARTICIPATION AND 
ORIGINATION. 
"(a) PHASE-IN OF PROGRAM.— 
"(1) GENERAL AUTHORITY.—The Secretary shall enter into 
agreements pursuant to section 454(a) with institutions of 
higher education to participate in the direct student loan pro-
gram imder this part, and agreements pursuant to section 
454(b) with institutions of mgher education, or consortia 
thereof, to originate loans in such program, for academic years 
beginning on or after July 1, 1994. Alternative origination 
services, through which an entity other than the participating 
institution at which the student is in attendance origmates 
the loan, shall be provided by the Secretary, through 1 or 
more contracts under section 456(b) or such other means as 
the Secretary may provide, for students attending participating 
institutions that do not originate direct student loans under 
this part. Such agreements for the academic year 1994-1995 
shall, to the extent feasible, be entered into not later than 
January 1,1994. 
"(2) TRANSITION PROVISIONS.—^In order to ensure an expedi-
tious but orderly transition from the loan programs under 
part B of this title to the direct student loan program under 
this part, the Secretary shall, in the exercise of the Secretary's 
discretion, determine the number of institutions with which 
the Secretary shall enter into agreements under subsections 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 343 
(a) and (b) of section 454 for any academic year, except that 
the Secretary shall exercise such discretion so as to achieve 
the following goals: 
"(A) for academic year 1994-1995, loans made imder 
this part shall represent 5 percent of the new student 
loan volume for such year; 
*
*
(
B
) for academic year 1995-1996, loans made under 
this part shall represent 40 percent of the new student 
loan volimie for such year; 
"(C) for academic years 1996-1997 and 1997-1998, 
loans made under this part shall represent 50 percent 
of the new student loan volume for such years; and 
**(D) for the academic year that begins in fiscal year 
1998, loans made under this part shall represent 60 percent 
of the new student loan volume for such year. 
"(3) EXCEPTION.—^The Secretary may exceed the percentage 
{:;oals described in subparagraphs (C) or (D) of paragraph (2) 
'if the Secretary determines that a higher percentage is war-
ranted by the number of institutions of higher education that 
desire to participate in the program imder this part and that 
meet the eligibility requirements for such participation. 
"(4) NEW STUDENT LOAN VOLUME.—For the purpose of this 
subsection, the term 'new student loan volume' means the 
estimated sum of all loans (other than consolidation loans) 
that will be made, insured or guaranteed under this part and 
gart B in the year for which tne determination is made. The 
ecretary shall base the estimate described in the preceding 
sentence on the most recent program data available. 
"(b) SELECTION CRITERIA.— 
"(1) APPLICATION.—Each institution of higher education 
desiring to participate in the direct student loan program under 
this part shall submit an appUcation satisfactory to the Sec-
retary containing such information and assurances as the Sec-
retary may require. 
"(2) SELECTION PROCEDURE.—The Secretary shall select Contracts. 
institutions for participation in the direct student loan program 
under this part, and shall enter into agreements with such 
institutions under section 454(a), from among those institutions 
that submit the applications described in paragraph (1), and 
meet such other eligibility requirements as the Secretary shall 
prescribe, by, to the extent possible— 
"(AXi) categorizing such institutions according to 
anticipated loan volume, length of academic program, con-
trol of the institution, highest degree ofTered, size of student 
enrollment, geographic location, annual loan volume, and 
default experience; and 
"(ii) beginning in academic year 1995-1996 selecting 
institutions that are reasonably representative of each of 
the categories described pursuant to clause (i); and 
"(B) if the Secretary determines it necessary to carry 
out the purposes of this part, selecting additional institu-
tions. 
"(c) SELECTION CRITERIA FOR ORIGINATION.— 
"(1) IN GENERAL.—^The Secretary may enter into a supple-
mental agreement with an institution (or a consortium of such 
institutions) that— 
"(A) has an agreement under subsection 454(a); 
107 STAT. 344 
PUBLIC LAW 103-66—AUG. 10, 1993 
"(B) desires to originate loans under this part; and 
"(C) meets the criteria described in paragraph (2). 
"(2) TRANSITION SELECTION CMTERIA.—For academic year 
1994-1995, the Secretary may approve an institution to origi-
nate loans only if such institution— 
"(A) made loans imder part E of this title in academic 
year 1993-1994 and did not exceed the applicable maxi-
mum default rate under section 462(g) for the most recent 
fiscal year for which data are available; 
"(B) is not on the reimbursement system of pa3niient 
for any of the programs under subpart 1 or 3 of part 
A, part C, or part E of this title; 
"(C) is not overdue on program or financial reports 
or audits required under this title; 
"(D) is not subject to an emergency action, or a limita-
tion, suspension, or termination luider section 428(bXlXT), 
432(h), or 487(c); 
"(E) in the opinion of the Secretary, has not had signifi-
cant deficiencies identified by a State postsecondary review 
entity imder subpart 1 of part H of this title; 
"(F) in the opinion of the Secretary, has not had severe 
performance deficiencies for any of the programs under 
this title, including such deficiencies demonstrated by 
audits or program reviews submitted or conducted during 
the 5 calendar years immediately preceding the date of 
application; 
"(G) provides an assurance that such institution has 
no delinquent outstanding debts to the Federal Grovem-
ment, unless such debts are being repaid under or in 
accordance with a repayment arrangement satisfactory to 
the Federal Government, or the Secretary in the Secretar3r's 
discretion determines that the existence or amount of such 
debts has not been finally determined by the cognizant 
Federal agency; and 
"(H) meets such other criteria as the Secretary may 
establish to protect the financial interest of the United 
States and to promote the purposes of this part. 
Federal 
«(3) REGULATIONS GOVERNING APPROVAL AFTER TRANSI-
^bliStion 
TION.—For academic year 1995-1996 and subsequent academic 
years, the Secretary shall promulgate and publish in the Fed-
eral Register regulations governing the approval of institutions 
to originate loans imder this part in accordance with section 
457(aX2). 
"(d) ELIGIBLE INSTITUTIONS.—The Secretary may not select an 
institution of higher education for participation under this section 
unless such institution is an eligible institution under section 435(a). 
"(e) CONSORTIA.—Subject to such requirements as the Secretary 
may prescribe, eligible institutions of higher education (as deter-
mined under subsection (d)) with agreements under section 454(a) 
may apply to the Secretary as consortia to originate loans under 
this part for students in attendance at such institutions. Each 
such institution shall be required to meet the requirements of 
subsection (c) with respect to loan origination. 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 345 
"SEC. 464. AGREEMENTS WITH INSTITUTIONS. 
20 USC 1087d. 
"(a) PARTICIPATION AGREEMENTS.—An agreement with any 
institution of higher education for participation in the direct student 
loan program under this part shall— 
(1) provide for the establishment and maintenance of a 
direct student loan program at the institution under which 
the institution will— 
"(A) identify eligible students who seek student finan-
cial assistance at such institution in accordance with sec-
tion 484; 
"(B) estimate the need of each such student as required 
by part F of this title for an academic year, except that, 
any loan obtained by a student under this part with the 
same terms as loans made under section 428H (except 
as otherwise provided in this part), or a loan obtained 
by a parent under this part with the same terms as loans 
made under section 428B (except as otherwise provided 
in this part), or obtained under any State-sponsored or 
private loan program, may be used to offset tne expected 
family contribution of the student for that year; 
**(C) provide a statement that certifies the eligibility 
of any student to receive a loan imder this part that is 
not in excess of the annual or aggregate limit applicable 
to such loan, except that the institution may, in exceptional 
circumstances identified by the Secretary, refuse to certify 
a statement that permits a student to receive a loan under 
this part, or certify a loan amount that is less than the 
student's determination of need (as determined under part 
F of this title), if the reason for such action is documented 
and provided in written form to such student; 
"(D) set forth a schedule for disbursement of the pro-
ceeds of the loan in instollments, consistent with the 
requirements of section 428G; and 
"(E) provide timely and accurate information— 
(i) concerning the status of student borrowers (and 
students on whose behalf parents borrow under this 
part) while such students are in attendance at the 
institution and concerning any new information of 
which the institution becomes aware for such students 
(or their parents) after such borrowers leave the 
institution, to the Secretory for the servicing and 
collecting of loans made under this part; and 
"(ii) if the institution does not have an agreement 
with the Secretory under subsection (b), concerning 
student eligibility and need, as determined under sub-
paragraphs (A) and (B), to the Secretary as needed 
for the alternative origination of loans to eligible stu-
dento and parents in accordance with this part; 
"(2) provide assurances that the institution will comply 
with requirements estoblished by the Secretory relating to stu-
dent loan information with respect to loans made under this 
part; 
''(S) provide that the institution accepts responsibility and 
financial liability stemming from its failure to perform its func-
tions pursuant to the agreement; 
"(4) provide that studente at the institution and their par-
ente (witn respect to such students) will be eligible to paitici-
107 STAT. 346 
PUBLIC LAW 103-66—AUG. 10, 1993 
pate in the programs under part B of this title at the discretion 
of the Secreta^ for the period during which such institution 
participates in the direct student loan program imder this 
part, except that a student or parent may not receive loans 
under both this part and part B for the same period of enroll-
ment; 
"(5) provide for the implementation of a quality assurance 
system, as established by the Secretary and developed in con-
sultation with institutions of higher education, to ensure that 
the institution is complying with program requirements and 
meeting program objectives; 
"(6) provide that the institution will not charge any fees 
of any kind, however described, to student or parent borrowers 
for origination activities or the provision of any information 
necessary for a student or parent to receive a loan imder 
this part, or any benefits associated with such loan; and 
(7) include such other provisions as the Secretary deter-
mines are necessary to protect the interests of the United 
States and to promote the purposes of this part. 
"(b) ORIGINATION.—^An agreement with any institution of higher 
education, or consortia thereof, for the origination of loans under 
this part shall— 
"(1) supplement the agreement entered into in accordance 
with subsection (a); 
"(2) include provisions established by the Secretary that 
are similar to the participation agreement provisions described 
in paragraphs (IXEXii), (2), (3), (4), (5), (6), and (7) of subsection 
(a), as modified to relate to the origination of loans by the 
institution or consortium; 
**(3) provide that the institution or consortium will originate 
loans to eligible students and parents in accordance with this 
part; and 
"(4) provide that the note or evidence of obligation on 
the loan shall be the property of the Secretary. 
**(c) WITHDRAWAL AND TERMINATION PROCEDURES.—The Sec-
retary shall establish procedures by which institutions or consortia 
may withdraw or be terminated from the program imder this part. 
20 use 1087e. 
<'SEC. 455. TERMS AND CONDITIONS OF LOANS. 
"(a) IN GENERAL.— 
**(1) 
PARALLEL 
TERMS, 
CONDITIONS, 
BENEFITS, 
AND 
AMOUNTS.—^Unless otherwise specified in this part, loans made 
to borrowers imder this part shall have the same terms, condi-
tions, and benefits, and be available in the same amounts, 
as loans made to borrowers under sections 428, 428B, and 
428H of this title. 
"(2) DESIGNATION OF LOANS.—Loans made to borrowers 
under this part that, except as otherwise specified in this 
part, have the same terms, conditions, and benefits as loans 
made to borrowers under— 
"(A) section 428 shall be known as 'Federal Direct 
Stafford Loans'; 
"(B) section 428B shall be known as 'Federal Direct 
PLUS Loans'; and 
"(C) section 428H shall be known as Tederal Direct 
Unsubsidized Stafford Loans'. 
"(b) INTEREST RATE.— 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 347 
"(1) RATES FOR FDSL AND FDUSL.—For Federal Direct Staf-
ford Loans and Federal Direct Unsubsidized Stafford Loans 
for which the first disbursement is made on or after July 
1, 1994, the applicable rate of interest shall, during any 12-
month period beginning on July 1 and ending on June 30, 
be determined on the preceding June 1 £uid be equal to— 
"(A) the bond equivalent rate of 91-day Treasury bills 
auctioned at the final auction held prior to such June 
1; plus 
"(B) 3.1 percent, 
except that such rate shall not exceed 8.25 percent. 
^(2) IN SCHOOL AND GRACE PERIOD RULES.—(A) Notwith-
standing the provisions of paragraph (1), but subject to para-
graph (3), with respect to any Federal Direct Stafford Loan 
or Federal Direct Unsubsidized Stafford Loan for which the 
first disbursement is made on or afl«r July 1, 1995, the 
applicable rate of interest for interest which accrues— 
"(i) prior to the beginning of the repayment period 
of the loan; or 
"(ii) during the period in which principal need not 
be paid (whether or not such principal is in fact paid) 
by reason of a provision described in section 428(bXlXM) 
or427(a)(2XC), 
shall not exceed the rate determined under subparagraph (B). 
"(B) For the purpose of subparagraph (A), the rate deter-
mined under this subparagraph shall, during any 12-month 
period beginning on July 1 and ending on June 30, be deter-
mined on the preceding June 1 and be equal to— 
"(i) the bond equivalent rate of 91-day Treasury bills 
auctioned at the final auction prior to such June 1; plus 
"(ii) 2.5 percent, 
except that such rate shall not exceed 8.25 percent. 
"(3) OUT-YEAR RULE.—^Notwithstanding paragraphs (1) and 
(2), for Federal Direct Stafford Loans and Federal Direct 
Unsubsidized Stafford Loans made on or after July 1, 1998, 
the applicable rate of interest shall, during any 12-month period 
beginning on July 1 and ending on June 30, be determined 
on the preceding Jiuie 1 and be equal to— 
"(A) the bond equivalent rate of the security with a 
comparable maturity as established by the Secretary; plus 
"(B) 1.0 percent, 
except that such rate shall not exceed 8.25 percent. 
"(4) RATES FOR FDPLUS.—(A) For Federal Direct PLUS 
Loans for which the first disbursement is made on or after 
July 1, 1994, the applicable rate of interest shall, during any 
12-month period beginning on July 1 and ending on June 
30, be determined on the preceding Jime 1 and be equal to— 
"(i) the bond equivalent rate of 52-week Treasury bills 
auctioned at final auction held prior to such June 1; plus 
"(ii) 3.1 percent, 
except that such rate shall not exceed 9 percent. 
(B) For Federal Direct PLUS loans made on or after July 
1, 1998, the applicable rate of interest shall, during any 12-
month period beginning on July 1 and ending on June 30, 
be determined on the preceding June 1 and be equal to— 
"(i) the bond equivalent rate of the security with a 
comparable maturity as established by the Secretary; plus 
107 STAT. 348 
PUBLIC LAW 103-66—AUG. 10, 1993 
"(ii) 2.1 percent, 
except that such rate shall not exceed 9 percent. 
\5) PUBUCATION.—The Secretary shall determine the 
applicable rates of interest under this subsection after consulta-
tion with the Secretary of the Treasury and shall publish such 
rate in the Federal Register as soon as practicable after the 
date of determination. 
"(c) LOAN FEE.—^The Secretary shall charge the borrower of 
a loan made under this part an origination fee of 4.0 percent 
of the principal amount of loan. 
"(d) REPAYMENT PLANS.— 
"(1) DESIGN AND SELECTION.—Consistent with criteria 
established by Uie Secretary, the Secretary shall offer a bor-
rower of a loan made under this part a variety of plans for 
repayment of such loan, including principal and interest on 
the loan. The borrower shall be entitled to accelerate, without 
penalty, repajonent on the borrower's loans imder this part. 
The borrower may choose— 
"(A) a standard repajonent plan, with a fixed annual 
repa3rment amount paid over a fixed period of time, consist-
ent with subsection (aXD of this section; 
"(B) an extended repayment plan, with a fixed annual 
repajrment amount paid over an extended period of time, 
except that the borrower shall annually repay a minimum 
amount determined by the Secretary in accordance with 
section 428(bXl)(L); 
"(C) a graduated repayment plan, with annual repay-
ment amounts establishea at 2 or more graduated levels 
and paid over a fixed or extended period of time, except 
that the borrower's scheduled pa3anents shall not be less 
than 50 percent, nor more than 150 percent, of what the 
amortized pajrment on the amount owed would be if the 
loan were repaid under the standard repayment plan; and 
"(D) an income contingent repayment plan, with vary-
ing annual repayment amounts based on the income of 
the borrower, paid over an extended period of time pre-
scribed by the Secretary, not to exceed 25 years, except 
that the plan described in this subparagraph shall not 
be available to the borrower of a Federal Direct PLUS 
loan. 
"(2) SELECTION BY SECRETARY.—If a borrower of a loan, 
made imder this part does not select a repayment plan 
described in paragraph (1), the Secretary may provide the bor-
rower with a repayment plan described in suoparagraph (A), 
(B), or (C) of paragraph (1). 
"(3) CHANGES IN SELECTIONS.—The borrower of a loan made 
under this part may change the borrower's selection of a repay-
ment plan under paragraph (1), or the Secretarsr's selection 
of a plan for the borrower under paragraph (2), as the case 
may be, imder such terms and conditions as may be established 
by the Secretary. 
"(4) ALTERNATIVE REPAYMENT PLANS.—The Secretary may 
provide, on a case by case basis, an alternative repayment 
plan to a borrower of a loan made under this part who dem-
onstrates to the satisfaction of the Secretary that the terms 
and conditions of the repayment plans available under para-
graph (1) are not adequate to accommodate the borrower's 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 349 
exceptional circumstances. In designing such alternative repay-
ment plans, the Secretary shall ensure that such plans do 
not exceed the cost to the Federal Government, as determined 
on the basis of the present value of future payments by such 
borrowers, of loans made using the plans available under para-
graph (1). 
"(5) REPAYMENT AFTER DEFAULT.—The Secretary may 
require any borrower who has defaulted on a lo£ui made under 
this part to— 
"(A) pay all reasonable collection costs associated with 
such loan; and 
"(B) repay the loan pursuant to an income contingent 
repajnnent plan. 
**(e) INCOME CONTINGENT REPAYMENT.— 
**(1) INFORMATION AND PROCEDURES.—The Secretary may 
obtain such information as is reasonably necessary regarding 
the income of a borrower (and the borrower's spouse, u 
applicable) of a loan made under this part that is, or may 
be, repaid pursuant to income contingent repayment, for the 
purpose of determining the annual repajrment obligation of 
the borrower. Returns and return information (as defined in 
section 6103 of the Internal Revenue Code of 1986) may be 
obtained under the preceding sentence only to the extent 
authorized by section 6103(1X13) of such Code. The Secretary 
shall establish procedures for determining the borrower's repay-
ment obligation on that loan for such year, and such other 
procedures as are necessary to implement effectively income 
contingent repayment. 
"(2) REPAYMENT BASED ON ADJUSTED GROSS INCOME.—A 
repa3mtient schedule for a loan made under this part and repaid 
pursuant to income contingent repayment shall be based on 
the adjusted gross income (as defined in section 62 of the 
Internal Revenue Code of 1986) of the borrower or, if the 
borrower is married and files a Federal income tax return 
jointly with the borrower's spouse, on the adjusted gross income 
of the borrower and the borrower's spouse. 
"(3) ADDITIONAL DOCUMENTS.—^A borrower who chooses, or 
is required, to repay a loan made under this part pursuant 
to income contingent repayment, and for whom adjusted gross 
income is unavailable or does not reasonably reflect the 
borrower's current income, shall provide to the Secretary other 
documentation of income satisfactory to the Secretary, which 
documentation the Secretary may use to determine an appro-
priate repayment schedule. 
**(4) REPAYMENT SCHEDULES.—Income contingent repay- Regulations. 
ment schedules shall be established by regulations promulgated 
by the Secretary and shall require payments that vary in 
relation to the appropriate portion oi tne annual income of 
the borrower (and the borrower's spouse, if applicable) as deter-
mined by the Secretary. 
•*(5) CALCULATION OF BALANCE DUE.—The balance due 
on 
a loan made under this part that is repaid pursuant to income 
contingent repayment shall equal the unpaid principal amount 
of the loan, any accrued interest, and any fees, such as late 
charges, assessed on such loan. The Secretary may promulgate 
regulations limiting the amount of interest that may be capital-
ized on such loan, and the timing of any such capitalization. 
107 STAT. 350 
PUBLIC LAW 103-66—AUG. 10, 1993 
"(6) NOTIFICATION TO BORROWERS.—The Secretary shall 
establish procedures under which a borrower of a loan made 
under this part who chooses or is required to repay such loan 
pursuant to income contingent repayment is notified of the 
terms and conditions of such plan, including notification of 
such borrower— 
"(A) that the Internal Revenue Service will disclose 
to the Secretary tax return information as authorized under 
section 6103(1X13) of the Internal Revenue Code of 1986; 
and 
"(B) that if a borrower considers that special cir-
cumstances, such as a loss of employment by the borrower 
or the borrower's spouse, warrant an adjustment in the 
borrower's loan repayment as determined using the 
information described in subparagraph (A), or the alter-
native documentation described in paragraph (3), the bor-
rower may contact the Secretary, who snail determine 
whether such adjustment is appropriate, in accordance with 
criteria established by the Secretary, 
"(f) DEFERMENT.— 
"(1) EFFECT ON PRINCIPAL AND INTEREST.—A borrower of 
a loan made under this part who meets the requirements 
described in p£tra^aph (2) shall be eligible for a deferment, 
during which periodic installments of principal need not be 
paid, and interest— 
"(A) shall not accrue, in the case of a— 
''(i) Federal Direct Stafford Loan; or 
"(ii) a Federal Direct ConsoUdation Loan that 
consoUdated only Federal Direct Stafford Loans, or 
a combination of such loans and Federal Stafford Loans 
for which the student borrower received an interest 
subsidy under section 428; or 
"(B) shall accrue and be capitalized or paid by the 
borrower, in the case of a Federal Direct PLUS Loan, 
a Federal Direct Unsubsidized Stafford Loan, or a Federal 
Direct Consolidation Loan not described in subparagraph 
(AXii). 
"(2) ELIGIBILITY.—^A borrower of a loan made under this 
part shall be eligible for a deferment during any period— 
"(A) during which the borrower— 
"(i) is canying at least one-half the normal full-
time work load for the course of study that tihe 
borrower is pursuing, as determined by the eligible 
institution (as such term is defined in section 435(a)) 
the borrower is attending; or 
"(ii) is pursuing a course of study pursuant to 
a graduate fellowsmp program approved b]^ the Sec-
retary, or pursuant to a rehabihtation training pro-
gram for individuals with disabilities approved by tiie 
Secretary, 
except that no borrower shall be eligible for a deferment 
under this subparagraph, or a loan made under this part 
(other than a Federal Direct PLUS Loan or a Federal 
Direct Consolidation Loan), while serving in a medical 
internship or residency program; 
"(B) not in excess of 3 years during which the borrower 
is seeking and unable to find full-time employment; 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 351 
"(C) not in excess of 3 years during which the Secretary 
determines, in accordance with regulations prescribed 
under section 435(o), that the borrower has experienced 
or will experience an economic hardship. 
"(g) FEDERAL DIRECT CONSOUDATION LOANS.—A borrower of 
a loan made under this part may consolidate such loan with the 
loans described in section 428C(aX4) only under such terms and 
conditions as the Secretary shall establish pursuant to section 
457(aXl) or regulations promulgated imder this part. Loans made 
under this subsection shall be known £is 'Federal Direct Consolida-
tion Loans'. 
"(h) BORROWER DEFENSES.—^Notwithstanding any other provi- Regulations. 
sion of State or Federal law, the Secretary shall specify in regula-
tions (except as authorized under section 457(aXl)) which acts 
or omissions of an institution of higher education a borrower may 
assert as a defense to repayment of a loan made under this part, 
except that in no event may a borrower recover from the Secretary, 
in any action arising from or relating to a loan made under this 
part, an amount in excess of the amount such borrower has repaid 
on such loan. 
"(i) LOAN APPUCATION AND PROMISSORY NOTE.—The common 
financial reporting form required in section 483(aXl) shall con-
stitute the appUcation for loans made under this part (other than 
a Federal Direct PLUS loan). The Secretary shall develop, print, 
and distribute to participating institutions a standard promissory 
note and loan disclosure form. 
"(j) LOAN DISBURSEMENT.— 
"(1) IN GENERAL.—^Proceeds of loans to students under this 
part shall be applied to the student's account for tuition and 
fees, and, in the case of institutionally owned housing, to room 
and board. Loan proceeds that remain after the application 
of the previous sentence shall be delivered to the borrower 
by check or other means that is payable to and requires the 
endorsement or other certification by such borrower. 
"(2) PAYMENT PERIODS.—The Secretary shall establish peri-
ods for the payments described in paragraph (1) in a manner 
consistent with payment of basic grants under subpart 1 of 
part A of this title, 
"(k) FISCAL CONTROL AND FUND ACCOUNTABILITY.— 
"(1) IN GENERAL.—(A) An institution shall maintain finan-
cial records in a manner consistent with records maintained 
for other programs under this title. 
"(B) Except as otherwise required by regulations of the 
Secretary, or in a notice under section 457(aXl)> an institution 
may maintain loan fimds under this part in the same accoimt 
as other Federal student 
financial 
assistance. 
"(2) PAYMENTS AND REFUNDS.—Payments and refunds shall 
be reconciled in a manner consistent with the manner set 
forth for the submission of a payment summary report required 
of institutions participating in the program under subpart 1 
of part A, except that nothmg in this paragraph shall prevent 
such reconciliations on a monuily basis. 
"(3) TRANSACTION HISTORIES.—All transaction histories 
under this part shall be maintained using the same system 
designated by the Secretary for the provision of basic grants 
under subpart 1 of part A of this title. 
107 STAT. 352 
PUBLIC LAW 103-66—AUG. 10, 1993 
20 use 1087f. 
20 use 1087g. 
Federal 
Register, 
publication. 
"SEC. 456. CONTRACTS. 
"(a) CONTRACTS FOR SUPPUES AND SERVICES.— 
"(1) IN GENERAL.—The Secretary shall, to the extent prac-
ticable, award contracts for origination, servicing, and collection 
described in subsection (b). In awarding such contracts, the 
Secretary shall ensure that such services and supplies are 
provided at competitive prices. 
"(2) ENTITIES.—^The entities with which the Secretary may 
enter into contracts shall include only entities which the Sec-
retary determines are qualified to provide such services and 
supplies and will comply with the procedures applicable to 
the award of such contracts. In the case of awarding contracts 
for the origination, servicing, and collection of loans under 
this part, the Secretary shall enter into contracts only with 
entities that have extensive and relevant experience and dem-
onstrated effectiveness. The entities with which the Secretary 
may enter into such contracts shall include, where practicable, 
agencies with agreements with the Secretanr under sections 
428(b) and (c), if such agencies meet the qualincations as deter-
mined by the Secretary imder this subsection and if those 
agencies have such experience and demonstrated effectiveness. 
In awarding contracts to such State agencies, the Secretary 
shall, to the extent practicable and consistent with the purposes 
of this part, give special consideration to State agencies with 
a history of high quality performance to perform services for 
institutions of higher education within their State. 
"(3) RULE OF CONSTRUCTION.—Nothing in this section shall 
be construed as a limitation of the authority of any State 
agency to enter into an agreement for the purposes of this 
section as a member of a consortiiun of State agencies. 
"(b) CONTRACTS FOR ORIGINATION, SERVICING, AND DATA SYS-
TEMS.—^The Secretary may enter into contracts for— 
"(1) the cdtemative origination of loans to students attend-
ing institutions of higher education with agreements to partici-
pate in the program imder this part (or their parents), if such 
institutions do not have agreements with the Secretary under 
section 454(b); 
"(2) the servicing and collection of loans made under this 
part; 
"(3) the estabUshment and operation of 1 or more data 
systems for the maintenance of records on all loans made 
under this part; 
"(4) services to assist in the orderly transition from the 
loan programs under part B to the direct student loan program 
under this part; and 
''(5) such other aspects of the direct student loan program 
as the Secretary determines are necessary to ensure the 
successful operation of the program. 
'nSEC. 457. REGULATORY ACnvrriES. 
"(a) NOTICE IN LIEU OF REGULATIONS FOR FIRST YEAR OF PRO-
GRAM.— 
*
*
(
1
) NOTICE IN LIEU OF REGULATIONS FOR FIRST YEAR OP 
PROGRAM.—^The Secretary shall publish in the Federal Register 
whatever standards, criteria, and procedures, consistent with 
the provisions of this part, the Secretary, in consultation with 
members of the higher education community, determines are 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 353 
reasonable and necessary to the successful implementation of 
the first year of the direct student loan program authorized 
by this part. Section 431 of the General Education Provisions 
Act shall not apply to the publication of such standards, criteria, 
and procedures. 
"(2) NEGOTIATED RULEMAKING.—Beginning with academic 
year 1995-1996, all standards, criteria, procedures, and regula-
tions implementing this part as amended by the Student Loan 
Reform Act of 1993 shall, to the extent practicable, be subject 
to negotiated rulemaking, including all such standards, criteria, 
procedures, and regulations promulgated from the date of enact-
ment of such Act. 
"(b) CLOSING DATE FOR APPLICATIONS FROM INSTITUTIONS.— 
The Secretary shall establish a date not later than October 1, 
1993, as the closing date for receiving applications from institutions 
of higher education desiring to participate in the first year of 
the direct loan program under this part. 
"(c) PUBLICATION OF LIST OF PARTICIPATING INSTITUTIONS.— 
Not later than January 1, 1994, the Secretary shall publish in 
the Federal Register a list of the institutions of higher education 
selected to participate in the first year of the direct loan program 
under this part. 
"SEC. 458. FUNDS FOR ADMINISTRATIVE EXPENSES. 
20 USC 1087h. 
"(a) IN GENERAL.—^Each fiscal year, there shall be available 
to the Secretary of Education from fimds available pursuant to 
section 422(g) and from fimds not otherwise appropriated, funds 
to be obligated for administrative costs under this part, including 
the costs of the transition from the loan programs under part 
B to the direct student loan programs under this part (including 
the costs of annually assessing the program under this part and 
the progress of the transition) and transition support (including 
administrative costs) for the expenses of guaranty agencies in servic-
ing outstanding loans in their portfolios and in guaranteeing new 
loans, not to exceed (from such funds not otherwise appropriated) 
$260,000,000 in fiscal year 1994, $345,000,000 in fiscal year 1995, 
$550,000,000 in fiscal year 1996, $595,000,000 in fiscal year 1997, 
and $750,000,000 in fiscal year 1998. If in any fiscal year the 
Secretary determines that additional fimds for administrative 
expenses are needed as a result of such transition or the expansion 
of the direct student loan programs under this part, the Secretary 
is authorized to use funds available under this section for a subse-
quent fiscal year for such expenses, except that the total expendi-
tures by the Secretary (from such funds not otherwise appropriated) 
shall not exceed $2,500,000,000 in fiscal years 1994 through 1998. 
The Secretary is also authorized to carry over funds available 
imder this section to a subsequent fiscal year. 
"(b) AVAILABILITY.—^Funds made available under subsection (a) 
shall remain available until expended. 
"(c) BUDGET JUSTIFICATION.—^No fimds may be expended under 
this section unless the Secretary includes in the Department of 
Education's annual budget justification to Congress a detailed 
description of the specific activities for which the ftmds made avail-
able by this section have been used in the prior and current years 
(if applicable), the activities and costs planned for the budget year, 
and tne projection of activities and costs for each remaining year 
107 STAT. 354 
PUBLIC LAW 103-66—AUG. 10, 1993 
for which administrative expenses under this section are made 
available. 
"(d) NOTIFICATION.—In the event the Secretary finds it nec-
essary to use the authority provided to the Secretary under sub-
section (a) to draw fimds for administrative expenses irom a fiiture 
yeaj^B fimds, no funds may be expended imder this section unless 
the Secretaiy immediately notifies the Committees on Appropria-
tions of the Senate and of the House of Representatives, and the 
Labor and Humem Resources Committee of the Senate and the 
Education and Labor Committee of the House of Representatives, 
of such action and explain the reasons for such action.". 
CHAPTER 2—CONFORMING AMENDMENTS TO THE 
HIGHER EDUCATION ACT OF 1965 
SEC. 4041. PRESERVING LOAN ACCESS. 
(a) ADVANCES TO GUARANTY AGENCIES FOR LENDER-OF-LAST-
RESORT SERVICES.— 
(1) AMENDMENT.—Section 428(j) of the Act (20 U.S.C. 
1078(1)) is amended by striking paragraph (3) and inserting 
the following: 
*
*
(
3
) ADVANCES TO GUARANTY AGENCIES FOR LENDER-OF-
LAST-RESORT SERVICES DURING TRANSITION TO DIRECT LEND-
ING.^A) In order to ensure the availability of loan capital 
during the transition from the Federal Family Education Loan 
Program under this part to the Federal Direct Student Loan 
Program under part D of this title, the Secretary is authorized 
to provide a guaranty agency with additional advance funds 
in accordance with section 422(cX7), with such restrictions on 
the use of such funds as are determined appropriate by the 
Secretary, in order to ensure that the guaranty agency will 
make loans as the lender-of-last-resort. Such agency shall make 
such loans in accordance with this subsection and the require-
ments of the Secretary. 
"(B) Notwithstanding any other provision in this part, a 
guaranty agencv serving as a lender-of-last-resort under this 
paragraph shall be paid a fee, established by the Secretary, 
for making such loans in lieu of interest and special allowance 
subsidies, and shall be required to assign such loans to the 
Secretary on demeind. Upon such assignment, the portion of 
the advance represented by the loans assigned shall be consid-
ered repaid by such guaranty agency.". 
(2) CONFORMING AMENDMENTS.— 
(A) 
ADVANCES TO GUARANTEE AGENCIES.—Section 
422(cX7) of the Act (20 U.S.C. 1072(cX7)) is amended bv 
striking all beginning with "to a guaranty agency" through 
the period and inserting "to a guaranty agency— 
"(A) in accordance with section 428(j), in order to 
ensure that the guaranty agency shall make loans as the 
lender-of-last-resort during the transition from the Federal 
Family Education Losin Program under this part to the 
Federal Direct Student Loan Program under part D of 
this title; or 
"(B) if the Secretary is seeking to terminate the guar-
anty agency's agreement, or assuming the guaranty agen-
cy's functions, in accordance with section 428(c)(10XFXv), 
in order to assist the agency in meeting its immediate 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 355 
cash needs, ensure the uninterrupted pa3nnent of claims, 
or ensure that the guaranty agency shall make loans as 
described in subparagraph (A);". 
(B) 
RULES 
AND 
OPERATING 
PROCEDURES.—Section 
4280X2) of the Act (20 U.S.C. 1078gX2)) is amended— 
(i) in subparagraph (A), by inserting before the 
semicolon at the end the following: ''and ensure a 
response within 60 days after the student's original 
complete application is filed under this subsection"; 
(ii) by redesignating subparagraphs (B) through 
(D) as subparagraphs (C) through (E), respectively; 
and 
(iii) by inserting after subparagraph (A) the follow-
ing new subparagraph: 
''(B) consistent with standards established by the Sec-
retary, students applying for loans under this subsection 
shall not be subject to additional eligibility requirements 
or requests for additional information beyond what is 
required under this title in order to receive a loan under 
this part from an eligible lender, nor be required to receive 
more than two rejections from eligible lenders in order 
to obtain a loan under this subsection;", 
(b) LENDER REFERRAL SERVICES.—Section 428(e) of the Act 
(20 U.S.C. 1078(e)) is amended— 
(1) in paragraph (1)— 
(A) by amending the paragraph heading to read as 
follows: "IN GENERAL; AGREEMENTS WITH GUARANTY AGEN-
CIES.—"; 
(B) by inserting the subparagraph designation "(A)" 
immediately before 'The Secretary"; 
(C) by striking "in any State" and inserting "with which 
the Secretary has an agreement under subparagraph (B)"; 
and 
(D) by adding at the end the following new subpara-
graph: 
"(BXi) The Secretary may enter into agreements ^yith guar-
anty agencies that meet standards established by the Secretary 
to provide lender referral services in geographic areas specified 
by the Secretary. Such guaranty agencies shall be paid in 
accordance with paragraph (3) for such services. 
"(ii) The Secretary shall publish in the Federal Register Federal 
whatever standards, criteria, and procedures, consistent with ^hif<^«r 
the provisions of this part and part D of this title, the Secretary 
determines are reasonable and necessary to provide lender 
referral services under this subsection and ensure loan access 
to student and parent borrowers during the transition from 
the loan programs under this part to the direct student loan 
programs under part D of this title. Section 431 of the General 
Education Provisions Act shall not apply to the publication 
of such standards, criteria, and procedures."; 
(2) in paragraph (2)— 
(A) in the matter preceding subparagraph (A), by strik-
ing "in a State" and inserting "with whicn the Secretary 
has an agreement under paragraph (1)(B)"; 
(B) by amending subparagraph (A) to read as follows: 
"(A)(i) such student is either a resident of, or is 
accepted for enrollment in, or is attending, an eligible 
publication. 
107 STAT. 356 
PUBLIC LAW 103-66—AUG. 10, 1993 
institution located in a geographic area for which the Sec-
retary (I) determines that loans are not available to all 
eligible students, and (II) has entered into an agreement 
with a guaranty agency under paragraph (IXB) to provide 
lender referral services; and"; 
(3) in paragraph (3), by striking "The" and inserting "From 
fimds available for costs of transition under section 458 of 
the Act, the"; and 
(4) by striking paragraph (5). 
(c) LENDER-OF-LAST-RESORT FUNCTIONS OF STUDENT LOAN 
MAWCETING AssociATiON.^^ubsection (q) of section 439 of the Act 
(20 U.S.C. 1087-2(q)) is amended to read as follows: 
"(q) LENDER-OF-LAST-RESORT.— 
"(1) ACTION AT REQUEST OF SECRETARY.—<A) Whenever the 
Secretary determines that eligible borrowers are seeking and 
are unable to obtain loans under this part, the Association 
or its designated agent shall, not later than 90 days after 
the date of enactment of the Student Loan Reform Act of 
1993, begin making loans to such eligible borrowers in accord-
ance with this subsection at the request of the Secretary. The 
Secretary may request that the Association make loans to 
borrowers within a geographic area or for the benefit of students 
attending institutions of higher education that certify, in accord-
ance with standards established by the Secretary, that their 
students are seeking and imable to obtain loans. 
"(B) Loans made pursuant to this subsection shall be insur-
able by the Secretary under section 429 with a certificate 
of comprehensive insurance coverage provided for under section 
429(bXl) or by a guaranty agency imder paragraph (2)(A) of 
this subsection. 
"(2) ISSUANCE AND COVERAGE OF LOANS.—(A) Whenever 
the Secretary, after consultation with, and with the agreement 
of, representatives of the guaranty agency in a State, or an 
eligible lender in a State described in section 435(dXlXD), 
determines that a substantial portion of eligible borrowers in 
such State or within an area of such State are seeking and 
are unable to obtain loans under this part, the Association 
or its designated agent shall begin making such loans to borrow-
ers in such State or within an area of such State in accordance 
with this subsection at the request of the Secretary. 
"(B) Loans made pursuant to this subsection shall be insur-
able by the agency identified in subparagraph (A) having an 
agreement pursuant to section 428(b). For loans insured by 
such agency, the agency shall provide the Association with 
a certificate of comprehensive insurance coverage, if the 
Association and the agency have mutually agreed upon a means 
to determine that the agency has not already guaranteed a 
loan under this part to a student which would cause a subse-
quent loan made by the Association to be in violation of any 
provision imder this part. 
"(3) TERMINATION OF LENDING.—The Association or its des-
ignated agent shall cease making loans under this subsection 
at such time as the Secretory determines that the conditions 
which caused the implementotion of this subsection have ceased 
to exist.". 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 357 
SEC. 4042. GUARANTY AGENCY RESERVES. 
Section 422 of the Act (20 U.S.C. 1072) is amended by adding 
at the end the following new subsection: 
"(g) PRESERVATION AND RECOVERY OF GUARANTY AGENCY 
RESERVES.— 
"(1) AUTHORITY TO RECOVER FUNDS.—Notwithstanding any 
other provision of law, the reserve funds of the guaranty agen-
cies, and any assets purchased with such reserve funds, regard-
less of who holds or controls the reserves or assets, shcul be 
considered to be the property of the United States to be used 
in the operation of the program authorized by this part or 
the program authorized by part D of this title. However, the 
Secretaiy may not reauire uie return of all reserve funds of 
a guaranty agency to the Secretary unless the Secretary deter-
mines that such return is in the best interest of the operation 
of the program authorized by this part or the program autiior-
ized by part D of this title, or to ensure the proper maintenance 
of such agency's funds or assets or the orderly termination 
of the guaranty agency's operations and the liquidation of its 
assets. The reserves shall be maintained by each guaranty 
agency to pay program expenses and contingent liabilities, as 
authorized by tne Secretary, except that— 
**(A) the Secretary may direct a guaranty agency to 
return to the Secretary a portion of its reserve fund wnich 
the Secretary determines is unnecessary to pay the pro-
gram expenses and contingent liabilities of the guaranty 
agency; 
"(B) the Secretary may direct the guaranty agency 
to require the return, to tne guaranty agency or to the 
Secretary, of any reserve funds or assets held by, or under 
the control of, any other entity, which the Secretary deter-
mines are necessary to pay the program expenses and 
contingent liabilities of the guaranty agency, or which are 
required for the orderly termination of the guaranty 
agency's operations and the liquidation of ite assete; 
"(C) the Secretory ma^ direct a guaranty agency, or 
such agenc/s officers or directors, to cease any activities 
involving expenditure, use or transfer of the guaranty 
agency's reserve funds or assets which the Secretary deter-
mines is a misapplication, misuse, or improper expenditure 
of such funds or assete; and 
**(D) any such determination under subpcu'agraph (A) Regulations. 
or (B) shall be based on stondards prescribed by regulations 
that are developed through negotiated rulemaking and that 
include procedures for administrative due process. 
"(2) TERMINATION 
PROVISIONS IN CONTRACTS.—(A) 
To 
ensure that the funds and assete of the guaranty agency are 
preserved, any contract with respect to tpe admmistration of 
a guaranty agency's reserve funds, or th6 administration of 
any assete purchased or acquired with the^ reserve funds of 
the guaranty agency, that is entered into or extended by the 
guaranty agencv, or any other party on behalf of or with the 
concurrence of tne guaranty agency, after the date of enactment 
of this subsection shall provide that the contract is terminable 
by the Secretory upon 30 days notice to the contracting parties 
if the Secretaiy detormines that such contract includes an 
impermissible transfer of the reserve funds or assete, or is 
107 STAT. 358 
PUBLIC LAW 103-66—AUG. 10, 1993 
otherwise inconsistent with the terms or purposes of this sec-
tion. 
**(B) The Secretary may direct a guaranty agency to suspend 
or cease activities under any contract entered into by or on 
behalf of such agency after January 1, 1993, if the Secretary 
determines that the misuse or improper expenditure of such 
guaranty agency's funds or assets or such contract provides 
unnecessary or improper benefits to such agency's officers or 
directors. 
"(3) PENALTIES.—^Violation of any direction issued by the 
Secretary under this subsection may be subject to the penalties 
described in section 490 of this Act. 
**(4) AVAILABILITY OF FUNDS.—^Any funds that are returned 
or otherwise recovered by the Secretary pursuant to this sub-
section shall be available for expenditiure for expenses pursuant 
to section 458 of this Act.". 
SEC. 4043. TERMS OF LOANS. 
(a) AMENDMENT.—Section 428 of the Act (20 U.S.C. 1078) is 
amended— 
(1) in subsection (bXlXD), by striking "be subject to" 
through the semicolon and inserting "be subject to income 
contingent repayment in accordance with subsection (m);"; and 
(2) in subsection (m)— 
(A) by amending paragraph (1) to read as follows: 
"(1) AUTHORITY OF SECRETARY TO REQUIRE.—The Secretary 
shall require at least 10 percent of the borrowers who have 
defaulted on loans made imder this part that are assigned 
to the Secretary under subsection (cX8) to repay those loans 
under an income contingent repayment plan, the terms and 
conditions of which shall be established by the Secretary and 
the same as, or similar to, an income contingent repajrment 
plan established for purposes of part D of this title."; and 
(B) by striking paragraphs (2), (3), and (4) and insert-
ing tJie following new paragraph: 
"(2) LOANS FOR WHICH INCOME CONTINGENT REPAYMENT 
M
A
Y BE REQUIRED.—^A loan made under this part may be 
required to be repaid under this subsection if the note or 
other evidence of the loan has been assigned to the Secretary 
pursuant to subsection (cX8).". 
20 use 1078 
(b) EFFECTIVE DATE.—The amendments made by this section 
shall take effect on July 1,1994. 
SEC. 4044. ASSIGNMENT OF LOANS. 
Section 428(cX8) of the Act (20 U.S.C. 1078(cX8)) is amended— 
(1) in the first sentence, by inserting the subparagraph 
designation "(A)" before "If the"; 
(2) by striking the second and third sentences; and 
(3) by adding at the end the following new subparagraph: 
"(B) An orderly transition from the Federal Family Edu-
cation Loan Program under this part to the Federal Direct 
Student Loan Program vuider part D of this title shall be 
deemed to be in the Federal fiscal interest, and a guaranty 
agency shall promptly assign loans to the Secreta^ under 
tfis paragraph upon the Secretar3r*s request.". 
note. 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 359 
SEC. 4045. TERAHNATION OF GUARANTY AGENCY AGREEMENTS; 
ASSUMPTION OF GUARANTY AGENCY FUNCTIONS BY THE 
SECRETARY. 
Section 428(cX10) of the Act is amended— 
20 use 1078. 
(1) in subparagraph (C), by inserting *
*
, as appropriate," 
after "the Secretary shall require"; 
(2) in subparagraph (D)— 
(A) by inserting the clause designation "(i)" before 
"Each"; 
(B) by striking ''Each" and inserting "If the Secretary 
is not seeking to terminate the guaranty agency's agree-
ment imder subparagraph (E), or assuming the guaranty 
agency's functions under subparagraph (F), a"; 
(C) by adding at the end the following new clause: 
"(ii) If the Secretary is seeking to terminate the guaranty 
agency's agreement under subparagraph (E), or assuming the 
guaranty agency's fimctions under subparagraph (F), a manage-
ment plan described in subparagraph (C) shall include the 
means by which the Secretaiy and the guaranty agency shall 
work together to ensure the orderly termination of the oper-
ations, and liquidation of the assets, of the guaranty agency."; 
(3) in subparagraph (E)— 
(A) in clause (ii), by striking "or" after the semicolon; 
(B) in clause (iii), by striking the period and inserting 
a semicolon; and 
(C) by adding at the end the following new clauses: 
"(iv) the Secretary determines that such action is nec-
essary to protect the Federal fiscal interest; 
"(v) the Secretary determines that such action is nec-
essary to ensure the continued availability of loans to stu-
dent or parent borrowers; or 
"(vi) the Secretary determines that such action is nec-
essary to ensure an orderly transition from the loan pro-
grams under this part to the direct student loan programs 
under part D of this title."; 
(4) in subparagraph (F)— 
(A) in the matter preceding clause (i), by striking 
"Except as provided in subparagraph (G), if" and inserting 
"ir; 
(B) by amending clause (v) to read as follows: 
"(v) provide the guaranty agency with additional 
advance funds in accordance with section 422(cX7), with 
such restrictions on the use of such funds as is determined 
appropriate by the Secretary, in order to— 
"(I) meet the immediate cash needs of the guaranty 
agency; 
"(II) ensure the iminterrupted payment of claims; 
or 
"(III) ensure that the guaranty agency will make 
loans as the lender-of-last-resort, in accordance with 
subsection (j);"; 
(C) in clause (vi)— 
(i) by striking "and to avoid" and inserting "to 
avoid"; 
(ii) by striking the period and inserting a comma 
and "and to ensure an orderly transition from the 
69-194 O - 94 - 13 : QL. 3 Part 1 
107 STAT. 360 
PUBLIC LAW 103-66—AUG. 10, 1993 
loan programs under this part to the direct student 
loan programs under part D of this title."; and 
(iii) by redesignating such clause as clause (vii); 
and 
(D) by inserting after clause (v) the following new 
clause: 
"(vi) use all funds and assets of the guaranty agency 
to assist in the activities undertaken in accordance with 
this subparagraph and take appropriate action to reqmre 
the retiim, to the guaranty agency or the Secretary, of 
any funds or assets provided by the guaranty agency, luider 
contract or otherwise, to any person or organization; or"; 
(5) by striking subparagraph (G); 
(6) by redesignating subparagraphs (H), (I), and (J) as 
subparagraphs (I), (J), and (K), respectively; 
(7) by inserting after subparagraph (F) the following new 
subparagraphs: 
"(G) Notwithstanding £uiy other provision of Federal or 
State law, if the Secretary has terminated or is seeking to 
terminate a guaranty agenc/s agreement under subparagraph 
(E), or has assumed a guaranty agency's functions under 
subparagraph (F)— 
"(i) no State court may issue any order afTecting the 
Secretary's actions with respect to such guaranty agency; 
"(ii) any contract with respect to the administration 
of a guaranty agency's reserve funds, or the administration 
of any assets purchased or acquired with the reserve funds 
of the guaranty agency, that is entered into or extended 
by the guaranty agency, or any other party on behalf 
of or with the concurrence of the guaranty agency, after 
the date of enactment of this subparagraph shall provide 
that the contract is terminable by the Secretary upon 30 
days notice to the contracting parties if the Secretary 
determines that such contract includes an impermissible 
transfer of the reserve funds or assets, or is otherwise 
inconsistent with the terms or purposes of this section; 
and 
"(iii) no provision of State law shall apply to the actions 
of the Secretary in terminating the operations of a guaranty 
agency. 
"(H) Notwithstanding any other provision of law, the Sec-
retary's liability for any outstanding liabilities of a guaranty 
agency (other than outstanding student loan guarantees under 
tMs part), the functions of which the Secretary has assumed, 
shall not exceed the fair market value of the reserves of the 
guaranty agency, minus any necessary liquidation or other 
administrative costs."; and 
(8) in subparagraph (K) (as redesignated by paragraph 
(5)), by striking all beginning with "system, together" through 
the period and inserting "system and the progress of the transi-
tion from the loan programs under this part to the direct 
student loan programs under part D of this title.". 
SEC. 4046. CONSOLIDATION LOANS. 
(a) COST SAVINGS FROM CONSOLIDATION LOANS.—Section 428C 
of the Act (20 U.S.C. 1078-3) is amended— 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 361 
(1) in subsection (a) by amending paragraph (SKA) to read 
as follows: 
"(3) DEFINITION OF EUGIBLE BORROWERS.—(A) For the pur-
pose of this section, the term 'eligible borrower* means a bor-
rower who, at the time of application for a consolidation loan 
is in repajnnent status, or in a grace period preceding repay-
ment, or is a delinquent or defaulted borrower who will reenter 
repajnnent through loan consolidation.**; 
(2) in subsection (b)— 
(A) in paragraph (1)— 
(i) in subparagraph (AXii), by inserting "with 
income-sensitive repayment terms" after ''obtain a 
consolidation loan"; 
(ii) by redesignating subparagraph (E) as subpara-
graph (F); and 
(iii) by inserting after subparagraph (D) the follow-
ing new subparagraph: 
"(E) that the lender shall offer an income-sensitive Regulations. 
repa3mient schedule, established by the lender in accord-
ance with the regulations promulgated by the Secretary, 
to the borrower of any consolidation loan made by the 
lender on or after July 1,1994; and"; 
(B) in paragraph (4), by amending subparagraph (C) 
to read as follows: 
"(CXi) provides that periodic installments of principal 
need not bie paid, but interest shall accrue and be paid 
in accordance with clause (ii), during any period for which 
the borrower would be eligible for a deferral under section 
428(bXl)(M), and that any such period shall not be included 
in determining the repayment schedule pursuant to sub-
section (cX2) of this section; and 
"(ii) provides that interest shall accrue and be paid— 
"(I) by the Secretary, in the case of a consolidation 
loan that consolidated only Federal Stafford Loans for 
which the student borrower received an interest sub-
sidy under section 428; or 
"(II) by the borrower, or capitalized, in the case 
of a consolidation loan other than a loan described 
in subclause (I);"; smd 
(C) by adding at the end the following new paragraph: 
"(5) DIRECT LOANS.—In the event that a borrower is unable 
to obtain a consolidation loan from a lender with an agreement 
under subsection (aXD, or is unable to obtain a consolidation 
loan with income-sensitive repayment terms acceptable to the 
borrower from such a lender, the Secretary shall offer any 
such borrower who applies for it, a direct consolidation loan. 
Such direct consolidation loan shall, as requested by the bor-
rower, be repaid either pursuant to income contingent repay-
ment under part D of this title or pursuant to any other 
repayment provision under this section. The Secretary shall 
not offer such loans if, in the Secretary's judgment, the Depart-
ment of Education does not have the necessary origination 
and servicing arrangements in place for such loans."; and 
(3) in subsection (c)— 
(A) in paragraph (1), by amending subparagraphs (B) 
and (C) to read as follows: 
107 STAT. 362 
PUBLIC LAW 103-66—AUG. 10, 1993 
"(B) A consolidation loan made before July 1, 1994, shall 
bear interest at an annual rate on the iinpaid principal balance 
of the loan that is equal to the greater of— 
"(i) the weighted average of the interest rates on the 
lo£uis consolidated, rounded to the nearest whole percent; 
or 
"(ii) 9 percent. 
"(C) A consolidation loan made on or after July 1, 1994, 
shall bear interest at an annual rate on the unpaid principal 
balance of the loan that is equal to the weighted average 
of the interest rates on the loans consolidated, rounded upward 
to the nearest whole percent."; 
(B) in paragraph (2)— 
(i) in subparagraph (A)— 
(I) in the matter preceding clause (i), by strik-
ing "income sensitive repayment schedules. Such 
repayment terms" and inserting "income-sensitive 
repayment schedules, established by the lender 
in accordance with the regulations of the Sec-
retary. Except as required by such income-sen-
sitive repayment schedules, or by the terms of 
repayment pursuant to income contingent repay-
ment offered by the Secretary under subsection 
(bX5), such repayment terms"; 
(II) by redesignating clauses (i), (ii), (iii), (iv), 
and (v) as clauses (ii), (iii), (iv), (v), and (vi), respec-
tively; and 
(III) by inserting before clause (ii) (as redesig-
nated by subclause (II)) the following new clause: 
"(i) is less than $7,500, then such consolidation loan 
shall be repaid in not more than 10 years;"; 
(ii) by striking subparagraph (B); and 
(iii) by redesignating subparagraph (C) as subpara-
raph (B); and 
rC) in paragraph (3)(B), by inserting "except as 
required by the terms of repayment pursuant to income 
contingent repayment offered by the Secretary under sub-
section (bX5)," before "the lender^, 
(b) COHORT DEFAULT RATE CONFORMING AMENDMENTS.— 
(1) AMENDMENTS TO DEFINITION.—Section 435(mXl) of the 
Act (20 U.S.C. 1085) is amended— 
(A) in subparagraph (A), by inserting "(or on the por-
tion of a loan made imder section 428C that is used to 
repay any such loans)" immediately after "on such loans"; 
(B) in subparagraph (C), by inserting "(or on the por-
tion of a loan made under section 428C that is used to 
repay any such loans)" immediately sifter "on such loans"; 
and 
(C) in subparagraph (D)— 
(i) by inserting "(or the portion of a loan made 
imder section 428C that is used to repay a loan made 
under such section)" after "section 428A" the first place 
it appears; and 
(ii) by inserting "(or a loan made under section 
428C a portion of which is used to repay a loan made 
under such section)" after "section 428A" the second 
place it appears. 
grf 
fC] 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 363 
(2) CONFORMING AMENDMENT.—Section 428C(aX3)(B)(ii) of 
the Act (20 U.S.C. 1078-3(a)(3)(B)(ii)) is amended by striking 
the second sentence. 
(c) EFFECTIVE DATE.—^The amendments made by this section 
20 use i078-3 
shall take effect on July 1, 1994, except that the amendments 
"°*®' 
made by subsection (aX2XB) shall take effect upon enactment. 
SEC. 4047. CONSOUDATION OF PROGRAMS. 
(a) IN GENERAL.—Section 428H of the Act (20 U.S.C. 1078-
9) is amended— 
20 use 1078-8. 
(1) in the matter preceding paragraph (1) of subsection Regulations. 
(b), by inserting "(including graduate and professional students 
as defined in regulations promulgated by the Secretary)" after 
"484"; 
(2) by amending subsection (d) to read as follows: 
"(d) LOAN LIMITS.— 
"(1) IN GENERAL.—Except as provided in paragraphs (2) 
and (3), the annual and aggregate limits for loans under this 
section shall be the same as those established under section 
428(b)(1), less any amount received by such student pursuant 
to the subsidized loan program established under section 428. 
"(2) ANNUAL LIMITS FOR INDEPENDENT, GRADUATE, AND 
PROFESSIONAL STUDENTS.—^The maximum annual amount of 
loans under this section an independent student (or a student 
whose parents are unable to borrow under section 428B or 
the Feoeral Direct PLUS Loan Program) may borrow in any 
academic year or its equivalent or in any period of 7 consecutive 
months, whichever is longer, shall be the amount determined 
under paragraph (1), plus— 
"(A) in the case of such a student attending an eligible 
institution who has not completed such student's first 2 
years of undergraduate study— 
"(i) $4,000, if such student is enrolled in a program 
whose length is at least one academic year in length 
(as determined under section 481); 
"(ii) $2,500, if such student is enrolled in a program 
whose length is less than one academic year, but at 
least V3 of such an academic year; and 
"(iii) $1,500, if such student is enrolled in a pro-
gram whose length is less than Va, but at least Vs, 
of such an academic year; 
"(B) in the case of such a student attending an eligible 
institution who has completed the first 2 years of under-
graduate study but who has not completed the remainder 
of a program of undergraduate study— 
"(i) $5,000, if such student is enrolled in a program 
whose length is at least one academic year in length 
(as determined under section 481); 
"(ii) $3,325, if such student is enrolled in a program 
whose length is less than one academic year, but at 
least % of such an academic year; and 
"(iii) $1,675, if such student is enrolled in a pro-
gram whose length is less than Va, but at least Vs, 
of such an academic year; and 
"(C) in the case of such a student who is a graduate 
or professional student attending an eligible institution, 
$10,000. 
107 STAT. 364 
PUBLIC LAW 103-66—AUG. 10, 1993 
20 use 1078-1. 
20 use 1078-8 
note. 
20 u s e 1078-8 
note. 
"(3) AGGREGATE LIMITS FOR INDEPENDENT, GRADUATE, AND 
PROFESSIONAL STUDENTS.—^The maximum aggregate amount of 
loans under this section a student described in paragraph (2) 
may borrow shall be the amount described in paragraph (1), 
adjusted to reflect the increased annual limits described in 
paragraph (2), as prescribed by the Secretary by regulation."; 
and 
(3) in subsection (e), by adding at the end the following 
new paragraphs: 
(5) AMORTIZATION.—^The amount of the periodic payment 
and the repayment schedule for any loan made pursuant to 
this section snail be established by assuming an interest rate 
equal to the applicable rate of interest at the time the repay-
ment of the principal amount of the loan commences. At the 
option of the lender, the note or other written evidence of 
tne loan may require that— 
"(A) the amount of the periodic payment will be 
ac^usted annually; or 
"(B) the period of repayment of principal will be length-
ened or shortened, 
in order to reflect adjustments in interest rates occurring as 
a consequence of section 427A(c)(4). 
"(6) REPAYMENT PERIOD.—^For purposes of calculating the 
10-year repayment period under section 428(b)(1)(D), such 
period shall commence at the time the first payment of principal 
IS due from the borrower.". 
(b) REPEAL.—Section 428A of the Act is repealed. 
(c) TERMS, CONDITIONS AND BENEFITS.—Notwithstanding the 
amendments made by this section, with respect to loans provided 
under sections 428A and 428H of the Act (as such sections existed 
on the date preceding the date of enactment of this Act) the terms, 
conditions and beneflts applicable to such loans under such sections 
shall continue to apply to such loans after the date of enactment 
of this Act. 
(d) EFFECTIVE DATE.—^Except as otherwise provided herein, 
the amendments made by this section shall take efTect on July 
1,1994. 
Subtitle B—Additional Savings From The 
Student Loan Programs 
Federal 
Register, 
publication. 
SEC. 4101. REDUCTION OF BORROWER INTEREST RATES. 
Section 427A of the Act (20 U.S.C. 1077a) is amended— 
(1) in subsection (cX4), by adding at the end the following 
new subparagraph: 
"(E) Notwithstanding subparagraphs (A) and (D) for any 
loan made pursuant to section 428B for which the first disburse-
ment is made on or after July 1,1994— 
"(i) subparagraph (B) shall be applied by substituting 
"3.1" for "3.25"; and 
"(ii) the interest rate shall not exceed 9 percent."; 
(2) by redesignating subsections (f), (g), and (h) as sub-
sections (i), (j), and (k) respectively; 
(3) by adding after subsection (e) the following new sub-
sections: 
"(0 INTEREST RATES FOR NEW LOANS AFTER JULY 1, 1994.— 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 365 
"(1) IN GENERAL.—^Notwithstanding subsections (a), (b), (d), 
and (e) of this section, with respect to any loan made, insured, 
or guaranteed iinder this part (other than a loan made pursuant 
to section 428B or 428C) for which the first disbursement 
is made on or after July 1, 1994, the applicable rate of interest 
shall, during any 12-month period beginning on July 1 and 
ending on June 30, be determined on the preceding Jime 1 
and be equal to— 
(A) the bond equivalent rate of 91-day Treasury bills 
auctioned at the final auction held prior to such Jime 
1; plus 
"(B) 3.10 percent, 
except that such rate shall not exceed 8.25 percent. 
\2) 
CONSULTATION.—The Secretary shall determine the 
applicable rate of interest under paragraph (1) after consulta-
tion with the Secretary of the Treasury and shall publish such 
rate in the Federal Ilegister as soon as practicable after the 
date of determination. 
**(g) IN SCHOOL AND GRACE PERIOD RULES.— 
"(1) GENERAL RULE.—^Notwithstanding the provisions of 
subsection (f), but subject to subsection (h), with respect to 
any loan under section 428 or 428H of this part for which 
the first disbursement is made on or after July 1, 1995, the 
applicable rate of interest for interest which accrues— 
"(A) prior to the beginning of the repajrment period 
of the loan; or 
"(B) during the period in which principal need not 
be paid (whether or not such principal is in fact paid) 
by reason of a provision described in section 428(b)(lXM) 
or 427(a)(2)(C), 
shall not exceed the rate determined under paragraph (2). 
"(2) RATE DETERMINATION.—For purposes of paragraph (1), 
the rate determined under this paragraph shall, during any 
12-month period beginning on July 1 and ending on June 
30, be determined on the preceding June 1 and be equal to— 
"(A) the bond eqxiivalent rate of 91-day Treasury bills 
auctioned at the final auction prior to such June 1; plus 
"(B) 2.5 percent, 
except that such rate shall not exceed 8.25 percent. 
"(3) CONSULTATION.—^The Secretary shall determine the 
applicable rate of interest under this subsection after consulta-
tion with the Secretary of the Treasury and shall publish such 
rate in the Federal Register as soon as practicable after the 
date of determination. 
"(h) INTEREST RATES FOR NEW LOANS AFTER JULY 1, 1998.— 
"(1) IN GENERAL.—^Notwithstanding subsections (a), (b), (d), 
(e), (f), and (g) of this section, with respect to any loan made, 
insured, or guaranteed under this part (other than a loan 
made pursuant to sections 428B and 428C) for which the first 
disbursement is made on or after July 1, 1998, the applicable 
rate of interest shall, during any 12-month period beginning 
on July 1 and ending on June 30, be determined on the preced-
ing June 1 and be equal to— 
"(A) the bond equivalent rate of the securities with 
a comparable maturity as established by the Secretary; 
plus 
"(B) 1.0 percent, 
107 STAT. 366 
PUBLIC LAW 103-66—AUG. 10, 1993 
except that such rate shall not exceed 8.25 percent. 
"(2) INTEREST RATES FOR NEW PLUS LOANS AFTER JULY 
1, 1998.—Notwithstanding subsections (a), (b), (d), (e), (f), and 
(g), with respect to any loan made under section 428B for 
which the first disbursement is made on or after July 1, 1998, 
paragraph (1) shall be applied— 
"(A) by substituting '2.1 percent' for *1.0 percent* in 
subparagraph (B); and 
"(B) by substituting *9.0 percent' for '8.25 percent' in 
the matter following such subparagraph. 
Federal 
"(3) CONSULTATION.—^The Secretary shall determine the 
Register, 
applicable rate of interest under this subsection after consulta-
pubiication. 
^^^^ ^.^j^ ^j^^ Secretary of the Treasury and shall publish such 
rate in the Federal Register as soon as practicable after the 
date of determination.". 
SEC. 4102. REDUCTION IN LOAN FEES PAID BY STUDENTS. 
(a) ORIGINATION FEES.—Section 438 of the Act (20 U.S.C. 1087-
1) is amended— 
(1) in the heading of subsection (c) by inserting "FROM 
STUDENTS" after "ORIGINATION FEES"; and 
(2) in subsection (c)— 
(A) in paragraph (2)— 
(i) by striking "428A, 428B, 428C," and inserting 
"428C"; and 
(ii) by striking "5 percent" and inserting "3.0 per-
cent"; and 
(B) in paragraph (6), by striking "5 percent" and insert-
ing "3.0 percent". 
(b) ORIGINATION FEE; INSURANCE PREMIUM FOR UNSUBSIDIZED 
LOANS.—Section 428H of the Act (20 U.S.C. 1078-8) is amended— 
(1) in subsection (f)— 
(A) in the subsection heading, by striking "INSURANCE 
PREMIUM" and inserting "ORIGINATION FEE"; 
(B) in the heading of paragraph (1), by striking 
"/INSURANCE PREMIUM"; 
(C) in paragraph (1)— 
(i) by striking "a combined origination fee and 
insurance premium in the amount of 6.5 percent" and 
inserting "an origination fee in the amount of 3.0 per-
cent"; and 
(ii) by striking the second sentence; 
(D) in paragraph (2), by striking "combined fee and 
premium" and inserting "origination fee"; 
(E) in paragraph (3), by striking "combined origination 
fee and insurance premium" and inserting "origination fee"; 
(F) in paragraph (4)— 
(i) in the heading, by striking "INSURANCE PRE-
MIUM" and inserting "ORIGINATION FEE"; 
(ii) by striking combined origination fee and insur-
ance premiums" and inserting "origination fees"; and 
(iii) by striking "and premiums to pay" and insert-
ing "to pay"; and 
(G) in paragraph (5)— 
(i) in the neading, by inserting "ORIGINATION FEE 
AND" before "INSURANCE"; and 
(ii) in the second sentence— 
20 use 1078 
note. 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 367 
(I) by striking "6.5 percent insurance pre-
mium" and inserting "combined origination fee 
under this subsection and the insurance premium 
under subsection (h)"; and 
(II) by inserting "origination fee and" before 
"insurance"; and 
(2) by adding at the end the following new subsection: 
"(1) INSURANCE PREMiUM.~Each State or nonprofit private 
institution or organization having an agreement with the Secretary 
under section 428(bXl) may charge a boirower under this section 
an insurance premium equal to not more than 1.0 percent of the 
principal amount of the loan, if such premium will not be used 
for incentive payments to lenders.". 
(c) INSURANCE PREMIUM.—Section 428(bXlXH) of the Act (20 
U.S.C. 1078(bXlXH)) is amended by striking "3 percent" and insert-
ing "1.0 percent". 
(d) EFFECTIVE DATE.—^The amendments made by this section 
shall take effect on July 1,1994. 
SEC. 4103. LOAN FEES FROM LENDERS. 
Section 438 of the Act (20 U.S.C 1087-1) is further amended— 
(1) by redesignating subsections (d) and (e) as subsections 
(e) and (f), respectively; and 
(2) by inserting after subsection (c) the following new sub-
section: 
"(d) LOAN FEES FROM LENDERS.— 
"(1) DEDUCTION FROM INTEREST AND SPECIAL ALLOWANCE 
SUBSIDIES.—^Notwithstanding subsection (b), the Secretary shall 
reduce the total amount of interest and special allowance pay-
able under section 428(aX3XA) and subsection (b) of this section, 
respectively, to any holder of a loan by a loan fee in an amount 
determined in accordance with paragraph (2) of this subsection. 
If the total amount of interest and special allowance payable 
under section 428(aX3XA) and subsection (b) of this section, 
respectively, is less than the amount of such loan fee, then 
the Secretary shall deduct such excess amount from subsequent 
quarters' payments imtil the total amount has been deducted. 
"(2) AMOUNT OF LOAN FEES.—With respect to any loan 
under this part for which the first disbursement was made 
on or after October 1, 1993, the amount of the loan fee which 
shall be deducted under paragraph (1) shall be equal to 0.50 
percent of the principal amount of the loan. 
"(3) DISTRIBUTION OF LOAN FEES.—The Secretary shall 
deposit all fees collected pursuant to paragraph (3) into the 
insurance fund established in section 431.". 
SEC. 4104. OFFSET FEE. 
Subsection (h) of section 439 of the Act (20 U.S.C. 1087-2(h)) 
is amended by adding at the end the following new paragraph: 
"(7) OFFSET FEE.—<A) "Die Association shall pay to the 
Secretajry, on a monthly basis, an offset fee calculated on an 
annual basis in an amount equal to 0.30 percent of the principal 
amount of each loan made, insured or guaranteed under tnis 
part that the Association holds (except for loans made pursuant 
to sections 428C, 439(o), or 439(q)) and that was acquired 
on or after the date of enactment of mis paragraph. 
107 STAT. 368 
PUBLIC LAW 103-66—AUG. 10, 1993 
"(B) If the Secretary determines that the Association has 
substantially failed to comply with subsection (q), subparagraph 
(A) shall be applied by substituting '1.0 percent' for *0.3 percent'. 
"(C) The Secretary shall deposit all fees collected pursuant 
to this paragraph into the insurance fimd established in section 
431.". 
SEC. 410S. ELIMINATION OF TAX EXEMPT FLOOR. 
Section 438(bX2)(B) of the Act (20 U.S.C. 1087-l(bX2XB)) is 
amended by adding at the end the following new clause: 
"(iv) Notwithstanding clauses (i) and (ii), the quarterly 
rate of the special allowance for holders of loans wnich are 
financed with fluids obtained by the holder from the issuance 
of obligations originally issued on or after October 1, 1993, 
the income from which is excluded from gross income under 
the Internal Revenue Code of 1986, shall be the quarterly 
rate of the special allowance established under subparagraph 
(A), (E), or (F), as the case may be. Such rate shall also 
apply to holders of loans which were made or purchased with 
fluids obtained by the holder from collections or default 
reimbursements on, or interest or other income pertaining to, 
eligible loans made or purchased with funds descnbed in the 
preceding sentence of this subparagraph or from income on 
the investment of such funds.". 
SEC. 4106. REDUCTION IN INTEREST RATE FOR CONSOLIDATION 
LOANS; REBATE FEE. 
(a) AMENDMENT.—Section 428C of the Act (20 U.S.C. 1078-
3) is amended by adding at the end the following new subsection: 
"(0 INTEREST PAYMENT REBATE FEE.— 
"(1) IN GENERAL.—^For any month beginning on or after 
October 1, 1993, each holder of a consolidation loan under 
this section for which the first disbursement was made on 
or after October 1, 1993, shall pay to the Secretary, on a 
monthly basis and in such manner as the Secretary shall pre-
scribe, a rebate fee calculated on an annual basis equal to 
1.05 percent of the principal plus accrued unpaid interest on 
such loan. 
"(2) DEPOSIT.—^The Secretary shall deposit all fees collected 
pursuant to subsection (a) into the insurance fund established 
in section 431.". 
(b) ENFORCEMENT.—Subsection (d) of section 435 of the Act 
(20 U.S.C. 1085(d)) is amended— 
(1) in the matter preceding subparagraph (A) of paragraph 
(1), by strikinff "(5)" and inserting "(6)"; and 
(2) by adding at the end the following new paragraph: 
"(6) REBATE FEE REQUIREMENT.—^To be an eligible lender 
under this part, an eligible lender shall pay rebate fees in 
accordance with section 428C(f).". 
SEC. 4107. REINSURANCE FEES AND ADMINISTRATIVE COST ALLOW-
ANCE. 
(a) REINSURANCE FEES.—Section 428(c) of the Act (20 U.S.C. 
1078(c)) is amended— 
(1) by striking paragraph (9); and 
(2) by redesignating paragraph (10) as paragraph (9). 
(b) ADMINISTRATIVE COST ALLOWANCE.—Section 428(f)(1) of the 
Act (20 U.S.C. 1078(f)(1)) is amended— 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 369 
(1) in subparagraph (A), by striking T h e Secretary" and 
inserting "For a fiscal year prior to fiscal year 1994, the Sec-
retary"; and 
(2) in subparagraph (B), by inserting "prior to fiscal year 
1994" after "any fiscal year". 
(c) EFFECTIVE DATE.—The amendments made by this section 20 use 1078 
shall take effect on October 1,1993. 
"o^ 
SEC. 4108. RISK SHARING. 
(a) 
GUARANTY AGENCY REINSURANCE PERCENTAGE.—Section 
428(cXl) of the Act (20 U.S.C. 1078(c)(1)) is amended— 
(1) in the fourth sentence of subparagraph (A), by striking 
"100 percent" and inserting "98 percent"; 
(2) in subparagraph (BXi), by striking "90 percent" and 
inserting "88 percent"; 
(3) m subparagraph (BXii), by striking "80 percent" and 
inserting "78 percent"; and 
(4) by adding at the end the following new subparagrai)hs: 
"(E) Notwithstanding any other provisions of this section, 
in the case of a loan made pursuant to a lender-of-last-resort 
program, the Secretary shall apply the provisions of— 
"(i) the fourth sentence of subparagraph (A) by 
substituting *100 percent' for *98 percent; 
"(ii) subparagraph (BXi) by substituting '100 percent* 
for *88 percent'; and 
"(iii) subparagraph (BXii) by substituting '100 percent' 
for *78 percent'. 
"(F) Notwithstanding any other provisions of this section, 
in the case of an outstanding loan transferred to a guaranty 
agency from another guaranty agency pursuant to a plan 
approved by the Secretary in response to the insolvency of 
the latter such guarantee agency, the Secretary shall apply 
the provision of— 
"(i) the fourth sentence of subparagraph (A) by 
substituting '100 percent' for '98 percent; 
"(ii) subparagraph (B)(i) by substituting '90 percent' 
for '88 percent'; and 
"(iii) subparagraph (B)(ii) by substituting *80 percent' 
for '78 percent'.". 
(b) RISK SHARING BY THE LOAN HOLDERS.—Section 428(bXlXG) 
of the Act (20 U.S.C. 1078(bXlXG)) is amended— 
(1) by striking "100 percent" and inserting "98 percent"; 
and 
(2) by adding before the semicolon at the end the following: 
", except that such program shall insure 100 percent of the 
unpaid principal of loans made with funds advanced pursuant 
to section 428(j) or 439(q)". 
(c) EFFECTIVE DATE.—^The amendments made by this section 20 use 1078 
shall apply to any loan for which the first disbursement is made 
on or after October 1,1993. 
SEC. 4109. PLUS LOAN DISBURSEMENTS. 
(a) MULTIPLE DISBURSEMENT REQUIRED.—The matter preceding 
paragraph (1) of section 428B(c) of the Act (20 U.S.C. 1078-2(c)) 
is amended by inserting "shall be disbursed in accordance with 
the requirements of section 428G and" after "imder this section". 
(b) CONFORMING AMENDMENTS.—Section 428G(e) of the Act (20 
U.S.C. 1078-7(e) is amended— 
note. 
note. 
107 STAT. 370 
PUBLIC LAW 103-66—AUG. 10, 1993 
(1) in the subsection heading, by striking "PLUS, CONSOLI-
DATION," and inserting "CONSOLIDATION"; and 
(2) by striking "section 428B or 428C" and inserting "section 
428C". 
20 use 1078-2 
(c) EFFECTIVE DATE.—^The amendments made by this section 
^°^- 
shall be effective with respect to loans for which the first disburse-
ment is made on or after October 1,1993. 
SEC. 4110. SECRETARinS EQUITABLE SHARE. 
(a) AMENDMENT.—Section 428(cX6XAXii) of the Act (20 U.S.C. 
1078(cX6XAXii)) is amended by striking "30 percent" and inserting 
"27 percent". 
20 use 1078 
(b) EFFECTIVE DATE.—^The amendment made by subsection (a) 
shall take effect on October 1,1993. 
SEC. 4111. REDUCTION IN THE SPECIAL ALLOWANCE PAYMENT. 
Paragraph (2) of section 438(b) of the Act (20 U.S.C. 1087-
l(bX2)) is amended— 
(1) in subparagraph (A)— 
(A) by striking "and (D)" and inserting "(D), (E), and 
(F)"; and 
(B) by striking "427A(e)" and inserting "427A(f)"; and 
(2) by adding at the end the following new subparagraphs: 
"(E) In the case of any loan for which the applicable rate 
of interest is described in section 427A(gX2), subparagraph 
(AXiii) shall be applied by substituting '2.5 percent for '3.10 
percent'. 
"(F) Subject to paragraph (4), the special cQlowance paid 
pursuant to this subsection on loans for which the applicable 
rate of interest is determined under section 427A(h) shall be 
computed (i) by determining the applicable bond equivalent 
rate of the security with a comparable maturity, as established 
by the Secretary, (ii) by subtracting the applicable interest 
rates on such loans from such applicable bond equivalent rate, 
(iii) by adding 1.0 percent to the resultant percent, and (iv) 
by dividing the resultant percent by 4. If such computation 
produces a number less than zero, such loans shall be subject 
to section 427A(f).''. 
SEC. 4112. SUPPLEMENTAL PRECLAIMS ASSISTANCE. 
(a) AMENDMENT.—Section 428(1X2) of the Act (20 U.S.C. 
1078(1X2)) is amended by striking the second sentence and inserting 
the following: "For each loan on which such assistance is performed 
and for which a default claim is not presented to the guaranty 
agency by the lender on or before the 150th day after the loan 
becomes 120 days delinquent, such payment shall be equal to one 
percent of the total of the unpaid principal and the accrued unpaid 
interest of the loan.". 
20 use 1078 
(b) EFFECTIVE DATE.—The amendment made by this section 
shall take effect on October 1,1993. 
Subtitle C—Cost Sharing by States 
SEC. 4201. COST SHARING BY STATES. 
(a) AMENDMENT.—Section 428 of the Act (20 U.S.C. 1078) is 
amended by adding at the end the following new subsection: 
"(n) STATE SHARE OF DEFAULT COSTS.— 
note. 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 371 
"(1) IN GENERAL.—In the case of any State in which there 
are located any institutions of higher education that have a 
cohort default rate that exceeds 20 percent, such State shall 
pay to the Secretary an amount equal to— 
"(A) the new loan volume attributable to all institutions 
in the State for the current fiscal year; multiplied by 
"(B) the percentage specified in paragraph (2); multi-
plied by 
"(C) the quotient of— 
"(i) the sum of the amounts calculated under para-
graph (3) for each such institution in the State; divided 
by 
"(ii) the total amount of loan volume attributable 
to current and former students of institutions located 
in that State entering repayment in the period used 
to calculate the cohort default rate. 
"(2) PERCENTAGE.—For purposes of paragraph (IXB), the 
percentage used shall be— 
"(A) 12.5 percent for fiscal year 1995; 
"(B) 20 percent for fiscal year 1996; and 
"(C) 50 percent for fiscal year 1997 and succeeding 
fiscal years. 
"(3) CALCULATION.—For purposes of paragraph (IXCXi), 
the amount shall be determined by calculating for each institu-
tion the amount by which— 
"(A) the amount of the loans received for attendance 
by such institution's current and former students who (i) 
enter repajonent during the fiscal year used for the calcula-
tion of the cohort default rate, and (ii) default before the 
end of the following fiscal year; exceeds 
"(B) 20 percent of the loans received for attendance 
by all the current and former students who enter repay-
ment during the fiscal year used for the calculation of 
the cohort default rate. 
"(4) FEE.—^A State may charge a fee to an institution of 
higher education that participates in the program under this 
part and is located in that State according to a fee structure, 
approved by the Secretary, that is based on the institution's 
cohort default rate and the State's risk of loss under this 
subsection. Such fee structure shall include a process by which 
an institution with a high cohort default rate is exempt from 
any fees under this paragraph if such institution demonstrates 
' 
to the satisfaction of the State that exceptional mitigating 
circumstances, as determined by the State and approved by 
the Secretary, contributed to its cohort default rate.", 
(b) EFFECTIVE DATE.—The amendment made by this section 
20 use 1078 
shall take effect on October 1,1994. 
°°^ 
Subtitle D—Group Health Plans 
SEC. 4301. STANDARDS FOR GROUP HEALTH PLAN COVERAGE. 
(a) IN GENERAL.—Part 6 of subtitle B of title I of the Employee 
Retirement Income Security Act of 1974 (29 U.S.C. 1161 et seq.) 
is amended by adding at the end the following new section: 
107 STAT. 372 
PUBLIC LAW 103-66—AUG. 10, 1993 
"ADDITIONAL STANDARDS FOR GROUP HEALTH PLANS 
2
9 use 1169. 
"SEC. 609. 
(a) GROUP HEALTH PLAN COVERAGE PURSUANT TO 
MEDICAL CHILD SUPPORT ORDERS.— 
"(1) IN GENERAL.—^Each group health plan shall provide 
benefits in accord£ince with the applicable reqmrements of any 
qualified medical child support order. 
"(2) DEFINITIONS.—For purposes of this subsection— 
"(A) QUALIFIED MEDICAL CHILD SUPPORT ORDER.—The 
term 'qualified medical child support order* means a medi-
cal child support order— 
"(i) which creates or recognizes the existence of 
an alternate recipient's right to, or assigns to an alter-
nate recipient the right to, receive benefits for which 
a participant or beneficiary is eligible under a group 
health plan, and 
"(ii) with respect to which the requirements of 
paragraphs (3) and (4) are met. 
"(B) MEDICAL CHILD SUPPORT ORDER.—The term 'medi-
cal child support order' means any judgment, decree, or 
order (including approval of a settlement agreement) issued 
by a court of competent jurisdiction which— 
"(i) provides for child support with respect to a 
child of a participant under a group health plan or 
provides for health benefit coverage to such a child, 
IS made pursuant to a State domestic relations law 
(including a community property law), and relates to 
benefits under such plan, or 
"(ii) enforces a law relating to medical child sup-
port described in section 1908 of the Social Security 
Act (as added by section 13822 of the Omnibus Budget 
Reconciliation Act of 1993) with respect to a group 
health plan. 
"(C) 
ALTERNATE 
RECIPIENT.—The 
term 
'alternate 
recipient' means any child of a participant who is recog-
nized under a medical child support order as having a 
right to enrollment under a group health plan with respect 
to such participant. 
"(3) INFORMATION TO BE INCLUDED IN QUALIFIED ORDER.— 
A medical child support order meets the requirements of this 
paragraph only if such order clearly specifies— 
"(A) the name and the last known mailing address 
(if any) of the participant and the name and mailing 
address of each alternate recipient covered by the order, 
"(B) a reasonable description of the type of coverage 
to be provided by the plan to each such alternate recipient, 
or the manner in which such type of coverage is to be 
determined, 
"(C) the period to which such order applies, and 
"(D) each plan to which such order applies. 
"(4) RESTRICTION ON NEW TYPES OR FORMS OF BENEFITS.— 
A medical child support order meets the requirements of this 
paragraph only if such order does not require a plan to provide 
any type or form of benefit, or any option, not otherwise pro-
vided under the plan, except to the extent necessary to meet 
the requirements of a law relating to medical child support 
described in section 1908 of the Social Security Act (as added 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 373 
by section 13822 of the Omnibus Budget Reconciliation Act 
of 1993). 
"(5) PROCEDURAL REQUIREMENTS.— 
"(A) TIMELY NOTIFICATIONS AND DETERMINATIONS.—In 
the case of any medical child support order received by 
a group health plan— 
"(i) the plan administrator shall promptly notify 
the participant and each alternate recipient of the 
receipt of such order and the plan's procedures for 
determining whether medical child support orders are 
qualified medical child support orders, and 
"(ii) within a reasonable period after receipt of 
such order, the plsm administrator shall determine 
whether such order is a qualified medical child support 
order and notify the participant and each alternate 
recipient of such determination. 
"(B) ESTABLISHMENT OF PROCEDURES FOR DETERMINING 
QUALIFIED STATUS OF ORDERS.—^Each group health plan 
shall establish reasonable procedures to determine whether 
medical child support orders are qualified medical child 
support orders and to administer the provision of benefits 
under such qualified orders. Such procedures— 
"(i) shall be in writing, 
"(ii) shall provide for the notification of each person 
specified in a medical child support order as eligible 
to receive benefits imder the plan (at the address 
included in the medical child support order) of such 
procedures promptly upon receipt by the plan of the 
medical child support order, and 
"(iii) shall permit an alternate recipient to des-
ignate a representative for receipt of copies of notices 
that are sent to the alternate recipient with respect 
to a medical child support order. 
"(6) ACTIONS TAKEN BY FIDUCIARIES.—If a plan fiduciary 
acts in accordance with part 4 of this subtitle in treating 
a medical child support order as being (or not being) a qualified 
medical child support order, then the plan's obligation to the 
participant and each alternate recipient shall be discharged 
to the extent of any pa3mient made pursuant to such act of 
the fiduciary. 
"(7) TREATMENT OF ALTERNATE RECIPIENTS.— 
"(A) TREATMENT AS BENEFICIARY GENERALLY.—A per-
son who is an alternate recipient under a qualified medical 
child support order shall be considered a beneficiary imder 
the plan for purposes of any provision of this Act. 
"(B) 
TREATMENT AS PARTICIPANT FOR PURPOSES OF 
REPORTING AND DISCLOSURE REQUIREMENTS.—^A person who 
is an alternate recipient imder any medical child support 
order shall be considered a participant under the plan 
for purposes of the reporting and disclosure requirements 
of part 1. 
"(8) DIRECT PROVISION OF BENEFITS PROVIDED TO ALTER-
NATE RECIPIENTS.—^Any payment for benefits made by a group 
health plan pursuant to a medical child support order in 
reimbursement for expenses paid by an alternate recipient or 
an alternate recipient's custodial parent or legal guardian shall 
107 STAT. 374 
PUBLIC LAW 103-66—AUG. 10, 1993 
be made to the alternate recipient or the alternate recipient's 
custodial parent or legal guardian. 
"(b) RIGHTS OF STATES WITH RESPECT TO GROUP HEALTH PLANS 
WHERE PARTICIPANTS OR BENEFICIARIES THEREUNDER ARE EUGIBLE 
FOR MEDICAID BENEFITS.— 
"(1) COMPLIANCE BY PLANS WITH ASSIGNMENT OF RIGHTS.— 
A group health plan shall provide that payment for benefits 
with respect to a participant under the plan will be made 
in accordance with any assignment of rights made by or on 
behalf of such participant or a beneficiary of the participant 
as reqtured by a State plan for medical assistance approved 
under title XIX of the Social Security Act pursuant to section 
1912(aXl)(A) of such Act (as in effect on the date of the enact-
ment of the Omnibus Budget Reconciliation Act of 1993). 
"(2) 
ENROLLMENT AND PROVISION OF BENEFITS WITHOUT 
REGARD TO MEDICAID ELIGIBILITY.—A group health plan shall 
provide that, in enrolling an individual as a participant or 
beneficiary or in determining or making any payments for 
benefits of an individual as a participant or beneficiary, the 
fact that the individual is eligible for or is provided medical 
assistance imder a State plan for medical assistance approved 
under title XIX of the Social Seciuity Act will not be taken 
into account. 
"(3) ACQUISITION BY STATES OF RIGHTS OF THIRD PARTIES.— 
A group health plan shall provide that, to the extent that 
payment has been made under a State plan for medical assist-
ance approved under title XIX of the Social Security Act in 
any case in which a group health plan has a legal liability 
to make pa3nnent for items or services constituting such assist-
ance, payment for benefits iinder the plan will be made in 
accordance with any State law which provides that the Stete 
has acquired the rights with respect to a participant to such 
payment for such items or services. 
"(c) GROUP HEALTH PLAN COVERAGE OF DEPENDENT CHILDREN 
IN CASES OF ADOPTION.— 
"(1) 
COVERAGE EFFECTIVE UPON PLACEMENT FOR ADOP-
TION.—In any case in which a group health plan provides 
coverage for dependent children of participants or beneficiaries, 
such plan shall provide benefits to dependent children placed 
with participants or beneficiaries for adoption under the same 
terms and conditions as apply in the case of dependent children 
who are natural children of participants or beneficiaries under 
the plan, irrespective of whether the adoption has become final. 
"(2) RESTRICTIONS BASED ON PREEXISTING CONDITIONS AT 
TIME OF PLACEMENT FOR ADOPTION PROHIBITED.—^A group 
health plan may not restrict coverage under the plan of any 
dependent child adopted by a participant or beneficiary, or 
placed with a participant or beneficiary for adoption, solely 
on the basis of a preexisting condition of such child at the 
time that such child would otherwise become eligible for cov-
erage under the plan, if the adoption or placement for adoption 
occurs while the participant or beneficiary is eligible for cov-
erage under the plan. 
"(3) DEFINITIONS.—For purposes of this subsection— 
"(A) CHILD.—^The term 'child' means, in connection with 
any adoption, or placement for adoption, of the child, an 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 375 
individual who has not attained age 18 as of the date 
of such adoption or placement for adoption. 
"(B) PLACEMENT FOR ADOPTION.—The term 'placement', 
or being 'placed', for adoption, in connection with any place-
ment for adoption of a child with any person, means the 
assumption and retention by such person of a legal obliga-
tion for total or partial support of such child in anticipation 
of adoption of such child. The child's placement with such 
person terminates upon the termination of such legal 
obligation. 
"(d) CONTINUED COVERAGE OF COSTS OF A PEDIATRIC VACCINE 
UNDER GROUP HEALTH PLANS.—^A group health plan may not reduce 
its coverage of the costs of pediatric vaccines (as defined imder 
section 1928(hX6) of the Social Security Act as amended by section 
13830 of the Omnibus Budget Reconciliation Act of 1993) below 
the coverage it provided as of May 1,1993. 
**(e) REGULATIONS.—Any regulations prescribed under this sec-
tion shall be prescribed by the Secretary of Labor, in consultation 
with the Secretary of Health and Human Services.". 
(b) CONFORMING AMENDMENTS TO ERISA To ENSURE COMPLI-
ANCE WITH MEDICARE AND MEDICAID COVERAGE DATA BANK 
REQUIREMENTS.— 
(1) REPORTS TO DATA BANK.—Section 101 of the Employee 
Retirement Income Security Act of 1974 (29 U.S.C. 1021) is 
amended— 
(A) by redesignating subsection (f) as subsection (g); 
and 
(B) by inserting after subsection (e) the following new 
subsection: 
"(f) INFORMATION NECESSARY TO COMPLY WITH MEDICARE AND 
MEDICAID COVERAGE DATA BANK REQUIREMENTS.— 
"(1) PROVISION OF INFORMATION BY GROUP HEALTH PLAN 
UPON REQUEST OF EMPLOYER.— 
"(A) IN GENERAL.—An employer shall comply with the 
applicable requirements of section 1144 of the Social Secu-
rity Act (as added by section 13581 of the Omnibus Budget 
Reconciliation Act of 1993). Upon the request of an 
employer maintaining a group health plan, any plan spon-
sor, plan administrator, insurer, third-party administrator, 
or other person who maintains under the plan the informa-
tion necessary to enable the employer to comply with the 
applicable requirements of section 1144 of the Social Secu-
rity Act shall, in such form and manner as may be pre-
scribed in regulations of the Secretary (in consultation 
with the Secretary of Health and Human Services), provide 
such information (not inconsistent with paragraph (2))— 
"(i) in the case of a request by an employer 
described in subparagraph (B) and a plan that is not 
a multiemi)loyer plan or a component of an arrange-
ment described in subparagraph (C), to the Medicare 
and Medicaid Coverage Data Bank; 
"(ii) in the case of a plan that is a multiemployer 
plan or is a component of an arrangement described 
in subparagraph (C), to the employer or to such Data 
Bank, at the option of the plan; and 
"(iii) in any other case, to the employer or to such 
Data Bank, at the option of the employer. 
107 STAT. 376 
PUBLIC LAW 103-66—AUG. 10, 1993 
**(B) EMPLOYER DESCRIBED.—^An employer is described 
in this subparagraph for any calendar year if such employer 
normally employed fewer than 50 employees on a typical 
business day during such calendar year. 
"(C) 
ARRANGEMENT 
DESCRIBED.—An 
arrangement 
described in this subparagraph is any arrangement in 
which two or more employers contribute for the purpose 
of providing group health plan coverage for employees. 
"(2) INFORMATION NOT REQUIRED TO BE PROVIDED.—Any 
plan sponsor, plan administrator, insurer, third-party adminis-
trator, or other person described in paragraph (1)(A) (other 
than the employer) that maintains the information imder the 
plan shall not provide to an employer in order to satisfy the 
requirements of section 1144 of the Social Security Act, and 
shall not provide to the Data Bank imder such section, informa-
tion that pertains in any way to— 
"(A) the health status of a participant, or of the partici-
pant's spouse, dependent child, or other beneficiary, 
"(B) the cost of coverage provided to any participant 
or beneficiary, or 
"(C) any limitations on such coverage specific to any 
participant or beneficiary. 
"(3) REGULATIONS.—^The Secretary may, in consultation 
with the Secretary of Health and Human Services, prescribe 
such regulations as are necessary to carry out this subsection.", 
(c) CONFORMING AMENDMENTS.— 
(1) CIVIL ACTIONS.—Section 502(a) of such Act (29 U.S.C. 
1132(a)) is amended— 
(A) in paragraph (5), by striking "or" at the end; 
(B) in paragraph (6), by striking the period and insert-
ing a semicolon; and 
(C) by adding at the end the following new paragraphs: 
"(7) by a State to enforce compliance with a qualified medi-
cal child support order (as defined in section 609(aX2)(A)); 
or 
"(8) by the Secretary, or by an employer or other person 
) 
referred to in section 101(f)(1), (A) to enjoin any act or practice 
which violates subsection (f) of section 101, or (B) to obtain 
appropriate equitable relief (i) to redress such violation or (ii) 
to enforce such subsection.". 
(2) CIVIL PENALTY.—Section 502(c) of such Act (29 U.S.C. 
1132(c)) is amended by adding at the end the following new 
paragraph: 
"(4) The Secretary may assess a civil penalty of not more 
than $1,000 for each violation by any person of section lOl(fXl). 
For purposes of this paragraph, each violation described in subpara-
graph (A) with respect to any single participant, and each violation 
described in subparagraph (B) with respect to any single participant 
or beneficiary, shall be treated as a separate violation. The Sec-
retary and the Secretary of Health and Himian Services shall 
maintain such ongoing consultation as may be necessary and appro-
priate to coordinate enforcement imder this subsection with enforce-
ment under section 1144(c)(8) of the Social Security Act.". 
(3) JURISDICTION.—Section 502(e)(1) of such Act (29 U.S.C. 
1132(e)(1)) is amended— 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 377 
(A) in the first sentence, by striking "or 
fiduciary" 
and inserting "fiduciary, or any person referred to in section 
lOKfXl)"; and 
(B) in the second sentence, by striking "subsection 
(aXlXB)" and inserting "paragraphs (IXB) and (7) of sub-
section (a)". 
(4) EFFECT ON OTHER LAWS.—Section 514 of such Act (29 
U.S.C. 1144) is amended— 
(A) in subsection (bX7XD), by inserting ", qualified 
medical child support orders (within the meaning of section 
609(aX2XA)), and the provisions of law referred to in section 
609(aX2XBXii) to the extent enforced by qualified medical 
child support orders" before the period; and 
(B) by striking subsection (b)(8) and inserting the fol-
lowing: 
"(8) Subsection (a) of this section shall not be construed to 
preclude any State cause of action— 
"(A) with respect to which the State exercises its acquired 
rights under section 609(b)(3) with respect to a group health 
plan (as defined in section 607(1)), or 
"(B) for recoupment of payment with respect to items or 
services pursuant to a State plan for medical assistance 
approved imder title XIX of the Social Security Act which 
would not have been payable if such acquired rights had been 
executed before pa3anent with respect to such items or services 
by the group health plan."; 
(5) CLERICAL AMENDMENTS.— 
(A) The heading for part 6 of subtitle B of title I 
of such Act is amended to read as follows: 
"PART 6—GROUP HEALTH PLANS". 
(B) The table of contents in section 1 of such Act 
is amended— 
(i) by striking the item relating to the heading 
for part 6 of subtitle B of title I and inserting the 
following: 
"PART 6—GROUP HEALTH PLANS"; 
and 
(ii) by inserting after the item relating to section 
608 the following new item: 
"Sec. 609. Additional standards for group health plans.". 
(d) EFFECTIVE D A T E . — 
29 u s e 1021 
(1) IN GENERAL.—^The amendments made by this section "°*®-
shall take effect on the date of the enactment of this Act. 
(2) 
PLAN AMENDMENTS NOT REQUIRED UNTIL JANUARY 1, 
1994.—^Any amendment to a plan required to be made by an 
amendment made by this section shall not be required to be 
made before the first plan year beginning on or after January 
1,1994, if— 
(A) during the period after the date before the date 
of the enactment of this Act and before such first plan 
year, the plan is operated in accordance with the require-
ments of the amendments made by this section, and 
107 STAT. 378 
PUBLIC LAW 103-66—AUG. 10, 1993 
(B) such plan amendment applies retroactively to the 
period after the date before the date of the enactment 
of this Act and before such first plan year. 
A plan shall not be treated as failing to be operated in accord-
ance with the provisions of the plan merely because it operates 
in accordance with this paragraph. 
Subtitle E—^Fee Increase 
Exports and 
SEC. 4401. FEE INCREASE. 
'"^ ^ ^ 
The Tea Importation Act (21 U.S.C. 41 et seq.) is amended— 
(1) by inserting the 4th undesignated paragraph iinder 
the center heading "FOOD AND DRUG ADMINISTRATION" of title 
II of the Labor-Federal Security Appropriation Act, 1942 (21 
U.S.C. 46a) as a new section 13 of the Tea Importation Act, 
and 
(2) by amending such new section 13 to read as follows: 
21 use 46a. 
"SEC. 13. No tea or merchandise described as tea shall be 
examined for importation into the United States, or released by 
the Customs Service, under the Tea Importation Act vmless the 
importer or consignee of such tea or merchandise has paid, before 
the examination, a fee in an amount equal to— 
"(1) 10 cents for each hundred weight or fraction thereof 
of the tea or merchandise; or 
"(2) the approximate cost of the examinations; 
whichever amount is less. Such fee shall be deposited into the 
Treasury of the United States as miscellaneous receipts." 
TITLE V—TRANSPORTATION AND 
PUBLIC WORKS PROVISIONS 
SEC. 5001. RECREATIONAL USER FEES. 
(a) IN GENERAL.—Section 210 of the Flood Control Act of 1968 
(16 U.S.C. 460d-3) is amended— 
(1) by striking "SEC. 210. No entrance" and inserting the 
following: 
'^EC. 210. RECREATIONAL USER FEES. 
"(a) PROHIBITION ON ADMISSIONS FEES.—No entrance"; 
(2) by striking the second sentence; and 
(3) by adding at the end the following new subsection: 
"(b) FEES FOR USE OF DEVELOPED RECREATION SITES AND 
FACILITIES.— 
"(1) ESTABLISHMENT AND COLLECTION.—Notwithstanding 
section 4(b) of the Land and Water Conservation Fund Act 
of 1965 (16 U.S.C. 4601-6a(b)), the Secretary of the Army is 
authorized, subject to paragraphs (2) and (3), to establish and 
collect fees for the use of developed recreation sites and facili-
ties, including campsites, swimming beaches, and boat launch-
ing ramps but excluding a site or facility which includes only 
a boat launch ramp and a courtesy dock. 
"(2) 
EXEMPTION OF CERTAIN FACILITIES.-The Secretary 
shall not establish or collect fees under this subsection for 
the use or provision of drinking; water, wayside exhibits, roads, 
scenic drives, overlook sites, picnic tables, toilet facilities, sur-
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 379 
face water areas, undeveloped or lightly developed shoreland, 
or general visitor information. 
"(3) PER VEHICLE LIMIT.—The fee under this subsection 
for use of a site or facility (other than an overnight camping 
site or facility or any other site or facility at which a fee 
is charged for use of the site or facihty as of the date of 
the enactment of this paragraph) for persons entering the site 
or facility by private, noncommercial vehicle transporting not 
more than 8 persons (including the driver) shall not exceed 
$3 per day per vehicle. Such maximum amount may be adjusted 
annually by the Secretary for changes in the Consumer Price 
Index of All Urban Consumers published by the Bureau of 
Labor Statistics of the Department of Labor. 
"(4) DEPOSIT INTO TREASURY ACCOUNT.—All fees collected 
under this subsection shall be deposited into the Treasuiy 
accoimt for the Corps of Engineers established by section 4(i) 
of the Land and Water Conservation Fund Act of 1965 (16 
U.S.C. 4601-«a(i)).". 
(b) CONFORMING AMENDMENT FOR CAMPSITES.—Section 4(b) of 
the Land and Water Conservation Fund Act of 1965 (16 U.S.C. 
4601-6a(b)) is amended by striking the next to the last sentence. 
TITLE VI—COMMUNICATIONS LICENS-
ING AND SPECTRUM ALLOCATION IM-
PROVEMENT 
SEC. 6001. TRANSFER OF AUCTIONABLE FREQUENCIES. 
(a) 
AMENDMENT.—^The National 
Telecommunications 
and 
Information Administration Organization Act (47 U.S.C. 901 et 
seq.) is amended— 
(1) by striking the heading of part B and inserting the 
following: 
"PART C—SPECIAL AND TEMPORARY 
PROVISIONS"; 
(2) by redesignating sections 131 through 135 as sections 
151 through 155, respectively; and 
l7^T§r*qQ?4^ 
(3) by inserting after part A the following new part: 
USC 254r note 
106 Stat. 3542.' 
**PART B—TRANSFER OF AUCTIONABLE 
FREQUENCIES. 
"SEC. 111. DEFINITIONS. 
47 USC 921. 
''As used in this part: 
"(1) The term 'allocation' means an entry in the National 
Table of Frequency Allocations of a given frequency band for 
the purpose of its use by one or more radiocommunication 
services. 
"(2) The term 'assignment' means an authorization given 
to a station licensee to use specific frequencies or channels. 
"(3) The term 'the 1934 Act' means the Communications 
Act of 1934 (47 U.S.C. 151 et seq.). 
107 STAT. 380 
PUBLIC LAW 103-66—AUG. 10, 1993 
47 use 922. 
"SEC. 112. NATIONAL SPECTRUM ALLOCATION PLANNING. 
T h e Assistant Secretary and the Chairman of the Commission 
shall meet, at least biannually, to conduct joint spectrum planning 
with respect to the following issues: 
**(1) the extent to which licenses for spectrum use can 
be issued pursuant to section 309(j) of the 1934 Act to increase 
Federal revenues; 
**(2) the future spectrum requirements for public and pri-
vate uses, including State and local government public safety 
agencies; 
''(3) the spectrum allocation actions necessary to accommo-
date those uses; and 
"(4) actions necessary to promote the efficient use of the 
spectrum, including spectrum meuiagement techniques to pro-
mote increased shared use of the spectrum that does not cause 
harmful interference as a means of increasing commercieil 
access. 
47 use 923. 
"SEC. 113. IDENTIFICATION OF REALLOCABLE FREQUENCIES. 
Reports. 
«(a) IDENTIFICATION REQUIRED.—The Secretary shall, within 
18 months after the date of the enactment of the Omnibus Budget 
Reconciliation Act of 1993, prepare and submit to the President 
and the Congress a report identifying and recommending for 
reallocation bands of frequencies— 
"(1) that are allocated on a primary basis for Federal 
Government use; 
"(2) that are not required for the present or identifiable 
future needs of the Federal Government; 
''(3) that can feasibly be made available, as of the date 
of submission of the report or at any time during the next 
15 years, for use imder the 1934 Act (other than for Federal 
Government stations under section 305 of the 1934 Act); 
"(4) the transfer of which (from Federal Grovernment use) 
will not result in costs to the Federal Government, or losses 
of services or benefits to the public, that are excessive in 
relation to the benefits to the public that may be provided 
by non-Federal licensees; and 
"(5) that are most likely to have the greatest potential 
for productive uses and public benefits under the 1934 Act 
if allocated for non-Federal use. 
"(b) MINIMUM AMOUNT OF SPECTRUM RECOMMENDED.— 
"(1) IN GENERAL.—In accordance with the provisions of 
this section, the Secretary shall recommend for reallocation, 
for use other than by Federal Government stations under sec-
tion 305 of the 1934 Act (47 U.S.C. 305), bands of frequencies 
that in the aggregate span not less than 200 megahertz, that 
are located below 5 gigahertz, £uid that meet the criteria speci-
fied in paragraphs (1) through (5) of subsection (a). Such bands 
of frequencies shall include bands of frequencies, located below 
3 gigeihertz, that span in the aggregate not less than 100 
megaJiertz. 
"(2) MIXED USES PERMITTED TO BE COUNTED.—Bands of 
frequencies which a report of the Secretary under subsection 
(a) or (dXD recommends be partially retained for use by Federal 
(jrovemment stations, but which are also recommended to be 
reallocated to be made av£ulable imder the 1934 Act for use 
by non-Federal stations, may be counted toward the minimum 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 381 
spectrum required by paragraph (1) of this subsection, except 
that^ 
''(A) the bands of frequencies counted under this para-
graph may not count toward more than one-half of the 
minimums required by paragraph (1) of this subsection; 
"(B) a band of frequencies may not be counted under 
this paragraph imless uie assignments of the band to Fed-
eral Government stations under section 305 of the 1934 
Act (47 U.S.C. 305) are limited by geographic area, by 
time, or by other means so as to guarantee that the poten-
tial use to be made by such Federal Government stations 
is substantially less (as measured by geographic area, time, 
or otherwise) than the potential use to be made by non-
Federal stations; and 
''(C) the operational sharing permitted luder this para-
graph shall be subject to the interference regulations pre-
scribed by the Commission pursuant to section 305(a) of 
the 1934 Act and to coordination procedures that the 
Conunission and the Secretary shall jointly establish and 
implement to ensure against harmful interference. 
"(c) CRITERIA FOR IDENTIFICATION.— 
"(1) NEEDS OF THE FEDERAL GOVERNMENT.—In determining 
whether a band of frequencies meets the criteria specified in 
subsection (aX2), the Secretary shall— 
"(A) consider whether the band of frequencies is used 
to provide a communications service that is or could be 
available from a commercial provider or other vendor; 
"(B) seek to promote— 
"(i) the maximum practicable reliance on commer-
cially available substitutes; 
"(ii) the sharing of frequencies (as permitted under 
subsection (bX2)); 
"(iii) the development and use of new commimica-
tions technologies; and 
"(iv) the use of nonradiating communications sys-
tems where practicable; and 
"(C) seek to avoid— 
"(i) serious degradation of Federal (]rovemment 
services and operations; 
"(ii) excessive costs to the Federal Government 
and users of Federal Government services; and 
"(iii) excessive disruption of existing use of Federal 
Grovemment frequencies by amateur radio licensees. 
"(2) FEASIBILITY OF USE.—In determining whether a fre-
quency band meets the criteria specified in subsection (aX3), 
the Secretary shall— 
"(A) assume that the frequency will be assigned by 
the Commission under section 303 of the 1934 Act (47 
U.S.C. 303) within 15 years; 
"(B) assimie reasonable rates of scientific progress and 
growth of demand for telecommimications services; 
"(C) seek to include frequencies which can be used 
to stimiilate the development of new technologies; and 
"(D) consider the immediate and recurring costs to 
reestablish services displaced by the reallocation of spec-
trum. 
107 STAT. 382 
PUBLIC LAW 103-66—AUG. 10, 1993 
"(3) ANALYSIS OF BENEFITS.—In determining whether a 
band of frequencies meets the criteria specified in subsection 
(aX5), the Secretary shall consider— 
"(A) the extent to which equipment is or will be avail-
able that is capable of utilizing the band; 
"(B) the proximity of frequencies that are already 
assigned for commercial or other non-Federal use; 
"(C) the extent to which, in general, commercial users 
could share the frequency with amateur radio licensees; 
and 
"(D) the activities of foreign governments in making 
frequencies available for experimentation or commercicd 
assignments in order to support their domestic manufactur-
ers of equipment. 
*'(4) POWER AGENCY FREQUENCIES.— 
"(A) APPLICABILITY OF CRITERIA.—The criteria specified 
by subsection (a) shall be deemed not to be met for any 
purpose under this part with regard to any frequency 
assignment to, or any frequency assignment used by, a 
Federal power agency for the purpose of withdrawing that 
assignment. 
"(B) MIXED USE ELIGIBILITY.—^The frequencies assigned 
to any Federal power agency may only be eligible for mixed 
use under subsection (bX2) in geographically separate 
areas, but in those cases where a frequency is to be shared 
by an affected Federal power agency and a non-Federal 
user, such use by the non-Federal user shall not cause 
harmful interference to the afTected Federal power agency 
or adversely affect the reliability of its power system. 
"(C) DEFINITION.—^As used in this paragraph, the term 
Tederal power agenc/ means the Tennessee Valley Author-
ity, the Bonneville Power Administration, the Western Area 
Power Administration, the Southwestern Power Adminis-
tration, the Southeastern Power Administration, or the 
" 
Alaska Power Administration. 
"(5) LIMITATION ON REALLOCATION.—None of the fre-
quencies recommended for reallocation in the reports required 
by this subsection shall have been recommended, prior to the 
date of enactment of the Omnibus Budget Reconciliation Act 
of 1993, for reallocation to non-Federal use by international 
agreement. 
"(d) PROCEDURE FOR IDENTIFICATION OF REALLOCABLE BANDS 
OF FREQUENCIES.— 
PH.biic 
"(1) SUBMISSION OF PRELIMINARY IDENTIFICATION TO CON-
iL°^!^f 
GRESS.—Within 6 months after the date of the enactment of 
the Omnibus Budget Reconciliation Act of 1993, the Secretary 
shall prepare, make publicly available, and submit to the Presi-
dent, the Congress, and the Commission a report which makes 
a preliminary identification of reallocable bands of frequencies 
which meet the criteria established by this section. 
"(2) 
PUBUC 
COMMENT.—The Secretary 
shall 
provide 
interested persons with the opportunity to submit, within 90 
days after the date of its publication, written comment on 
the preliminary report required by paragraph (1). The Secretary 
shall immediately transmit a copy of any such comment to 
the Commission. 
Reports. 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 383 
"(3) 
COMMENT AND RECOMMENDATIONS FROM 
COMMIS-
SION.—^The Commission shall, within 90 days after the conclu-
sion of the period for comment provided pursuant to paragraph 
(2), submit to the Secretary the Commission's analysis of such 
comments 
and 
the 
Commission's 
recommendations 
for 
responses to such comments, together with such other com-
ments and recommendations as the Commission deems appro-
priate. 
"(4) DIRECT DISCUSSIONS.—The Secretary shall encourage 
and provide opportunity for direct discussions among commer-
cial representatives and Federal Grovemment users of the spec-
trum to aid the Secretary in determining which frequencies 
to recommend for reallocation. The Secretary shall provide 
notice to the public and the Commission of any such discussions, 
including the name or names of any businesses or other persons 
represented in such discussions. A representative of the 
Commission (and of the Secretary at the election of the Sec-
retary) shall be permitted to attend any such discussions. The 
Secretary shall provide the public and the Commission with 
an opportunity to comment on the results of any such discus-
sions prior to the submission of the final report required by 
subsection (a). 
"(e) TIMETABLE FOR REALLOCATION AND LIMITATION.— 
"(1) TIMETABLE REQUiRED.^The Secretary shall, as part 
President. 
of the reports required by subsections (a) and (dXl), include 
a timetable that recommends effective dates by which the Presi-
dent shall withdraw or limit assignments of the frequencies 
specified in such reports. 
"(2) EXPEDITED REALLOCATION.— 
"(A) REQUIRED REALLOCATION.—^The Secretary shall, 
as part of the report required by subsection (dXD, specifi-
cally identify and recommend for immediate reallocation 
bands of frequencies that in the aggregate span not less 
than 50 megahertz, that meet the criteria described in 
subsection (a), and that can be made available for 
reallocation immediately upon issuance of the report 
required by subsection (dXl). Such bands of frequencies 
shall include bands of frequencies, located below 3 
gigahertz, that in the aggregate span not less than 25 
megahertz. 
"(B) 
PERMITTED REALLOCATION.—The Secretary 
may, 
as part of such report, identify and recommend bands of 
frequencies for immediate reallocation for a mixed use 
piursuant to subsection (b)(2), but such bands of frequencies 
may not count toward the minimums required by subpara-
graph (A). 
"(3) 
DELAYED EFFECTIVE DATES.—In setting the rec-
ommended delayed effective dates, the Secretary shall— 
"(A) consider the need to reallocate bands of frequencies 
as early as possible, taking into account the requirements 
of paragraphs (1) and (2) of section 115(b); 
"(B) be based on the useful remaining life of equipment 
that has been purchased or contracted for to operate on 
identified frequencies; 
"(C) consider the need to coordinate frequency use with 
other nations; and 
107 STAT. 384 
PUBLIC LAW 103-66—AUG. 10, 1993 
''(D) take into account the relationship between the 
costs to the Federal Government of changing to different 
frequencies and tiie benefits that may be obtained from 
commercial and other non-Federal uses of the reeussigned 
frequencies. 
President. 
*«£€. 114. WITHDRAWAL OR LIMITATION OF ASSIGNMENT TO FED-
47 use 924. 
ERAL GOVERNMENT STATIONS. 
"(a) IN GENERAL.—The President shall— 
"(1) within 6 months after receipt of a report by the Sec-
retary under subsection (a) or (dXD of section 113, withdraw 
the assignment to a Federal Glovemment station of any fre-
quency 
which 
the 
report 
recommends 
for 
immediate 
reallocation; 
"(2) within either such 6-month period, limit the assign-
ment to a Federal Grovemment station of any frequency which 
the report recommends be made immediately available for 
mixed use under section 113(b)(2); 
"(3) by the delayed effective date recommended by the 
Secretary under section 113(e) (except as provided in subsection 
(bX4) of this section), withdraw or limit the assignment to 
a Federal Government station of any frequency which the report 
recommends be reallocated or made available for mixed use 
on such delayed effective date; 
''(4) assign or reassign other frequencies to Federal Govern-
ment stations as necessary to adjust to such withdrawal or 
limitation of assignments; and 
"(5) transmit a notice £uid description to the Commission 
and each House of Congress of the actions taken under this 
subsection. 
"(b) EXCEPTIONS.— 
"(1) AUTHORITY TO SUBSTITUTE.—If the President deter-
mines that a circumstance described in paragraph (2) exists, 
the President— 
"(A) may substitute an alternative frequency or fre-
quencies for the frequency that is subject to such deter-
mination and withdraw (or limit) the assignment of that 
alternative frequency in the manner required by subsection 
(a); and 
"(B) shall submit a statement of the reasons for taking 
the action described in subparagraph (A) to the Commis-
sion, Committee on Energy and Commerce of the House 
of Representatives, and the Committee on Commerce, 
Science, and Transportation of the Senate. 
"(2) GROUNDS FOR SUBSTITUTION.—^For purposes of para-
graph (1), the following circumstances are described in this 
paragraph: 
"(A) the reassignment would seriously jeopardize the 
national defense interests of the United Stetes; 
"(6) the frequency proposed for reassignment 
is 
uniquely suited to meeting important governmental needs; 
"(C) the reassignment would seriously jeopardize public 
health or safety; 
"(D) the reassignment will result in costs to the Federal 
Government that are excessive in relation to the benefits 
that may be obtained from commercial or other non-Federal 
uses of the reassigned frequency; or 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 385 
"(E) the reassignment will disrupt the existing use 
of a Federal Government band of frequencies by amateur 
radio licensees. 
"(3) CRITERIA FOR SUBSTITUTED FREQUENCIES.—For pur-
poses of paragraph (1), a frequency may not be substituted 
for a frequency identified and recommended by the report of 
the Secretary under section 113(a) unless the substituted fre-
quency also meets each of the criteria specified by section 
113(a). 
"(4) DELAYS IN IMPLEMENTATION.—If the President deter-
mines that any action cannot be completed by the delayed 
effective date recommended by the Secretary pursuant to sec-
tion 113(e), or that such an action by such date would result 
in a frequency being unused as a consequence of the Commis-
sion's plan under section 115, the President may— 
"(A) withdraw or limit the assignment to Federal 
Government stations on a later date that is consistent 
with such plan, except that the President shall notify each 
committee specified in paragraph (IXB) and the Commis-
sion of the reason that withdrawal or limitation at a later 
date is required; or 
"(B) substitute alternative frequencies pursuant to the 
provisions of this subsection. 
"SEC. 116. DISTRTOUTIGN OF FREQUENCIES BY THE COMMISSION. 
47 USC 925. 
"(a) ALLOCATION AND ASSIGNMENT OF IMMEDIATELY AVAILABLE Regulations. 
FREQUENCIES.—^With respect to the frequencies made available for 
immediate reallocation pursuant to section 113(e)(2), the Commis-
sion, not later than 18 months after the date of enactment of 
the Omnibus Budget Reconciliation Act of 1993, shall issue regula-
tions to allocate such frequencies and shall propose regulations 
to assign such frequencies. 
"(b) ALLOCATION AND ASSIGNMENT OF REMAINING AVAILABLE 
FREQUENCIES.—^With respect to the frequencies made available for 
reallocation pursuant to section 113(eX3), the Commission shall, 
not later than 1 year after receipt of the report required by section 
113(a), prepare, submit to the President and the Congress, and 
implement, a plan for the allocation and assignment under the 
1934 Act of such frequencies. Such plan shall— 
"(1) not propose the immediate allocation and assignment 
of all such frequencies but, taking into account the timetable 
recommended by the Secretary pursuant to section 113(e), shall 
propose— 
"(A) gradually to allocate and assign the frequencies 
remaining, after making the reservation required by 
subparagraph (B), over the course of 10 years oeginning 
on the date of submission of such plan; and 
"(B) to reserve a significant portion of such frequencies 
for allocation and assignment beginning after the end of 
such 10-year period; 
"(2) contain appropriate provisions to ensure— 
"(A) the availability of frequencies for new technologies 
and services in accordance with the policies of section 7 
of the 1934 Act (47 U.S.C. 157); 
"(B) the availability of frequencies to stimulate the 
development of such technologies; and 
107 STAT. 386 
PUBLIC LAW 103-66—AUG. 10, 1993 
"(C) the safety of life and property in accordance with 
the policies of section 1 of the 1934 Act (47 U.S.C. 151); 
"(3) address (A) the feasibility of reedlocating portions of 
the spectrum from current commercial and other non-Federal 
uses to provide for more efficient use of the spectnmi, and 
(B) innovation and marketplace developments that may affect 
the relative efficiencies of different spectrum allocations; 
"(4) not prevent the Commission from allocating fre-
quencies, and assigning licenses to use frequencies, not included 
in the plan; and 
"(5) not preclude the Commission from making changes 
to the plan in future proceedings. 
47 use 926. 
«SEC. 116. AUTHORITY TO RECOVER REASSIGNED FREQUENCIES. 
"(a) AUTHORITY OF PRESIDENT.—Subsequent to the withdrawal 
of assignment to Federal Government stations pursuant to section 
114, the President may reclaim reassigned frequencies for reassign-
ment to Federal Government stations in accordance with this sec-
tion. 
President. 
«(b) PROCEDURE FOR RECLAIMING FREQUENCIES.— 
"(1) UNALLOCATED FREQUENCIES.—If the frequencies to be 
reclaimed have not been allocated or assigned bv the Commis-
sion pursuant to the 1934 Act, the President shall follow the 
procedures for substitution of frequencies established by section 
114(b) of this part. 
"(2) ALLOCATED FREQUENCIES.—^If the frequencies to be 
reclaimed have been allocated or assigned by the Commission, 
the President shall follow the procedures for substitution of 
frequencies established by section 114(b) of this part, except 
that the statement required by section 114(b)(lXB) shall 
include— 
"(A) a timetable to accommodate an orderly transition 
for licensees to obtain new frequencies and equipment nec-
essary for its utilization; and 
"(B) an estimate of the cost of displacing spectrum 
users licensed by the Commission. 
"(c) COSTS OF RECLAIMING FREQUENCIES.—The Federal Govern-
ment shall bear all costs of reclaiming frequencies pursuant to 
this section, including the cost of e(|iupment which is rendered 
unusable, the cost of relocating operations to a different frequency, 
and any other costs that are directly attributable to the reclaiming 
of the frequency pursuant to this section, and there are authorized 
to be appropriated such sums as may be necessary to carry out 
the purposes of this section. 
"(d) 
EFFECTIVE 
DATE OF RECLAIMED 
FREQUENCIES.—The 
Commission shall not withdraw licenses for any reclaimed fre-
quencies until the end of the fiscal year following the fiscal year 
in which a statement under section 114(bXlXB) pertaining to such 
frequencies is received by the Commission. 
"(e) EFFECT ON OTHER LAW.—^Nothing in this section shall 
be construed to limit or otherwise £dfect the authority of the Presi-
dent under section 706 of the 1934 Act (47 U.S.C. 606). 
47 use 927. 
«SEC. 117. EXISTING 
ALLOCATION AND TRANSFER 
AUTHORITY 
RETAINED. 
"(a) ADDITIONAL REALLOCATION.—Nothing in this part prevents 
or limits additional reallocation of spectrum from the Federal 
Government to other users. 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 387 
"(b) IMPLEMENTATION OF NEW TECHNOLOGIES AND SERVICES.— 
Notwithstanding any other provision of this part— 
"(1) the Secretary may, consistent with section 104(e) of 
this Act, at any time allow frequencies allocated on a primary 
basis for Federal Grovemment use to be used by non-Federal 
licensees on a mixed-use basis for the purpose of facilitating 
the prompt implementation of new technologies or services 
and for other purposes; and 
"(2) the (Commission shall make any allocation and licens-
ing decisions with respect to such frequencies in a timely man-
ner and in no event later than the date required by section 
7ofthel934Act.". 
(b) CONFORMING AMENDMENT TO ENSURE COLLECTION OF FCC 
FEES.^Section 104 of the National Telecommunications 
and 
Information Administration Organization Act (47 U.S.C. 903) is 
amended by adding at the end the following new subsection: 
"(e) 
PROOF OF COMPLIANCE WITH FCC 
LICENSING REQUIRE-
MENTS.— 
"(1) AMENDMENT TO MANUAL REQUIRED.—Within 90 days 
after the date of enactment of this subsection, the Secretary 
and the NTIA shall amend the spectrum management docu-
ment described in subsection (a) to require that— 
"(A) no person or entity (other than an agency or 
instrumentality of the United States) shall be permitted, 
after 1 year after such date of enactment, to operate a 
radio station utilizing a frequency that is authorized for 
the use of government stations pursuant to section 
103(bX2XA) of this Act for any non-government application 
unless such person or entitv has submitted to the NTIA 
proof, in a form prescribed by such manual, that such 
person or entity has obtained a license from the Commis-
sion; and 
"(B) no person or entity (other than an agency or 
instrumentality of the United States) shall be permitted, 
after 1 year aft«r such date of enactment, to utilize a 
radio station belonging to the United States for any non-
government application unless such person or entity has 
submitted to the NTIA proof, in a form prescribed by 
such manual, that such person or entity has obtained a 
license from the Commission. 
"(2) RETENTION OF FORMS.—The NTIA shall maintain on 
file the proofs submitted under paragraph (1), or facsimiles 
thereof. 
"(3) CERTIFICATION.—Within 1 year after the date of enact-
ment of this subsection, the Secretary and the NTIA shall 
certify to the Committee on Energy and Commerce of the 
House of Representatives and the (Committee on Commerce, 
Science, and Transportation of the Senate that— 
"(A) the amendments required by paragraph (1) have 
been accomplished; and 
"(B) the reqtiirements of subparagraphs (A) and (B) 
of such paragraph are being enforced.". 
SEC. 6002. AUTHORITY TO USE COMPETITIVE BIDDING. 
(a) USE OF COMPETITIVE BIDDING.—Section 309 of the Commu-
nications Act of 1934 (47 U.S.C. 309) is amended by adding at 
the end the following new subsection: 
107 STAT. 388 
PUBLIC LAW 103-66—AUG. 10, 1993 
Regulations. 
"(j) USE OF COMPETITIVE BIDDING.— 
"(1) GENERAL AUTHORITY.—If mutually exclusive applica-
tions are accepted for filing for any initial license or construc-
tion permit which will involve a use of the electromagnetic 
spectrum described in paragraph (2), then the Commission 
shall have the authority, subject to paragraph (10), to grant 
such license or permit to a qualified applicant through the 
use of a system of competitive bidding that meets the require-
ments of this subsection. 
"(2) USES TO WHICH BIDDING MAY APPLY.—A use 
of 
the 
electromagnetic spectrum is described in this paragraph if the 
Commission determines that— 
"(A) the principal use of such spectrum will involve, 
or is reasonably likely to involve, the licensee receiving 
compensation from subscribers in return for which the 
licensee— 
"(i) enables those subscribers to receive commu-
nications signals that are transmitted utilizing fre-
quencies on which the Ucensee is licensed to operate; 
or 
"(ii) enables those subscribers to transmit directly 
communications signals utilizing frequencies on which 
the licensee is licensed to operate; and 
"(B) a system of competitive bidding will promote the 
objectives described in paragraph (3). 
"(3) 
DESIGN OF SYSTEMS OF COMPETITIVE BIDDING.—For 
each class of licenses or permits that the Commission grants 
through the use of a competitive bidding system, the Commis-
sion shall, by regulation, establish a competitive bidding meth-
odology. The Commission shall seek to design and test multiple 
alternative methodologies imder appropriate circumstances. In 
identifying classes of licenses and permits to be issued by 
competitive 
bidding, 
in 
specifying 
eligibility 
and 
other 
characteristics of such licenses and permits, and in designing 
the methodologies for use under this subsection, the Commis-
sion shall include safeguards to protect the public interest 
in the use of the spectrum and shall seek to promote the 
purposes specified in section 1 of this Act and the following 
objectives: 
"(A) the development and rapid deployment of new 
technologies, products, and services for the benefit of the 
public, including those residing in rural areas, without 
administrative or judicial delays; 
"(B) promoting economic opportunity and competition 
and ensuring that new and innovative technologies are 
readily accessible to the American people by avoiding exces-
sive concentration of licenses and by (Usseminating licenses 
among a wide variety of applicants, including small 
businesses, rural telephone companies, and businesses 
owned by members of minority groups and women; 
"(C) recovery for the public of a portion of the value 
of the public spectrum resource made available for commer-
cial use and avoidance of unjust enrichment through the 
methods employed to award uses of that resource; and 
"(D) efficient and intensive use of the electromagnetic 
spectrum. 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 389 
"(4) CONTENTS OF REGULATIONS.—^In prescribing regula-
tions pursuant to paragraph (3), the Commission shall— 
"(A) consider alternative payment schedules and meth-
ods of calculation, including lump sums or guaranteed 
installment pa3mients, with or without royalty pa3anents, 
or other schedules or methods that promote the objectives 
described in paragraph (3XB), and combinations of such 
schedules and methods; 
"(B) include performance requirements, such as appro-
priate deadlines and penalties for performance failures, 
to ensiire prompt delivery of service to rural areas, to 
prevent stockpiling or warehousing of spectrum by licensees 
or permittees, and to promote investment in and rapid 
deplo)nnent of new technologies and services; 
"(C) consistent with the public interest, convenience, 
and necessity, the purposes of this Act, and the characteris-
tics of the proposed service, prescribe area designations 
and bandwidth assignments that promote (i) an equitable 
distribution of licenses and services among geographic 
areas, (ii) economic opportunity for a wide variety of 
applicants, including small businesses, rural telephone 
companies, and businesses owned by members of minority 
groups and women, and (iii) investment in and rapid 
deplo3nnent of new technologies and services; 
"(D) ensure that small businesses, rural telephone 
companies, and businesses owned by members of minority 
groups and women are given the opportunity to participate 
in the provision of spectrum-based services, and, for such 
purposes, consider the use of tax certificates, bidding pref-
erences, and other procedures; and 
"(E) 
require 
such 
transfer 
disclosures 
and 
antitraf!lcking restrictions and payment schedules as may 
be necessary to prevent ui^just enrichment as a result 
of the methods employed to issue licenses and permits. 
"(5) BIDDER AND LICENSEE QUALIFICATION.—NO person shall 
be permitted to participate in a system of competitive bidding 
piirsuant to this subsection unless such bidder submits such 
information and assurances as the Commission may require 
to demonstrate that such bidder's application is acceptable for 
filing. No license shall be granted to an applicant selected 
pursuant to this subsection unless the Commission determines 
that the applicant is qualified pursuant to subsection (a) and 
sections 308(b) and 310. Consistent with the objectives 
Regulations. 
described in paragraph (3), the Commission shall, by regulation, 
prescribe expedited procedures consistent with the procedures 
authorized by subsection (iX2) for the resolution of any substan-
tial and material issues of fact concerning qualifications. 
"(6) RULES OF CONSTRUCTION.—Nothing in this subsection, 
or in the use of competitive bidding, shall— 
"(A) alter spectrum allocation criteria and procedures 
established by the other provisions of this Act; 
"(B) limit or otherwise affect the requirements of sub-
section (h) of this section, section 301, 304, 307, 310, or 
706, or any other provision of this Act (other than sub-
sections (d)(2) and (e) of this section); 
107 STAT. 390 
PUBLIC LAW 103-66—AUG. 10, 1993 
**(C) diminish the authority of the Commission under 
the other provisions of this Act to regulate or reclaim 
spectrum licenses; 
*
*
(
D
) be construed to convey any rights, including any 
expectation of renewal of a license, that differ from the 
ri^ts that apply to other licenses within the same service 
that were not issued pursuant to this subsection; 
"(E) be construed to reUeve the Commission of the 
obligation in the public interest to continue to use engineer-
ing solutions, negotiation, threshold qualifications, service 
regulations, and other means in order to avoid mutual 
exclusivity in appUcation and licensing proceedings; 
"(F) be construed to prohibit the Commission from 
issuing nationwide, regional, or local Ucenses or permits; 
"(G) be construed to prevent the Commission from 
awarding licenses to those persons who make significant 
contributions to the development of a new telecommimi-
cations service or technology; or 
"(H) be construed to relieve any applicant for a license 
or permit of the obligation to pay charges imposed pursuant 
to section 8 of this Act. 
"(7) CONSIDERATION OF REVENUES IN PUBLIC INTEREST 
DETERMINATIONS.— 
"(A) CONSIDERATION PROHIBITED.—^In making a deci-
sion pursuant to section 303(c) to assign a band of fre-
quencies to a use for which licenses or permits will be 
issued pursuant to this subsection, and in prescribing regu-
lations pursuant to paragraph (4XC) of this subsection, 
the Commission may not base a finding of public interest, 
convenience, and necessity on the expectation of Federal 
revenues from the use of a system of competitive bidding 
under this subsection. 
"(B) CONSIDERATION LIMITED.—In prescribing regula-
tions pursuant to paragraph (4)(A) of this subsection, the 
Commission may not base a finding of public interest, 
convenience, and necessity solely or predominantly on the 
expectation of Federal revenues from the use of a system 
of competitive bidding under this subsection. 
"(C) CONSIDERATION OF DEMAND FOR SPECTRUM NOT 
AFFECTED.—^Nothing in this paragraph shall be construed 
to prevent the Commission from continuing to consider 
consumer demand for spectrum-based services. 
"(8) TREATMENT OF REVENUES.— 
"(A) GENERAL RULE.—^Except as provided in subpara-
graph (B), all proceeds from the use of a competitive bidding 
system imder this subsection shall be deposited in the 
Treasunr in accordance with chapter 33 of title 31, United 
States Code. 
"(B) 
RETENTION 
OF 
REVENUES.—Notwithstanding 
subparagraph (A), the salaries and expenses account of 
the Commission shall retain as an offsetting collection such 
sums as may be necessary from such proceeds for the 
costs of developing and implementing the program required 
by this subsection. Such offsetting collections shall be av£ul-
able for obligation subject to tiie terms and conditions 
of the receiving appropriations account, and shall be depos-
ited in such accounts on a quarterly basis. Any funds 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 391 
appropriated to the Commission for fiscal years 1994 
through 1998 for the purpose of assigning licenses using 
random selection under subsection (i) shall be used by 
the Commission to implement this subsection. 
"(9) 
USE 
OF 
FORMER 
GOVERNMENT SPECTRUM.—The 
Commission shall, not later than 5 years after the date of 
enactment of this subsection, issue licenses and permits pursu-
ant to this subsection for the use of bands of frequencies that— 
"(A) in the aggregate span not less than 10 megahertz; 
and 
"(B) have been reassigned from Government use pursu-
ant to part B of the National Telecommunications and 
Information Administration Organization Act. 
"(10) AUTHORITY CONTINGENT ON AVAILABILITY OF ADDI-
TIONAL SPECTRUM.— 
"(A) INITIAL CONDITIONS.—The Commission's authority 
to issue licenses or permits under this subsection shall 
not take effect unless— 
"(i) the Secretary of Commerce has submitted to 
the Commission the report required by section 
113(dXl) of the National Telecommunications and 
Information Administration Organization Act; 
"(ii) such report recommends for immediate 
reallocation bands of frequencies that, in the aggregate, 
sp£ui not less than 50 megahertz; 
''(iii) such bands of frequencies meet the criteria 
required by section 113(a) of such Act; and 
"(iv) the Commission has completed the rule-
making required by section 332(cXlXD) of this Act. 
*
*
(
B
) SUBSEQUENT CONDITIONS.—The Commission's 
authority to issue licenses or permits under this subsection 
on and after 2 years after Uie date of the enactment of 
this subsection shall cease to be effective i
f
— 
**(i) the Secretary of Commerce has failed to submit 
the report required by section 113(a) of the National 
Telecommunications and Information Administration 
Organization Act; 
"(ii) the President has failed to withdraw and limit 
assignments of frequencies as required by paragraphs 
(1) and (2) of section 114(a) of such Act; 
"(iii) the Commission has failed to issue the regula-
tions required by section 115(a) of such Act; 
"(iv) the Commission has failed to complete and 
submit to Congress, not later than 18 months after 
the date of enactment of this subsection, a study of 
current and future spectrum needs of State and local 
government public safety agencies through the year 
2010, and a specific plan to ensure that adequate fre-
quencies are made available to public safety licensees; 
or 
"(v) the Commission has failed under section 
332(cX3) to grant or deny within the time required 
by such section any petition that a State has filed 
within 90 days after the date of enactment of this 
subsection; 
imtil such failure has been corrected. 
69-194 O - 94 - 14 : QL. 3 Part 1 
107 STAT. 392 
PUBLIC LAW 103-66—AUG. 10, 1993 
"(11) TERMINATION.—The authority of the Commission to 
grant a license or permit under this subsection shall expire 
September 30,1998. 
Reports. 
«(12) EVALUATION.—Not later than September 30, 1997, 
the Commission shall conduct a public inquiry and submit 
to the Congress a report— 
"(A) containing a statement of the revenues obtained, 
and a projection of the future revenues, from the use of 
competitive bidding systems under this subsection; 
"(B) describing the methodologies established by the 
Commission pursuant to paragraphs (3) and (4); 
"(C) comparing the relative adveintages and disadvan-
tages of such methodologies in terms of attaining the objec-
tives described in such paragraphs; 
"(D) evaluating whether and to what extent— 
"(i) competitive bidding significantly improved the 
efficiency and effectiveness of the process for granting 
radio spectnmi licenses; 
"(ii) competitive bidding facilitated the introduction 
of new spectrum-based technologies and the entry of 
new companies into the telecommunications market; 
"(iii) competitive bidding methodologies 
have 
secured prompt deUvery of service to rural areas and 
have adequately addressed the needs of rural spectrum 
users; and 
"(iv) small businesses, rural telephone companies, 
and businesses owned by members of minority groups 
and women were able to participate successfully in 
the competitive bidding process; and 
"(E) recommending any statutory changes that are 
needed to improve the competitive bidding process.", 
(b) CONFORMING AMENDMENTS.— 
(1) LIMITATIONS ON LOTTERIES.—Section 309 of the Commu-
nications Act of 1934 (47 U.S.C. 309) is further amended— 
(A) by striking subsection (iXl) and inserting the fol-
lowing: 
"(i) RANDOM SELECTION.— 
"(1) GENERAL AUTHORITY.—If— 
"(A) there is more than one application for any initial 
license or construction permit which will involve a use 
of the electromagnetic spectrum; and 
"(B) the Commission has determined that the use is 
not described in subsection (jX2XA); 
then the Commission shall have the authority to grant such 
license or permit to a qualified applicant through the use of 
a system of random selection."; and 
(B) in paragraph (4), by adding at the end the following 
new subparagraph: 
"(C) Not later than 180 days after the date of enactment of 
this subparagraph, the Commission shall prescribe such transfer 
disclosures and antitrafficking restrictions and payment schedules 
as are necessary to prevent the unjust enrichment of recipients 
of Ucenses or permits as a result of the methods employed to 
issue licenses under this subsection.". 
(2) REGULATORY TREATMENT TO ENHANCE AUCTION VALUE 
OF SPECTRUM UCENSES.— 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 393 
(A) AMENDMENT.—Section 332 of the Communications 
Act of 1934 (47 U.S.C. 332) is amended— 
(i) by striking "PRIVATE LAND" from the heading 
of the section; 
(ii) by striking "land" each place it appears in 
subsections (a) and (b); and 
(iii) by striking subsection (c) and inserting the 
following: 
"(c) REGULATORY TREATMENT OF MOBILE SERVICES.— 
"(1) COMMON CARRIER TREATMENT OF COMMERCIAL MOBILE 
SERVICES.—(A) A person engaged in the provision of a service 
that is a commercial mobile service shall, insofar as such person 
is so engaged, be treated as a common carrier for purposes 
of this Act, except for such provisions of title II as the Commis-
sion may specify by regulation as inapplicable to that service 
or person. In prescribing or amending any such regulation, 
the Commission may not specify any provision of section 201, 
202, or 208, and may specify any other provision only if the 
Commission determines that— 
"(i) enforcement of such provision is not necessaiy in 
order to ensure that the charges, practices, classifications, 
or regulations for or in connection with that service are 
just and reasonable and are not unjustly or unreasonably 
discriminatory; 
"(ii) enforcement of such provision is not necessary 
for the protection of consumers; and 
"(iii) specifying such provision is consistent with the 
public interest. 
"(B) Upon reasonable request of any person providing 
commercial mobile service, the Commission snail order a com-
mon carrier to establish physical connections with such service 
pursuant to the provisions of section 201 of this Act. Except 
to the extent that the Commission is required to respond to 
such a request, this subparagraph shall not be construed as 
a limitation or expansion of the Commission's authority to 
order interconnection pursuant to this Act. 
"(C) The Commission shall review competitive market 
conditions with respect to commercial mobile services and shall 
include in its annual report an analysis of those conditions. 
Such analysis shall include an identification of the number 
of competitors in various commercial mobile services, an analy-
sis of whether or not there is effective competition, an analysis 
of whether any of such competitors have a dominant share 
of the market for such services, and a statement of whether 
additional providers or classes of providers in those services 
would be likely to enhance competition. As a part of making 
a determination with respect to the public interest under 
subparagraph (AXiii), the Commission snail consider whether 
the proposed regulation (or amendment thereof) will promote 
competitive market conditions, including the extent to which 
such regulation (or amendment) will enhance competition 
among providers of commercial mobile services. If the Cfommis-
sion determines that such regulation (or amendment) will 
promote competition among providers of commercial mobile 
services, such determination may be the basis for a Commission 
finding that such regulation (or amendment) is in the public 
interest. 
107 STAT. 394 
PUBLIC LAW 103-66—AUG. 10, 1993 
Regulations. 
"(D) The Commission shall, not later than 180 days after 
the date of enactment of this subparagraph, complete a rule-
making required to implement this paragraph with respect 
to the licensing of personal communications services, including 
making any determinations required by subparagraph (C). 
"(2) NON-COMMON CARRIER TREATMENT OF PRIVATE MOBILE 
SERVICES.—^A person engaged in the provision of a service that 
is a private mobile service shall not, insofar as such person 
is so engaged, be treated as a common carrier for any purpose 
under this Act. A common carrier (other than a person that 
was treated as a provider of a private land mobile service 
prior to the enactment of the Omnibus Budget Reconciliation 
Act of 1993) shall not provide any dispatch service on any 
frequency allocated for common carrier service, except to the 
extent such dispatch service is provided on stations licensed 
in the domestic public land mobile radio service before January 
1, 1982, The Commission may by regulation terminate, in whole 
or in part, the prohibition contained in the preceding sentence 
if the Commission determines that such termination will serve 
the public interest. 
"(3) STATE PREEMPTION.—(A) Notwithstanding sections 2(b) 
and 221(b), no State or local government shall have any author-
ity to regulate the entry of or the rates charged by any commer-
cial mobile service or any private mobile service, except that 
this paragraph shall not prohibit a State from regulating the 
other terms and conditions of commercial mobile services. Noth-
ing in this subparagraph shall exempt providers of commercial 
mobile services (where such services are a substitute for land 
line telephone exchange service for a substantial portion of 
the commimications within such State) from requirements 
imposed by a State commission on all providers of telecommuni-
cations services necessary to ensure the universal availability 
of telecommimications service at affordable rates. Notwith-
standing the first sentence of this subparagraph, a State may 
petition the Commission for authority to regulate the rates 
for any commercial mobile service and the Commission shall 
grant such petition if such State demonstrates that— 
"(i) market conditions with respect to such services 
fail to protect subscribers adequately from imjust and 
unreasonable rates or rates that are unjustly or unreason-
ably discriminatory; or 
"(ii) such market conditions exist and such service 
is a replacement for land line telephone exchange service 
for a substantial portion of the telephone land line exchange 
service within such State. 
The Commission shall provide reasonable opportunity for public 
comment in response to such petition, and shall, within 9 
months after the date of its submission, grant or deny such 
petition. If the Commission grants such petition, the Commis-
sion shall authorize the State to exercise imder State law 
such authority over rates, for such periods of time, as the 
Commission deems necessary to ensure that such rates are 
just and reasonable and not unjustly or unreasonably discrimi-
natory. 
"(B) If a State has in effect on June 1, 1993, any regulation 
concerning the rates for any commercial mobile service offered 
in such State on such date, such State may, no later than 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 395 
1 year after the date of enactment of the Omnibus Budget 
Reconciliation Act of 1993, petition the Commission requesting 
that the State be authorized to continue exercising authority 
over such rates. If a State files such a petition, the State's 
existing regulation shall, notwithstanding subparagraph (A), 
remain in effect until the Commission completes all action 
(including any reconsideration) on such petition. The Commis-
sion shall review such petition in accordance with the proce-
dures established in such subparagraph, shall complete all 
action (including any reconsideration) within 12 months after 
such petition is filed, and shall grant such patition if the 
State satisfies the showing required under subparagraph (AXi) 
or (AXii). If the Commission grants such petition, the Commis-
sion shall authorize the State to exercise under State law 
such authority over rates, for such period of time, as the 
Commission deems necessary to ensure that such rates are 
just and reasonable and not u]:\justly or unreasonably discrimi-
natoiy. After a reasonable period of time, as determined by 
the (Jommission, has elapsed from the issuance of an order 
under subparagraph (A) or this subparagraph, any interested 
party may petition the Commission for an order that the exer-
cise of authority by a State pursuant to such subparagraph 
is no longer necessary to ensure that the rates for commercial 
mobile services are just and reasonable and not unjustly or 
unreasonably discriminatory. The Commission shall provide 
reasonable opportunity for public comment in response to such 
petition, and shall, within 9 months after the date of its submis-
sion, grant or deny such petition in whole or in part. 
"(4) 
REGULATORY TREATMENT OF COMMUNICATIONS SAT-
ELLITE CORPORATION.—Nothing in this subsection shall be con-
strued to alter or affect the regulatonr treatment required by 
title IV of the Commimications Satellite Act of 1962 of the 
corporation authorized by title III of such Act. 
"(5) SPACE SEGMENT CAPACITY.—Nothing in this section 
shall prohibit the Commission from continuing to determine 
whether the provision of space segment capacity by satellite 
systems to providers of commercial mobile services shall be 
treated as common carriage. 
"(6) FOREIGN OWNERSHIP.—The Commission, upon a peti-
tion for waiver filed within 6 months after the date of enactment 
of the Omnibus Budget Reconciliation Act of 1993, may waive 
the application of section 310(b) to any foreign ownership that 
lawfully existed before May 24, 1993, of any provider of a 
private land mobile service that will be treated as a common 
carrier as a result of the enactment of the Omnibus Budget 
Reconciliation Act of 1993, but only upon the following condi-
tions: 
"(A) The extent of foreign ownership interest shall 
not be increased above the extent which existed on May 
24,1993. 
''(B) Such waiver shall not permit the subsequent 
transfer of ownership to any other person in violation of 
section 310(b). 
"(d) DEFINITIONS.—^For purposes of this section— 
"(1) the term 'commercial mobile service' means any mobile Regulations. 
service (as defined in section 3(n)) that is provided for profit 
and makes interconnected service available (A) to the public 
107 STAT. 396 
PUBLIC LAW 103-66—AUG. 10, 1993 
or (B) to such classes of eligible users as to be effectively 
available to a substantial portion of the public, as specified 
by regulation by the Commission; 
"(2) the term 'interconnected service* means service that 
is interconnected with the public switched network (as such 
terms are defined by regulation by the Commission) or service 
for which a request for interconnection is pending pursuant 
to subsection (cXlXB); and 
"(3) the term 'private mobile service' means any mobile 
service (as defined in section 3(n)) that is not a commercial 
mobile service or the functional equivalent of a commercial 
mobile service, as specified by regulation by the Commission.". 
(B) ADDITIONAL CONFORMING AMENDMENTS.—(i) Sec-
tion 2(b) of the Communications Act of 1934 (47 U.S.C. 
152(b)) is amended by inserting "and section 332," after 
"inclusive,". 
(ii) Section 3 of the Communications Act of 1934 (47 
U.S.C. 153) is amended— 
(I) in subsection (n) by inserting "(1)" after "and 
includes", and by inserting before the period at the 
end the following: ", (2) a mobile service which provides 
a regularly interacting group of base, mobile, portable, 
and associated control and relay stations (whether 
licensed on an individual, cooperative, or multiple 
basis) for private one-way or two-way land mobile radio 
communications by eligible users over designated areas 
of operation, and (3) any service for which a license 
is required in a personal communications service estab-
lished pursuant to the proceeding entitled 'Amendment 
to the Commission's Rules to Establish New Personal 
Communications Services' (GEN Docket No. 90-314; 
ET Docket No. 92-100), or any successor proceeding"; 
and 
(II) by striking subsection (gg). 
47 u s e 332 note. 
(c) EFFECTIVE DATES.— 
(1) IN GENERAL.—^Except as provided in paragraph (2), the 
amendments made by this section are effective on the date 
of enactment of this Act. 
(2) EFFECTIVE DATES OF MOBILE SERVICE AMENDMENTS.— 
The amendments made by subsection (bX2) shall be effective 
on the date of enactment of this Act, exc^t that— 
(A) section 332(cX3XA) of the Conununications Act of 
1934, as amended by such subsection, shall take effect 
1 year after such date of enactment; and 
(B) any private land mobile service provided by any 
person before such date of enactment, and any paging 
service utilizing frequencies allocated as of January 1,1993, 
for private land mobile services, shall, except for purposes 
of section 332(cX6) of such Act, be treated as a private 
mobile service until 3 years after such date of enactment. 
(d) DEADLINES FOR COMMISSION ACTION.— 
47 use 309 note. 
(1) GENERAL RULEMAKING.—The Federal Communications 
Commission shall prescribe regulations to implement section 
309^') of the Communications Act of 1934 (as added by this 
section) within 210 days after the date of enactment of this 
Act. 
Reports. 
(2) PCS O
R
D
E
R
S A
N
D UCENSING.—The Commission shall— 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 397 
(A) within 180 days after such date of enactment, 
issue a final report and order (i) in the matter entitled 
"Redevelopment of Spectrum to Encourage Innovation in 
the Use of New Telecommunications Technologies" (ET 
Docket No. 92-9); and (ii) in the matter entitled "Amend-
ment of the Commission's Rules to Establish New Personal 
Conmiunications Services" (GEN Docket No. 90-314; ET 
Docket No. 92-100); and 
(B) within 270 days after such date of enactment, 
commence issuing licenses and permits in the personal 
communications service. 
(3) TRANSITIONAL RULEMAKING FOR MOBILE SERVICE PROVID- 4
7 use 332 note. 
ERS.—^Within 1 year after the date of enactment of this Act, 
the Federal Communications Commission— 
(A) shall issue such modifications or terminations of 
the regulations applicable (before the date of enactment 
of this Act) to private land mobile services as are necessary 
to implement the amendments made by subsection (bX2); 
(B) in the regulations that will, after such date of 
enactment, apply to a service that was a private land 
mobile service and that becomes a commercial mobile serv-
ice (as a conse(][uence of such amendments), shall make 
such other modifications or terminations as may be nec-
essary and practical to assure that licensees in such service 
are subjected to technical requirements that are com-
parable to the technical requirements that apply to licens-
ees that are providers of substantially similar common 
carrier services; 
(C) shall issue such other regulations as are necessary 
to implement the amendments made by subsection (bX2); 
and 
(D) shall include, in such regulations, modifications, 
and terminations, such provisions as are necessary to pro-
vide for an orderly transition. 
(e) SPECIAL RULE.—The Federal Communications Commission 4
7 use 309 note. 
shall not issue any license or permit pursuant to section 309(i) 
of the Communications Act of 1934 (47 U.S.C. 309(i)) after the 
date of enactment of this Act unless— 
(1) the Commission has made the determination required 
by paragraph (IXB) of such section (as added by this section); 
or 
(2) one or more applications for such license were accepted 
for 
filing 
by the Commission before July 26,1993. 
SEC. 6003. ADDITIONAL COMMUNICATIONS FEES. 
(a) REGULATORY FEES.— 
(1) AMENDMENT.—^Title I of the Communications Act of 
1934 is amended by inserting after section 8 the following 
new section: 
SEC. 0. REGULATORY FEES. 
47 USC 159. 
"(a) GENERAL AUTHORITY.—^The Commission, in accordance 
with this section, shall assess and collect regulatory fees to recover 
the costs of the following regulatory activities of the Commission: 
enforcement activities, policy and rulemaking activities, user 
information services, and mtemational activities. 
"(b) ESTABUSHMENT AND ADJUSTMENT OF REGULATORY FEES.— 
107 STAT. 398 
PUBLIC LAW 103-66—AUG. 10, 1993 
"(1) IN GENERAL.—^The fees assessed under subsection (a) 
shall— 
"(A) be derived by determining the full-time equivalent 
number of employees performing the activities described 
in subsection (a) within the Private Radio Bureau, Mass 
Media Bureau, Common Carrier Bureau, and other offices 
of the Commission, a4ju8ted to take into account factors 
that are reasonably related to the benefits provided to 
the payor of the fee by the Commission's activities, includ-
ing such factors as service area coverage, shared use versus 
exclusive use, and other factors that the Commission deter-
mines are necessary in the public interest; 
"(B) be established at amoimts that will result in collec-
tion, during each fiscal year, of an amount that can reason-
ably be expected to equal the amount appropriated for 
such fiscal year for Uie performance of the activities 
described in subsection (a); and 
"(C) until adjusted or amended by the Commission 
pursuant to paragraph (2) or (3), be the fees established 
by the Schedule of Regulatory Fees in subsection (g). 
"(2) MANDATORY ADJUSTMENT OF SCHEDULE.—For any fiscal 
year after fiscal year 1994, the Commission shall, by rule, 
revise the Schedule of Regulatory Fees by proportionate 
increases or decreases to reflect, in accordance with paragraph 
(IXB), changes in the amount appropriated for the performance 
of the activities described in subsection (a) for such fiscal year. 
Such proportionate increases or decreases shall— 
"(A) be adjusted to reflect, within the overall amoimts 
described in appropriations Acts under the authority of 
paragraph (IXA), unexpected increases or decreases in the 
number of licensees or units subject to pajrment of such 
fees; and 
"(B) be established at amounts that will result in collec-
tion of an aggregate amount of fees pursuant to this section 
that can reasonably be expected to equal the aggregate 
amount of fees tiiat are required to be collected by appro-
priations Acts pursuant to paragraph (IXB). 
Increases or decreases in fees made by adjustments pursuant 
to this paragraph shall not be subject to judicial review. In 
making a4justments pursuant to this paragraph the Commis-
sion may round such fees to the nearest $5 in the case of 
fees under $1,000, or to the nearest $25 in the case of fees 
of$l,000ormore. 
"(3) PERMITTED AMENDMENTS.—^In addition to the a4just-
ments required by paragraph (2), the Commission shall, by 
regulation, amend the Schedule of Regulatory Fees if the 
Commission determines that the Schedule requires amendment 
to comply with the requirements of paragraph (IXA). In mcUdng 
such amendments, the Commission shall add, delete, or 
reclassify services in the Schedule to reflect additions, deletions, 
or changes in the nature of its services as a consequence of 
Commission rulemaking proceedings or changes in law. 
Increases or decreases in fees made by amendments pursuant 
to this paragraph shall not be subject to judicial review. 
"(4) NOTICE TO CONGRESS.—The Commission shall— 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 399 
''(A) transmit to the Congress notification of any adjust-
ment made pursuant to paragraph (2) immediately upon 
the adoption of such a4justment; and 
''(B) tr£insmit to the Congress notification of any 
amendment made pursuant to paragraph (3) not later than 
90 days before the effective date of such amendment. 
"(c) ENFORCEMENT.— 
"(1) PENALTIES FOR LATE PAYMENT.—The Commission shall 
prescribe by regulation an additional charge which shall be 
assessed as a penalty for late payment of fees required by 
subsection (a) of this section. Such penalty shall be 25 percent 
of the amount of the fee which was not paid in a timely 
manner. 
"(2) 
DISMISSAL 
OF APPUCATIONS 
FOR FILINGS.—The 
Commission may dismiss any application or other filing for 
failure to pay in a timely manner £my fee or penalty under 
this section. 
"(3) REVOCATIONS.—In addition to or in lieu of the penalties 
and dismissals authorized by paragraphs (1) and (2), the 
Commission may revoke any instnunent of authorization held 
by any entity that has failed to make payment of a regulatory 
fee assessed pursuant to this section. Such revocation action 
may be taken by the Commission after notice of the Commis-
sion's intent to take such action is sent to the licensee by 
registered mail, return receipt requested, at the licensee's last 
known address. The notice will provide the licensee at least 
30 days to either pay the fee or show cause why the fee 
does not apply to the licensee or should otherwise be waived 
or payment deferred. A hearing is not required under this 
subsection unless the licensee's response presents a substantial 
and material question of fact. In any case where a hearing 
is conducted pursuant to this section, the hearing shall be 
based on written evidence only, and the burden of proceeding 
with the introduction of evidence and the burden of proof shall 
be on the licensee. Unless the licensee substantially prevails 
in the hearing, the Commission may assess the licensee for 
the costs of such hearing. Any Commission order adopted pursu-
ant to this subsection shall determine the amount due, if any, 
and provide the licensee with at least 30 days to pay that 
amount or have its authorization revoked. No order of revoca-
tion under this subsection shall become final until the licensee 
has exhausted its right to judicial review of such order under 
section 402(bX5) of this title. 
"(d) WAIVER, REDUCTION, AND DEFERMENT.—The Commission 
may waive, reduce, or defer pa3rment of a fee in any specific instance 
for good cause shown, where such action would promote the public 
interest. 
"(e) DEPOSIT OF COLLECTIONS.—^Moneys received from fees 
established under this section shall be deposited as an offsetting 
collection in, and credited to, the account providing appropriations 
to carry out the functions of the Commission. 
"(6 REGULATIONS.— 
"(1) IN GENERAL.—^The Commission shall prescribe appro-
priate rules and regulations to carry out the provisions of 
this section. Such rules and regulations shall permit payment 
by installments in the case of fees in large amounts, and 
in the case of fees in small amoimts, shall require the payment 
107 STAT. 400 
PUBLIC LAW 103-66—AUG. 10, 1993 
of the fee in advance for a number of years not to exceed 
the term of the license held by the payor. 
"(g) SCHEDULE.—^Until amended by the Commission pursuant 
to subsection (b), the Schedide of Regulatory Fees which the Federal 
Communications Commission shall, subject to subsection (aX2), 
assess and collect shall be as follows: 
"SCHEDULE OF REGULATORY FEES 
Bureau/Categoty 
" ^ ^ f S 
Private Radio Bureau 
Excliisive use services (per license) 
Land Mobile (above 470 MHz, Base Station and SMRS) (47 
C.F.R. Part 90) 
$16 
Microwave (47 C.F.R. Part 94) 
16 
Interactive Video Data Service (47 C.F.R, Part) 
16 
Shared use services (i)er license unless otherwise noted) 
7 
Amatevir vanity call-signs 
7 
Mass Media Bureau (per license) 
AM radio (47 C.F.R. Part 73) 
Class D Daytime 
260 
Class A Fulltime 
900 
Class B Fulltime 
500 
Class C Fulltime 
200 
Construction permits 
100 
FM radio (47 C.F.R. Part 73) 
Classes C, CI, C2, B 
900 
Classes A, Bl, C3 
600 
Construction permits 
500 
TV (47 C.F.R. Part 73) 
VHF Commercial 
Markets 1 thru 10 
18,000 
Markets 11 thru 25 
16,000 
Markets 26 thru 50 
12,000 
Markets 51 thru 100 
8,000 
Remaining; Markets 
5,000 
(Construction permits 
4,000 
UHF Commercial 
Markets 1 thru 10 
14,400 
Markets 11 thru 25 
12,800 
Markets 26 thru 50 
9,600 
Markets 51 thru 100 
6,400 
Remaining Markets 
4,000 
Construction permits 
3,200 
Low Power TV, TV Translator, and TV Booster (47 C.F.R. Part 
74) 
136 
Broadcast Auxiliary (47 C.F.R. Part 74) 
26 
International (HF) Broadcast (47 CF.R. Part 73) 
200 
Cable Antenna Relay Service (47 C.F.R. Part 78) 
220 
Cable Television System (per 1,000 subscribers) (47 C.F.R. Part 
76) 
370 
Common Carrier Bureau 
Radio Facilities 
Cellular Radio (per 1,000 subscribers) (47 C.F.R. Part 22) 
60 
Personal Communications (per 1,000 subscribers) (47 C.F.R.) .... 
60 
Space Station (per operational station in geosynchronous orbit) 
(47 C.F.R. Part 25) 
65,000 
Space Station (per system in low-earth orbit) (47 CF.R. Part 
25) 
^
^
_ _ 
90 000 
Public MobiieTper 1,000 siibTC^ 
' 60 
Domestic Public Fixed (per call sign) (47 C.F.R. Part 21) 
66 
International Public Fixed (per cidl sign) (47 C.F.R. Part 23) 
110 
Earth Stations (47 C.F.R. Part 25) 
VSAT and equivalent C-Band antennas (per 100 antennas) 
6 
Mobile satellite earth stations (per 100 antennas) 
6 
Earth station antennas 
Less than 9 meters (per 100 antennas) 
6 
9 Meters or more 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 401 
"SCHEDULE OF REGULATORY FEES—Continued 
Bureau/Categoiy 
^ ^ j g ' 
Transmit/Receive and Transmit Only (per meter) 
85 
Receive only (per meter) 
55 
Carriers 
Inter-Exchange Carrier (per 1,000 presubscribed access lines) 
60 
Local Exchange Carrier (per 1,000 access lines) 
60 
Competitive access provider (per 1,000 subscribers) 
60 
International circuits (per 100 active 64KB circuit or equivalent) . 
220 
"(h) EXCEPTIONS.—^The charges established under this section 
shall not be applicable to (1) governmental entities or nonprofit 
entities; or (2) to amateur radio operator licenses under part 97 
of the Commission's regulations (47 C.F.R. Part 97). 
"(i) ACCOUNTING SYSTEM.—The Commission shall develop 
accounting systems necessary to making the adjustments authorized 
bv subsection (b)(3). In the Commission's annual report, the 
Commission shall prepare an analysis of its progress in developing 
such systems and shall afford interested persons the opportunity 
to submit comments concerning the allocation of the costs of 
performing the functions described in subsection (a) among the 
services in the Schedule.". 
(2) CONFORMING AMENDMENTS.—Section 8 of the Commu-
nications Act of 1934 (47 U.S.C. 158) is amended— 
(A) by striking the heading of such section and insert-
ing "APPLICATION FEES"; 
(B) by striking "charges" each place it appears and 
inserting "application fees"; 
(C) by striking "charge" each place it appears in sub-
section (c) and inserting "application fee"; 
(D) by striking out "Schedule of Charges" each place 
it appears and inserting "Schedule of Application Fees"; 
and 
(E) in the schedule contained in subsection (g)— 
(i) by striking "SCHEDULE OF CHARGES" and insert-
ing "SCHEDULE OF APPLICATION FEES"; 
(ii) by striking "charge" and "Charges" each place 
they appear and inserting "application fee" and 
"Application fees", respectively; and 
(iii) by striking "CHARGES" and inserting "APPLICA-
TION FEES". 
(b) USE OF REGULATORY FEES.—Section 6 of the Commimica-
tions Act of 1934 (47 U.S.C. 156) is amended by adding at the 
end the following new subsection: 
"(d) Of the sum appropriated in any fiscal year under this 
section, a portion, in an amoimt determined under section 9(b), 
shall be derived from fees authorized by section 9.". 
TITLE VII—NUCLEAR REGULATORY 
COMMISSION PROVISIONS 
SEC. 7001. NUCLEAR REGULATORY COMMISSION ANNUAL CHARGES. 
Section 6101(aX3) of the Omnibus Budget Reconciliation Act 
of 1990 (42 U.S.C. 2214(aX3)) is amended by striking "September 
30,1995" and inserting "September 30,1998". 
107 STAT. 402 
PUBLIC LAW 103-66—AUG. 10, 1993 
TITLE Vni—PATENT AND TRADEMARK 
FEES 
SEC. 8001. PATENT AND TRADEMARK FEES. 
Section 10101 of the Omnibus Budget Reconciliation Act of 
1990 (35 U.S.C. 41 note) is amended— 
(1) in subsection (a) by striking "1995" and inserting "1998"; 
(2) in subsection (b)(2) by striking "1995" and inserting 
"1998"; and 
(3) in subsection (c)— 
(A) by striking "through 1995" and inserting "through 
1998"; and 
(B) by adding at the end the following: 
"(6) $111,000,000 in fiscal year 1996. 
"(7) $115,000,000 in fiscal year 1997. 
"(8) $119,000,000 in fiscal year 1998.". 
TITLE IX—MERCHANT MARINE 
PROVISIONS 
SEC. 9001. EXTENSION OF VESSEL TONNAGE DUTIES. 
(a) EXTENSION OF DUTIES.—Section 36 of the Act of August 
5,1909 (36 Stat. Ill; 46 App. U.S.C. 121), is amended by— 
(1) striking "and 1995," each place it appears and inserting 
"1995,1996,1997,1998,"; 
(2) striking "place," and inserting "place;"; and 
(3) striking port, not, however, to include vessels in dis-
tress or not engaged in trade" and inserting "port. However, 
neither duty shall be imposed on vessels in aistress or not 
engaged in trade". 
(b) CONFORMING AMENDMENT.—The Act of March 8, 1910 (36 
Stat. 234; 46 App. U.S.C. 132), is amended by striking "and 1995," 
and inserting "1995,1996,1997, and 1998,". 
(c) TECHNICAL CORRECTION.— 
(1) CORRECTION.—Section 10402(a) of the Omnibus Budget 
46 use app. 121. 
Reconciliation Act of 1990 (104 Stat. 1388-398) is amended 
by striking "in the second paragraph". 
46 use app. 121 
(2) EFFECTIVE DATE.—The amendment made by paragraph 
(1) shall be effective on and after November 5,1990. 
TITLE X—NATURAL RESOURCE 
PROVISIONS 
Subtitle A—Recreation Use Fees 
SEC. 10001. ADMISSION FEES. 
(a) ADDITIONAL AREAS.—(1) The first sentence of section 4(a) 
of the Land and Water Conservation Fund Act of 1965 (16 U.S.C. 
4601-6a(a)) is amended by inserting after "National Park System" 
the phrase "or National Conservation Areas" and by inserting after 
"National Recreation Areas" the following ", National Monuments, 
note. 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 403 
National Volcanic Monuments, National Scenic Areas, and no more 
than 21 areas of concentrated public use". 
(2) Section 4(a) of the Land and Water Conservation Fund 
Act of 1965 (16 U.S.C. 4601-6a(a)) is amended by inserting the 
following after the first sentence: ''For purposes of this subsection, 
the term 'area of concentrated public use' means an area that 
is managed primarily for outdoor recreation purposes, contains at 
least one major recreation attraction, where facilities and services 
necessary to accommodate heavy public use are provided, and public 
access to the area is provided in such a manner that admission 
fees can be efficiently collected at one or more centralized locations.". 
(b) GOLDEN AGE PASSPORT.—^The second sentence of section 
4(aX4) of the Land and Water Conservation Fund Act of 1965 
(16 U.S.C. 4601-6a(aX4)) is amended by striking "without charge," 
and inserting in lieu thereof "for a one-time charge of $10,". 
SEC. 10002. RECREATION USER FEES. 
(a) IN GENERAL.—(1) The first sentence of section 4(b) of the 
Land and Water Conservation Fund Act of 1965 (16 U.S.C. 4601-
6a(b)) is amended by striking out "toilet facilities, picnic tables, 
or boat ramps" and all that follows down through the end of the 
sentence and inserting in lieu thereof: "or toilet facilities, nor shall 
there be any such charge solely for the use of picnic tables: Provided, 
That in no event shall there be a charge for the use of any camp-
groimd not having a majority of the following: tent or trailer spaces, 
J
>icnic tables, drinking water, access road, refuse containers, toilet 
iacilities, personal collection of the fee b}r an employee or agent 
of the Federal agency operating the facility, reasonable visitor 
protection, and simple devices for containing a campfire (where 
campfires are permitted). For the purposes of this suosection, the 
term 'specialized outdoor recreation sites' includes, but is not limited 
to, campgroimds, swimming sites, boat launch facilities, and man-
aged parking lots.". 
(2) Section 4(b) of the Land and Water Conservation Fund 
Act of 1965 (16 U.S.C. 4601-6a(b)) is amended by striking the 
second sentence. 
(b) COSTS OF COLLECTION.—Section 4(iXl) of the Land and 
Water Conservation Fund Act of 1965 (16 U.S.C. 4601-6a(i)) is 
amended by inserting "(A)" after "(1)" and by adding the following 
at the end of paragraph (1): 
"(B) Notwithstanding subparagraph (A), in any fiscal year, the 
Secretary of Agriculture and the Secretary of the Interior may 
withhold from the special accoimt established under subparagraph 
(A) such portion of all receipts collected from fees imposed under 
this section in such fiscal year as the Secretary of Agriculture 
or the Secretary of the Interior, as appropriate, determines to 
be equal to the fee collection costs for that fiscal year: Provided, 
That such costs shall not exceed 15 percent of all receipts collected 
from fees imi)osed under this section in that fiscal year. The 
amounts so withheld shall be retained by the Secretary of Agri-
culture or the Secretary of the Interior, as appropriate, and shall 
be available, without further appropriation, for expenditure by the 
Secretary concerned to cover fee collection costs in that fiscal year. 
The Secretary concerned shall deposit into the special accoimt estab-
Ushed pursuant to subparagraph (A) any amounts so retained which 
remain unexpended and unobligated at the end of the fiscal year. 
For the purposes of this subparagraph, for any fiscal year, the 
107 STAT. 404 
PUBLIC LAW 103-66—AUG. 10, 1993 
term fee collection costs' means those costs for personnel and infra-
structure directly associated with the collection of fees imposed 
under this section.". 
(c) COMMERCIAL TOUR USE FEES.—Section 4 of the Land and 
Water Conservation Fimd Act of 1965 (16 U.S.C. 4601-6a) is 
amended by adding the following new subsection at the end thereof: 
"(nXD In the case of each unit of the National Park System 
for which an admission fee is charged under this section, the Sec-
retary of the Interior shall establish, by October 1, 1993, a commer-
cial tour use fee to be imposed on each vehicle entering the unit 
for the purpose of providing commercial tour services within the 
imit. Fee revenue derived from such commercial tour use fees 
sYiall be deposited into the special accoimt established under sub-
section (i). 
"(2) The Secretary shall establish the amount of fee per entry 
as follows: 
"(A) $25 per vehicle with a passenger capacity of 25 persons 
or less, and 
''(B) $50 per vehicle with a passenger capacity of more 
than 25 persons. 
"(3) The Secretory may periodically make reasonable adjust-
ments to the commercial tour use fee imposed under this subsection. 
"(4) The commercial tour use fee imposed under this subsection 
shedl not apply to either of the following: 
"(A) Any vehicle transporting organized school groups or 
outings conducted for educational purposes by schools or other 
bona nde educational institutions. 
''(B) Any vehicle entering a park system unit pursuant 
to a contract issued under the Act of October 9, 1965 (16 
U.S.C. 20-20g) entitled 'An Act relating to the estoblishment 
of concession policies in the areas administered by the National 
Fark. Service and for other purposes.*. 
''(5)(A) The provisions of this subsection shall apply to aircraft 
entering the airspace of units of the National Park System identified 
in section 2(b) and section 3 of Public Law 100-91 for the specific 
purpose of providing commercial tour services within the airspace 
of such units. 
"(B) The provisions of this subsection shall also apply to aircraft 
entering the airspace of other units of the National Park System 
for the specific purpose of providing commercial tour services if 
the Secretory determines that the level of such services is equal 
to or greater than the level at those imits of the National Park 
System specified in subparagraph (A).". 
(d) NON-FEDERAL GOLDEN EAGLE PASSPORT SALES.—Section 
4(aXl)(A) of the Land and Water Conservation Fund Act of 1965 
(16 U.S.C. 4601-6a(aXlXA)) is amended by inserting "(i)" after 
"(A)" and by adding at the end thereof the following new clause: 
"(ii) The Secretory of the Interior and the Secretory of Agri-
culture may authorize businesses, nonprofit entities, and other 
organizations to sell and collect fees for the Golden Eagle Passport 
subject to such terms and conditions as the Secretories may jointly 
prescribe. The Secretories shall develop detoiled guidelines for pro-
motional advertising of non-Federal Golden Eagle Passport sales 
and shall monitor compliance with such guidelines. The Secretories 
may authorize the sellers to withhold amoimto up to, but not 
exceeding 8 percent of the gross fees collected from the sale of 
such passporto as reimbursement for actual expenses of the sales. 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 405 
Receipts from such non-Federal sales of the Golden Eagle Passport 
shall be deposited into the special account established in subsection 
(i), to be allocated between the Secretaiy of the Interior and the 
Secretary of Agriculture in the same ratio as receipts from admis-
sion into Federal fee areas administered by the Secretary of A ^ -
culture and the Secretary of the Interior pursuant to subsection 
(a).". 
(e) CONFORMING AMENDMENT.—Section 4(aXlXA) of the Land 
and Water Conservation Fund Act of 1965 (16 U.S.C. 4601-
6a(aXlXA)) is amended by striking the third sentence in its entirety 
and inserting in lieu thereof The annual permit shall be valid 
for a period of 12 months from the date the annual fee is paid.". 
SEC. 10003. COMMUNICATION SITE FEES. 
Notwithstanding any other provision of law, for fiscal year 
1994, the Secretary of Agriculture and the Secretary of the Interior 
shall assess and collect annual charges for the utilization of existing 
radio, television, and commercial telephone transmission commu-
nication sites located on Federal lands administered by the Forest 
Service and the Bureau of Land Management at a level 10 percent 
above the fee assessed and collected during fiscal vear 1993. For 
a site located after the enactment of this Act, the charges for 
fiscal year 1994 shall be equal in amount to the charges assessed 
for a comparable new site located before the enactment of this 
Act, plus 10 percent. 
Subtitle B—Hardrock Mining Claim 
Maintenance Fee 
SEC. 10101. FEE. 
30 USC 28f. 
(a) CLAIM MAINTENANCE FEE.—The holder of each unpatented 
mining claim, mill or timnel site located pursuant to the Mining 
Laws of the United States, whether located before or after the 
enactment of this Act, shall pay to the Secretary of the Interior, 
on or before August 31 of each year, for years 1994 through 1998, 
a claim maintenance fee of $100 per claim. Such claim maintenance 
fee shall be in lieu of the assessment work requirement contained 
in the Mining Law of 1872 (30 U.S.C. 28-28e) and the related 
filing requirements contained in section 314 (a) and (c) of the 
Federal Land Policy and Management Act of 1976 (43 U.S.C. 1744 
(a) and (c)). 
(b) TIME OF PAYMENT.—^The claim maintenance fee payable 
pursuant to subsection (a) for any assessment year shall be paid 
before the commencement of the assessment year, except that for 
the initial assessment year in which the location is made, the 
locator shall pay the claim maintenance fee at the time the location 
notice is recorded with the Bureau of Land Management. The 
location fee imposed under section 10102 shall be payable not 
later than 90 days after the date of location. 
(c) OIL SHALE CLAIMS SUBJECT TO CLAIM MAINTENANCE FEES 
UNDER ENERGY POLICY ACT OF 1992.—This section shall not apply 
to any oil shale claims for which a fee is required to be paid 
under section 2511(eX2) of the Energy Policy Act of 1992 (PubUc 
Law 102-486; 106 Stat. 3111; 30 U.S.(r242). 
(d) WAIVER.—-(1) The claim maintenance fee required imder 
this section may be waived for a clcdmant who certifies in writing 
107 STAT. 406 
PUBLIC LAW 103-66—AUG. 10, 1993 
to the Secretary that on the date the payment was due, the claimant 
and all related parties— 
(A) held not more than 10 mining claims, mill sites, or 
tunnel sites, or any combination thereof, on public lands; and 
(B) have performed assessment work required under the 
Mining Law of 1872 (30 U.S.C. 28-28e) to maintain the mining 
claims held by the claimant and such related parties for the 
assessment year ending on noon of September 1 of the calendsir 
year in which payment of the claim maintenance fee was due. 
(2) For purposes of paragraph (1), with respect to any claimant, 
the term "related party^ means— 
(A) the spouse and dependent children (as defined in section 
152 of the Internal Revenue Code of 1986), of the claimant; 
and 
(B) a person who controls, is controlled by, or is imder 
common control with the claimant. 
For purposes of this section, the term control includes actual control, 
legal control, and the power to exercise control, through or by 
common directors, ofiEicers, stockholders, a voting trust, or a holding 
company or investment company, or any other means. 
30 u s e 28g. 
SEC. 10102. LOCATION FEE. 
Notwithstanding any other provision of law, for every 
unpatented mining claim, mill or tunnel site located after the 
date of enactment of this subtitle and before September 30, 1998, 
pursuant to the Mining Laws of the United States, the locator 
shall, at the time the location notice is recorded with the Bureau 
of Land Management, pay to the Secretary of the Interior a location 
fee, in addition to the claim maintenance fee required by section 
10101, of $25.00 per claim. 
30 u s e 28h. 
SEC. 10103. CO-OWNERSHIP. 
The co-ownership provisions of the Mining Law of 1872 (30 
U.S.C. 28) shall remain in effect, except that in applying such 
provisions, the annual claim maintenance fee required under this 
Act shall, where applicable, replace applicable assessment require-
ments and expenditures. 
30USe28i. 
SEC. 10104. FAILURE TO PAY. 
Failure to pay the claim maintenance fee or the location fee 
as required by this subtitle shall conclusively constitute a forfeiture 
of the unpatented mining claim, mill or tunnel site by the claimant 
and the claim shall be deemed null and void by operation of law. 
30USe28j. 
SEC. 10105. OTHER REQUIREMENTS. 
(a) FEDERAL LAND POLICY AND MANAGEMENT ACT REQUIRE-
MENTS.—^Nothing in this subtitle shall change or modify the require-
ments of section 314(b) of the Federal Land Policy and Management 
Act of 1976 (43 U.S.C. 1744(b)), or the requirements of section 
314(c) of the Federal Land Policy and Management Act of 1976 
(43 U.S.C. 1744(c)) related to filings required by section 314(b), 
and such requirements shall remain in effect with respect to claims, 
and mill or tunnel sites for which fees are required to be paid 
under this section. 
(b) REVISED STATUTES SECTION 2324.—The third sentence of 
section 2324 of the Revised Statutes (30 U.S.C. 28) is amended 
by inserting after "On each claim located after the tenth day of 
May, eighteen hundred and seventy-two," the following: "that is 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 407 
acanted a waiver under section 10101 of the Omnibus Budget 
Reconciliation Act of 1993,". 
(c) FEE ADJUSTME^fTS.—<1) The Secretary of the Interior shall 
acljust the fees required by this subtitle to reflect changes in the 
Consumer Price Index published by the Bureau of Labor Statistics 
of the Department of Labor every 5 years after the date of the 
enactment of this Act, or more frequently if the Secretary deter-
mines an adjustment to be reasonable. 
(2) The Secretary shall provide claimants notice of any adjust-
ment made imder this subsection not later than July 1 of any 
year in which the adjustment is made. 
(3) A fee adjustment imder this subsection shall begin to apply 
the first assessment year which begins after adjustment is made. 
SEC. 10106. REGULATIONS. 
30 USC 28k 
The Secretary of the Interior shall promulgate rules and regula-
tions to cany out the terms and conditions of this subtitle as 
soon as practicable after the date of the enactment of this subtitle. 
Subtitle C—^Mineral Receipts 
SEC. 10201. AMENDMENT TO THE MINERAL LEASING ACT. 
Section 35 of the Mineral Leasing Act (30 U.S.C. 191) is 
amended as follows: 
(1) Delete the last sentence and redesignate the remaining 
language as subsection (a). 
(2) Amend subsection (a) by inserting "and, subject to the 
provisions of subsection (b)," between the words "United 
States;" and "50 per centum". 
(3) Add a new subsection (b) as follows: 
"(bXl) In calculating the amount to be paid to States during Inter-
any fiscal year under this section or imder any other provision felSio^^" 
of law requiring payment to a State of any revenues derived from 
the leasing of any onshore lands or interest in land owned by 
the United States for the production of the same types of minerals 
leasable under this Act or of geothermal steam, 50 percent of 
the portion of the enacted appropriation of the Department of 
the Interior and any other agency during the preceding fiscal year 
allocable to the administration of all laws providing for the leasing 
of any onshore lands or interest in land owned by the Unitea 
States for the production of the same types of minerals leasable 
under this Act or of geothermal steam, and to enforcement of 
such laws, shall be deducted from the receipts derived imder those . 
laws in approximately equal amounts each month (subject to para-
graph (4)) prior to tne division and distribution of such receipts 
between the States and the United States. 
"(2) The proportion of the deduction provided in paragraph 
(1) allocable to each State shall be determined hy dividing uie 
monies disbursed to the State during the preceding fiscal year 
derived from onshore mineral leasing referred to in paragraph 
(1) in that State by the total money disbursed to States during 
the preceding fiscal year from such onshore mineral leasing in 
all States. 
"(3) In the event the deduction apportioned to any State under 
this subsection exceeds 50 percent of the Secretary of the Interioi^s 
estimate of the amounts attributable to onshore mineral leasing 
107 STAT. 408 
PUBLIC LAW 103-66—AUG. 10, 1993 
referred to in paragraph (1) within that State during the preceding 
fiscal year, the deduction from receipts received from leases in 
that State shall he limited to such estimated amoimts and the 
total amount to be deducted from such onshore mineral leasing 
receipts shall be reduced accordingly. 
(4) If the amount otherwise deductible under this subsection 
in any month from the portion of receipts to be distributed to 
a State exceeds the amoimt payable to the State during that month, 
any amount exceeding the amoiint payable shall be carried forward 
and deducted from amounts payable to the State in subsequent 
months. If any amount remains to be carried forward at the end 
of the fiscal year, such amoimt shall not be deducted from any 
disbursements in any subsequent fiscal year. 
"(5) All deductions to oe made pursuant to this subsection 
shall be made in full during the fiscal year in which such deductions 
were incurred.". 
SEC. 10202. CONFORMING AMENDMENTS. 
(a) MINERAL LEASING ACT FOR ACQUIRED LANDS.—Section 6(a) 
of the Mineral Leasing Act for Acquired Lands (30 U.S.C. 355) 
is amended by striking "All receipts at the beginning of the first 
sentence and inserting the following: "Subject to the provisions 
of section 35(b) of the Mineral Leasing Act (30 U.S.C. 191(b)), 
all receipts'*. 
(b) GEOTHERMAL STEAM ACT.—Section 20 of the Geothermal 
Steam Act (30 U.S.C. 1019) is amended by striking "All moneys" 
at the beginning thereof and inserting "Subject to the provisions 
of section 35(b) of the Mineral Leasing Act (30 U.S.C. 191(b)), 
all moneys". 
TITLE XI—CIVIL SERVICE AND POST 
OFFICE PROVISIONS 
Subtitle A—Civil Service 
5 use 8340 note. 
SEC 11001. DELAY IN COST^F-LIVING ADJUSTMENTS IN FEDERAL 
EMPLOYEE RETIREMENT BENEFITS DURING FISCAL 
YEARS 1994,1995, AND 1996. 
(a) APPLICABILITY.—^This section shall apply with respect to 
any cost-of-living increase scheduled to take effect, during fiscal 
year 1994,1995, or 1996, under— 
(1) section 8340(b) or 8462(b) of title 5, United States 
Code; 
(2) section 826 or 858 of the Foreign Service Act of 1980; 
or 
(3) section 291 of the Central Intelligence Agency Retire-
ment Act (50 U.S.C. 2131), as set forth in section 802 of the 
CIARDS Technical Corrections Act of 1992 (Public Law 102-
496; 106 Stat. 3196). 
(b) DELAY IN EFFECTIVE DATE OF ADJUSTMENTS.—A cost-of-
Uving increase described in subsection (a) shall not take effect 
until the first day of the third calendar month after the date 
such increase would otherwise take effect. 
(c) RULE OF CONSTRUCTION.—Nothing in this section shall be 
considered to affect any determination relating to eligibility for 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 409 
an annuity increase or the amount of the first increase in an 
annuity under section 8340 (b) or (c) or section 8462 (b) or (c) 
of title 5, United States Code, or comparable provisions of law. 
SEC. 11002. PERMANENT EUMINATION OF THE ALTERNATIVE-FORM-
OF-ANNUTTY OPTION EXCEPT FOR INDIVIDUALS WITH 
A CRITICAL MEDICAL CONDITION. 
(a) CIVIL SERVICE RETIREMENT SYSTEM; FEDERAL EMPLOYEES' 
RETIREMENT SYSTEM.—Sections 8343a and 8420a of title 5, United 
States Code, are each amended— 
(1) in subsection (a) by striking "an employee or Member 
may," and inserting "any employee or Member who has a 
life-threatening afQiction or other critical medical condition 
may,"; and 
(2) by striking subsection (f). 
(b) FOREIGN SERVICE RETIREMENT AND DISABILITY SYSTEM.— 
Section 807(eXl) of the Foreign Service Act of 1980 (22 U.S.C. 
4047(eXl)) is amended by striking "a participant may," and insert-
ing "any participant who has a life-threatening affliction or other 
critical medical condition may,". 
(c) CENTRAL INTELLIGENCE AGENCY RETIREMENT AND DISABIL-
ITY SYSTEM.^-Section 294(a) of the Central Intelligence Agency 
Retirement Act (50 U.S.C. 2143(a)), as set forth in section 802 
of the CIARDS Technical Corrections Act of 1992 (Public Law 
102-496; 106 Stat. 3196), is amended by striking "a participant 
may," and inserting "any participant wno has a life-threatening 
affliction or other critical medical condition may,". 
(d) EFFECTIVE DATE.—^The amendments made by this section 5 use 8343a 
shall become effective on October 1, 1994, and shall apply with 
respect to any annuity commencing on or after that date. 
SEC. 11003. A P P U C A T I O N OF MEDICARE PART B UMTTS TO PHYSI-
CIANS' SERVICES FURNISHED TO FEDERAL EMPLOYEE 
HEALTH BENEFITS ENROLLEES AGE 65 OR OLDER. 
(a) IN GENERAL.—Section 8904(b) of title 5, United States Code, 
is amended— 
(1) in paragraph (1) by inserting "(A)" after "(b)(1)" and 
by adding at the end the following: 
"(BXi) A plan, other than a prepayment plan described in 
section 8903(4), may not provide benefits, in the case of any retired 
enrolled individual who is age 65 or older and is not entitled 
to Medicare supplementanr medical insurance benefits under part 
B of title XVIII of the Social Security Act (42 U.S.C. 1395j et 
seq.), to pay a charge imposed for physicians' services (as defined 
in section 1848(j) of such Act, 42 U.S.C. 1395w-4(j)) which are 
covered for purposes of benefit pajrments imder this chapter and 
under such part, to the extent that such charge exceeds the fee 
schedule amount under section 1848(a) of such Act (42 U.S.C. 
1395w-4(a)). 
"(ii) Physicians and suppliers who have in force participation 
agreements with the Secretary of Health and Human Services 
consistent with section 1842(hXl) of such Act (42 U.S.C. 
1395u(hXl)), wherebv the participating provider accepts Medicare 
benefits (including allowable deductible and coinsurance amounts) 
as full payment for covered items and services shall accept equiva-
lent benefit and enroUee cost-sharing under this chapter as full 
payment for services described in clause (i). Physicians and suppli-
ers who are nonparticipating physicians and suppliers for purposes 
note. 
107 STAT. 410 
PUBLIC LAW 103-66—AUG. 10, 1993 
Contracts. 
5 u s e 8904 note. 
Regulations. 
of part B of title XVIII of such Act shall not impose charges 
that exceed the limiting charge under section 1848(g) of such Act 
(42 U.S.C. 1395w-4(g)) with respect to services described in clause 
(i) provided to enrollees described in such clause. The Office of 
Personnel Management shall notify a phvsician or supplier who 
is found to have violated this clause and iniorm them of tne require-
ments of this clause and sanctions for such a violation. The Office 
of Personnel Management shall notify the Secretary of Health and 
Human Services if a physician or supplier is foimd to knowingly 
and willfully violate tnis clause on a repeated basis and the Sec-
retary of Health and Human Services may invoke appropriate sanc-
tions in accordance with sections 1128A(a) and 1848(gXl) of such 
Act (42 U.S.C. 1320a-7a(a), 1395w-4(gXl)) and applicable regula-
tions. 
"(C) If the Secretary of Health and Himian Services determines 
that a violation of this subsection warrants excluding a provider 
from participation for a specified period under title XVIII of the 
Social Security Act, the Oulce shall enforce a corresponding exclu-
sion of such provider for purposes of this chapter."; 
(2) in paragraph (3XB)— 
(A) by inserting "(i)** after "includes"; and 
(B) by inserting before the period at the end the follow-
ing: ", and (ii) the fee schedule amounts and limiting 
charges for physicians' services established under section 
1848 of such Act (42 U.S.C. 1395w-4) and the identity 
of participating physicians and suppliers who have in force 
agreements with such Secretary imder section 1842(h) of 
such Act (42 U.S.C. 1395u(h))''; and 
(3) by adding at the end the following: 
"(4) The Director of the Office of Personnel Management shall 
enter into an arrangement with the Secretarv of Health and Human 
Services, to be efiTective before the first day of the fifth month 
that begins before each contract year, under which— 
"(A) physicians and suppliers (whether or not participating) 
under the Medicare program will be notified of the requirements 
of paragraph (1)(B); 
"(B) enforcement procedures will be in place to carry out 
such paragraph (including enforcement of protections against 
overcharging of beneficiaries); and 
"(C) Medicare program information described in paragraph 
(3XB)(ii) will be supplied to carriers under paragrapn (3XA).'*. 
(b) EFFECTIVE DATE.—^The amendments made by subsection 
(a) shall apply with respect to contract years beginning on or 
after January 1,1995. 
SEC. 11004. FEDERAL EMPLOYEES' SURVIVOR ANNUITY IMPROVE-
MENTS. 
(a) CIVIL SERVICE RETIREMENT SYSTEM.— 
(1) REDUCTION FOR SPOUSAL ANNUITY.—Section 8339(j) of 
title 5, United States Code, is amended— 
(A) in paragraph (Sh-
(i) in the second sentence by striking ", within 
such 2-year period,**; and 
(ii) by striking the fourth sentence and inserting 
the following: "The Office shall, by regulation, provide 
for pajnoient of the deposit required under this para-
graph by a reduction m the annuity of the employee 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 411 
or Member. The reduction shall, to the extent prac-
ticable, be designed so that the present value of the 
future reduction is actuarially equivalent to the deposit 
required under this paragraph, except that the total 
reductions in the annuity of an employee or Member 
to pay deposits required by the provisions of this para-
graph, paragraph (5), or subsection (kX2) shall not 
exceed 25 percent of the annuity computed imder sub-
sections (a) through (i), (n), and (q), including adjust-
ments under section 8340. The reduction, which shall 
be effective on the same date as the election under 
this paragraph, shall be permanent and unaffected 
by any future termination of the entitlement of the 
former spouse. Such reduction shall be independent 
of and in addition to the reduction required under 
the first sentence of this paragraph."; and 
(B) in paragraph (5XC)— 
(i) in clause (ii) by striking ", within 2 years after 
the date of the remarriage or, if later, the death or 
remarriage of the former spouse (or of the last such 
surviving former spouse),"; and 
(ii) by amending clause (iii) to read as follows: 
"(iii) The Office shall, by regulation, provide for pay-
ment of the deposit required imder clause (ii) by a reduction 
in the annuity of the employee or Member. The reduction 
shall, to the extent practicable, be designed so that the 
{>resent value of the future reduction is actuarially equiva-
ent to the deposit required under clause (ii), except that 
total reductions in the annuity of an employee or Member 
to pay deposits required by the provisions of this paragraph 
or paragraph (3) shall not exceed 25 percent of the annuity 
computed under subsections (a) through (i), (n), and (q), 
including adjustments under section 8340. The reduction 
required by this clause, which shall be effective on the 
same date as the election under clause (i), shall be perma-
nent and unaffected by any future termination of the 
marriage. Such reduction shall be independent of and in 
addition to the reduction required under clause (i).". 
(2) 
REDUCTION 
RELATING TO FORMER SPOUSE.—Section 
8339(k)(2) of title 5, United States Code, is amended— 
(A) in subparagraph (B)(ii) by striking "Within 2 years 
after the date of the marriage, the" and inserting "The"; 
and 
(B) by amending subparagraph (C) to read as follows: 
"(C) The Office shall, by regulation, provide for payment 
of the deposit required under subparagraph (BXii) by a reduc-
tion in the annuity of the employee or Member. The reduction 
shall, to the extent practicable, be designed so that the present 
value of the future reduction is actuarially equivalent to the 
deposit required under subparagraph (BXii), except that total 
reductions in the annuity of an employee or Member to pay 
deposits required by this subsection or subsection (jX3) shall 
not exceed 25 percent of the annuity computed under sub-
sections (a) through (i), (n), and (q), including adjustments 
under section 8340. The reduction required by this subpara-
graph, which shall be effective on the same date as the election 
unoer subparagraph (A), shall be permanent and unaffected 
107 STAT. 412 
PUBLIC LAW 103-66—AUG. 10, 1993 
by any future termination of the marriage. Such reduction 
shall be independent of and in addition to the reduction 
required under subparagraph (A).". 
(3) DEPOSITS.—Section 8334(h) of title 5, United States 
Code, is amended by striking "and by section 8339(j)(5XC) 
and the last sentence of section 8339(k)(2) of this title", 
(b) FEDERAL EMPLOYEES' RETIREMENT SYSTEM.—Section 8418 
of title 5, United States Code, is amended— 
(1) in subsection (a)(1) bv striking ", before the expiration 
of the 2-year period involved, ; £ind 
(2) by amending subsection (b) to read as follows: 
"(b) The Office shall, by regulation, provide for payment of 
the deposit required under subsection (a) by a reduction in the 
annuity of the employee or Member. The reduction shall, to the 
extent practicable, be designed so that the present value of the 
future reduction is actuarially equivalent to the deposit required 
imder subsection (a), except that the total reductions in the annuity 
of an employee or Member to pay deposits required by this section 
shall not exceed 25 percent of the annuity computed under section 
8415 or section 8452, including adjustments imder section 8462. 
The reduction required by this subsection, which shall be effective 
at the same time as the election under section 8416 (b) and (c) 
or section 8417(b), shall be permanent and imaffected by any future 
termination of the marriage or the entitlement of the former spouse. 
Such reduction shall be independent of and in addition to the 
reduction required imder section 8416 (b) and (c) or section 
8417(b).''. 
5 use 8339 note. 
(c) EFFECTIVE DATE.— 
(1) IN GENERAL.—^The amendments made by this section 
shall take effect on the first day of the first month beginning 
at least 30 days after the date of the enactment of this Act 
and shall apply to all deposits required under section 8339(j) 
(3) or (5), 8339(k)(2), or 8418 of title 5, United States Code, 
on which no payment has been made prior to such effective 
date. 
(2) PARTIAL DEPOSIT.—^For any deposit required iinder sec-
tion 83390) (3) or (5), 8339(k)(2), or 8418 of title 5, United 
States Code, or section 4 (b) or (c) of the Civil Service Retire-
ment Spouse Equity Act of 1984 (5 U.S.C. 8341 note) that 
has been partially, but not fully, paid before the effective date 
of this Act, the Office shall by regulation provide for determin-
ing the remaining portion of the deposit and for payment of 
the remaining portion of the deposit by a prospective reduction 
in the annuity of the employee or Member. The reduction 
shall be similar to the reductions provided pursuant to the 
amendments made imder this section. 
SEC. 11005. TEMPORARY EXTENSION AND MODIFICATION OF THE 
METHOD FOR DETERMINING GOVERNMENT CONTRIBU-
TIONS UNDER FEHBP IN THE ABSENCE OF A GOVERN-
MENT-WIDE INDEMNITY BENEFIT PLAN. 
Public Law 101-76 (5 U.S.C. 8906 note) is amended by striking 
the matter after the enacting clause and before paragraph (2) 
of subsection (a) and inserting the following: 
"That (aXD in the administration of chapter 89 of title 5, United 
States Code, for each of contract years 1990 through 1998 (inclu-
sive), in order to compute the average subscription charges under 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 413 
section 8906(a) of such title for such contract years, the subscription 
charges in effect for the indemnity benefit plan on the beginning 
date of each such contract year— 
"(A) shall be deemed to be the subscription charges which 
were in effect for such plan on the beginning date of the 
preceding contract year as adjusted under paragraph (2); or 
''(B) if subparagraph (A) does not apply, shall be deemed 
tobe— 
"(i) the subscription charges which were deemed under 
this Act to have been in effect for such plan with respect 
to the preceding contract year as adjusted imder paragraph 
(2), except as provided in clause (ii); or 
"(ii) for each of contract years 1997 and 1998, the 
subscription charges which would be derived by applying 
the terms of clause (i), reduced by 1 percent.". 
Subtitle B—^Postal Service 
SEC. 11101. PAYMENTS TO BE MADE BY THE UNITED STATES POSTAL 
SERVICE. 
(a) RELATING TO CORRECTED CALCULATIONS FOR PAST RETIRE- 5 use 8348 note. 
MENT COLAs.—^In addition to any other payments required under 
section 8348(m) of title 5, United States Code, or any other provision 
of law, the United States Postal Service shall pay into the Civil 
Service Retirement and Disability Fund a total of $693,000,000, 
of which— 
(1) at least one-third shall be paid not later than September 
30,1996; 
(2) at least two-thirds shall be paid not later than Septem-
ber 30,1997; and 
(3) any remaining balance shall be paid not later than 
September 30,1998. 
(b) RELATING TO CORRECTED CALCULATIONS FOR PAST HEALTH 5 use 8906 note. 
BENEFITS.—In addition to any other payments required under sec-
tion 8906(gX2) of title 5, United States Code, or any other provision 
of law, the United States Postal Service shall pay into the Employ-
ees Health Benefits Fund a total of $348,000,000, of which— 
(1) at least one-third shall be paid not later than September 
30,1996; 
(2) at least two-thirds shall be paid not later than Septem-
ber 30,1997; and 
(3) any remaining balance shall be paid not later than 
September 30,1998. 
TITLE XII—VETERANS' AFFAIRS 
PROVISIONS 
Veterans 
Reconciliation 
Act of 1993. 
SEC. 12001. SHORT TITLE. 
This title may be cited as the "Veterans Reconciliation Act 
of 1993". 
38 use 101 note. 
107 STAT. 414 
PUBLIC LAW 103-66—AUG. 10, 1993 
SEC. 12002. EXTENSION OF AUTHORITY TO REQUIRE THAT CERTAIN 
VETERANS AGREE TO MAKE COPAYMENTS IN EXCHANGE 
FOR RECEIVING HEALTH-CARE BENEFITS. 
(a) HOSPITAL AND MEDICAL CARE.—Section 8013(e) of the Omni-
bus Budget Reconciliation Act of 1990 (Public Law 101-508; 38 
U.S.C. 1710 note) is amended— 
(1) by striking out "September 30, 1992" in the first sen-
tence and inserting in lieu thereof "September 30, 1998"; and 
(2) by striking out the second sentence. 
(b) OUTPATIENT MEDICATIONS.—Section 1722A(c) of title 38, 
United States Code, is amended— 
(1) by striking out "September 30, 1992" in the first sen-
tence and inserting in lieu thereof "September 30, 1998"; and 
(2) by striking out the second sentence. 
SEC. 12003. EXTENSION OF AUTHORITY FOR MEDICAL CARE COST 
RECOVERY. 
Section 1729(a)(2XE) of title 38, United States Code, is amended 
by striking out Ibefore August 1,1994," and inserting in lieu thereof 
"before October 1,1998,". 
SEC. 12004. EXTENSION OF CERTAIN INCOME VERIFICATION AUTHOR-
ITY. 
Section 5317(g) of title 38, United States Code, is amended 
by striking out "September 30, 1997" and inserting in lieu thereof 
"September 30,1998". 
SEC. 12005. EXTENSION OF LIMITATION ON PENSION FOR CERTAIN 
RECIPIENTS OF MEDICAID-COVERED NURSING HOME 
CARE. 
Section 5503(fK7) of title 38, United States Code, is amended 
by striking out "September 30, 1997" and inserting in lieu thereof 
"September 30,1998". 
SEC. 12006. EXTENSION OF PROCEDURES APPUCABLE TO LIQUIDA-
TION SALES ON DEFAULTED HOME LOANS GUARANTEED 
BY THE DEPARTMENT OF VETERANS AFFAIRS. 
(a) INCLUSION OF LOSSES.—Section 3732(c) of title 38, United 
States Code, is amended— 
(1) in paragraph (IXC), by striking out "resale," and insert-
ing in lieu thereof "resale (including losses sustained on the 
resale of the property),"; and 
(2) in paragraph (11), by striking out "shall" and all that 
follows and inserting in lieu thereof "shall apply to loans closed 
before October 1,1998.". 
38 use 3732 
(b) EFFECTIVE DATE.—The amendments made by this section 
•^o*® 
shall become effective October 1,1993. 
SEC. 12007. LOAN FEES. 
(a) INCREASE IN HOME LOAN FEES.—Subsection (a) of section 
3729 of title 38, United States Code, is amended— 
(1) by striking out paragraph (6); and 
(2) by inserting after paragraph (3) the following: 
"(4) With respect to a loan closed after September 30, 1993, 
and before October 1, 1998, for which a fee is collected under 
paragraph (1), the amount of such fee, as computed under para-
graph (2), shall be increased by 0.75 percent of the total loan 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 415 
amount other than in the case of a loan described in subparagraph 
(A), (DXii), or (E) of paragraph (2).". 
(b) FEE FOR MULTIPLE USE OF HOUSING ASSISTANCE.—Sub-
section (a) of such section, as amended by subsection (a) of this 
section, is amended by adding at the end the following: 
''(5)(A) Except as provided in subparagraph (B) of this para-
graph, notwithstanding paragraphs (2) and (4) of this subsection, 
after a veteran has obtained an initial loan pursuant to section 
3710 of this title, the amount of such fee with respect to anv 
additional loan obtained under this chapter by such veteran shall 
be 3 percent of the total loan amount. 
(B) Subparagraph (A) of this paragraph does not apply with 
respect to (i) a loan obtained by a veteran with a downpayment 
described in paragraph (2)(B), (2XC), or (2XDXiii) of this subsection, 
and (ii) loans described in paragraph (2XE) of this subsection. 
''(C) This paragraph applies with respect to a loan closed after 
September 30,1993, and before October 1, 1998.". 
(c) CONFORMING AMENDMENT.—^Paragraph (2) of subsection (a) 
of such section is amended by striking out "paragraph (6)" and 
inserting in lieu thereof "paragraphs (4) and (5)". 
SEC. 12008. POUCY REGARDING COST-OF-LIVING ADJUSTMENT IN 38 USC 1101 
COMPENSATION RATES. 
note. 
(a) POLICY.—^The fiscal year 1994 cost-of-living adjustments 
in the rates of and limitations for compensation payable under 
chapter 11 of title 38, United States Code, and of dependency 
and indemnity compensation payable under chapter 13 of sucn 
title, except as provided in subsection (b) of this section, will be 
no more than a percentage equal to the percentage by which benefit 
amounts payable under title II of the Social Security Act (42 U.S.C. 
401 et seq.) are increased effective December 1, 1993, as a result 
of a determination under section 215(i) of such Act (42 U.S.C. 
415(i)), with all increased monthly rates and Umitations (other 
than increased rates or limitations equal to a whole dollar amount) 
rounded down to the next lower dollar. 
(b) LIMITATION ON FISCAL YEAR 1994 COST-OF-LIVING ADJUST-
MENT F
O
R CERTAIN DIC RECIPIENTS.—(1) During fiscal year 1994, 
the amount of any increase in any of the rates of dependency 
and indemnity compensation in effect under section 1311(aX3) of 
title 38, United States Code, will not exceed 50 percent of the 
new law increase, rounded down (if not an even dollar amoimt) 
to the next lower dollar. 
(2) For purposes of paragraph (1), the new law increase is 
the amount oy which the rate of^ dependency and indemnity com-
pensation provided for recipients under section 1311(aXl) of such 
title is increased for fiscal year 1994. 
SEC. 12009. LIMITATION REGARDING COST-OF-LIVING ADJUSTMENTS 
FOR MONTGOMERY GI BILL BENEFITS. 
(a) BENEFITS PAYABLE UNDER CHAPTER 30.—Section 3015(g) 
of title 38, United States Code, is amended— 
(1) by striking out "(1)" and all that follows through "(2)" 
and by redesignatmg subparagraphs (A) and (B) as paragraphs 
(1) and (2), respectively; and 
(2) in paragraph (2), as redesignated by paragraph (1) 
of this subsection, by striking out "subparagraph (A)" and 
inserting in lieu thereof "paragraph (1)". 
107 STAT. 416 
PUBLIC LAW 103-66—AUG. 10, 1993 
(b) BENEFITS PAYABLE UNDER SELECTED RESERVE PROGRAM.— 
Section 2131(b)(2) of title 10, United States Code, is amended— 
(1) by striking out "(A)" the first place it appears and 
all that follows through "(B) With respect to" and inserting 
in lieu thereof "With respect to"; 
(2) by redesignating clauses (i) and (ii) as subparagraphs 
(A) and (B), respectively; and 
(3) in subparagraph (B), as redesignated by paragraph 
(2) of this subsection, by striking out "clause (i)" and inserting 
in lieu thereof "subparagraph (A) . 
10 use 2131 
(c) LIMITATION.—^The fiscal year 1995 cost-of-living adiustments 
"°*®- 
in the rates of educational assistance payable under chapter 30 
of title 38, United States Code, and under chapter 106 of title 
10, United States Code, shall be the percentage equal to 50 percent 
of the percentage by which such assistance would be increased 
under section 3015(g) of title 38, and under section 2131(bX2) 
of title 10, United States Code, respectively, but for this section. 
(d) TECHNICAL AMENDMENTS.—(1) Section 301(c) of PubHc Law 
38 use 3015. 
102-568 (106 Stat. 4326) is amended by striking out "Section 
3015(0" and inserting in lieu thereof "Section 3015(g) (as redesig-
nated by section 307(a)(1))". 
38 use 3015. 
(2) Section 307(a) of such Public Law (106 Stat. 4328) is 
amended by striking out "(as amended by section 301)". 
38 use 3015 
(3) The amendments made by paragraphs (1) and (2) shall 
^°^' 
apply as if included in the enactment of Public Law 102-568. 
TITLE XIII—REVENUE, HEALTH CARE, 
HUMAN RESOURCES, INCOME SECU-
RITY, CUSTOMS AND TRADE, FOOD 
STAMP PROGRAM, AND TIMBER SALE 
PROVISIONS 
Revenue 
CHAPTER 1—REVENUE PROVISIONS 
Reconciliation 
26 l?SC l^note 
®^^* ^^^^' 
SHORT TITLE; ETC. 
(a) SHORT TITLE.—^This chapter may be cited as the "Revenue 
Reconciliation Act of 1993". 
(b) AMENDMENT TO 1986 CODE.—Except as otherwise expressly 
provided, whenever in this chapter cui 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 Internal Revenue Code of 
1986. 
26 use 15 note. 
(c) SECTION 15 NOT To APPLY.—Except in the case of the 
amendments made by section 13221 (relating to corporate rate 
increase), no amendment made by this chapter shall be treated 
as a change in a rate of tax for purposes of section 15 of the 
Internal Revenue Code of 1986. 
26 u s e 6654 
(d) WAIVER OF ESTIMATED TAX PENALTIES.—No addition tO 
note. 
^^Qj^ gjjg^U YyQ made under section 6654 or 6655 of the Internal 
Revenue Code of 1986 for any period before Ai}ril 16, 1994 (March 
16, 1994, in the case of a corporation), with respect to any 
iinderpa3nnent to the extent such imderpayment was created or 
increased by any provision of this chapter. 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 417 
(e) TABLE OF CONTENTS.— 
CHAPTER 1—REVENUE PROVISIONS 
Sec. 13001. Short title; etc. 
Subchapter A—Training and Investment Incentives 
PART I—PROVISIONS RELATING TO EDUCATION AND TRAINING 
Sec. 13101. Employer-provided educational assistance. 
Sec. 13102. Targeted jobs credit. 
PART II—INVESTMENT INCENTIVES 
SUBPART A—RESEARCH AND CLINICAL TESTING CREDITS 
Sec. 13111. Extension of research and clinical testing credits. 
Sec. 13112. Modification of 
fixed 
base percentage for startup companies. 
SUBPART B—CAPITAL GAIN PROVISIONS 
Sec. 13113. 50-percent exclusion for gain 
fix>m 
certain small business stock. 
Sec. 13114. Rollover of gain from sale of publicly traded securities into specialized 
small business investment compames. 
SUBPART C—^MODIFICATION TO MINIMUM TAX DEPRECIATION RULES 
Sec. 13115. Modification to minimum tax depreciation rules. 
SUBPART D—INCREASE IN EXPENSE TREATMENT FOR SMALL BUSINESSES 
Sec. 13116. Increase in expense treatment for small businesses. 
SUBPART E—TAX EXEMPT BONDS 
Sec. 13121. High-speed intercity rail facility bonds exempt 
fi:t)m 
State volume cap. 
Sec. 13122. Permanent extension of qualified small issue bonds. 
PART III—EXPANSION AND SIMPUFICATION OF EARNED INCOME TAX CREDIT 
Sec. 13131. Expansion and simplification of earned income tax credit. 
PART IV—INCENTIVES FOR INVESTMENT IN REAL ESTATE 
SUBPART A—EXTENSION OF QUALIFIED MORTGAGE BONDS AND LOW-INCOME HOUSING 
CREDIT 
Sec. 13141. Permanent extension of qualified mortgage bonds. 
Sec. 13142. Low-income housing cremt. 
SUBPART B—PASSIVE LOSS RULES 
Sec. 13143. Application of passive loss rules to rental real estate activities. 
SUBPART C—PROVISIONS RELATING TO REAL ESTATE INVESTMENTS BY PENSION FUNDS 
Sec. 13144. Real estate property acquired by a qualified organization. 
Sec. 13145. Repeal of special treatment of publicly treated partnerships. 
Sec. 13146. Title-holding companies permitted to receive small amounts of unre-
lated business taxable income. 
Sec. 13147. Exclusion fi«m unrelated business tax of gains 
fi:t>m 
certain property. 
Sec. 13148. Exclusion frotn unrelated business tax of certain fees and option pre-
miums. 
Sec. 13149. Treatment of pension fimd investments in real estate investment 
trusts. 
SUBPART D—DISCHARGE OF INDEBTEDNESS 
Sec. 13150. Exclusion 
firom 
gross income for income 
firom 
discharge of qualified real 
property business indebtedness. 
SUBPART 
E—INCREASE 
IN 
RECOVERY 
PERIOD 
FOR 
NONRESIDENTIAL 
REAL 
PROPERTY 
Sec. 13151. Increase in recovery period for nonresidential real property. 
PART V—LUXURY TAX 
Sec. 13161. Repeal of luxury excise taxes other than on passenger vehicles. 
Sec. 13162. Exemption 
fix>m 
luxury excise tax for certain eauipment installed on 
passenger vehicles for use by disabled individuals. 
Sec. 13163. Tax on diesel fuel used in noncommercial boats. 
PART VI—OTHER CHANGES 
Sec. 13171. Alternative minimum tax treatment of contributions of appreciated 
property. 
107 STAT. 418 
PUBLIC LAW 103-66—AUG. 10, 1993 
Sec. 13172. Substantiation requirement for deduction of certain charitable contribu-
tions. 
Sec. 13173. Disclosiire related to quid pro quo contributions. 
Sec. 13174. Temporary extension of deduction for health insurance costs of self-em-
ployed individuals. 
Subchapter B—^Revenue Increases 
PART I—PROVISIONS AFFECTING INDIVIDUALS 
SUBPART A—RATE INCREASES 
Sec. 13201. Increase in top marginal rate under section 1. 
Sec. 13202. Surtax on high-income taxpayers. 
Sec. 13203. Modifications to alternative minimum tax rates and exemption 
amovmts. 
Sec. 13204. Overall limitation on itemized deductions for high-income taxpayers 
made permanent. 
Sec. 13205. Phaseout of personal exemption of high-income taxpayers made perma-
nent. 
Sec. 13206. Provisions to prevent conversion of ordinary income to capital gain. 
SUBPART B—OTHER PROVISIONS 
Sec. 13207. Repeal of limitation on amoimt of wages subject to health insurance 
employment tax. 
Sec. 13208. Top estate and gift tax rates made permanent. 
Sec. 13209. Reduction in deductible portion of business meals and entertainment. 
Sec. 13210. Elimination of deduction for club membership fees. 
Sec. 13211. Disallowance of deduction for certain employee remuneration in excess 
of $1,000,000. 
Sec. 13212. Reduction in compensation taken into account in determining contribu-
tions and benefits under qualified retirement plans. 
Sec. 13213. Modifications to deduction for moving expenses. 
Sec. 13214. Simplification of individual estimated tax safe harbor based on last 
year's tax. 
Sec. 13215. Social security and tier 1 railroad retirement benefits. 
PART II—PROVISIONS AFFECTING BUSINESSES 
Sec. 13221. Increase in top mar^nal rate under section 11. 
Sec. 13222. Denial of deduction Tor lobbying expenses. 
Sec. 13223. Mark to market accounting methoa for securities dealers. 
Sec. 13224. Clarification of treatment of certain FSLIC financial assistance. 
Sec. 13225. Modificationof corporate estimated tax rules. 
Sec. 13226. Modifications of discharge of indebtedness provisions. 
Sec. 13227. Limitation on section 936 credit. 
Sec. 13228. Modification to limitation on deduction for certain interest. 
PART III—FOREIGN TAX PROVISIONS 
SUBPART 
A—CURRENT 
TAXATION 
OF 
CERTAIN 
EARNINGS 
OF 
CONTROLLED 
FOREIGN 
CORPORATIONS 
Sec. 13231. Earnings invested in excess passive assets. 
Sec. 13232. Modification to taxation of investment in United States property. 
Sec. 13233. Other modifications to subpart F. 
SUBPART 
B—ALLOCATION 
OF 
RESEARCH 
AND 
EXPERIMENTAL 
EXPENDITURES 
Sec. 13234. Allocation of research and experimental expenditures. 
SUBPART C—OTHER PROVISIONS 
Sec. 13235. Repeal of certain exceptions for working capital. 
Sec. 13236. Modifications of accuracy-related penalty. 
Sec. 13237. Denial of portfolio interest exemption for contingent interest. 
Sec. 13238. Regulations dealing with conduit arrangements. 
Sec. 13239. Treatment of export of certain softwood logs. 
PART IV—TRANSPORTATION FUELS PROVISIONS 
SUBPART A—^TRANSPORTATION FUELS TAX 
Sec. 13241. Transportation fuels tax. 
SUBPART B—MODIFICATIONS TO TAX ON DIESEL FUEL 
Sec. 13242. Modifications to tax on diesel fuel. 
Sec. 13243. Floor stocks tax. 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 419 
SUBPART C—OTHER PROVISIONS 
Sec. 13244. Increased deposits into Mass Transit Account. 
Sec. 13245. Floor stocks tax on aviation fuel held on October 1, 1995. 
PART V—COMPLIANCE PROVISIONS 
Sec. 13251. Modifications to substantial understatement penalty. 
Sec. 13252. Returns relating to the cancellation of indebtedness by certain financial 
entities. 
PART VI—TREATMENT OP INTANGIBLES 
Sec. 13261. Amortization of goodwill and certain other intangibles. 
Sec. 13262. Treatment of certain pajrments to retired or deceased partner. 
PART VII—^MISCELLANEOUS PROVISIONS 
Sec. 13271. Disallowance of interest on certain overpayments of tax. 
Sec. 13272. Denial of deduction relating to travel expenses. 
Sec. 13273. Increase in withholding from supplemental wage payments. 
Subchapter C—Empowerment 2k>nes, Enterprise Communities, Rural Development 
Investment Areas, Etc. 
PART I—^EMPOWERMENT ZONES, ENTERPRISE COMMUNITIES, AND RURAL 
DEVELOPMENT INVESTMENT AREAS 
Sec. 13301. Designation and treatment of empowerment zones, enterprise commu-
nities, and rural development investment areas. 
Sec. 13302. Technical and conforming amendments. 
Sec. 13303. Effective date. 
PART II—CREDIT FOR CONTRIBUTIONS TO CERTAIN COMMUNITY DEVELOPMENT 
CORPORATIONS 
Sec. 13311. Credit for contributions to certain community development corpora-
tions. 
PART III—INVESTMENT IN INDIAN RESERVATIONS 
Sec. 13321. Accelerated depreciation for property on Indian reservations. 
Sec. 13322. Indian employment credit. 
Subchapter D—Other Provisions 
PART I—DISCLOSURE PROVISIONS 
Sec. 13401. Disclosure of return information for administration of certain veterans 
programs. 
Sec. 13402. Disclosure of return information to carry out income contingent repay-
ment of student loans. 
Sec. 13403. Use of return information for income verification under certain housing 
assistance programs. 
PART II—PUBUC DEBT LIMIT 
Sec. 13411. Increase in public debt limit. 
PART III—-VACCINE PROVISIONS 
Sec. 13421. Excise tax on certain vaccines made permanent. 
Sec. 13422. Continuation coverage imder group health plans of costs of pediatric 
vaccines. 
PART IV—DISASTER REUEF PROVISIONS 
Sec. 13431. Modification of involuntary conversion rules for certain disaster-related 
conversions. 
PART V—MISCELLANEOUS PROVISIONS 
Sec. 13441. Increase in presidential election campaign check-off. 
Sec. 13442 Special rule for hospital services. 
Sec. 13443. Credit for portion of employer social security taxes paid with respect 
to employee cash tips. 
Sec. 13444. Availability and use of death information. 
107 STAT. 420 
PUBLIC LAW 103-66—AUG. 10, 1993 
Subchapter A—^Training and Investment Incentives 
P A R T I — P R O V I S I O N S R E L A T I N G T O 
E D U C A T I O N A N D T R A I N I N G 
SEC. 13101. EMPLOYER-PROVTOED EDUCATIONAL ASSISTANCE. 
(a) EXTENSION OF EXCLUSION.— 
26 use 127. 
(1) IN GENERAL.—Subsection (d) of section 127 (relating 
to educational assistance programs) is amended to read as 
follows: 
"(d) TERMINATION.—^This section shall not apply to taxable years 
beginning after December 31,1994." 
(2) CONFORMING AMENDMENT.—Paragraph (2) of section 
103(a) of the Tax Extension Act of 1991 is hereby repealed. 
(b) COORDINATION WITH SECTION 132.—Paragraph (8) of section 
132(i) is amended to read as follows: 
"(8) APPLICATION OF SECTION TO OTHERWISE TAXABLE EDU-
CATIONAL OR TRAINING BENEFITS.—^Amounts paid or expenses 
incurred by the employer for education or training provided 
to the employee which are not excludable from gross income 
under section 127 shall be excluded from gross income under 
this section if (and only if) such amounts or expenses are 
a working condition fringe." 
(c) EFFECTIVE DATES.— 
26 use 127 note. 
(1) SUBSECTION (a).—The amendments made by subsection 
(a) shall apply to taxable years ending after June 30, 1992. 
26 use 132 note. 
(2) SUBSECTION (b).—^The amendment made by subsection 
(b) shall apply to taxable years beginning after December 31, 
1988. 
SEC. 13102. TARGETED JOBS CREDIT. 
(a) EXTENSION OF CREDIT.—Paragraph (4) of section 51(c) (relat-
ing to termination) is amended by striking "June 30, 1992" and 
inserting "December 31,1994". 
26 use 51 note. 
(b) EFFECTIVE DATE.—The amendment made by subsection (a) 
shall apply to individuals who begin work for the employer after 
June 30,1992. 
PART II—INVESTMENT INCENTIVES 
Subpart A—^Research and Clinical Testing Credits 
SEC. 13111. EXTENSION OF RESEARCH AND CLINICAL TESTING CRED-
ITS. 
(a) RESEARCH CREDIT.— 
(1) IN GENERAL.—Subsection (h) of section 41 (relating to 
credit for research activities) is amended— 
(A) by striking "June 30, 1992" each place it appears 
and inserting "June 30, 1995", and 
(B) by striking "July 1, 1992" each place it appears 
and inserting "July 1,1995". 
(2) CONFORMING AMENDMENT.—Subparagraph (D) of sec-
tion 28(b)(1) is amended by striking "June 30, 1992" and insert-
ing "June 30,1995". 
(b) CLINICAL TESTING CREDIT.—Subsection (e) of section 28 
is amended by striking "June 30, 1992" and inserting "December 
31,1994". 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 421 
(c) EFFECTIVE DATE.—^The amendments made by this section 26 use 28 note. 
shall apply to taxable years ending after Jime 30,1992. 
SEC. 13112. MODIFICATION 
OF 
FIXED-BASE 
PERCENTAGE 
FOR 
STARTUP COMPANIES. 
(a) GENERAL RULE.—Clause (ii) of section 41(cX3)(B) is amended 26 use 4i. 
to read as follows: 
**(ii) FDCED-BASE PERCENTAGE.—^In a case to which 
this subparagraph applies, the fixed-base percentage 
is— 
"(I) 3 percent for each of the taxpayer's 1st 
5 taxable years beginning after December 31,1993, 
for which the taxpayer has qualified research 
expenses, 
"(II) in the case of the taxpayer's 6th such 
taxable year, V
e of the percentage which the aggre-
gate qualified research expenses of the taxpayer 
for the 4th and 5th such taxable years is of the 
aggregate gross receipts of the taxpayer for such 
years, 
"(III) in the case of the taxpayer's 7th such 
taxable year, V
b of the percentage which the aggre-
gate qualified research expenses of the taxpayer 
for the 5th and 6th such taxable years is of the 
aggregate gross receipts of the taxpayer for such 
years, 
"(IV) in the case of the taxpayer's 8th such 
taxable year, V
2 of the percentage which the aggre-
gate qualified research expenses of the taxpayer 
for the 5th, 6th, and 7th such taxable years is 
of the aggregate gross receipts of the taxpayer 
for such years, 
"(V) in the case of the taxpayer's 9th such 
taxable year, % of the percentage which the aggre-
gate qualified research expenses of the taxpayer 
for the 5th, 6th, 7th, and 8th such taxable years 
is of the aggregate gross receipts of the taxpayer 
for such years, 
"(VI) in the case of the taxpayer's 10th such 
taxable year, % of the percentage which the aggre-
gate qualified research expenses of the taxpayer 
for the 5th, 6th, 7th, 8th, and 9th such taxable 
years is of the aggregate gross receipts of the 
taxpayer for such years, and 
"(VII) for taxable years thereafter, the percent-
age which the aggregate qualified 
research 
expenses for any 5 taxable years selected by the 
taxpayer from among the 5th through the 10th 
such taxable years is of the aggregate gross 
receipts of the taxpayer for such selected years.". 
(b) CONFORMING AMENDMENTS.— 
(1) Clause (iii) of section 41(cX3XB) is amended by striking 
"clause (i)" and inserting "clauses (i) and (ii)". 
(2) Subparagraph (D) of section 41(cX3) is amended by 
striking "subparagraph (A)" and inserting "subparagraphs (A) 
and(BXii)". 
107 STAT. 422 
PUBLIC LAW 103-66—AUG. 10, 1993 
26 use 41 note. 
(c) EFFECJTIVE DATE.—^The amendments made by this section 
shall apply to taxable years beginning after December 31, 1993. 
Subpart B—Capital Gain Provisions 
SEC. 13113. 50-PERCENT EXCLUSION FOR GAIN FROM CERTAIN SMALL 
BUSINESS STOCK. 
(a) GENERAL RULE.—^Part I of subchapter P of chapter 1 (relat-
ing to capital gains and losses) is amended by adding at the end 
thereof the following new section: 
'^EC. 1202. 60-PERCENT EXCLUSION FOR GAIN FROM CERTAIN SMALL 
BUSINESS STOCK. 
"(a) 50-PERCENT EXCLUSION.—In the case of a taxpayer other 
than a corporation, ^oss income shall not include 50 percent of 
any gain from the sale or exchange of qualified small business 
stock held for more than 5 years. 
"(b) PER-ISSUER LIMITATION ON TAXPAYER'S ELIGIBLE GAIN.— 
"(1) IN GENERAL.—If the taxpayer has eligible gain for 
the taxable year from 1 or more dispositions of stock issued 
by any corporation, the aggregate amount of such gain from 
dispositions of stock issued by such corporation which may 
be taken into accoimt under subsection (a) for the taxable 
year shall not exceed the greater of— 
"(A) $10,000,000 reduced by the aggregate amount of 
eligible gain taken into accoimt by the taxpayer under 
subsection (a) for prior taxable years and attributable to 
dispositions of stock issued by such corporation, or 
"(B) 10 times the aggregate adjusted bases of qualified 
small business stock issued by such corporation and dis-
posed of by the taxpayer during the taxable year. 
For purposes of subparagraph (B), the adjusted basis of any 
stock shall be determined without regard to any addition to 
bsisis after the date on which such stock was originally issued. 
"(2) ELIGIBLE GAIN.—^For purposes of this subsection, the 
term 'eligible gain' means any gain from the sale or exchange 
of qualified small business stock held for more than 5 years. 
"(3) TREATMENT OF MARRIED INDIVIDUALS.— 
"(A) SEPARATE RETURNS.—In the c£ise of a separate 
return by a married individual, paragraph (IXA) shall be 
applied by substituting '$5,000,000' for '$10,000,000'. 
"(B) ALLOCATION OF EXCLUSION.—In the case of any 
joint return, the amount of gain taken into account under 
subsection (a) shall be allocated equally between the 
spouses for purposes of applying this subsection to subse-
quent taxable years. 
**(C) MARITAL STATUS.—^For purposes of this subsection, 
marital status shall be determined under section 7703. 
"(c) QUALIFIED SMALL BUSINESS STOCK.—For purposes of this 
section— 
"(1) IN GENERAL.—^Except as otherwise provided in this 
section, the term 'qualified small business stock' means any 
stock in a C corporation which is originally issued after the 
date of the enactment of the Revenue Reconciliation Act of 
1993, if— 
"(A) as of the date of issuance, such corporation is 
a qualified small business, and 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 423 
"(B) except as provided in subsections (f) and (h), such 
stock is acQuired by the taxpayer at its original issue 
(directly or through an underwriter)— 
"(i) in exchange for money or other property (not 
including stock), or 
"(ii) as compensation for services provided to such 
corporation (other than services performed as an 
underwriter of such stock). 
"(2) ACTIVE BUSINESS REQUIREMENT; ETC.— 
"(A) IN GENERAL.—Stock in a corporation shall not 
be treated as qualified small business stock unless, during 
subst£uitially £ul of the taxpayer's holding period for such 
stock, such corporation meets the active business require-
ments of subsection (e) and such corporation is a C corpora-
tion. 
"(B) 
SPECIAL RULE FOR CERTAIN SMALL BUSINESS 
INVESTMENT COMPANIES.— 
"(i) WAIVER OF ACTIVE BUSINESS REQUIREMENT.— 
Notwithstanding any provision of subsection (e), a cor-
poration shall be treated as meeting the active business 
requirements of such subsection for any period during 
wMch such corporation qualifies as a specialized small 
business investment company. 
"(ii) SPECIALIZED SMALL BUSINESS INVESTMENT 
COMPANY.—^For purposes of clause (i), the term 'special-
ized small business investment compan/ means any 
eli^ble corporation (as defined in subsection (eX4)) 
which is licensed to operate under section 301(d) of 
the Small Business Investment Act of 1958 (as in 
effect on May 13,1993). 
"(3) CERTAIN PURCHASES BY CORPORATION OF ITS OWN 
STOCK.— 
*
*
(
A
) REDEMPTIONS FROM TAXPAYER OR RELATED PER-
SON.—Stock acquired b^ the taxpa>rer shall not be treated 
as qualified small busmess stock if, at any time during 
the 4-year period beginning on the date 2 ^ears before 
the issuance of such stock, the corporation issuing such 
stock purchased (directly or indirectly) any of its stock 
firom tne taxpayer or fiiom a person related (within the 
meaning of section 267(b) or 707(b)) to the taxpayer. 
"(B) SIGNIFICANT REDEMPTIONS.—Stock issued by a cor-
poration shall not be treated as qualified business stock 
if, during the 2-year period beginning on the date 1 year 
before the issuance or such stoK:k, such corporation made 
1 or more purchases of its stock with an aggregate value 
(as of the time of the respective purchases) exceeding 5 
percent of the aggregate value of all of its stock as of 
the beginning of such 2-year period. 
"(C) TREATMENT OF CERTAIN TRANSACTIONS.—If any 
transaction is treated under section 304(a) as a distribution 
in redemption of the stock of any corporation, for purposes 
of subparagraphs (A) and (B), such corporation shall be 
treated as purchasing an amoimt of its stock equal to 
the amount treated as such a distribution under section 
304(a). 
"(d) QUALIFIED SMALL BUSINESS.—^For purposes of this 
section— 
69-194 O - 94 - 15 : QL. 3 Part 1 
107 STAT. 424 
PUBLIC LAW 103-66—AUG. 10, 1993 
"(1) IN GENERAL.—^The term 'qualified small business' 
means any domestic corporation which is a C corporation if— 
"(A) the aggregate gross assets of such corporation 
(or any predecessor thereof) at all times on or after the 
date of tiie enactment of the Revenue Reconciliation Act 
of 1993 and before the issuance did not exceed $50,000,000, 
(B) the aggregate gross assets of such corporation 
immediately after the issuance (determined by talang into 
account amounts received in the issuance) do not exceed 
$50,000,000, and 
Reports. 
"(C) such corporation agrees to submit such reports 
to the Secretary and to shareholders as the Secretary may 
require to carry out the purposes of this section. 
**(2) AGGREGATE GROSS ASSETS.— 
"(A) IN GENERAL.—For purposes of paragraph (1), the 
term 'aggregate gross assets' means the amount of cash 
and the aggregate adjusted bases of other property held 
by the corporation. 
"(B) TREATMENT OF CONTRIBUTED PROPERTY.—For pur-
poses of subparagraph (A), the adjusted basis of any prop-
erty contributed to the corporation (or other property with 
a basis determined in whole or in part by reference to 
the adjusted basis of property so contributed) shall be 
determined as if the basis of the property contributed to 
the corporation (immediately after such contribution) were 
equal to its fair market value as of the time of such con-
tribution. 
"(3) AGGREGATION RULES.— 
"(A) IN GENERAL.—All corporations which are members 
of the same psirent-subsidiary controlled group shall be 
treated as 1 corporation for purposes of this subsection. 
"(B) PARENT-SUBSIDIARY CONTROLLED GROUP.—For pur-
poses of subparagraph (A), the term 'parent-subsidiary con-
trolled group' means any controlled group of corporations 
as defined in section 1563(a)(1), except that— 
"(i) 'more than 50 percent' shall be substituted 
for 'at least 80 percent' each place it appears in section 
1563(aXl), and 
"(ii) section 1563(aX4) shall not apply. 
**(e) ACTIVE BUSINESS REQUIREMENT.— 
"(1) IN GENERAL.—^For purposes of subsection (cX2), the 
requirements of this subsection are met by a corporation for 
any period if during such period— 
"(A) at least 80 percent (by value) of the assets of 
such corporation are used by such corporation in the active 
conduct of 1 or more qualified trades or businesses, and 
"(B) such corporation is an eligible corporation. 
"(2) SPECIAL RULE FOR CERTAIN ACTIVITIES.—For purposes 
of paragraph (1), if, in connection with any future qualified 
trade or business, a corporation is engaged in— 
"(A) start-up activities described in section 195(cXlXA), 
"(B) activities resulting in the payment or incurring 
of expenditures which may be treated as research and 
experimental expenditures under section 174, or 
"(C) activities with respect to in-house 
research 
expenses described in section 41(b)(4), 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 425 
assets used in such activities shall be treated as used in the 
active conduct of a qualified trade or business. Any determina-
tion under this paragraph shall be made without regard to 
whether a corporation has any gross income from such activities 
at the time of the determination. 
"(3) QUALIFIED TRADE OR BUSINESS.—For purposes of this 
subsection, the term 'qualified trade or business means any 
trade or business other than— 
"(A) any trade or business involving the performance 
of services in the fields of health, law, engineering, architec-
ture, 
accounting, 
actuarial 
science, performing 
arts, 
consulting, athletics, financial services, brokerage services, 
or any trade or business where the principal asset of such 
trade or business is the reputation or skill of 1 or more 
of its employees, 
''(B) anv banking, insurance, financing, leasing, invest-
ing, or similar business, 
"(C) any farming business (including the business of 
raising or harvesting trees), 
"(D) any business involving the production or extrac-
tion of proaucts of a character with respect to which a 
deduction is allowable under section 613 or 613A, and 
"(E) any business of operating a hotel, motel, res-
taurant, or similar business. 
"(4) ELIGIBLE CORPORATION.—For purposes of this sub-
section, the term 'eligible corporation' means any domestic cor-
poration; except that such term shall not include— 
"(A) a DISC or former DISC, 
"(B) a corporation with respect to which an election 
under section 936 is in effect or which has a direct or 
indirect subsidiary with respect to which such an election 
is in effect, 
"(C) a regulated investment company, real estate 
investment trust, or REMIC, and 
"(D) a cooperative. 
"(5) STOCK IN OTHER CORPORATIONS.— 
"(A) LOOK-THRU IN CASE OF SUBSIDIARIES.—^For pur-
poses of this subsection, stock and debt in any subsidiary 
corporation shall be disregarded and the parent corporation 
shall be deemed to own its ratable share of the subsidiarjr's 
assets, and to conduct its ratable share of the subsidiary's 
activities. 
"(B) PORTFOUO STOCK OR SECURITIES.—A corporation 
shall be treated as failing to meet the requirements of 
paragraph (1) for any period during which more than 10 
percent of the value of its assets (m excess of liabilities) 
consists of stock or securities in other corporations which 
are not subsidiaries of such corporation (other than assets 
described in paragraph (6)). 
"(C) SUBSIDIARY.—For purposes of this paragraph, a 
corporation shall be considered a subsidiary if the parent 
owns more than 50 percent of the combined voting power 
of all classes of stock entitled to vote, or more than 50 
percent in value of all outstanding stock, of such corpora-
tion. 
"(6) WORKING CAPITAL.—For purposes of paragraph (IXA), 
any assets which— 
107 STAT. 426 
PUBLIC LAW 103-66—AUG. 10, 1993 
"(A) are held as a psirt of the reasonably required 
working capital needs of a qualified trade or business of 
the corporation, or 
"(B) are held for investment and are reasonably 
expected to be used within 2 ye&ra to finance research 
and experimentation in a qualified trade or business or 
increases in working capital needs of a qualified trade 
or business, 
shall be treated as used in the active conduct of a qualified 
trade or business. For periods after the corporation has been 
in existence for at least 2 years, in no event may more than 
50 percent of the assets of the corporation qualify as used 
in the active conduct of a qualified trade or business by reason 
of this p£iragraph. 
**(7) MAXIMUM REAL ESTATE HOLDINGS.—A corporation shall 
not be treated as meeting the requirements of paragraph (1) 
for any period during which more than 10 percent of the total 
value of its assets consists of real property which is not used 
in the active conduct of a qualified trade or business. For 
purposes of the preceding sentence, the ownership of, dealing 
m, or renting of real property shall not be treated as the 
active conduct of a qualified trade or business. 
**(8) COMPUTER SOFTWARE ROYALTIES.—For purposes of 
paragraph (1), rights to computer software which produces 
active business computer software royalties (within the mean-
ing of section 543(dXl)) shall be treated as an asset used 
in the active conduct of a trade or business. 
"(f) STOCK ACQUIRED ON CONVERSION OF OTHER STOCK.—If 
any stock in a corporation is acquired solely through the conversion 
of other stock in such corporation which is qualified small business 
stock in the hands of the taxpayer— 
"(1) the stock so acquired shall be treated as qualified 
small business stock in the hands of the taxpayer, and 
"(2) the stock so acquired shall be treated as having been 
held during the period during which the converted stock was 
held, 
"(g) TREATMENT OF PASS-THRU ENTITIES.— 
"(1) IN GENERAL.—If any amount included in gross income 
by reason of holding an interest in a pass-thru entity meets 
the requirements of paragraph (2)— 
"(A) such amount shall be treated as gain described 
in subsection (a), and 
"(B) for purposes of applying subsection (b), such 
amount shall be treated as gain from a disposition of stock 
in the corporation issuing the stock disposed of by the 
pass-thru entity and the taxpayer's proportionate share 
of the adjusted basis of the pass-thru entity in such stock 
shall be taken into account. 
"(2) REQUIREMENTS.—^An amount meets the requirements 
of this paragraph if— 
"(A) such amoimt is attributable to gain on the sale 
or exchange by the pass-thru entity of stock which is quali-
fied small business stock in the hands of such entity (deter-
mined by treating such entity as an individual) and which 
was held, by such entity for more than 5 years, and 
"(B) such amount is includible in the gross income 
of the taxpayer by reason of the holding of an interest 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 427 
in such entity which was held by the taxpayer on the 
date on which such pass-thru entity acquired such stock 
and at all times thereafter before the disposition of such 
stock by such pass-thru entity. 
"(3) LIMITATION BASED ON INTEREST ORIGINALLY HELD BY 
TAXPAYER.—^Paragraph (1) shall not apply to any amount to 
the extent such amount exceeds the amount to which paragraph 
(1) would have applied if such amount were determined by 
reference to the interest the taxpayer held in the pass-thru 
entity on the date the qualified small business stock was 
acquired. 
"(4) PASS-THRU ENTITY.—For purposes of this subsection, 
the term 'pass-thru entitj^ means— 
"(A) any partnership, 
"(B) any S corporation, 
"(C) any regulated investment company, and 
"(D) any common trust fund. 
"(h) CERTAIN TAX-FREE AND OTHER TRANSFERS.—For purposes 
of this section— 
"(1) IN GENERAL.—In the case of a transfer described in 
paragraph (2), the transferee shall be treated as— 
"(A) having acquired such stock in the same manner 
as the transferor, and 
"(B) having held such stock during any continuous 
period immediately preceding the transfer during which 
it was held (or treated as held under this subsection) by 
the transferor. 
"(2) DESCRIPTION OF TRANSFERS.—A transfer is described 
in this subsection if such transfer is— 
"(A) by gift, 
"(B) at death, or 
"(C) from a partnership to a partner of stock with 
respect to which requirements similar to the requirements 
of subsection (g) are met at the time of the transfer (without 
regard to the 5-year holding period requirement). 
"(3) CERTAIN RULES MADE APPLICABLE.—Rules similar to 
the rules of section 1244(dX2) shall apply for purposes of this 
section. 
"(4) 
INCORPORATIONS AND REORGANIZATIONS INVOLVING 
NONQUALIFIED STOCK.— 
"(A) IN GENERAL.—In the case of a transaction 
described in section 351 or a reorganization described in 
section 368, if qualified small business stock is exchanged 
for other stock which would not qualify as qualified small 
business stock but for this subparagraph, such other stock 
shall be treated as qualified small business stock acquired 
on the date on which the exchanged stock was acquired. 
"(B) LIMITATION.—^This section shall apply to gain from 
the sale or exchange of stock treated as qualified small 
business stock by reason of subparagraph (A) only to the 
extent of the gain which would have been recognized at 
the time of the transfer described in subparagraph (A) 
if section 351 or 368 had not applied at such time. The 
preceding sentence shall not apply if the stock which is 
treated as qualified small biisiness stock by reason of 
subparagraph (A) is issued by a corporation which (as 
107 STAT. 428 
PUBLIC LAW 103-66—AUG. 10, 1993 
of the time of the transfer described in subparagraph (A)) 
is a qualified small business. 
^(C) SUCCESSIVE APPUCATION.—For piirposes of this 
paragraph, stock treated as qualified small business stock 
under subparagraph (A) shall be so treated for subsequent 
transactions or reorganizations, except that the limitation 
of subparagraph (B) shall be applied as of the time of 
the first transfer to which such limitation applied (deter-
mined after the application of the second sentence of 
subparagraph (B)). 
**(D) CONTROL TEST.—In the case of a trsuisaction 
described in section 351, this paragraph shall apply only 
if, immediately after the transaction, the corporation issu-
ing the stock owns directly or indirectly stock representing 
control (within the meaning of section 368(c)) of the cor-
poration whose stock was exchanged. 
**(i) BASIS RULES.—For purposes of this section— 
**(1) STOCK EXCHANGED FOR PROPERTY.—In the case where 
the taxpayer transfers property (other than money or stock) 
to a corporation in exchange for stock in such corporation— 
(A) such stock shall be treated as having been acquired 
by the taxpayer on the date of such exchange, and 
"(B) the basis of such stock in the hands of the taxpayer 
shall in no event be less than the fair market value of 
the property exchanged. 
"(2) 
TREATMENT OF CONTRIBUTIONS TO CAPITAL.—If 
the 
adjusted basis of any qualified small business stock is adjusted 
by reason of any contribution to capital after the date on 
which such stock was originally issued, in determining the 
amount of the adjustment by reason of such contribution, the 
basis of the contributed property shall in no event be treated 
as less than its fair market value on the date of the contribu-
tion, 
"(j) TREATMENT OF CERTAIN SHORT POSITIONS.— 
"(1) IN GENERAL.—If the taxpayer has an offsetting short 
position with respect to any qualified small business stock, 
subsection (a) shall not apply to any gain from the sale or 
exchange of such stock unless— 
''(A) such stock was held by the taxpayer for more 
than 5 years as of the first day on which there was such 
a short position, and 
''(B) the taxpayer elects to recognize gain as if such 
stock were sold on such first day for its fair market value. 
"(2) OFFSETTING SHORT POSITION.—^For purposes of para-
graph (1), the taxpayer shall be treated as having an offsetting 
short position with respect to any qualified small business 
stock if— 
''(A) the taxpayer has made a short sale of substantially 
identical property, 
"(B) the taxpayer has acquired an option to sell 
substantially identical property at a fixed price, or 
"(C) to the extent provided in regulations, the taxpayer 
has entered into any other transaction which substantially 
reduces the risk of loss from holding such qualified small 
business stock. 
For purposes of the preceding sentence, any reference to the 
taxpayer shall be treated as including a reference to any person 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 429 
who is related (within the meaning of section 267(b) or 707(b)) 
to the taxpayer. 
"(k) REGULATIONS.—^The Secretary shall prescribe such regula-
tions as may be appropriate to carry out the purposes of this 
section, including regulations to prevent the avoidance of the pur-
poses of this section through split-ups, shell corporations, partner-
ships, or otherwise." 
(b) ONE-HALF OF EXCLUSION TREATED AS PREFERENCE FOR 
MINIMUM TAX.— 
(1) IN GENERAL.—Subsection (a) of section 57 (relating to 26 use 57. 
items of tax preference) is amended by adding at the end 
thereof the following new paragraph: 
"(8) 
EXCLUSION FOR GAINS ON SALE OF CERTAIN SMALL 
BUSINESS STOCK.—^An amount equal to one-half of the amount 
excluded from gross income for the taxable year under section 
1202." 
(2) CONFORMING AMENDMENT.—Subclause (II) of section 
53(d)(l)(B)(ii) is amended by striking "and (6)" and inserting 
"(6), and (8)". 
(c) 
PENALTY FOR FAILURE 
TO 
COMPLY WITH REPORTING 
REQUIREMENTS.—Section 6652 is amended by inserting before the 
last subsection thereof the following new subsection: 
"(k) FAILURE TO MAKE REPORTS REQUIRED UNDER SECTION 
1202.—In the case of a failure to make a report required under 
section 1202(d)(1)(C) which contains the information required by 
such section on the date prescribed therefor (determined with regard 
to any extension of time for filing), there shall be paid (on notice 
and demand by the Secretary and in the same manner as tax) 
by the person failing to make such report, an amount equal to 
$50 for each report with respect to which there was such a failure. 
In the case of any failure due to negligence or intentional disregard, 
the preceding sentence shall be applied by substituting '$100' for 
*$50'. In the case of a report covering periods in 2 or more years, 
the penalty determined under preceding provisions of this sub-
section shall be multiplied by the number of such years." 
(d) CONFORMING AMENDMENTS.— 
(1)(A) Section 172(d)(2) (relating to modifications with 
respect to net operating loss deduction) is amended to read 
as loUows: 
"(2) CAPITAL GAINS AND LOSSES OF TAXPAYERS OTHER THAN 
CORPORATIONS.—In the case of a taxpayer other than a 
corporation— 
"(A) the amount deductible on account of losses from 
sales or exchanges of capital assets shall not exceed the 
amount includable on account of gains from sales or 
exchanges of capital assets; and 
"(B) the exclusion provided by section 1202 shall not 
be allowed." 
(B) Subparagraph (B) of section 172(d)(4) is amended by 
inserting ", (2)(B)," afl^er "paragraph (1)". 
(2) Paragraph (4) of section 642(c) is amended to read 
as follows: 
"(4) ADJUSTMENTS.—To the extent that the aniount other-
wise allowable as a deduction under this subsection consists 
of gain described in section 1202(a), proper adjustment shall 
be made for any exclusion allowable to the estate or trust 
imder section 1202. In the case of a trust, the deduction allowed 
107 STAT. 430 
PUBLIC LAW 103-66—AUG. 10, 1993 
by this subsection shall be subject to section 681 (relating 
to unrelated business income)." 
26 use 643. 
(3) Paragraph (3) of section 643(a) is amended by adding 
at the end thereof the following new sentence: The exclusion 
under section 1202 shall not be taken into account.". 
(4) Paragraph (4) of section 691(c) is amended by striking 
"1201, and 1 2 i r and inserting "1201,1202, and 1211". 
(5) The second sentence of paragraph (2) of section 871(a) 
is amended by inserting "such gains and losses shall be deter-
mined without regard to section 1202 and" after "except that". 
(6) The table of sections for part I of subchapter P of 
chapter 1 is amended by adding after the item relating to 
section 1201 the following new item: 
"Sec. 1202. 5(Kpercent exclusion for gain from certain small business stock." 
26 use 53 note. 
(e) EFFECTIVE DATE.—^The amendments made by this section 
shall apply to stock issued after the date of the enactment of 
this Act. 
SEC. 13114. ROIXOVER OF GAIN FROM SALE OF PUBUCLY TRADED 
SECURITIES INTO SPECIALIZED SMALL BUSINESS 
INVESTMENT COMPANIES. 
(a) IN GENERAL.—^Part III of subchapter O of chapter 1 (relating 
to common nontaxable exchanges) is amended by adding at the 
end the following new section: 
*«EC. 1044. ROLLOVER OF PUBLICLY TRADED SECURITIES GAIN INTO 
SPECIALIZED SMALL BUSINESS INVESTMENT COMPA-
NIES. 
"(a) NONRECOGNITION OF GAIN.—In the case of the sale of 
any publicly traded securities with respect to which the taxpayer 
elects the application of this section, gain from such sale shall 
be recognized only to the extent that the amount realized on such 
sale exceeds— 
"(1) the cost of any common stock or partnership interest 
in a specialized small business investment company purchase 
by the taxpayer during the 60-day period beginning on the 
date of such sale, reduced by 
"(2) any portion of such cost previously taken into account 
under this section. 
This section shall not apply to any gain which is treated as ordinary 
income for purposes of tms subtitle. 
"(b) LIMITATIONS.— 
"(1) LIMITATION ON INDIVIDUALS.—In the case of an individ-
ual, the amoiuit of gain which may be excluded under sub-
section (a) for any taxable year shall not exceed the lesser 
of— 
"(A) $50,000, or 
"(B) $500,000, reduced by the amount of gain excluded 
under subsection (a) for all preceding taxable years. 
"(2) LIMITATION ON c CORPORATIONS.—In the case of a 
C corporation, the amoimt of gain which may be excluded 
under subsection (a) for any taxable year shall not exceed 
the lesser of— 
"(A) $250,000, or 
"(B) $1,000,000, reduced by the amount of gain 
excluded under subsection (a) for all preceding taxable 
years. 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 431 
"(3) SPECIAL RULES FOR MARRIED INDIVIDUALS.—For piir-
poses of this subsection— 
"(A) SEPARATE RETURNS.—In the case of a separate 
return by a married individual, paragraph (1) shall be 
applied by substituting '$25,000' for '$50,000' and '$250,000' 
for '$500,000'. 
"(B) ALLOCATION OF GAIN.—In the case of any joint 
return, the amount of gain excluded imder subsection (a) 
for any taxable year shall be allocated equally between 
the spouses for purposes of appl3dng this subsection to 
subsequent taxable years. 
"(C) MARITAL STATUS.—^For purposes of this subsection, 
marital status shall be determined under section 7703. 
"(4) SPECIAL RULES FOR C CORPORATION.—For purposes of 
this subsection— 
"(A) all corporations which are members of the same 
controlled group of corporations (within the meaning of 
section 52(a)) shall be treated as 1 taxpayer, and 
"(B) any gain excluded under subsection (a) by a prede-
cessor of any C corporation shall be treated as having 
been excluded by such C corporation. 
"(c) DEFINITIONS AND SPECIAL RULES.—For purposes of this 
section— 
"(1) PUBUCLY TRADED SECURITIES.—The term 'publicly 
traded securities' means securities which are traded on an 
established securities market. 
"(2) PURCHASE.—^The term 'purchase' has the meaning 
given such term by section 1043(b)(4). 
"(3) SPECIALIZED SMALL BUSINESS INVESTMENT COMPANY.— 
The term 'specialized small business investment company* 
means any partnership or corporation which is licensed by 
the Small Business Administration imder section 301(d) of the 
Small Business Investment Act of 1958 (as in effect on May 
13,1993). 
"(4) CERTAIN ENTITIES NOT ELIGIBLE.—This section shall 
not apply to any estate, trust, partnership, or S corporation. 
"(d) BASIS ADJUSTMENTS.—If gain from any sale is not recog-
nized by reason of subsection (a), such gain shall be applied to 
reduce (in the order acquired) the basis for determining gain or 
loss of any common stock or partnership interest in any specialized 
small business investment company which is purchased by the 
taxpayer during the 60-day period described in subsection (a). This 
subsection shall not applv for purposes of section 1202." 
(b) 
CONFORMING AMENDMENT.—Paragraph (24) of section 
1016(a) is amended— 
26 use 1016. 
(1) by striking "section 1043" and inserting "section 1043 
or 1044", and 
(2) by striking "section 1043(c)" and inserting "section 
1043(c) or 1044(d), as the case may be". 
(c) CLERICAL AMENDMENT.—The table of sections for part III 
of subchapter O of chapter 1 is amended by adding at the end 
the following new item: 
"Sec. 1044. Rollover of publicly traded securities gain into specialized small 
business investment companies." 
(d) EFFECTIVE DATE.—^The amendments made by this section 26 use ioi6 
shall apply to sales on and after the date of the enactment of "°*®-
this Act, in taxable years ending on and after such date. 
107 STAT. 432 
PUBLIC LAW 103-66—AUG. 10, 1993 
Subpart C—^Modification to Minimum Tax 
Depreciation Rules 
SEC. 13116. MODIFICATION TO MINIMUM TAX DEPRECIATION RULES. 
(a) ELIMINATION OF ACE DEPRECIATION ADJUSTMENT.—Clause 
26 use 56. 
(i) of section 56(g)(4XA) (relating to depreciation adjustments for 
computing adjusted current earnings) is amended by adding at 
the end thereof the following new sentence: T h e prececting sentence 
shall not apply to any property placed in service after December 
31, 1993, and the depreciation deduction with respect to such prop-
erty shall be determined under the rules of subsection (aXlXA). . 
26 use 56 note. 
(b) EFFECTIVE DATES,— 
(1) IN GENERAL.—Except as provided in paragraph (2), the 
amendments made by this section shall apply to property placed 
in service after December 31,1993. 
(2) COORDINATION WITH TRANSITIONAL RULES.—The amend-
ments made by this section shall not apply to any property 
to which paragraph (1) of section 56(a) of the Internal Revenue 
Code of 1986 does not apply by reason of subparagraph (CXi) 
thereof. 
Subpart D—Increase in Expense Treatment for 
Small Businesses 
SEC. 13116. INCREASE 
IN 
EXPENSE 
TREATMENT 
FOR 
SMALL 
BUSINESSES. 
(a) GENERAL RULE.—Paragraph (1) of section 179(b) (relating 
to dollar limitation) is amended by striking "$10,000" and inserting 
"$17,500". 
26 use 179 note. 
(b) EFFECTIVE DATE.—The amendment made by subsection (a) 
shall apply to taxable years beginning after December 31, 1992. 
Subpart E—^Tax Exempt Bonds 
SEC. 13121. HIGH-SPEED INTERCITY RAIL FACILITY BONDS EXEMPT 
FROM STATE VOLUME CAP. 
(a) IN GENERAL.—Paragraph (4) of section 146(g) (relating to 
exemption for certain bonds) is amended by adding at the end 
thereof the following flush sentence: 
"Paragraph (4) shall be applied without regard to '75 percent of 
if all of the property to oe financed by the net proceeds of the 
issue is to be owned by a governmental unit (within the meaning 
of section 142(b)(1))." 
26 use 146 note. 
(b) EFFECTIVE DATE.—^The amendment made by subsection (a) 
shall apply to bonds issued after December 31,1993. 
SEC. 13122. PERMANENT EXTENSION OF QUALIFIED SMALL ISSUE 
BONDS. 
(a) IN GENERAL.—Subparagraph (B) of section 144(aX12) is 
amended to read as follows: 
"(B) BONDS ISSUED TO FINANCE MANUFACTURING FACILI-
TIES AND FARM PROPERTY.—Subparagraph (A) shall not 
apply to any bond issued as part of an issue 95 percent 
or more of the net proceeds of which are to be used to 
provide— 
"(i) any manufacturing facility, or 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 433 
"(ii) any land or property in accordance with sec-
tion 147(c)(2).'' 
(b) EFFECTIVE DATE.—The amendment made by subsection (a) 26 use 144 note. 
shall apply to bonds issued after June 30,1992. 
(c) TREATMENT UNDER INDUCEMENT REGULATIONS.—If the 
1-
year period specified in Treasury Regulation § 1.103-8(aX5) (as 
in effect before July 1, 1993) or any successor regulation would 
(but for this subsection) expire after June 30, 1992, and before 
January 1, 1994, such period shall not expire before January 1, 
1994. 
PART III—EXPANSION AND SIMPLIFICATION 
OF EARNED INCOME TAX CREDIT 
SEC. 13131. EXPANSION AND SIMPLIFICATION OF EARNED INCOME 
TAX CREDIT. 
(a) GENERAL RULE.—Section 32 (relating to earned income 26 use 32. 
credit) is amended by striking subsections (a) and (b) and inserting 
the following: 
"(a) ALLOWANCE OF CREDIT.— 
"(1) IN GENERAL.—In the case of an eligible individual, 
there shall be allowed as a credit against the tax imposed 
by this subtitle for the taxable year an amoimt equal to the 
credit percentage of so much of the taxpayer's earned income 
for the taxable year as does not exceed the earned income 
amount. 
"(2) LIMITATION.—The amount of the credit allowable to 
a taxpayer under paragraph (1) for any taxable year shall 
not exceed the excess (if any) of— 
"(A) the credit percentage of the earned income 
amount, over 
"(B) the phaseout percentage of so much of the adjusted 
gross income (or, if greater, the earned income) of the 
taxpayer for the taxable year as exceeds the phaseout 
amount. 
"(b) PERCENTAGES AND AMOUNTS.—For purposes of subsection 
( a ) -
"(1) PERCENTAGES.—^The credit percentage and the phase-
out percentage shall be determined as follows: 
"(A) IN GENERAL.—In the case of taxable years begin-
ning after 1995: 
^"^'inSijfl^withf^"^ 
The credit percentage is: 
The phaseout percentage 
1 qualifying child 
34 
15.98 
2 or more qualifying 
40 
21.06 
children 
No qualifying children 
7.65 
7.65 
"(B) TRANSITIONAL PERCENTAGES FOR 1995.—In the case 
of taxable years beginning in 1995: 
^" * to^vldull^with:^"* The credit percentage is: 
^he phaseout percentage 
1 qualifying child 
34 
15.98 
2 or more qualifying 
36 
20.22 
children 
No qualifying children 
7.65 
7.65 
107 STAT. 434 
PUBLIC LAW 103-66—AUG. 10, 1993 
"(C) TRANSITIONAL PERCENTAGES FOR 1994.—In the case 
of a taxable year beginning in 1994: 
In the case of an eligible 
q- 
... nercentaire is- 
'"*® phaseout percentage 
individual with: 
^"® *^™**^' percentage is. 
^. 
1 qualifying child 
26.3 
15.98 
2 or more qualifying 30 
17.68 
children 
No qualifying children 
7.65 
7.66 
"(2) AMOUNTS.—^The earned income amount and the phase-
out amoimt shall be determined as follows: 
"(A) IN GENERAL.—^In the case of taxable years begin-
ning after 1994: 
'"'ina^'Si^"' 
""SIZftT"" 
11.eph««,ut.mou„.»: 
1 qualifying child 
$6,000 
$11,000 
2 or more qualifying $8,425 
$11,000 
children 
No qualifying children 
$4,000 
$5,000 
"(B) TRANSITIONAL AMOUNTS.—In the case of a taxable 
year beginning in 1994: 
In the case of an eligible 
The earned income 
qru^ «KOO»,«.,* «.«»..»4-;». 
individual with: 
amount is: 
The phaseout amount is: 
1 qualifying child 
$7,750 
$11,000 
2 or more qualifying $8,425 
$11,000 
children 
No qualifying children 
$4,000 
$5,000". 
26 use 32. 
(b) ELIGIBLE INDIVIDUAL.—Subparagraph (A) of section 32(cXl) 
(defining eligible individual) is amended to read as follows: 
"(A) IN GENERAL.—The term 
'eligible 
individual' 
means— 
"(i) any individual who has a qualifying child for 
the taxable year, or 
"(ii) any other individual who does not have a 
qualifying child for the taxable year, if— 
"(I) such individual's principal place of abode 
is in the United States for more than one-half 
of such taxable year, 
"(II) such individual (or, if the individual is 
married, either the individual or the individual's 
spouse) has attained age 25 but not attained age 
65 before the close of the taxable year, and 
"(III) such individual is not a dependent for 
whom a deduction is allowable imder section 151 
to another taxpayer for any taxable year beginning 
in the same calendar year as such taxable year. 
For purposes of the preceding sentence, marital status 
shall be determined under section 7703." 
(c) INFLATION ADJUSTMENTS.—Section 32(i) (relating to inflation 
adjustments) is amended— 
(1) by striking paragraphs (1) and (2) and inserting the 
following new paragraph: 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 435 
**(1) IN GENERAL.—In the case of any taxable year beginning 
after 1994, each dollar amount contained in subsection (bX2XA) 
shall be increased by an amount equal to— 
"(A) such dollar amount, multiplied by 
"(B) the cost-of-living adjustment determined under 
section l(fK3), for the calendar year in which the taxable 
year begins, by substituting 'calendar year 1993' for 'cal-
endar year 1992'.", and 
(2) by redesignating paragraph (3) as paragraph (2). 
(d) CONFORMING AMENDMENTS.— 
(1) Subparagraph (D) of section 32(cX3) is amended— 
26 use 32. 
(A) by striking "clause (i) or (ii)" in clause (iii) and 
inserting "clause (i)", 
(B) by striking clause (ii), and 
(C) by redesignating clause (iii) as clause (ii). 
(2) Paragraph (3) of section 162(1) is amended to read 
as follows: 
"(3) 
COORDINATION 
WITH 
MEDICAL 
DEDUCTION.—Any 
amoimt paid by a taxpayer for insurance to which paragraph 
(1) applies shall not be taken into account in computing tiie 
amount allowable to the taxpayer as a deduction under section 
213(a)." 
(3) Section 213 is amended by striking subsection (f). 
(4) Subsection (b) of section 3507 is amended by redesignat-
ing paragraphs (2) and (3) as paragraphs (3) and (4), respec-
tively, and by inserting after paragraph (1) the following new 
paragraph: 
"(2) certifies that the employee has 1 or more qualifying 
children (within the meaning of section 32(cX3)) for such taxable 
year,". 
(5) Subparagraph (B) of section 3507(cX2) is amended by 
striking clauses (i) and (ii) and inserting the following: 
"(i) of not more than 60 percent of the credit 
percentage in effect under section 32(bXl) for an 
eligible individual with 1 qualifying child and with 
earned income not in excess of the earned income 
amoimt in effect under section 32(bX2) for such an 
eligible individual, which 
"(ii) phases out at 60 percent of the phaseout 
percentage in effect under section 32(bXl) for such 
an eligible individual between the phaseout amoimt 
in effect under section 32(bX2) for such an eligible 
individual and the amount of earned income at which 
the credit under section 32(a) phases out for such 
an eligible individual, or". 
(6) Section 3507 is amended by adding at the end thereof 
the following new subsection: 
"(f) INTERNAL REVENUE SERVICE NOTIFICATION.—The Internal 
Revenue Service shall take such steps as may be appropriate to 
ensure that taxpayers who have 1 or more qualifying children 
and who receive a refund of the credit under section 32 are aware 
of the availability of earned income advance amounts under this 
section." 
(e) EFFECTIVE DATE.—^The amendments made by this section 
26 use 32 note. 
shall apply to taxable years beginning after December 31, 1993. 
107 STAT. 436 
PUBLIC LAW 103-66—AUG. 10, 1993 
PART 
IV—INCENTIVES 
FOR 
INVESTMENT 
IN 
REAL 
ESTATE 
Subpart A—^Extension of Qualified Mortgage 
Bonds and Low-Income Housing Credit 
SEC. 13141. PERMANENT EXTENSION OF QUALIFIED MORTGAGE 
BONDS. 
26 use 143. 
(a) IN GENERAL.—Paragraph (1) of section 143(a) (defining 
qualified mortgage bond) is amended to read as follows: 
"(1) QUALIFIED MORTGAGE BOND DEFINED.—For purposes 
of this title, the term 'qualified mortgage bond' means a bond 
which is issued as part of a qualified mortgage issue." 
(b) MORTGAGE CREDIT CERTIFICATES.—Section 25 is amended 
by striking subsection (h) and by redesignating subsections (i) and 
(j) as subsections (h) and (i), respectively. 
(c) TREATMENT OF RESALE PRICE CONTROL AND SUBSIDY LIEN 
PROGRAMS.—Subsection (k) of section 143 is amended by adding 
at the end thereof the following new paragraph: 
"(10) TREATMENT OF RESALE PRICE CONTROL AND SUBSIDY 
LIEN PROGRAMS.— 
"(A) IN GENERAL.—^In the case of a residence which 
is located in a high housing cost area (as defined in section 
143(fK5)), the interest of a governmental imit in such resi-
dence by reason of financing provided under any qualified 
program shall not be taken mto account under this section 
(other than subsection (m)), and the acquisition cost of 
the residence which is taken into account under subsection 
(e) shall be such cost reduced by the amount of such financ-
ing. 
"(B) QUALIFIED PROGRAM.—For purposes of subpara-
graph (A), the term 'qualified program* means any govern-
mental program providing mortgage loans (other than 1st 
mortgage loans) or grants— 
"(i) which restricts (throughout the 9-year period 
beginning on the date the financing is provided) the 
resale of the residence to a purchaser qualifying under 
this section and to a price determined by an index 
that reflects less than the full amount of any apprecia-
tion in the residence's value, or 
"(ii) which provides for deferred or reduced interest 
payments on such financing and grants the govern-
mental unit a share in the appreciation of the resi-
dence, 
but only if such financing is not provided directly or 
indirectly through the use of any tax-exempt private activ-
ity bond." 
(d) 
FINANCING ALLOWED FOR CONTRACT FOR DEED AGREE-
MENTS.— 
(1) IN GENERAL.—Paragraph (2) of section 143(d) (relating 
to exceptions to 3-year requirement) is amended— 
(A) by striking "and" at the end of subparagraph (A), 
(B) by adding "and" at the end of subparagraph (B), 
and 
(C) by inserting after subparagraph (B) the following 
new subparagraph: 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 437 
"(C) financing with respect to land described in sub-
section (i)(l)(C) and the construction of any residence 
thereon." 
(2) EXCEPTION TO NEW MORTGAGE REQUIREMENT.—Para-
graph (1) of section 143(i) (relating to mortgages must be new 26 use 143. 
mortgages) is amended by adding at the end thereof the follow-
ing new subparagraph: 
"(C) 
EXCEPTION FOR CERTAIN CONTRACT FOR DEED 
AGREEMENTS.— 
"(i) IN GENERAL.—In the case of land possessed 
under a contract for deed by a mortgagor— 
"(I) whose principal residence (within the 
meaning of section 1034) is located on such land, 
and 
"(II) whose family income (as defined in sub-
section (f)(2)) is not more than 50 percent of 
applicable median family income (as defined in 
subsection (f)(4)), 
the contract for deed shall not be treated as an existing 
mortgage for purposes of subparagraph (A). 
"(ii) CONTRACT FOR DEED DEFINED.—For purposes 
of this subparagraph, the term 'contract for deed' 
means a seller-financed contract for the conveyance 
of land under which— 
"(I) legal title does not pass to the purchaser 
imtil the consideration under the contract is fully 
paid to the seller, and 
"(II) the seller's remedy for nonpayment is 
forfeiture rather than judicial or nonjudicial fore-
closure." 
(3) ACQUISITION COST INCLUDES COST OF LAND.—Clause 
(iii) of section 143(k)(3)(B) is amended by inserting "(other 
than land described in subsection (i)(lXC)(i))" after "cost of 
land". 
(e) FINANCING OF NEW 2-FAMILY RESIDENCES PERMITTED.— 
Paragraph (7) of section 143(k) is amended by adding at the end 
thereof the following flush sentence: 
"Subparagraph (B) shall not apply to any 2-family residence 
if the residence is a targeted area residence and the family 
income of the mortgagor meets the requirement of subsection 
(f)(3)(B)." 
(f) EFFECTIVE DATES.— 
(1) BONDS.—The amendment made by subsection (a) shall 26 use 143 note. 
apply to bonds issued after June 30, 1992. 
(2) CERTIFICATES.—^The amendment made by subsection 26 use 25 note. 
(b) shall apply to elections for periods after June 30, 1992. 
(3) SUBSECTIONS (C) AND (e).—The amendments made by 26 use 143 note. 
subsections (c) and (e) shall apply to qualified mortgage bonds 
issued and mortgage credit certificates provided on or after 
the date of enactment of this Act. 
(4) CONTRACT FOR DEED AGREEMENTS.—The amendments 26 use 143 note. 
made by subsection (d) shall apply to loans originated and 
credit certificates provided after the date of the enactment 
of this Act. 
SEC. 13142. LOW-INCOME HOUSING CREDIT. 
(a) PERMANENT EXTENSION.— 
107 STAT. 438 
PUBLIC LAW 103-66—AUG. 10, 1993 
26 use 42. 
(1) IN GENERAL.—Section 42 (relating to low-income hous-
ing credit) is amended by striking subsection (o). 
26 use 42 note. 
(2) EFFECTIVE DATE.—The amendment made by paragraph 
(1) shall apply to periods ending after Jime 30,1992. 
(b) MODIFICATIONS.— 
(1) HOUSING CREDIT AGENCY DETERMINATION OF REASON-
ABLENESS OF PROJECT COSTS.—Subparagraph (B) of section 
42(mX2) (relating to credit allocated to building not to exceed 
amount necessary to assure project feasibility) is amended— 
(A) by striking "and" at the end of clause (ii), 
(B) by striking the period at the end of clause (iii) 
and inserting ", and", and 
(C) by inserting after clause (iii) the following new 
clause: 
"(iv) the reasonableness of the developmental and 
operational costs of the project." 
(2) UNITS WITH CERTAIN FULL-TIME STUDENTS NOT DISQUALI-
FiED.^Subparagraph (D) of section 42(iX3) (defining low-income 
unit) is amended to read as follows: 
"(D) CERTAIN STUDENTS NOT TO DISQUALIFY UNIT.— 
A unit shall not fail to be treated as a low-income unit 
merely because it is occupied^— 
"(i) by an individual who is— 
"(I) a student and receiving assistance under 
title IV of the Social Security Act, or 
"(II) enrolled in a job training program receiv-
ing assistance under the Job Training Partnership 
Act or imder other similar Federal, State, or local 
laws, or 
"(ii) entirely by full-time students if such students 
are— 
"(I) single parents and their children and such 
parents and children are not dependents (as 
defined in section 152) of another individual, or 
"(II) married and file a joint return." 
(3) TREASURY WAIVERS OP CERTAIN DE MINIMIS ERRORS AND 
RECERTIPICATIONS.—Subsection (g) of section 42 (relating to 
qualified low-income housing projects) is amended by adding 
at the end thereof the following new paragraph: 
"(8) 
WAIVER 
OF CERTAIN 
DE MINIMIS 
ERRORS AND 
RECERTIPICATIONS.—On application by the taxpayer, the Sec-
retary may waive— 
"(A) any recapture under subsection (j) in the case 
of any de minimis error in complying with paragraph (1), 
or 
"(B) any annual recertification of tenant income for 
purposes of this subsection, if the entire building is occu-
pied by low-income tenants." 
(4) DISCRIMINATION AGAINST TENANTS PROHIBITED.—Section 
42(hX6XB) (defining extended low-income housing commitment) 
is amended by redesignating clauses (iv) and (v) as clauses 
(v) and (vi) and by inserting £dter clause (iii) the following 
new clause: 
"(iv) which prohibits the refusal to lease to a holder 
of a voucher or certificate of eligibility under section 
8 of the United States Housing Act of 1937 because 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 439 
of the status of the prospective tenant as such a 
holder,". 
(5) HOME ASSISTANCE NOT TO RESULT IN CERTAIN BUILD-
INGS BEING FEDERALLY SUBSIDIZED.—Paragraph (2) of section 
42(i) (relating to determination of whether building is federally 26 USC 42. 
subsidized) is amended by adding at the end thereof the follow-
ing new subparagraph: 
"(E) BUILDINGS RECEIVING HOME ASSISTANCE.— 
"(i) IN GENERAL.—^Assistance provided under the 
HOME Investment Partnerships Act (as in effect on 
the date of the enactment of this subparagraph) with 
respect to any building shall not be taken into account 
imder subpara|praph (D) if 40 percent or more of the 
residential units in the building are occupied by 
individuals whose income is 50 percent or less of area 
median gross income. Subsection (d)(5)(C) shall not 
apply to any building to which the preceding sentence 
applies. 
**(ii) SPECIAL RULE FOR CERTAIN HIGH-COST HOUS-
ING AREAS.—In the case of a building located in a 
city described in section 142(d)(6), clause (i) shall be 
applied by substituting *25 percent' for *40 percent'." 
(6) EFFECTIVE DATES.— 
2
6 use 42 note. 
(A) IN GENERAL.—^Except as provided in subparagraphs 
(B) and (C), the amendments made by this subsection shall 
apply to— 
(i) determinations under section 42 of the Internal 
Revenue Code of 1986 with respect to hoiising credit 
dollar amounts allocated from State housing credit ceil-
ings after June 30,1992, or 
(ii) buildings placed in service after June 30, 1992, 
to the extent paragraph (1) of section 42(h) of such 
Code does not apply to any building by reason of para-
graph (4) thereof, but only with respect to bonds issued 
after such date. 
(B) WAIVER AUTHORITY AND PROHIBITED DISCRIMINA-
TION.—^The amendments made by paragraphs (3) and (4) 
shall take effect on the date of the enactment of this 
Act. 
(C) HOME ASSISTANCE.—The amendment made by 
paragraph (2) shall apply to periods after the date of the 
enactment of this Act. 
(c) ELECTION TO DETERMINE RENT LIMITATION BASED ON NUM- 2
6 use 4
2 note. 
BER OF BEDROOMS AND DEEP RENT SKEWING.— 
(1) In the case of a building to which the amendments 
made by subsection (eXD or (nX2) of section 7108 of the Reve-
nue Reconciliation Act of 1989 did not apply, the taxpayer 
may elect to have such amendments apply to such bmlding 
if the taxpayer has met the requirements of the procedures 
described in section 42(mXlXB)(iii) of the Internal Revenue 
Code of 1986. 
(2) In the case of the amendment made by such subsection 
(eXl), such election shall apply only with respect to tenants 
first occupying any unit in the building after the date of the 
election. 
(3) In the case of the amendment made by such subsection 
(n)(2), such election shall apply only if rents of low-income 
107 STAT. 440 
PUBLIC LAW 103-66—AUG. 10, 1993 
tenants in such building do not increase as a result of such 
election. 
(4) An election under this subsection may be made only 
during tiie 180-day period beginning on the date of the enact-
ment of this Act and, once made, shall be irrevocable. 
Subpart B—^Passive Loss Rules 
SEC. 13143. APPUCATION OF PASSIVE LOSS RULES TO RENTAL REAL 
ESTATE ACTIVITIES. 
(a) RENTAL REAL ESTATE ACTIYITIES OF PERSONS IN REAL PROP-
ERTY BUSINESS NOT AUTOMATICALLY TREATED AS PASSIVE ACTIVI-
26 use 469. 
TIES.—Subsection (c) of section 469 (defining passive activity) is 
amended by adding at the end thereof the following new paragraph: 
"(7) SPECIAL RULES FOR TAXPAYERS IN REAL PROPERTY BUSI-
NESS.— 
"(A) IN GENERAL.—If this paragraph applies to any 
taxpayer for a taxable year— 
"(i) paragraph (2) shall not apply to any rental 
real estate activity of such taxpayer for such taxable 
year, and 
"(ii) this section shall be applied as if each interest 
of the taxpayer in rental real estate were a separate 
activity. 
Notwithstaiiding clause (ii), a taxpayer may elect to treat 
all interests in rental real estate as one activity. Nothing 
in the preceding provisions of this subparagraph shall be 
construed as Einecting the determination of whether the 
taxpayer materially participates with respect to any 
interest in a limited partnership as a limited partner. 
"(B) TAXPAYERS TO WHOM PARAGRAPH APPLIES.—This 
paragraph shall apply to a taxpayer for a taxable year 
i
f
— 
**(i) more than one-half of the personal services 
performed in trades or businesses oy the taxpayer 
during such taxable year are performed in real prop-
erty trades or businesses in which the taxpayer materi-
ally participates, and 
(ii) such taxpayer performs more than 750 hours 
of services during the taxable year in real property 
trades or businesses in which the taxpayer materially 
participates. 
In tne case of a joint return, the requirements of the 
preceding sentence are satisfied if and only if either spouse 
separately satisfies such requirements. For purposes of the 
preceding sentence, activities in which a spouse materially 
participates shall be determined imder subsection (h). 
"((J) REAL PROPERTY TRADE OR BUSINESS.—For purposes 
of this paragraph, the term 'real property trade or business' 
means any real property development, redevelopment, 
construction, reconstruction, acquisition, conversion, rental, 
operation, management, leasing, or brokerage trade or busi-
ness. 
"(D) SPECIAL RULES FOR SUBPARAGRAPH (B).— 
"(i) CLOSELY HELD C CORPORATIONS.—In the case 
of a closely held C corporation, the requirements of 
subparagraph (B) shall be treated as met for any tax-
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 441 
able year if more than 50 percent of the gross receipts 
of such corporation for such taxable year are derived 
from real property trades or businesses in which the 
corporation materially participates. 
"(ii) PERSONAL SERVICES AS AN EMPLOYEE.—For 
purposes of subparagraph (B), personal services per-
formed as an employee shall not be treated as per-
formed in real property trades or businesses. The 
preceding sentence shall not apply if such emplovee 
IS a 5-percent owner (as defined in section 416(iXlxB)) 
in the employer." 
(b) CONFORMING AMENDMENTS.— 
(1) Paragraph (2) of section 469(c) is amended by striking 26 use 469. 
"The" and inserting "Except as provided in paragraph (7), the . 
(2) Clause (iv) of section 469(iX3XE) is amended by insert-
ing "or any loss tillowable by reason of subsection (cX7)" after 
•loss". 
(c) EFFECTIVE DATE.—The amendments made by this section 26 use 469 note. 
shall apply to taxable years beginning after December 31, 1993. 
Subpart C—^Provisions Relating to Real Estate 
Investments by Pension Funds 
SEC. 13144. REAL ESTATE PROPERTY ACQUIRED BY A QUALIFIED 
ORGANIZATION. 
(a) MODIFICATIONS OF EXCEPTIONS.—Paragraph (9) of section 
514(c) (relating to real property acquired by a qualined organization) 
is amended by adding at the end thereof the following new 
subp£uragraphs: 
"(G) 
SPECIAL RULES FOR PURPOSES OF THE EXCEP-
TIONS.—Except as otherwise provided by regulations— 
"(i) SMALL LEASES DISREGARDED.—For purposes of 
clauses (iii) and (iv) of subparagraph (B), a lease to 
a person described in such clause (iii) or (iv) shall 
be disregarded if no more than 25 percent of the 
leasable floor space in a building (or complex of build-
ings) is covered by the lease and if the lease is on 
commercially reasonable terms. 
"(ii) 
COMMERCIALLY REASONABLE FINANCING.— 
Clause (v) of subparagraph (B) shall not apply if the 
financing is on commercially reasonable terms. 
"(H) QUAUFYING SALES BY FINANCIAL INSTITUTIONS.— 
"(i) IN GENERAL.—In the case of a qualifying sale 
by a financial institution, except as provided in regula-
tions, clauses (i) and (ii) of subparagraph (B) shall 
not apply with respect to financing provided by such 
institution for such sale. 
"(ii) QUALIFYING SALE.—For purposes of this 
clause, there is a qualifying sale by a financial institu-
tion i
f
— 
"(I) a qualified organization acquires property 
described in clause (iii) from a financial institution 
and any gain recognized by the financial institu-
tion with respect to the property is ordinary 
income, 
"(II) the stated principal amount of the financ-
ing provided by the financial institution does not 
107 STAT. 442 
PUBLIC LAW 103-66—AUG. 10, 1993 
exceed the amount of the outstanding indebtedness 
(including accrued but unpaid interest) of the 
financial institution with respect to the property 
described in clause (iii) immediately before the 
acquisition referred to in clause (iii) or (v), which-
ever is applicable, and 
"(III) the present value (determined as of the 
time of the sale and by using the applicable Fed-
eral rate determined under section 1274(d)) of the 
maximimi amoimt payable pursuant to the financ-
ing that is determined by reference to the revenue, 
income, or profits derived from the property cannot 
exceed 30 percent of the total purchase price of 
the property (including the contingent payments), 
"(iii) 
PROPERTY 
TO 
WHICH 
SUBPARAGRAPH 
APPLIES.—^Property is described in this clause if such 
property is foreclosure property, or is real property 
which— 
"(I) was acquired by the qualified organization 
from 
a 
financial 
institution 
which 
is in 
conservatorship or receivership, or from the con-
servator or receiver of such an institution, and 
"(II) was held by the financial institution at 
the time it entered into conservatorship or 
receivership. 
"(iv) FINANCIAL INSTITUTION.—For purposes of this 
subparagraph, the term 'financial institution' means— 
"(I) any financial institution described in sec-
tion 581 or 591(a), 
"(II) any other corporation which is a direct 
or indirect subsidiary of an institution referred 
to in subclause (I) but only if, by virtue of being 
affiliated with such institution, such other corpora-
tion is subject to supervision £md examination by 
a Federal or State agency which regulates institu-
tions referred to in subclause (I), and 
"(III) any person acting as a conservator or 
receiver of an entity referred to in subclause (I) 
or (II) (or any government agency or corporation 
succeeding to the rights or interest of such person), 
"(v) FORECLOSURE PROPERTY.—For purposes of this 
subparagraph, the term 'foreclosure property* means 
any real property acquired by the financial institution 
as the result of having bid on such property at fore-
closure, or by operation of an agreement or process 
of law, after there was a default (or a defaiilt was 
imminent) on indebtedness which such property 
secured.". 
26 use 514. 
(b) CONFORMING AMENDMENT.—Paragraph (9) of section 514(c) 
is amended— 
(1) by adding the following new sentence at the end of 
subparagraph (A): "For purposes of this paragraph, an interest 
in a mortgage shall in no event be treated as real property.", 
and 
(2) by striking the last sentence of subparagraph (B). 
26 u s e 514 note. 
(c) EFFECTIVE DATES.— 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 443 
(1) IN GENERAL.—^The amendments made by this section 
shall apply to acquisitions on or after January 1,1994. 
(2) SMALL LEASES.—The provisions of section 514(c)(9XGXi) 
of the Internal Revenue Code of 1986 shall, in addition to 
any leases to which the provisions apply by reason of paragraph 
(1), apply to leases entered into on or after January 1, 1994. 
SEC. 13145. REPEAL OF SPECIAL TREATMENT OF PUBUCLY TREATED 
PARTNERSHIPS. 
(a) GENERAL RULE.—Subsection (c) of section 512 is amended— 26 use 512. 
(1) by striking paragraph (2), 
(2) by redesignating paragraph (3) as paragraph (2), and 
(3) by striking "paragraph (1) or (2) in paragraph (2) 
(as so redesignated) and inserting ''paragraph (1)". 
(b) EFFECTIVE DATE.—The amendments made by subsection 
26 use 512 note. 
(a) shall apply to partnership years beginning on or after January 
1,1994. 
SEC. 13146. TITLE-HOLDING COMPANIES PERMITTED TO RECEIVE 
SMALL AMOUNTS OF UNRELATED BUSINESS TAXABLE 
INCOME. 
(a) GENERAL RULE.—Paragraph (25) of section 501(c) is 
amended by adding at the end thereof the following new subpara-
graph: 
"(GXi) An organization shall not be treated as failing 
to be described in this paragraph merely by reason of 
the receipt of any otherwise disqualifying income which 
is incidentally derived from the holding of real property. 
"(ii) Clause (i) shall not apply if the amoimt of gross 
income described in such clause exceeds 10 percent of the 
organization's gross income for the taxable year unless 
the organization establishes to the satisfaction of the Sec-
retary that the receipt of gross income described in clause 
(i) in excess of such limitation was inadvertent and reason-
able steps are being taken to correct the circumstances 
giving rise to such income." 
(b) CONFORMING AMENDMENT.—Paragraph (2) of section 501(c) 
is amended by adding at the end thereof the following new sentence: 
"Rules similar to the rules of subparagraph (G) of paragraph (25) 
shall apply for purposes of this paragraph.** 
(c) EFFECTIVE DATE.—The amendments made by this section 
26 use 501 note. 
shall apply to taxable years beginning on or after January 1, 1994. 
SEC. 13147. EXCLUSION FROM UNRELATED BUSINESS TAX OF GAINS 
FROM CERTAIN PROPERTY. 
(a) GENERAL RULE.—Subsection (b) of section 512 (relating 
to modifications) is amended by adding at the end thereof the 
following new paragraph: 
"(16)(A) Notwithstanding paragraph (5XB), there shall be 
excluded all gains or losses from the sale, exchange, or other 
disposition of any real property described in subparagraph (B) 
if— 
"(i) such property was acquired by the organization 
from— 
"(I) a financial institution described in section 581 
or 591(a) which is in conservatorship or receivership, 
or 
107 STAT. 444 
PUBLIC LAW 103-66—AUG. 10, 1993 
"(11) the conservator or receiver of such an institu-
tion (or any government agency or corporation succeed-
ing to the rights or interests of the conservator or 
receiver), 
"(ii) such property is designated by the organization 
within the 9-month period beginning on the date of its 
acquisition as property held for sale, except that not more 
than one-half (by value determined as of such date) of 
property acquired in a single transaction may be so 
designated, 
"(iii) such sale, exchange, or disposition occurs before 
the later of— 
"(I) the date which is 30 months after the date 
of the acquisition of such property, or 
"(II) the date specified by the Secretary in order 
to assure an orderly disposition of property held by 
persons described in subparagraph (A), and 
"(iv) while such property was held by the organization, 
the aggregate expenditures on improvements and develop-
ment activities included in the basis of the property are 
(or were) not in excess of 20 percent of the net selling 
price of such property. 
"(B) Property is described in this subparagraph if it is 
real property which— 
"(i) was held by the financial institution at the time 
it entered into conservatorship or receivership, or 
"(ii) was foreclosure property (as defined in section 
514(c)(9)(HXv)) which secured indebtedness held by the 
financial institution at such time. 
For purposes of this subparagraph, real property includes an 
interest in a mortgage." 
26 use 512 note. 
(b) EFFECTIVE DATE.—^The amendment made by subsection (a) 
shall apply to property acquired on or after January 1,1994. 
SEC. 13148. EXCLUSION FROM UNRELATED BUSINESS TAX OF CER-
TAIN FEES AND OPTION PREMIUMS. 
2
6 use 512. 
(a) LOAN COMMITMENT FEES.—Paragraph (1) of section 512(b) 
(relating to modifications) is amended by inserting "amounts 
received or accrued as consideration for entering into agreements 
to make loans," before "and annuities". 
(b) OPTION PREMIUMS.—The second sentence of section 512(bX5) 
is £miended— 
(1) by striking "all gains on" and inserting "all gains or 
losses recognized, in connection with the organization's invest-
ment activities, from", 
(2) by striking ", written by the organization in connection 
with its investment activities," and 
(3) by inserting "or real property and all gains or losses 
from the forfeiture of good-faith deposits (that £U'e consistent 
with established business practice) for the purchase, sale, or 
lease of real property in connection with the organization's 
investment activities" before the period. 
26 use 512 note. 
(c) EFFECTIVE DATE.—The amendments made by this section 
shall apply to amounts received on or after January 1,1994. 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 445 
SEC. 13149. TREATMENT OF PENSION FUND INVESTMENTS IN REAL 
ESTATE INVESTMENT TRUSTS. 
(a) GENERAL RULE.—Subsection (h) of section 856 (relating 26 use 856. 
to closely held determinations) is amended by adding at the end 
thereof the following new paragraph: 
"(3) TREATMENT OF TRUSTS DESCRIBED IN SECTION 40i(a).— 
"(A) LOOK-THRU TREATMENT.— 
"(i) IN GENERAL.—Except as provided in clause 
(ii), in determining whether the stock ownership 
requirement of section 542(a)(2) is met for purposes 
of paragraph (IXA), any stock held by a qualified trust 
shall be treated as held directly by its beneficiaries 
in proportion to their actuarial interests in such trust 
and shall not be treated as held by such trust. 
"(ii) 
CERTAIN RELATED TRUSTS NOT ELIGIBLE.— 
Clause (i) shall not apply to any qualified trust if 
one or more disqualified persons (as defined in section 
4975(e)(2), without regard to subparagraphs (B) and 
(I) thereof) with respect to such qualified trust hold 
in the aggregate 5 percent or more in value of the 
interests in the real estate investment trust and such 
real estate investment trust has accumulated earnings 
and profits attributable to any period for which it 
did not qualify as a real estate investment trust. 
"(B) COORDINATION WITH PERSONAL HOLDING COMPANY 
RULES.—If any entity qualifies as a real estate investment 
trust for any taxable year by reason of subparagraph (A), 
such entity shall not be treated as a personal holding 
company for such taxable year for purposes of part II 
of subchapter G of this chapter. 
"(C) TREATMENT FOR PURPOSES OF UNRELATED BUSI-
NESS TAX.—If any qualified trust holds more than 10 per-
cent (by value) of the interests in any pension-held REIT 
at any time during a taxable year, the trust shall be 
treated as having for such taxable year gross income from 
an unrelated trade or business in an amount which bears 
the same ratio to the aggregate dividends paid (or treated 
as paid) by the REIT to the trust for the taxable year 
of the REIT with or within which the taxable year of 
the trust ends (the 'REIT year*) as— 
"(i) the gross income (less direct expenses related 
thereto) of the REIT for the REIT year from unrelated 
trades or businesses (determined as if the REIT were 
a qualified trust), bears to 
"(ii) the gross income (less direct expenses related 
thereto) of the REIT for the REIT year. 
This subparagraph shall apply only if the ratio determined 
under the preceding sentence is at least 5 percent. 
"(D) PENSION-HELD REIT.—The purposes of subpara-
graph (C)— 
"(i) IN GENERAL.—^A real estate investment trust 
is a pension-held REIT if such trust would not have 
qualified as a real estate investment trust but for 
the provisions of this paragraph and if such trust is 
predominantly held by qualified trusts. 
107 STAT. 446 
PUBLIC LAW 103-66—AUG. 10, 1993 
"(ii) 
PREDOMINANTLY HELD.—For 
purposes 
of 
clause (i), a real estate investment trust is predomi-
nantly held by qualified trusts if— 
"(I) at least 1 qualified trust holds more than 
25 percent (by value) of the interests in such real 
estate investment trust, or 
"(II) 1 or more qualified trusts (each of whom 
own more than 10 percent by value of the interests 
in such real estate investment trust) hold in the 
aggregate more than 50 percent (by value) of the 
interests in such real estate investment trust. 
"(E) QUALIFIED TRUST.—For purposes of this para-
graph, the term 'qualified trust' means any trust described 
m section 401(a) and exempt from tax under section 
501(a)." 
26 use 856 note. 
(b) EFFECTIVE DATE.—The amendment made by this section 
shall apply to taxable years beginning after December 31, 1993. 
Subpart D—^Discharge of Indebtedness 
SEC. 13150. EXCLUSION FROM GROSS INCOME FOR INCOME FROM DIS-
CHARGE OF QUAUFIED REAL PROPERTY BUSINESS 
INDEBTEDNESS. 
26 use 108. 
(a) IN GENERAL.—Paragraph (1) of section 108(a) (relating to 
income from discharge of indebtedness) is amended by striking 
"or" at the end of subparagraph (B), by striking the period at 
the end of subparagrapn (C) and inserting ", or", and by adding 
at the end the following new subparagraph: 
"(D) in the case of a taxpayer other than a C corporation, 
the indebtedness discharged is qualified real property business 
indebtedness." 
(b) QUALIFIED REAL PROPERTY BUSINESS INDEBTEDNESS.—Sec-
tion 108 is amended by inserting after subsection (b) the following 
new subsection: 
"(c) TREATMENT OF DISCHARGE OF QUALIFIED REAL PROPERTY 
BUSINESS INDEBTEDNESS.— 
"(1) BASIS REDUCTION.— 
"(A) IN GENERAL.—^The amount excluded from gross 
income under subparagraph (D) of subsection (a)(1) shall 
be applied to reduce the basis of the depreciable real prop-
erty of the taxpayer. 
"(B) CROSS REFERENCE.—For provisions making the 
reduction described in subparagraph (A), see section 1017. 
"(2) LIMITATIONS.— 
"(A) INDEBTEDNESS IN EXCESS OF VALUE.—The amount 
excluded under subparagraph (D) of subsection (a)(1) with 
respect to any Qualified real property business indebtedness 
shall not exceed the excess (if any) of— 
"(i) the outstanding principal amount of such 
indebtedness (immediately before the discharge), over 
"(ii) the fair market value of the real property 
described in paragraph (3)(A) (as of such time), reduced 
by the outstanding principal amount of any other quali-
fied real property business indebtedness secured by 
such property (as of such time). 
"(B) 
OVERALL 
LIMITATION.—^The amount 
excluded 
under subparagraph (D) of subsection (a)(1) shall not exceed 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 447 
the aggregate adjusted bases of depreciable real property 
(determined after any reductions under subsections (b) and 
(g)) held by the taxpayer immediately before the discharge 
(other than depreciable real property acquired in con-
templation of such discharge). 
"(3) QUAUFIED REAL PROPERTY BUSINESS INDEBTEDNESS.— 
The term 'qiialified real property business indebtedness' means 
indebtedness which— 
''(A) was incurred or assumed by the taxpayer in 
connection with real property used in a trade or business 
and is secured by such real property, 
**(B) was incurred or assumed before January 1, 1993, 
or if incurred or assumed on or after such date, is qualified 
acquisition indebtedness, and 
"(C) with respect to which such taxpayer makes an 
election to have this paragraph apply. 
Such term shall not include qualified farm indebtedness. 
Indebtedness under subparagraph (B) shall include indebted-
ness resulting from the refinancing of indebtedness under 
subparagraph (B) (or this sentence), but only to the extent 
it does not exceed the amoimt of the indebtedness being 
refinanced. 
"(4) QUAUFIED ACQUISITION INDEBTEDNESS.—For purposes 
of paragraph (3)(B), the term 'qualified acquisition indebted-
ness' means, with respect to any real property described in 
paragraph (3XA), indebtedness incurred or assumed to acquire, 
construct, reconstruct, or substantially improve such property. 
"(5) REGULATIONS.—^The Secretary shall issue such regula-
tions as are necessary to carry out this subsection, including 
regulations preventing the abuse of this subsection through 
cross-coUateralization or other means." 
(c) TECHNICAL AMENDMENTS.— 
(1) Subparagraph (A) of section 108(aX2) is amended by 26 use 108. 
striking "and (C)" and inserting ", (C), and (D)". 
(2) Subparagraph (B) of section 108(a)(2) is amended to 
read as follows: 
*
*
(
B
) INSOLVENCY EXCLUSION TAKES PRECEDENCE OVER 
QUALIFIED FARM EXCLUSION AND QUAUFIED REAL PROPERTY 
BUSINESS EXCLUSION.—Subparagraphs (C) and (D) of para-
graph (1) shall not apply to a discharge to the extent 
the taxpayer is insolvent." 
(3) Subsection (d) of section 108 is amended— 
(A) by striking "subsections (a), (b), and (g)" in para-
graphs (6) and (7XA) and inserting "subsections (a), (b), 
(c), and (g)", 
(B) by striking "SUBSECTIONS (a), (b), AND (g)" in the 
subsection heading and inserting "CERTAIN PROVISIONS", 
and 
(C) by striking "SUBSECTIONS (a), (b), AND (g)" in the 
headings of paragraphs (6) and (7XA) and inserting "CER-
TAIN PROVISIONS". 
(4) Subparagraph (B) of section 108(dX7) is amended by 
adding at the end thereof the following new sentence: "The 
preceding sentence shall not apply to any discharge to the 
extent that subsection (aXlXD) applies to such discharge." 
107 STAT. 448 
PUBLIC LAW 103-66—AUG. 10, 1993 
26 use 108. 
(5) Subparagraph (A) of section 108(dX9) is amended by 
inserting "or under paragraph (3XB) of subsection (c)" after 
"subsection (b)". 
(6) Paragraph (2) of section 1017(a) is amended by striking 
"or (bXSr and inserting ", (bX5), or (cXD". 
(7) Subparagraph (A) of section 10170>X3) is amended by 
inserting "or (cXl)" after "subsection (bXS)". 
(8) Section 1017(bX3) is amended by adding at the end 
the following new subparagraph: 
"(F) SPECIAL RULES FOR QUALIFIED REAL PROPERTY 
BUSINESS INDEBTEDNESS.—^In the case of any amount which 
under section 108(cXl) is to be applied to reduce basis— 
"(i) depreciable property shall only include depre-
ciable real property for purposes of subparagraphs (A) 
and (C), 
"(ii) subparagraph (E) shall not apply, and 
"(iii) in the case of property taken into account 
under section 108(cX2XB), the reduction with respect 
to such property shall be made as of the time imme-
diately before disposition if earlier than the time under 
subsection (a)." 
(9) Paragraph (1) of section 703(b) is amended by striking 
"subsection (bXS)" and inserting "subsection (bX5) or (cX3) . 
26 use 108 note. 
(d) EFFECTIVE DATE.—^The amendments made by this section 
shall apply to discharges after December 31, 1992, in taxable years 
ending after such date. 
Subpart E—^Increase in Recovery Period for 
Nonresidential Real Property 
SEC. 13151. INCREASE IN RECOVERY PERIOD FOR NONRESIDENTIAL 
REAL PROPERTY. 
(a) GENERAL RULE.—Paragraph (1) of section 168(c) (relating 
to applicable recovery period) is amended by striking the item 
relating to nonresidential real property and inserting the following: 
"Nonresidential real property 
39 years.". 
26 use 168 note. 
(b) EFFECTIVE DATE.— 
(1) IN GENERAL.—^Except as provided in paragraph (2), the 
amendment made by subsection (a) shall apply to property 
placed in service by the t£ixpayer on or after May 13, 1993. 
(2) EXCEPTION.—^The amendments made by this section 
shall not apply to property placed in service by the taxpayer 
before January 1,1994, if— 
(A) the taxpayer or a qualified person entered into 
a binding written contract to purchase or construct such 
property before May 13,1993, or 
(B) the construction of such property was commenced 
by or for the taxpayer or a qualified person before 
May 13, 1993. 
For purposes of this paragraph, the term "qualified person" 
means any person who transfers his rights in such a contract 
or such property to the taxpayer but only if the property is 
not placed in service by such person before such rights are 
transferred to the taxpayer. 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 449 
PART V—LUXURY TAX 
SEC. 13161. REPEAL OF LUXURY EXCISE TAXES OTHER THAN ON PAS-
SENGER VEHICLES. 
(a) IN GENERAL.—Subchapter A of chapter 31 (relating to retail 
excise taxes) is amended to read as follows: 
^Subchapter A—^Luxury Passenger Automobiles 
"Sec. 4001. Imposition of tax. 
"Sec. 4002. Ist retail sale; uses, etc. treated as sales; determination of price. 
"Sec. 4003. Special rules. 
<«EC. 4001. IMPOSITION OF TAX. 
"(a) IMPOSITION OF TAX.—There is hereby imposed on the 1st 
retail S£de of any passenger vehicle a tax equal to 10 percent 
of the price for which so sold to the extent such price exceeds 
$30,000. 
"(b) PASSENGER VEHICLE.— 
"(1) IN GENERAL.—For purposes of this subchapter, the 
term 'passenger vehicle' means any 4-wheeled vehicle— 
"(A) which is manufactured primarily for use on public 
streets, roads, and highways, and 
"(B) which is rated at 6,000 pounds unloaded gross 
vehicle weight or less. 
"(2) SPECIAL RULES.— 
"(A) TRUCKS AND VANS.—In the case of a truck or 
van, paragraph (IXB) shall be applied by substituting 'gross 
vehicle weight* for 'imloaded gross vehicle weight'. 
**(B) LIMOUSINES.—In the case of a limousine, para-
graph (1) shall be applied without regard to subparagraph 
(B) thereof. 
"(c) EXCEPTIONS FOR TAXICABS, ETC.—The tax imposed by this 
section shall not apply to the sale of any passenger vehicle for 
use by the purchaser exclusively in the active conduct of a trade 
or business of transporting persons or property for compensation 
or hire. 
"(d) EXEMPTION FOR LAW ENFORCEMENT USES, ETC.—NO tax 
shall be imposed by this section on the sale of any passenger 
vehicle— 
"(1) to the Federal Grovemment, or a State or local govern-
ment, for use exclusively in police, firefighting, search and 
rescue, or other law enforcement or public safety activities, 
or in public works activities, or 
"(2) to any person for use exclusively in providing emer-
gen^ medical services, 
^(e) INFLATION ADJUSTMENT.— 
"(1) IN GENERAL.^If, for any calendar year, the excess 
(if any) o
f
— 
"(A) $30,000, increased by the cost-of-living adjustment 
for the calendar year, over 
"(B) the dollar amoimt in effect under subsection (a) 
for the calendar year, 
is equal to or greater than $2,000, then the $30,000 amount 
in subsection (a) and section 4003(a) (as previously adjusted 
under this subsection) for any subsequent calendar year shall 
be increased by the amoimt of such excess rounded to the 
next lowest multiple of $2,000. 
107 STAT. 450 
PUBLIC LAW 103-66—AUG. 10, 1993 
"(2) COST-OF-LIVING ADJUSTMENT.—For purposes of para-
graph (1), the cost-of-living acijustment for any calendar year 
shall be the cost-of-living a4justment under section l(fX3) for 
such calendar year, determined by substituting 'calendar year 
1990' for 'calendar year 1992' in subparagraph (B) thereof. 
"(f) TERMlNATlON.^The tax imposed by this section shall not 
apply to any sale or use after December 31,1999. 
"SEC. 4002. 1ST RETAIL SALE; USES, ETC. TREATED AS SALES; DETER-
MINATION OF PRICE. 
"(a) 1ST RETAIL SALE.—^For purposes of this subchapter, the 
term '1st retail sale' means the 1st sale, for a purpose other than 
resale, after manufacture, production, or importation. 
"(b) USE TREATED AS SALE.— 
"(1) IN GENERAL.—If any person uses a passenger vehicle 
(including anv use after importation) before the 1st retail sale 
of such vehicle, then such person shall be liable for tax under 
this subchapter in the same manner as if such vehicle were 
sold at retail by him. 
"(2) EXEMPTION FOR FURTHER MANUFACTURE.—Paragraph 
(1) shall not apply to use of a vehicle as material in the 
manufacture or production of, or as a component part of, 
another vehicle taxable under this subchapter to be manufac-
tured or produced by him. 
"(3) EXEMPTION FOR DEMONSTRATION USE.—^Paragraph (1) 
shall not apply to any use of a passenger vehicle as a dem-
onstrator. 
"(4) EXCEPTION FOR USE AFTER IMPORTATION OF CERTAIN 
VEHICLES.—Paragraph (1) shall not apply to the use of a vehicle 
aft^er importation if the user or importer establishes to the 
satisfaction of the Secretary that the 1st use of the vehicle 
occurred before January 1, 1991, outside the United States. 
"(5) COMPUTATION OF TAX.—In the case of any person made 
liable for tax by paragraph (1), the tax shall be computed 
on the price at wnich similar vehicles are sold at retail in 
the ordinary course of trade, as determined by the Secretary. 
"(c) LEASES CONSIDERED AS SALES.—For purposes of this 
subchapter— 
"(1) IN GENERAL.—Except as otherwise provided in this 
subsection, the lease of a vehicle (including any renewal or 
any extension of a lease or any subsequent lease of such vehicle) 
by any person shall be considered a sale of such vehicle at 
retail. 
"(2) SPECIAL RULES FOR LONG-TERM LEASES.— 
"(A) TAX NOT IMPOSED ON SALE FOR LEASING IN A 
QUALIFIED LEASE.—^The sale of a passenger vehicle to a 
person engaged in a passenger vehicle leasing or rentsd 
trade or business for leasing by such person in a long-
term lease shall not be treated as the 1st retail sale of 
such vehicle. 
"(B) LONG-TERM LEASE.—^For purposes of subparagraph 
(A), the term long-term lease' means any long-term lease 
(as defined in section 4052). 
"(C) SPECIAL RULES.—In the case of a long-term lease 
of a vehicle which is treated as the 1st retail sale of 
such vehicle— 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 451 
"(i) DETERMINATION OF PRICE.—The tax under this 
subchapter shall be computed on the lowest price for 
which the vehicle is sold by retailers in the ordinary 
course of trade. 
**(ii) PAYMENT OF TAX.—Rules similar to the rules 
of section 4217(eX2) shall apply. 
"(iii) No T
A
X WHERE EXEMPT USE BY LESSEE.— 
No tax shall be imposed on any lease payment under 
a long-term lease if the lessee's use of the vehicle 
imder such lease is an exempt use (as defined in section 
4003(b)) of such vehicle. 
"(d) DETERMINATION OF PRICE.— 
"(1) IN GENERAL.—^In determining price for purposes of 
this subchapter— 
"(A) there shall be included any charge incident to 
placing the passenger vehicle in condition ready for use, 
"(B) there shall be excluded— 
"(i) the amount of the tax imposed by this sub-
chapter, 
"(ii) if stated as a separate charge, the amount 
of any retail sales tax imposed by any State or political 
subdivision thereof or the District of Columbia, 
whether the liability for such tax is unposed on the 
vendor or vendee, and 
"(iii) the value of any component of such passenger 
vehicle i
f
— 
"(I) such component is furnished by the Ist 
user of such passenger vehicle, and 
"(II) such component has been used before 
such furnishing, and 
"(C) the price shall be determined without regard to 
any trade-in. 
"(2) OTHER RULES.—Rules similar to the rules of para-
graphs (2) and (4) of section 4052(b) shall apply for purposes 
of this subchapter. 
«SEC. 4003. SPECIAL RULES. 
"(a) SEPARATE PURCHASE OF VEHICLE AND PARTS AND ACCES- Regulations. 
SORIES 
THEREFOR.—^Under 
regulations 
prescribed 
by 
the 
Secretary— 
"(1) IN GENERAL.—^Except as provided in paragraph (2), 
if-
"(A) the owner, lessee, or operator of any passenger 
vehicle installs (or causes to be installed) any part or 
accessory on such vehicle, and 
"(B) such installation is not later than the date 6 
months after the date the vehicle was 1st placed in service, 
then there is hereby imposed on such installation a tax equal 
to 10 percent of the price of such part or accessory and its 
installation. 
"(2) LIMITATION.—^The tax imposed by paragraph (1) on 
the installation of any part or accessory shall not exceed 10 
percent of the excess (if any) o
f
— 
"(A) the sum o
f
— 
"(i) the price of such part or accessory and its 
installation. 
107 STAT. 452 
PUBLIC LAW 103-66—AUG. 10, 1993 
"(ii) the aggregate price of the parts and acces-
sories (and their installation) installed before such part 
or accessory, plus 
"(iii) the price for which the passenger vehicle 
was sold, over 
"(B) $30,000. 
"(3) EXCEPTIONS.—Paragraph (1) shall not apply i
f
— 
''(A) the part or accessory installed is a replacement 
part or accessory, 
"(B) the part or accessory is installed to enable or 
assist an individual with a disability to operate the vehicle, 
or to enter or exit the vehicle, by compensating for the 
effect of such disability, or 
"(C) the aggregate price of the parts and accessories 
(and their installation) described in paragraph (1) with 
respect to the vehicle does not exceed $200 (or such other 
amount or amounts as the Secretary may by regulation 
prescribe). 
The price of any part or accessory (and its installation) to 
which paragraph (1) does not apply by reason of this paragraph 
shall not be taken into account imder paragraph (2XA). 
"(4) INSTALLERS SECONDARILY LIABLE FOR TAX.—The owners 
of the trade or business installing the parts or accessories 
shall be secondarily liable for the tax imposed by this sub-
section. 
"(b) IMPOSITION OF TAX ON SALES, ETC., WITHIN 2 YEARS OF 
VEHICLES PURCHASED TAX-FREE.— 
"(1) IN GENERAL.—If— 
"(A) no tax was imposed under this subchapter on 
the 1st retail sale of any passenger vehicle by reason of 
its exempt use, and 
"(B) within 2 years after the date of such 1st retail 
sale, such vehicle is resold by the purchaser or such pur-
chaser makes a substantial nonexempt use of such vehicle, 
then such sale or use of such vehicle by such purchaser shall 
be treated as the 1st retail sale of such vehicle for a price 
equal to its fair market value at the time of such sale or 
use. 
"(2) EXEMPT USE.—^For purposes of this subsection, the 
term 'exempt use' means any use of a vehicle if the 1st retail 
sale of such vehicle is not taxable under this subchapter by 
reason of such use. 
"(c) PARTS AND ACCESSORIES SOLD WITH TAXABLE PASSENGER 
VEHICLE.—^Parts and accessories sold on, in connection vdth, or 
with the sale of any passenger vehicle shall be treated as part 
of the vehicle. 
"(d) PARTIAL PAYMENTS, ETC.—In the case of a contract, sale, 
or arrangement described in paragraph (2), (3), or (4) of section 
4216(c), rules similar to the rules of section 4217(eX2) shall apply 
for purposes of this subchapter." 
(b) TECHNICAL AMENDMENTS.— 
26 use 4221. 
(1) Subsection (c) of section 4221 is amended by striking 
"4002(b), 4003(c), 4004(a)'' and inserting "4001(d)''. 
(2) Subsection (d) of section 4222 is amended by striking 
"4002(b), 4003(c), 4004(3)" and inserting "4001(d)''. 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 453 
(3) The table of subchapters for chapter 31 is amended 
by striking the item relating to subchapter A and inserting 
the following: 
"Subchapter A. Luxury passenger vehicles." 
(c) EFFECTIVE DATE.—The amendments made by this section 26 use 400i 
shall take effect on January 1, 1993, except that the provisions ^°^^-
of section 4001(e) of the Internal Revenue Code of 1986 (as amended 
by subsection (a)) shall take effect on the date of the enactment 
of this Act. 
SEC. 13162. EXEMPTION FROM LUXURY EXCISE TAX FOR CERTAIN 
EQUIPMENT INSTALLED ON PASSENGER VEHICLES FOR 
USE BY DISABLED INDIVIDUALS. 
(a) IN GENERAL.—Paragraph (3) of section 4004(b) (relating 
26 use 4004. 
to separate purchase of article and parts and accessories therefor), 
as in effect on the day before the date of the enactment of this 
Act, is amended— 
(1) by striking "or" at the end of subparagraph (A), 
(2) by redesignating subparagraph (B) as subparagraph 
(C), 
(3) by inserting after subparagraph (A) the following new 
subparagraph: 
"(B) the part or accessory is installed on a passenger 
vehicle to enable or assist an individual with a disability 
to operate the vehicle, or to enter or exit tiie vehicle, 
by compensating for the effect of such disability, or^, and 
(4) by inserting after subparagraph (C) the following flush 
sentence: 
'The price of any part or accessory (and its installation) to 
which paragraph (1) does not applv by reason of this paragraph 
shall not be taken into account under paragraph (2)(A).*' 
(b) EFFECTIVE DATE.—The amendments made by this section 
26 use 4004 
shall take effect as if included in the amendments made by section 
""^^ 
11221(a) of the Omnibus Budget Reconciliation Act of 1990. 
(c) PERIOD FOR FILING CLAIMS.—If refund or credit of any 
26use4004 
overpa3nnent of tax resulting from the application of the amend-
ments made by this section is prevented at any time before the 
close of the 1-year period beginning on the date of the enactment 
of this Act by the operation of any law or rule of law (including 
res judicata), refund or credit of such overpajonent (to the extent 
attributable to such amendments) may, nevertheless, be made or 
allowed if claim therefor is filed before the close of such 1-year 
period. 
SEC. 13163. TAX ON DIESEL FUEL USED IN NONCOMMERCIAL BOATS. 
(a) GENERAL RULE.— 
(1) Paragraph (2) of section 4092(a) (defining diesel fuel) 
is amended by striking "or a diesel-powered train" and inserting 
", a diesel-powered train, or a diesel-powered boat". 
(2) Paragraph (1) of section 4041(a) is amended— ^ 
(A) by striking "diesel-powered highway vehicle" each 
place it appears and inserting "diesel-powered highway 
vehicle or diesel-powered boat", and 
(B) by striking "such vehicle" and inserting "such 
vehicle or boat". 
(3) Subparagraph (B) of section 4092(bXl) is amended by 
striking "commercial and noncommercial vessels" each place 
note. 
107 STAT. 454 
PUBLIC LAW 103-66—AUG. 10, 1993 
it appears and inserting "vessels for use in an ofT-highway 
business use (as defined in section 6421(eX2XB))''. 
(b) 
EXEMPTION FOR USE IN FISHERIES OR COMMERCIAL 
2
6 use 6421. 
TRANSPORTATION.—Subparagraph (B) of section 6421(eX2) is 
amended to read as follows: 
*
*
(
B
) USES IN BOATS.— 
"(i) IN GENERAL.—^Except as otherwise provided 
in this subparagraph, the term 'ofiT-highway business 
use' does not include any use in a motorboat. 
**(ii) FISHERIES AND WHALING.—The term 'off-high-
way business use' shall include any use in a vessel 
employed in the fisheries or in the whaling business. 
"(iii) EXCEPTION FOR DIESEL FUEL.—^The term 'off-
highway business use' shall include the use of diesel 
fuel in a boat in the active conduct o
f
— 
"(I) a trade or business of commercial fishing 
or transporting persons or property for compensa-
tion or hire, and 
"(II) except as provided in clause (iv), any 
other trade or business. 
"(iv) NONCOMMERCIAL BOATS.—In the case of a 
boat used predominantly in any activity which is of 
a type generally considered to constitute entertain-
ment, amusement, or recreation, clause (iiiXII) shall 
not apply to— 
"(I) the taxes under sections 4041(aXl) and 
4081 for the period after December 31, 1993, and 
before January 1, 2000, and 
"(II) so much of the tax under sections 
4041(aXl) and 4081 as does not exceed 4.3 cents 
per gallon for the period after December 31, 1999." 
(c) RETENTION OF TAXES IN GENERAL FUND.—Subsection (b) 
of section 9508 (relating to transfers to Leaking Underground Stor-
age Tank Trust Fund) is amended by adding at the end thereof 
the following new sentence: "For purposes of tliis subsection, there 
shall not be t£iken into account the taxes imposed by sections 
4041 and 4081 on diesel fuel sold for use or used as fuel in a 
diesel-powered boat." 
26 use 4041 
(d) EFFECTIVE DATE.—The amendments made by this section 
"°*^ 
shall take effect on January 1,1994. 
PART VI—OTHER CHANGES 
SEC. 13171. ALTERNATIVE MINIMUM TAX TREATMENT OF CONTRIBU-
TIONS OF APPRECIATED PROPERTY. 
(a) REPEAL OF TAX PREFERENCE.—Subsection (a) of section 
57 (as amended by section 13113) is amended by striking paragraph 
(6) (relating to appreciated property charitable deduction) and by 
redesignating paragraphs (7) and (8) as paragraphs (6) and (7), 
respectively. 
(b) EFFECT ON ADJUSTED CURRENT EARNINGS.—Paragraph (4) 
of section 56(g) is amended by adding at the end thereof the loUow-
ing new subparagraph: 
"(J) TREATMENT OF CHARITABLE CONTRIBUTIONS.—Not-
withstanding subparagraphs (B) and (C), no a^ustment 
related to the earnings and profits effects of any charitable 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 455 
contribution shall be made in computing adjusted current 
earnings." 
(c) 
CONFORMING AMENDMENT.—Subclause 
(II) of 
section 
53(dXlXBXii) (as amended by section 13113) is amended by striking 26 use 53. 
"(5), (6), and (8)" and inserting "(5), and (7)". 
(d) EFFECTIVE DATE.—^The amendments made by this section 26 use 53 note. 
shall apply to contributions made after June 30, 1992, except that 
in the case of any contribution of capital gain property which 
is not tangible personal property, such amendments shall apply 
only if the contribution is made after December 31,1992. 
SEC. 13172. SUBSTANTIATION REQUIREMENT FOR DEDUCTION OF 
CERTAIN CHARITABLE CONTRIBUTIONS. 
(a) SUBSTANTIATION REQUIREMENT.—Section 170(f) (providing 
special rules relating to the deduction of charitable contributions 
and gifts) is amended by adding at the end the following new 
paragraph: 
"(8) SUBSTANTIATION REQUIREMENT F
O
R CERTAIN CONTRIBU-
TIONS.— 
"(A) GENERAL RULE.—"So deduction shall be allowed 
under subsection (a) for any contribution of $250 or more 
imless the taxpayer substantiates the contribution b^ a 
contemporaneous written acknowledgment of the contribu-
tion by the donee organization that meets the requirements 
of subparagraph (B). 
"(B) CONTENT O
F ACKNOWLEDGEMENT.—An acknowl-
edgement meets the requirements of this subparagraph 
if it includes the following information: 
"(i) The amount of cash and a description (but 
not value) of any property other than cash contributed. 
"(ii) Whether the donee organization provided any 
goods or services in consideration, in whole or in part, 
for any property described in clause (i). 
"(iii) A description and good faith estimate of the 
value of any goods or services referred to in clause 
(ii) or, if such goods or services consist solely of intangi-
ble religious benefits, a statement to that effect. 
For purposes of this subparagraph, the term 'intangible 
religious benefit' means any intangible religious benefit 
which is provided by an organization organized exclusively 
for religious purposes and which generally is not sold in 
a commercial transaction outside the donative context. 
"(C) CONTEMPORANEOUS.—For purposes of subpara-
graph (A), an acknowledgment shall be considered to be 
contemporaneous if the taxpayer obtains the acknowledg-
ment on or before the earlier o^— 
"(i) the date on which the taxpayer files a return 
for the taxable year in which the contribution was 
made, or 
"(ii) the due date (including extensions) for filing 
such return. 
"(D) SUBSTANTIATION NOT REQUIRED FOR CONTRIBU-
TIONS REPORTED BY THE DONEE ORGANIZATION.—Subpara-
graph (A) shall not apply to a contribution if the donee 
organization files a return, on such form and in accordance 
with such regulations as the Secretary may prescribe, 
69-194 O - 94 - 16 : QL. 3 Part 1 
107 STAT. 456 
PUBLIC LAW 103-66—AUG. 10, 1993 
which includes the information described in subparagraph 
(B) with respect to the contribution. 
"(E) REGULATIONS.—^The Secretary shall prescribe such 
regulations as may be necessary or appropriate to carry 
out the purposes of this paragraph, including relations 
that may provide that some or all of the requurements 
of this paragraph do not apply in appropriate cases." 
26 use 170 note. 
(b) EFFECTIVE DATE.—The provisions of this section shall apply 
to contributions made on or after January 1,1994. 
SEC. 13173. DISCLOSURE 
RELATED 
TO 
QUID 
PRO QUO 
CONTRIBUTIONS. 
(a) DISCLOSURE REQUIREMENT.—Subchapter B of chapter 61 
(relating to information and returns) is amended by redesignating 
section 6115 as section 6116 and by inserting after section 6114 
the following new section: 
"SEC. 6115. DISCLOSURE RELATED TO QUID PRO QUO CONTRIBU-
TIONS. 
"(a) DISCLOSURE REQUIREMENT.—If an organization described 
in section 170(c) (other than paragraph (1) thereof) receives a quid 
pro quo contribution in excess of $75, the organization shall, in 
connection with the solicitation or receipt of the contribution, pro-
vide a written statement which— 
''(1) informs the donor that the amount of the contribution 
that is deductible for Federal income tax purposes is limited 
to the excess of the amount of any monev and the value of 
any property other than money contributed by the donor over 
the value of the goods or services provided by the organization, 
and 
"(2) provides the donor with a good faith estimate of the 
value of such goods or services. 
"(b) QUID PRO QUO CONTRIBUTION.—For purposes of this sec-
tion, the term 'quid pro quo contribution' means a pajrment made 
partly as a cpntribution and partly in consideration for goods or 
services provided to the payor by the donee organization. A quid 
pro quo contribution does not include any payment made to an 
organization, orgsinized exclusivelv for religious purposes, in return 
for which the taxpayer receives solely an intangible religious benefit 
that generally is not sold in a commercial transaction outside the 
donative context." 
(b) PENALTY FOR FAILURE TO DISCLOSE.—Part I of subchapter 
B of chapter 68 (relating to assessable penalties) is amendea by 
inserting after section 6713 the following new section: 
"SEC. 6714. FAILURE TO MEET 
DISCLOSURE 
REQUIREMENTS 
APPUCABLE TO QUID PRO QUO CONTRIBUTIONS. 
"(a) IMPOSITION OF PENALTY.—If an organization fails to meet 
the disclosure requirement of section 6115 with respect to a quid 
pro quo contribution, such organization shall pay a penalty of 
$10 for each contribution in respect of which the organization 
fails to make the required disclosure, except that the totel penalty 
imposed by this subsection with respect to a particular fundraising 
event or mailing shall not exceed $5,000. 
"(b) REASONABLE CAUSE EXCEPTION.—NO penalty shall be 
imposed under this section with respect to any fedlure if it is 
shown that such failure is due to reasonable cause. 
(c) CLERICAL AMENDMENTS.— 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 457 
(1) The table for subchapter B of chapter 61 is amended 
by striking the item relating to section 6115 and inserting 
the following new items: 
"Sec. 6115. Disclosure related to quid pro quo contributions. 
"Sec. 6116. Cross reference." 
(2) The table for part I of subchapter B of chapter 68 
is amended by inserting after the item for section 6713 the 
following new item: 
"Sec. 6714. Failure to meet disclosure requirements applicable to quid pro 
quo contributions." 
(d) EFFECTIVE DATE.—The provisions of this section shall apply 26 use 6ii5 
to quid pro quo contributions made on or after January 1, 1994. '^°^^-
SEC. 13174. TEMPORARY EXTENSION OF DEDUCTION FOR HEALTH 
INSURANCE COSTS OF SELF-EMPLOYED INDIVIDUALS. 
(a) IN GENERAL.— 
(1) EXTENSION.—Paragraph (6) of section 162(1) (relating 
26 use 162. 
to special rules for health insurance costs of self-employed 
individuals) is amended by striking "June 30, 1992" and insert-
ing "December 31,1993". 
(2) CONFORMING AMENDMENT.—Paragraph (2) of section 
110(a) of the Tax Extension Act of 1991 is hereby repealed. 
(3) EFFECTIVE DATE.—The amendments made by this sub- 26 use 162 note. 
section shall apply to taxable years ending aft;er June 30, 
1992. 
(b) DETERMINATION OF ELIGIBILITY FOR EMPLOYER-SPONSORED 
HEALTH PLAN.— 
(1) IN GENERAL.—Paragraph (2XB) of section 162(1) is 
amended to read as follows: 
"(B) OTHER COVERAGE.—Paragraph (1) shall not apply 
to any taxpayer for any calendar month for which the 
taxpayer is eligible to participate in any subsidized health 
plan maintained by any employer of the tcixpayer or of 
the spouse of the taxpayer." 
(2) EFFECTIVE DATE.—The amendment made by paragraph 26 use 162 note. 
(1) shall apply to taxable years beginning sifter December 31, 
1992. 
Subchapter B—^Revenue Increases 
PART I—PROVISIONS AFFECTING 
INDIVIDUALS 
Subpart A—^Rate Increases 
SEC. 13201. INCREASE IN TOP MARGINAL RATE UNDER SECTION 1. 
(a) GENERAL RULE.—Section 1 (relating to tax imposed) is 
amended by striking subsections (a) through (e) and inserting the 
following: 
"(a) MARRIED INDIVIDUALS FILING JOINT RETURNS AND SURVIV-
ING SPOUSES.—^There is hereby imposed on the taxable income 
of— 
"(1) every married individual (as defined in section 7703) 
who makes a single return jointly with his spouse under section 
6013, and 
"(2) every surviving spouse (as defined in section 2(a)), 
107 STAT. 458 
PUBLIC LAW 103-66—AUG. 10, 1993 
a tax determined in accordance with the following table: 
' V taxable income is: 
The tax is: 
Not over $36,900 
15% of taxable income. 
Over $36,900 but not over $89,150 ... 
$5,535, pliu 28% of the excess over 
$36,900. 
Over $89,150 but not over $140,000 
$20,165, plus 31% of the excess over 
$89,150. 
Over $140,000 
$35,928.50, plus 36% of the excess over 
$140,000. 
"(b) HEADS OF HOUSEHOLDS.—There is hereby imposed on the 
taxable income of every head of a household (as defined in section 
2(b)) a t£ix determined in accordance with the following table: 
' V taxable income is: 
The tax is: 
Not over $29,600 
15% of taxable income. 
Over $29,600 but not over $76,400 ... 
$4,440, plus 28% of the excess over 
$29,600. 
Over $76,400 but not over $127,500 
$17,544, plus 31% of the excess over 
$76,400. 
Over $127,500 
$33,385, pltis 36% of the excess over 
$127,500. 
"(c) UNMARRIED INDIVIDUALS (OTHER THAN SURVIVING SPOUSES 
A
N
D HEADS OF HOUSEHOLDS).—^There is hereby imposed on the 
taxable income of every individual (other than a surviving spouse 
as defined in section 2(a) or the head of a household as defined 
in section 2(b)) who is not a married individual (as defined in 
section 7703) a tax determined in accordance with the following 
table: 
*V taxable income is: 
The tax is: 
Not over $22,100 
15% of taxable income. 
Over $22,100 but not over $53,500 ... 
$3,315, plus 28% of the excess over 
$22,100. 
Over $53,500 but not over $115,000 
$12,107, plus 31% of the excess over 
$53,500. 
Over $115,000 
$31,172, plus 36% of the excess over 
$115,000. 
"(d) MARRIED INDIVIDUALS FILING SEPARATE. RETURNS.—There 
is hereby imposed on the taxable income of every married individual 
(as defined in section 7703) who does not make a single return 
jointly with his spouse under section 6013, a tax determined in 
accordance with the following table: 
'*U taxable income is: 
The tax is: 
Not over $18,450 
15% of taxable income. 
Over $18,450 but not over $44,575 ... 
$2,767.50, plus 28% of the excess over 
$18,450. 
Over $44,575 but not over $70,000 ... 
$10,082.50, plus 31% of the excess over 
$44,575. 
Over $70,000 
$17,964.25, plus 36% of the excess over 
$70,000. 
"(e) ESTATES AND TRUSTS.—^There is hereby imposed on the 
taxable income o
f
— 
"(1) every estate, and 
"(2) every trust, 
taxable under this subsection a t£ix determined in accordance with 
the following table: 
*V taxable income is: 
The tax is: 
Not over $1,500 
15% of taxable income. 
Over $1,500 but not over $3,500 
$225, plus 28% of the excess over 
$1,500. 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 459 
I f taxable income is: 
The tax is: 
Over $3,900 but not over $5,500 
$785, plus 31% of the excess over 
$3,500. 
Over $5,500 
$1,405, plus 36% of the excess over 
$5,500.^ 
(b) CONFORMING AMENDMENTS.— 
(1) Section 531 is amended by striking "28 percent" and 26 use 531. 
inserting "36 percent". 
(2) Section 541 is amended by striking "28 percent" and 
inserting "36 percent". 
(3XA) Subsection (f) of section 1 is amended— 
(i) by striking "1990" in paragraph (1) and inserting 
"1993", and 
(ii) by striking "1989" in paragraph (3XB) and inserting 
"1992". 
(B) Subsection (f) of section 1 is amended by adding at 
the end thereof the following new paragraph: 
"(7) SPECIAL RULE FOR CERTAIN BRACKETS.— 
"(A) CALENDAR YEAR 1994.—In prescribing the tables 
imder paragraph (1) which apply with respect to taxable 
years beginning in calendar year 1994, the Secretary shall 
N
^ 
make no adjustment to the dollar amounts at which the 
36 percent rate bracket begins or at which the 39.6 percent 
rate begins imder any table contained in subsection (a), 
(b),(c),(d),or(e). 
"(B) LATER CALENDAR YEARS.—^In prescribing tables 
under paragraph (1) which apply with respect to taxable 
years beginning in a calendar year after 1994, the cost-
of-living adjustment used in making adjustments to the 
dollar amounts referred to in subparagraph (A) shall be 
determined imder paragraph (3) by substituting '1993' for 
'1992'." 
(C) Subparagraph (C) of section 41(eX5) is amended by 
striking "1989" each place it appears and inserting "1992 . 
L 
(D) Subparagraph (B) of section 63(cX4) is amended by 
striking "1989" and inserting "1992". 
(E) Subparagraph (B) of section 68(bX2) is amended by 
striking "1989" and inserting "1992". 
(F) Subparagraph (B) of section 132(fX6) is amended by 
striking ", determined by substituting" and all that follows 
down through the period at the end thereof and inserting 
(G) Subparagraphs (AXii) and (BXii) of section 151(dX4) 
are each amended by striking "1989" and inserting "1992". 
(H) Clause (ii) of section 513(hX2XC) is amended by striking 
"1989" and inserting "1992". 
(4) Paragraph (3) of section 453A(c) is amended by adding 
at the end thereof the following new sentence: 
"For purposes of applying the preceding sentence with respect 
to so much of the gain which, when recognized, will be treated 
as long-term capital gain, the maximum rate on net capital 
gain imder section 1(h) or 1201 (whichever is appropriate) 
shall be taken into account." 
(c) EFFECTIVE DATE.—^The amendments made by this section 26 use 1 note. 
shall apply to taxable years beginning after December 31, 1992. 
(d) ELECTION TO PAY ADDITIONAL 1993 TAXES IN INSTALL- 26 use 1 note. 
MENTS.— 
107 STAT. 460 
PUBLIC LAW 103-66—AUG. 10, 1993 
(1) IN GENERAL.—^At the election of the taxpayer, the addi-
tional 1993 taxes may be paid in 3 equal installments. 
(2) DATES FOR PAYING INSTALLMENTS.—^In the case of any 
tax payable in installments by reason of paragraph (1)— 
(A) the first installment shall be paid on or before 
the due date for the taxpayer's taxable year beginning 
in calendar year 1993, 
(B) the second installment shall be paid on or before 
the date 1 year after the date determined under subpara-
graph (A), and 
(C) the third installment shall be paid on or before 
the date 2 years after the date determined under subpara-
graph (A). 
For purposes of the preceding sentence, the term ''due date" 
means the date prescribed for filing the taxpayer's return deter-
mined without regard to extensions. 
(3) EXTENSION WITHOUT INTEREST.—^For purposes of section 
6601 of the Internal Revenue Code of 1986, the date prescribed 
for the payment of any t£uc payable in installments under 
paragraph (1) shall be determined with regard to the extension 
under paragraph (1). 
(4) ADDITIONAL 1993 TAXES.— 
(A) IN GENERAL.—^For purposes of this subsection, the 
term "additional 1993 taxes" means the excess of— 
(i) the taxpayer's net chapter 1 liability as shown 
on the taxpayer's return for the taxpayer's taxable 
year beginning in calendar year 1993, over 
(ii) the amount which would have been the tax-
payer's net chapter 1 liability for such taxable year 
if such liability had been determined using the rates 
which would have been in effect under section 1 of 
the Internal Revenue Code of 1986 for taxable years 
beginning in ctdendar year 1993 but for the amend-
ments made by this section and section 13202 and 
such liability had otherwise been determined on the 
basis of the amounts shown on the taxpayer's return. 
(B) NET CHAPTER i 
LIABIUTY.-For purposes of 
subparagraph (A), the term "net chapter 1 liability" means 
the liability for tax under chapter 1 of the Internal Revenue 
Code of 1986 determined— 
(i) after the application of any credit against such 
tax other than the credits under sections 31 and 34, 
and 
(ii) before crediting any payment of estimated tax 
for the taxable year. 
(5) ACCELERATION OF PAYMENTS.—If the taxpayer does not 
pay any installment under this section on or before the date 
prescribed for its payment or if the Secretary of the IVeasuiy 
or his delegate beUeves that the collection of any amount pay-
able in installments under this section is in jeopardy, the 
Secretary shall immediately terminate the extension under 
paragraph (1) and the whole of the unpaid tax shall be paid 
on notice and demand from the Secretary. 
(6) ELECTION ON RETURN.—^An election under paragraph 
(1) shall be made on the taxpayer's return for the taxpayer's 
taxable year beginning in calendar year 1993. 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 461 
(7) EXCEPTION FOR ESTATES AND TRUSTS.—This subsection 
shall not apply in the case of an estate or trust. 
SEC. 13202. SURTAX ON mCH-INCOME TAXPAYERS. 
(a) GENERAL RULE.— 
(1) Subsection (a) of section 1 (as amended by section 
13201) is amended by striking the last item in the table con-
tained therein and inserting the following: 
"Over 
$140,000 
but 
not 
over 
$35,928.50, plus 36% of the excess over 
$250,000. 
$140,000. 
Over $250,000 
$75,528.50, plus 39.6% of the excess 
over $250,000." 
(2) Subsection (b) of section 1 (as so amended) is amended 
by striking the last item in the table contained therein and 
inserting tne following: 
"Over 
$127,500 
but 
not 
over 
$33,385, plus 36% of the excess over 
$250,000. 
$127,500. 
Over $250,000 
$77,485, plus 39.6% of the excess over 
$250,000," 
(3) Subsection (c) of section 1 (as so amended) is amended 
by striking the last item in the table contained therein and 
inserting the following: 
"Over 
$115,000 
but 
not 
over 
$31,172, plus 36% of the excess over 
$250,000. 
$115,000. 
Over $250,000 
$79,772, plus 39.6% of the excess over 
$250,000." 
(4) Subsection (d) of section 1 (as so amended) is amended 
by striking the last item in the table contained therein and 
inserting the following: 
"Over $70,000 but not over $125,000 
$17,964.25, plus 36% of the excess over 
$70 000. 
Over $125,000 
$37,764.25, plus 39.6% of the excess 
over $125,000." 
(5) Subsection (e) of section 1 (as so amended) is amended 
by striking the last item in the table contained therein and 
inserting the following: 
"Over $5,500 but not over $7,500 
$1,405, plus 36% of the excess over 
$5,500. 
Over $7,500 
$2,125, plus 39.6% of the excess over 
$7,500." 
(b) 
TECHNICAL AMENDMENT.—Sections 531 
and 
541 
(as 
amended by section 13201) are each amended by striking "36 per-
cent" and inserting "39.6 percent". 
(c) EFFECTIVE DATE.—^The amendments made by this section 
26 use i note. 
shall apply to taxable years beginning after December 31, 1992. 
SEC. 13203. MODIFICATIONS TO ALTERNATIVE MINIMUM T
A
X RATES 
AND EXEMPTION AMOUNTS. 
(a) INCREASE IN RATE.—Paragraph (1) of section 55(b) (defining 2
6 use 55. 
tentative minimiun tax) is amended to read as follows: 
"(1) AMOUNT OF TENTATIVE TAX.— 
"(A) NONCORPORATE TAXPAYERS.— 
"(i) IN GENERAL.—In the case of a taxpayer other 
than a corporation, the tentative minimum tax for 
the taxable year is the sum o
f
— 
"(I) 26 percent of so much of the taxable excess 
as does not exceed $175,000, plus 
107 STAT. 462 
PUBLIC LAW 103-66—AUG. 10, 1993 
"(11) 28 percent of so much of the taxable 
excess as exceeds $175,000. 
The amount determined under the preceding sentence 
shall be reduced by the alternative minimum tax for-
eign tax credit for tne taxable year. 
**(ii) TAXABLE EXCESS.—For purposes of clause (i), 
the term 'taxable excess' means so much of the alter-
native minimum taxable income for the taxable year 
as exceeds the exemption amount. 
"(iii) 
MARRIED 
INDIVIDUAL 
FILING 
SEPARATE 
RETURN.—In the case of a married individual filing 
a separate return, clause (i) shall be applied by 
substituting '$87,500' for '$175,000' each place it 
appears. For purposes of the preceding sentence, mari-
tal status shall be determined under section 7703. 
*
*
(
B
) CORPORATIONS.—In the case of a corporation, the 
tentative minimum tax for the taxable year is— 
"(i) 20 percent of so much of the alternative mini-
mum taxable income for the taxable year as exceeds 
the exemption amoimt, reduced by 
"(ii) tne alternative minimum tax foreign tax credit 
for the taxable year." 
(b) INCREASE IN EXEMPTION AMOUNTS.—Paragraph (1) of section 
26 use 55. 
55(d) (defining exemption amount) is amended— 
(1) by striking ''$40,000'' in subparagraph (A) and inserting 
"$45,000*^, 
(2) by striking "$30,000" in subparagraph (B) and inserting 
"$33,750*, and 
(3) by striking "$20,000" in subparagraph (C) and inserting 
"$22,500*. 
(c) CONFORMING AMENDMENTS.— 
(1) The last sentence of section 55(dX3) is amended by 
striking "$155,000 or (ii) $20,000" and inserting "$165,000 or 
(ii) $22,500". 
(2XA) Subparagraph (A) of section 897(aX2) is amended 
by striking "the amount determined imder section 55(bXlXA) 
shall not be less than 21 percent or and inserting "the taxable 
excess for purposes of section 55(bXlXA) shall not be less 
than". 
(B) The heading for paragraph (2) of section 897(a) is 
amended by striking 21-PERCENT". 
26 use 55 note. 
(d) EFFECTIVE DATE.—^The amendments made by this section 
shall apply to taxable years beginning after December 31, 1992. 
SEC. 13204. OVERALL LIMITATION ON ITEMIZED DEDUCTIONS FOR 
HIGH-INCOME TAXPAYERS MADE PERMANENT. 
Subsection (f) of section 68 (relating to overall limitation on 
itemized deductions) is hereby repealed. 
\ 
SEC. 13206. PHASEOUT OF PERSONAL EXEMPTION OF HIGH-INCOME 
TAXPAYERS MADE PERMANENT. 
Section 151(dX3) (relating to phaseout of personal exemption) 
is amended by striking subparagraph (E). 
SEC. 13206. PROVISIONS TO PREVENT CONVERSION OF ORDINARY 
INCOME TO CAPITAL GAIN. 
(a) INTEREST EMBEDDED IN FINANCIAL TRANSACTIONS.— 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 463 
(1) IN GENERAL.—Part IV of subchapter P of chapter 1 
(relating to special rules for determining capital gains and 
losses) IS amended by adding at the end the following new 
section: 
"SEC. 1258. RECHARACTERIZATION OF GAIN FROM CERTAIN FINAN-
CIAL TRANSACTIONS. 
"(a) GENERAL RULE.—In the case of any gain— 
''(1) which (but for this section) would be treated as gain 
from the sale or exchange of a capital asset, and 
''(2) which is recognized on the disposition or other termi-
nation of any position which was held as part of a conversion 
transaction, 
such gain (to the extent such g£dn does not exceed the applicable 
imputed income amoimt) shall be treated as ordinary income. 
"(b) APPLICABLE IMPUTED INCOME AMOUNT.—For purposes of 
subsection (a), the term 'applicable imputed income amount means, 
with respect to any disposition or other termination referred to 
in subsection (a), an amount equal to— 
"(1) the amoimt of interest which would have accrued on 
the taxpayer's net investment in the conversion transaction 
for the period ending on the date of such disposition or otiier 
termination (or, if earlier, the date on which the requirements 
of subsection (c) ceased to be satisfied) at a rate equal to 
120 percent of the applicable rate, reduced by 
(2) the amount treated as ordinary income under sub-
section (a) with respect to any prior disposition or other termi-
nation of a position which was held as a part of such 
transaction. 
The Secretary shall by regulations provide for such reductions in Regulations. 
the applicable imputed income amoimt as may be appropriate by 
reason of amounts capitalized under section 263(g), ordinary income 
received, or otherwise. 
"(c) CONVERSION TRANSACTION.—For purposes of this section, 
the term 'conversion transaction' means any transaction— 
"(1) substantially all of the taxpayer's expected return from 
which is attributable to the time value of the taxpayer's net 
investment in such transaction, and 
"(2) which is— 
"(A) the holding of any property (whether or not 
actively traded), and the entering into a contract to sell 
such property (or substantially identical property) at a 
price determined in accordance with such contract, but 
only if such property was acquired and such contract was 
entered into on a substantially contemporaneous basis, 
"(B) an applicable straddle, 
"(C) any other transaction which is marketed or sold 
as producing capital gains from a transaction described 
in paragraph (1), or 
"(Dj any other transaction specified in regulations pre-
scribed by tne Secretary. 
"(d) DEFINITIONS AND SPECIAL RULES.—For purposes of this 
section— 
"(1) APPLICABLE STRADDLE.—^The term 'applicable straddle' 
means any straddle (within the meaning of section 1092(c)); 
except that the term 'personal property* shall include stock. 
^(2) APPLICABLE RATE.—^The term 'applicable rate' means— 
107 STAT. 464 
PUBLIC LAW 103-66—AUG. 10, 1993 
"(A) the applicable Federal rate determined under 
section 1274(d) (compounded semiannually) as if the 
conversion transaction were a debt instrument, or 
''(B) if the term of the conversion transaction is indefi-
nite, the Federal short-term rates in effect under section 
6621(b) during the period of the conversion transaction 
(compounded daily). 
"(3) TREATMENT OF BUILT-IN LOSSES.— 
"(A) IN GENERAL.—If any position with a built-in loss 
becomes part of a conversion transaction— 
"(i) for purposes of applying this subtitle to such 
position for periods after such position becomes part 
of such transaction, such position shall be taken into 
account at its fair market value as of the time it 
became part of such transaction, except that 
"(ii) upon the disposition or other termination of 
such position in a transaction in which gain or loss 
is recognized, such built-in loss shall be recognized 
and shall have a character determined without regard 
to this section. 
"(B) BUILT-IN LOSS.—For purposes of subparagraph (A), 
the term 'built-in loss' means the loss (if any) which would 
have been realized if the position had been disposed of 
or otherwise terminated at its fair market value as of 
the time such position became part of the conversion trans-
action. 
"(4) 
POSITION TAKEN INTO ACCOUNT AT FAIR MARKET 
VALUE.—In determining the taxpayer's net investment in any 
conversion transaction, there shall be included the fair market 
value of any position which becomes part of such transaction 
(determined as of the time such position became part of such 
transaction). 
"(5) SPECIAL RULE FOR OPTIONS DEALERS AND COMMODITIES 
TRADERS.— 
"(A) IN GENERAL.—Subsection (a) shall not apply to 
transactions — 
"(i) of an options dealer in the normal course of 
the dealer's trade or business of dealing in options, 
or 
"(ii) of a commodities trader in the normal course 
of the trader's trade or business of trading section 
1256 contracts. 
"(B) DEFINITIONS.—^For purposes of this paragraph— 
•^(i) OPTIONS DEALER.—The term 'options dealer* 
has the meaning given such term by section 1256(gX8). 
"(ii) COMMODITIES TRADER.— The term 'commod-
ities trader* means any person who is a member (or, 
except as otherwise provided in regulations, is entitled 
to trade as a member) of a domestic board of trade 
which is designated as a contract market by the 
Commodity Futures Trading Commission. 
"(C) 
LIMITED 
PARTNERS 
AND 
LIMITED 
ENTRE-
PRENEURS.—In the case of any g&in from a transaction 
recognized by an entity which is allocable to a Umited 
partner or limited entrepreneur (within the meaning of 
section 464(eX2)), subparagraph (A) shall not apply i
f
— 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 465 
''(i) substantially all of the limited partner's (or 
limited entrepreneurs) expected return from the entity 
is attributable to the time value of the partnei^s (or 
entrepreneur's) net investment in such entity, 
''(ii) the transaction (or the interest in the entity) 
was marketed or sold as producing capital gains treat-
ment from a transaction described in subsection (cXD, 
or 
"(iii) the transaction (or the interest in the entity) 
is a transaction (or interest) specified in regulations 
prescribed by the Secretary." 
(2) CLERICAL AMENDMENT.—The table of sections for part 
IV of subchapter P of chapter 1 is amended by adding at 
the end thereof the following new item: 
"Sec. 1258. Recharacterization of gain from certain financial transactions." 
(3) EFFECTIVE DATE.—The amendments made by this sec- 2
6 use 1258 
tion shall apply to conversion transactions entered into after ^°^-
April 30,1993. 
(b) REPEAL OF CERTAIN EXCEPTIONS TO MARKET DISCOUNT 
RULES.— 
(1) MARKET DISCOUNT BONDS ISSUED ON OR BEFORE JULY 
18,1984.—^The following provisions sire hereby repealed: 
(A) Section 1276(e). 
26 use 1276. 
(B) Section 1277(d). 
(2) TAX-EXEMPT OBLIGATIONS.— 
(A) IN GENERAL.—Paragraph (1) of section 1278(a) 
(defining market discount bond) is amended— 
(i) by striking clause (ii) of subparagraph (B) and 
redesignating clauses (iii) and (iv) of such subpara-
graph as clauses (ii) and (iii), respectively, 
(ii) by redesignating subparagraph (C) as subpara-
graph (D), and 
(iii) by inserting after subparagraph (B) the follow-
ing new subparagraph: 
"(C) SECTION 1277 NOT APPUCABLE TO TAX-EXEMPT 
OBLIGATIONS.—For purposes of section 1277, the term 'mar-
ket discoimt bond' shall not include any t£ix-exempt obliga-
tion (as defined in section 1275(aX3)).'' 
(B) CONFORMING AMENDMENTS.— 
(i) Sections 1276(aX4) and 1278(bXl) are each 
amended by striking "sections 871(a)'' and inserting 
"sections 103, 871(a),''. 
(ii) Subparagraph (B) of section 1278(aX4) is 
amended by inserting before the period at the end 
thereof the following: "or, in the case of a tax-exempt 
obligation, the aggregate amoimt of the original issue 
discount which accrued in the manner provided by 
section 1272(a) (determined without regard to para-
graph (7) thereof) during periods before the acquisition 
of the bond by the taxpayer". 
(3) EFFECTIVE DATE.—The amendments made by this sec- 26 use 1276 
tion shall apply to obligations purchased (within the meaning "
°
*
® 
of section 1272(dXl) of the Internal Revenue Code of 1986) 
after April 30,1993. 
(c) TREATMENT OF STRIPPED PREFERRED STOCK.— 
107 STAT. 466 
PUBLIC LAW 103-66—AUG. 10, 1993 
26 use 305. 
(1) IN GENERAL.—Section 305 is amended by redesignating 
subsection (e) as subsection (f) and by inserting after subsection 
(d) the following new subsection: 
"(e) 
TREATMENT OF PURCHASER OF STRIPPED PREFERRED 
STOCK.— 
"(1) IN GENERAL.—If any person purchases after April 30, 
1993, any stripped preferreid stock, then such person, while 
holding such stock, shall include in gross income amounts equal 
to the amounts which would have been so includible if such 
stripped preferred stock were a bond issued on the purchase 
date and having original issue discount equal to the excess, 
if any, o
f
— 
"(A) the redemption price for such stock, over 
"(B) the price at which such person purchased such 
stock. 
The preceding sentence shall also apply in the case of any 
person whose basis in such stock is determined by reference 
to the basis in the hands of such purchaser. 
"(2) BASIS ADJUSTMENTS.—Appropriate adjustments to 
basis shall be made for amounts includible in gross income 
under paragraph (1). 
"(3) TAX TREATMENT OF PERSON STRIPPING STOCK.—If any 
person strips the rights to 1 or more dividends from any stock 
described in paragraph (5XB) and after April 30, 1993, disposes 
of such dividend rights, for purposes of paragraph (1), such 
person shall be treated as having purchased the stripped pre-
ferred stock on the date of such disposition for a purchase 
price equal to such person's adjusted basis in such stripped 
preferred stock. 
"(4) AMOUNTS TREATED AS ORDINARY INCOME.—Any amount 
included in gross income under paragraph (1) shall l>e treated 
as ordinary income. 
"(5) STRIPPED PREFERRED STOCK.—^For purposes of this 
subsection— 
"(A) IN GENERAL.—^The term 'stripped preferred stock' 
means any stock described in subparagraph (B) if there 
has been a separation in ownership between such stock 
and any dividend on such stock which has not become 
payable. 
"(B) DESCRIPTION OF STOCK.—Stock is described in this 
subsection if such stock— 
"(i) is limited and preferred as to dividends and 
does not participate in corporate growth to any signifi-
cant extent, and 
"(ii) has a fixed redemption price. 
"(6) PURCHASE.—^For piuposes of this subsection, the term 
'purchase' means— 
"(A) any acquisition of stock, where 
"(B) the basis of such stock is not determined in whole 
or in part by the reference to the adjusted basis of such 
stock in the hands of the person from whom acquired." 
(2) COORDINATION WITH SECTION i67(e).—Paragraph (2) of 
section 167(e) is amended to read as follows: 
"(2) COORDINATION WITH OTHER PROVISIONS.— 
"(A) SECTION 273.—^This subsection shall not apply to 
any term interest to which section 273 appUes. 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 467 
**(B) SECTION 305(e).—^This subsection shall not apply 
to the holder of the dividend rights which were separatea 
from any stripped preferred stock to which section 305(e)(1) 
applies. 
(3) EFFECTIVE DATE.—The amendments made by this sub- 2
6 use i67 note. 
section shall take effect on April 30,1993. 
(d) TREATMENT OF CAPITAL GAIN UNDER LIMITATION ON INVEST-
MENT INTEREST.— 
(1) IN GENERAL.—Subparagraph (B) of section 163(dX4) 2
6 use 163. 
(defining investment income) is amended to read as follows: 
"(B) INVESTMENT INCOME.—The term 'investment 
income' means the siun o
f
— 
"(i) gross income from property held for investment 
(other than any gain taken into account under clause 
(iiXD), 
**(ii) the excess (if any) o
f
— 
"(1) the net gain attributable to the disposition 
of property held for investment, over 
"(II) the net capital gain determined by only 
taking into account gains and losses from disposi-
tions of property held for investment, plus 
"(iii) so much of the net capital gain referred to 
in clause (iiXH) (or, if lesser, the net gain referred 
to in clause (iiXI)) as the taxpayer elects to take into 
accoimt under this clause." 
(2) COORDINATION WITH SPECIAL CAPITAL GAINS RATE.— 
Subsection (h) of section 1 is amended by adding at the end 
the following new sentence: 
"For purposes of the preceding sentence, the net capital gain for 
any taxable year shall be reduced (but not below zero) by the 
amount which the taxpayer elects to take into accoimt as investment 
income for the taxable year under section 163(dX4XBXiii).'' 
(3) EFFECTIVE DATE.—The amendments made by this sub- 26 use 1 note. 
section shall apply to taxable years beginning after December 
31.1992. 
(e) TREATMENT OF CERTAIN APPRECIATED INVENTORY.— 
(1) IN GENERAL.—Paragraph (1) of section 751(d) is 
amended to read as follows: 
"(1) SUBSTANTIAL APPRECIATION.— 
"(A) IN GENERAL.—Inventory items of the partnership 
shall be considered to have appreciated substantially in 
value if their fair market value exceeds 120 percent of 
the adjusted basis to the partnership of such property. 
"(B) CERTAIN PROPERTY EXCLUDED.—For purposes of 
subparagraph (A), there shall be excluded any inventory 
property if a principal purpose for acquiring such property 
was to avoid the provisions of this section relating to inven-
tory items." 
(2) EFFECTIVE DATE.—^The amendment made by paragraph 26 use 751 note. 
(1) shall apply to sales, exchanges, and distributions after April 
30.1993. 
Subpart B—Other Provisions 
SEC. 13207. REPEAL OF LIMITATION ON AMOUNT OF WAGES SUBJECT 
TO HEALTH INSURANCE EMPLOYMENT TAX. 
(a) HOSPITAL INSURANCE TAX.— 
107 STAT. 468 
PUBLIC LAW 103-66—AUG. 10, 1993 
26 use 3121. 
(1) Paragraph (1) of section 3121(a) (defining wages) is 
amended— 
(A) by inserting "in the case of the taxes imposed 
by sections 3101(a) and 3111(3)" after "(1)", 
(B) by striking "appUcable contribution base (as deter-
mined under subsection (x))" each place it appears and 
inserting "contribution and benefit base (as determined 
under section 230 of the Social Security Act)", and 
(C) by striking "such applicable contribution base" and 
inserting "such contribution and benefit base". 
(2) Section 3121 is amended by striking subsection (x). 
(b) SELF-EMPLOYMENT TAX.— 
(1) Subsection (b) of section 1402 is amended— 
(A) by striking "that part of the net" in paragraph 
(1) and inserting "in the case of the tax imposed by section 
1401(a), that part of the net", 
(B) by striking "applicable contribution base (as deter-
mined imder subsection (k))" in paragraph (1) and inserting 
"contribution and benefit base (as determined under section 
230 of the Social Security Act)", 
(C) by inserting "and" after "section 3121(b),", and 
(D) by striking "and (C) includes" and all that follows 
through "3111(b)". 
(2) Section 1402 is amended by striking subsection (k). 
(c) RAILROAD RETIREMENT TAX.— 
(1) Subparagraph (A) of section 3231(eX2) is amended by 
adding at the end thereof the following new clause: 
"(iii) HOSPITAL INSURANCE TAXES.—Clause (i) shall 
not apply to— 
"(I) so much of the rate applicable imder sec-
tion 3201(a) or 3221(a) as does not exceed the 
rate of tax in effect imder section 3101(b), and 
"(II) so much of the rate applicable under sec-
tion 3211(aXl) as does not exceed the rate of tax 
in effect imder section 1401(b)." 
(2) Clause (i) of section 3231(eX2XB) is amended to read 
as follows: 
"(i) TIER i TAXES.—^Except as provided in clause 
(ii), the term 'applicable base means for any calendar 
year the contribution and benefit base determined 
under section 230 of the Social Security Act for such 
calendar year." 
(d) TECHNICAL AMENDMENTS.— 
(1) Paragraph (1) of section 6413(c) is amended by striking 
"section 3101 or section 3201" and inserting "section 3101(a) 
or section 3201(a) (to the extent of so much of the rate 
applicable under section 3201(a) as does not exceed the rate 
of tax in effect under section 3101(a))". 
(2) Subparagraphs (B) and (C) of section 6413(cX2) are 
each amended by striking "section 3101" each place it appears 
and inserting "section 3101(a)". 
(3) Subsection (c) of section 6413 is amended by striking 
paragraph (3). 
(4) Sections 3122 and 3125 are each amended by striking 
"applicable contribution base Umitation" and inserting "con-
tribution and benefit base limitation". 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 469 
(e) EFFECTIVE DATE.—The amendments made by this section 26 use 1402 
shall apply to 1994 and later calendar years. 
^°^-
SEC. 13208. TOP ESTATE AND GIFT T
A
X RATES M
A
D
E PERMANENT. 
(a) GENERAL RULE.—The table contained in paragraph (1) of 
section 2001(c) is amended by striking the last item and mserting 
the following new items: 
"Over $2,500,000 but not over 
$1,025,800, plus 53% of the excess over 
$3,000,000. 
$2,500,000. 
Over $3,000,000 
$1,290,800, plus 55% of the excess over 
$3,000,000." 
(b) CONFORMING AMENDMENTS.— 
(1) Subsection (c) of section 2001 is amended by striking 26 use 2001. 
paragraph (2) and by redesignating paragraph (3) as paragraph 
(2). 
(2) Paragraph (2) of section 2001(c), as redesignated by 
paragraph (1), is amended by striking "($18,340,000 in the 
case of decedents djdng, and gifts made, after 1992)". 
(3) The last sentence of section 2101(b) is amended by 
striking "section 2001(cX3)'' and inserting "section 2001(cX2) . 
(c) EFFECTIVE DATE.—The amendments made by this section 26 use 2001 
shall apply in the case of decedents dying and gifts made after "
°
^
®
-
December 31,1992. 
SEC. 13209. REDUCTION IN DEDUCTIBLE PORTION OF BUSINESS 
MEALS AND ENTERTAINMENT. 
(a) GENERAL RULE.—Paragraph (1) of section 274(n) (relating 
to only 80 percent of meal and entertainment expenses allowea 
as deduction) is amended by striking "80 percent and inserting 
"50 percent". 
(b) CONFORMING AMENDMENT.—^The subsection heading for sec-
tion 274(n) is amended by striking "80" and inserting "50". 
(c) EFFECTIVE DATE.—^The amendments made by this section 
26 use 274 note. 
shall apply to taxable years beginning aft;er December 31, 1993. 
SEC. 13210. ELIMINATION OF DEDUCTION FOR CLUB MEMBERSHIP 
FEES. 
(a) IN GENERAL.—Subsection (a) of section 274 (relating to 
disallowance of certain entertainment, etc., expenses) is amended 
by adding at the end thereof the following new paragraph: 
"(3) DENIAL OF DEDUCTION FOR CLUB DUES.—Notwithstand-
ing the preceding provisions of this subsection, no deduction 
shall be allowed under this chapter for amounts paid or 
incurred for membership in any club organized for business, 
pleasure, recreation, or other social purpose." 
(b) EXCEPTION FOR EMPLOYEE RECREATIONAL EXPENSES NOT 
To APPLY.—^Paragraph (4) of section 274(e) is amended by adding 
at the end thereof the following: "This paragraph shall not apply 
for purposes of subsection (aX3). 
(c) EFFECTIVE DATE.—^The amendments made by this section 
26 use 274 note. 
shall apply to amounts paid or incurred aft«r December 31, 1993. 
SEC. 13211. DISALLOWANCE OF DEDUCTION FOR CERTAIN EMPLOYEE 
REMUNERATION IN EXCESS OF $1,000,000. 
(a) GENERAL RULE.—Section 162 (relating to trade or business 
expenses) is amended by redesignating subsection (m) as subsection 
(n) and by inserting after subsection (1) the following new sub-
section: 
107 STAT. 470 
PUBLIC LAW 103-66—AUG. 10, 1993 
"(m) CERTAIN EXCESSIVE EMPLOYEE REMUNERATION.— 
"(1) IN GENERAL.—^In the case of any publicly held corpora-
tion, no deduction shall be allowed under this chapter for 
applicable employee remuneration with respect to any covered 
employee to the extent that the amount of such remuneration 
for the taxable year with respect to such employee exceeds 
$1,000,000. 
"(2) PUBLICLY HELD CORPORATION.—For purposes of this 
subsection, the term 'publicly held corporation means any cor-
poration issuing any class of common equity securities required 
to be registered under section 12 of the Securities Exchange 
Act of 1934. 
"(3) COVERED EMPLOYEE.—^For purposes of this subsection, 
the term 'covered employee' means any employee of the tax-
payer if— 
"(A) as of the close of the taxable year, such employee 
is the chief executive officer of the taxpayer or is an individ-
ual acting in such a capacity, or 
"(B) the total compensation of such employee for the 
taxable year is required to be reported to shareholders 
under the Securities Exchange Act of 1934 by reason of 
such employee being among the 4 highest compensated 
ofiEicers for the taxable year (other than the chief executive 
officer). 
"(4) APPLICABLE EMPLOYEE REMUNERATION.—For purposes 
of this subsection— 
"(A) IN GENERAL.—^Except as otherwise provided in 
this paragraph, the term 'applicable employee remunera-
tion* means, with respect to any covered employee for any 
taxable year, the aggregate amount allowable as a deduc-
tion under this chapter for such t£ucable year (determined 
without regard to this subsection) for remuneration for 
services performed by such employee (whether or not dur-
ing the taxable year). 
"(B) 
EXCEPTION FOR 
REMUNERATION PAYABLE ON 
COMMISSION BASIS.—^The term 'applicable employee remu-
neration' shall not include any remuneration payable on 
a commission basis solely on accoimt of income generated 
directly by the individual performance of the individual 
to whom such remuneration is payable. 
"(C) OTHER PERFORMANCE-BASED COMPENSATION.—The 
term 'applicable employee remuneration' shall not include 
any remuneration payable solely on account of the attain-
ment of one or more performance goals, but only if— 
"(i) the performance goals are determined by a 
compensation committee of the board of directors of 
the taxpayer which is comprised solely of 2 or more 
outside directors, 
"(ii) the material terms under which the remunera-
tion is to be paid, including the performance goals, 
are disclosed to shareholders and approved by a major-
ity of the vote in a separate shareholder vote before 
the payment of such remuneration, and 
"(iii) before £uiy payment of such remuneration, 
the compensation committee referred to in clause (i) 
certifies that the performance goals and any other 
material terms were in fact satisfied. 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 471 
*
*
(
D
) EXCEPTION FOR EXISTING BINDING CONTRACTS.— 
The term 'applicable employee remimeration' shall not 
include any remuneration payable under a written binding 
contract which was in effect on February 17, 1993, and 
which was not modified thereafter in any material respect 
before such remuneration is paid. 
"(E) REMUNERATION.—^For purposes of this paragraph, 
the term 'remimeration' includes any remuneration (includ-
ing benefits) in any medium other than cash, but shall 
not include— 
"(i) any payment referred to in so much of section 
3121(aX5) as precedes subparagraph (E) thereof, and 
"(ii) any benefit provided to or on behalf of an 
employee if at the time such benefit is provided it 
is reasonable to believe that the employee will be able 
to exclude such benefit from gross income imder this 
chapter. 
For purposes of clause (i), section 3121(aX5) shall be applied 
without regard to section 3121(vXl). 
"(F) COORDINATION WITH DISALLOWED GOLDEN PARA-
CHUTE PAYMENTS.—^The dollar limitation contained in para-
graph (1) shall be reduced (but not below zero) by ihe 
amount (if any) which would have been included in the 
applicable employee remuneration of the covered employee 
for the taxable year but for being disallowed under section 
2800." 
(b) EFFECTIVE DATE.—^The amendment made by subsection (a) 26 use 162 note. 
shall apply to amounts which would otherwise be deductible for 
taxable years beginning on or after January 1,1994. 
SEC. 13212. REDUCTION IN COMPENSATION TAKEN INTO ACCOUNT IN 
DETERMINING CONTRIBUTIONS AND BENEFITS UNDER 
QUALIFIED RETIREMENT PLANS. 
(a) QUAUFICATION REQUIREMENT.— 
(1) IN GENERAL.—Section 401(aX17) is amended— 
26 USC 40i. 
(A) by striking "$200,000" in the first sentence and 
inserting ^$150,000^, 
(B) by striking the second sentence, and 
(C) by adding at the end the following new subpara-
graph: 
"(B) COST-OF-LIVING ADJUSTMENT.— 
"(i) IN GENERAL.—If, for any calendar year after 
1994, Uie excess (if cmy) o
f
— 
"(I) $150,000, increased by the cost-of-living 
adjustment for the calendar year, over 
"(II) the dollar amount in effect under 
subparagraph (A) for taxable years beginning in 
the calendar year, 
is equal to or greater than $10,000, then the $150,000 
amount under subparagraph (A) (as previously 
adjusted under this subparagraph) for any taxable year 
beginning in any subsequent calendar year shall be 
increased by the amount of such excess, rounded to 
the next lowest multiple of $10,000. 
"(ii) COST-OF-LIVING ADJUSTMENT.—^The cost-of-liv-
ing acljustment for any calendar year shall be the 
acQustment made imder section 415(d) for such cal-
107 STAT. 472 
PUBLIC LAW 103-66—AUG. 10, 1993 
endar year, except that the base period for purposes 
of section 415(dXlXA) shall be the calendar quarter 
beginning October 1,1993." 
26 use 401. 
(2) 
CONFORMING AMENDMENT.—Section 401(aX17) is 
amended by striking '*(n) A trust" and inserting: 
"(17) COMPENSATION LIMIT.— 
*
*
(
A
) IN GENERAL.—A trust". 
(b) SiMPUFiED EMPLOYEE PENSIONS.— 
(1) IN GENERAL.—Paragraphs (3XC) and (6XDXii) of section 
408(k) are each amended by striking "$200,000" and inserting 
"$150,000". 
(2) COST-OF-LIVING.—Paragraph (8) of section 408(k) is 
amended to read as follows: 
"(8) COST-OF-LIVING ADJUSTMENT.—The Secretary shall 
ac^ust the $300 amoiuit in paragraph (2XC) at the same time 
and in the same manner as under section 415(d) and shall 
adjust the $150,0(K) amoimt in paragraphs (3XC) and (GXDXii) 
at the same time, and by the same amoimt, as any adjustment 
under section 401(aX17)(B)." 
(c) OTHER RELATED PROVISIONS.— 
(1) IN GENERAL.—Sections 404(1) and 505(bX7) are each 
amended— 
(A) by striking "$200,000" m the first sentence and 
inserting "$150,000", and 
(B) oy striking the second sentence and inserting "The 
Secretary shall aqjust the $150,000 amount at the same 
time, and by the same amount, as any adjustment under 
section 401(aX17XB)." 
(2) CONFORMING AMENDMENT.—The heading for section 
505(bX7) is amended by striking "$200,000". 
26 use 401 note. 
(d) EFFECTIVE DATES.— 
(1) IN GENERAL.—^Except as provided in this subsection, 
the amendments made by this section shall apply to benefits 
accruing in plan years beginning after December 31, 1993. 
(2) COLLECTIVELY BARGAINED PLANS.—In the case of a plan 
maintained pursuant to 1 or more collective bargaining agree-
ments between employee representatives and 1 or more employ-
ers ratified before the date of the enactment of this Act, the 
amendments made by this section shall not apply to contribu-
tions or benefits pursuant to such agreements for plan years 
beginning before the earlier o
f
— 
(A) the latest o
f
— 
(i) January 1,1994, 
(ii) the date on which the last of such collective 
bargaining agreements terminates (without regard to 
any extension, amendment, or modification of such 
agreements on or after such date of enactment), or 
(iii) in the case of a plan maintained pursuant 
to collective bargaining under the Railway Labor Act, 
the date of execution of an extension or replacement 
of the last of such collective bargaining agreements 
in effect on such date of enactment, or 
(B) January 1,1997. 
(3) TRANSITION RULE FOR STATE AND LOCAL PLANS.— 
(A) IN GENERAL.—In the case of an eligible participant 
in a governmental plan (within the meaning of section 
414(d) of the Internal Revenue Code of 1986), the dollar 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 473 
limitation under section 401(a)(17) of such Code shall not 
apply to the extent the amoiint of compensation which 
is allowed to be taken into account under the plan would 
be reduced below the amount which was allowed to be 
taken into account under the plan as in effect on July 
1,1993. 
(B) ELIGIBLE PARTICIPANT.—For purposes of subpara-
graph (A), an eligible participant is an individual who 
first became a participant in the plan during a plan year 
beginning before the 1st plan year beginning after the 
earlier of— 
(i) the plan year in which the plan is amended 
to reflect the amendments made by this section, or 
(ii) December 31,1995. 
(C) PLAN MUST BE AMENDED TO INCORPORATE LIMITS.— 
This paragraph shall not apply to any eligible participant 
of a plan imless the plan is amended so that the plan 
incorporates by reference the dollar limitation under section 
401(aX17) of the Internal Revenue Code of 1986, effective 
with respect to noneligible participants for plan years 
beginning after December 31, 1995 (or earlier if the plan 
amendment so provides). 
SEC. 13213. MODIFICATIONS TO DEDUCTION FOR MOVING EXPENSES. 
(a) DEFINITION OF DEDUCTIBLE EXPENSES.— 
(1) IN GENERAL.-^ubsection (b) of section 217 (defining 
26 use 217. 
moving expenses) is amended to read as follows: 
"(b) DEFINITION OF MOVING EXPENSES.— 
"(1) IN GENERAL.—For purposes of this section, the term 
'moving expenses' means only the reasonable expenses— 
"(A) of moving household goods and personal effects 
from the former residence to the new residence, and 
"(B) of traveling (including lodging) from the former 
residence to the new place of residence. 
Such term shall not include any expenses for meals. 
"(2) INDIVIDUALS OTHER THAN TAXPAYER.—In the case of 
any individual other than the taxpayer, expenses referred to 
in paragraph (1) shall be taken into account only if such individ-
ual has both the former residence and the new residence as 
his principal place of abode and is a member of the taxpayer's 
household" 
(2) CONFORMING AMENDMENTS.— 
(A) Section 217 is amended by striking subsection (e). 
(B) Subsection (f) of section 217 is amended to read 
as follows: 
"(f) SELF-EMPLOYED INDIVIDUAL.—^For purposes of this section, 
the term 'self-employed individual' means an individual who per-
forms personal services— 
"(1) as the owner of the entire interest in an unincorporated 
trade or business, or 
"(2) as a partner in a partnership carrying on a trade 
or business." 
(C) Paragraph (3) of section 217(g) is amended by 
inserting "and" at the end of subparagraph (A), by striking 
subparagraph (B), and by redesignating subparagraph (C) 
as subparagraph (B). 
107 STAT. 474 
PUBLIC LAW 103-66—AUG. 10, 1993 
26 use 217. 
(D) Subsection (h) of section 217 is amended by striking 
paragraph (1) and reidesignating the following paragraphs 
accordingly. 
(E) Section 1001 is amended by striking subsection 
(f). 
(F) Subsection (e) of section 1016 is amended to read 
as follows: 
"(e) CROSS REFERENCE.— 
Tor treatment of separate mineral interests as one property, see 
section 614." 
(b) INCREASE IN MILEAGE REQUIREMENT.—Paragraph (1) of sec-
tion 217(c) is amended by striking "35 miles" each place it appears 
and inserting "50 miles". 
(c) 
DEDUCTION ALLOWED IN COMPUTING ADJUSTED 
GROSS 
INCOME.— 
(1) IN GENERAL.—Subsection (a) of section 62 (defining 
adjusted gross income) is amended by inserting after paragraph 
(14) the following new paragraph: 
"(15) MOVING EXPENSES.—^e deduction allowed by section 
217." 
(2) CONFORMING AMENDMENT.—Subsection (b) of section 
67 is amended by striking paragraph (6) and redesignating 
the following paragraphs accordingly. 
(d) EXCLUSION OF EMPLOYER REIMBURSEMENT FOR DEDUCTIBLE 
EXPENSES.— 
(1) IN GENERAL.—Subsection (a) of section 132 (relating 
to certain fringe benefits) is amended by striking "or" at the 
end of paragraph (4), by striking the period at the end of 
paragraph (5) and inserting ", or^ and by adding at the end 
thereof the following new paragraph: 
"(6) qualified moving expense reimbursement." 
(2) 
QUALIFIED 
MOVING 
EXPENSE 
REIMBURSEMENT 
DEFINED.—Section 132 is amended by redesignating subsections 
(g), (h), (i), (j), (k), and (1), as subsections (h), (i), (j), (k), 
(I), and (m), respectively, and by inserting after subsection 
(f) the following new subsection: 
**(g) QUALIFIED MOVING EXPENSE REIMBURSEMENT.—For pur-
poses of this section, the term 'qualified moving expense reimburse-
ment' means any amount received (directly or indirectly) by an 
individual from an employer as a p a r e n t for (or a reimbursement 
of) expenses which would, be deductible as moving expenses under 
section 217 if directly paid or incurred by the individual. Such 
term shall not include any payment for (or reimbursement of) 
an expense actually deducted by the individual in a prior taxable 
year." 
(3) CONFORMING AMENDMENTS.— 
(A) Section 82 is amended by striking "There shall" 
and inserting "Except as provided in section 132(aX6), there 
shall". 
(B) Subsection (j) of section 132 (as redesignated by 
paragraph (2)) is amended by striking "subsection (f)" in 
paragraph (4XBXiii) thereof and inserting "subsection (h)". 
(C) Subsection (1) of section 132 (as redesignated by 
paragraph (2)) is amended by striking "subsection (e)" and 
mserting "subsections (e) and (g)". 
(D) Section 4977(c) is amended by striking "section 
132(gX2)" and inserting "section 132(iX2)". 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 475 
(e) EFFECTIVE DATE.—^The amendments made by this section 26 use 62 note. 
shall apply to expenses incurred after December 31, 1993; except 
that the amendments made by subsection (d) shall apply to 
reimbursements or other payments in respect of expenses incurred 
after such date. 
SEC. 13214. SIMPLIFICATION OF INDIVIDUAL ESTIMATED TAX SAFE 
HARBOR BASED ON LAST YEAR'S TAX. 
(a) IN GENERAL.—Paragraph (1) of section 6654(d) (relating 
to amount of required estimated tax installments) is amended by 26 use 6654. 
striking subparagraphs (C), (D), (E), and (F) and by inserting the 
following new subparagraph: 
"(C) LIMITATION ON USE OF PRECEDING YEAR'S TAX.— 
**(i) IN GENERAL.—If the adjusted gross income 
shown on the return of the individual for the preceding 
t£ucable year exceeds $150,000, clause (ii) of subpara-
graph (B) shall be applied by substituting '110 percent' 
for 100 percent'. 
"(ii) SEPARATE RETURNS.—^In the case of a married 
individual (within the meaning of section 7703) who 
files a separate return for the taxable year for which 
the amount of the installment is being determined, 
clause (i) shall be applied by substituting '$75,000' 
for '$150,000'. 
"(iii) SPECIAL RULE.—In the case of an estate or 
trust, adjusted gross income shall be determined as 
provided in section 67(e).'' 
(b) CONFORMING AMENDMENTS.— 
(1) Subparagraph (A) of section 6654(jX3) is amended by 
striking "and subsection (dXlXCXiii) shall not BLpply^. 
(2) Paragraph (4) of section 6654(1) is amended by striking 
"paragraphs (l)(CXiv) and (2XBXi) of subsection (d)" and insert-
ing "subsection (dX2XBXi)''. 
(c) EFFECTIVE DATE.—^The amendments made by this section 26 use 6654 
shall apply to taxable years beginning after December 31, 1993. ^°^-
SEC. 13216. SOCIAL SECURITY AND TIER 1 RAILROAD RETIREMENT 
BENEFITS. 
(a) ADDITIONAL INCLUSION FOR CERTAIN TAXPAYERS.— 
(1) IN GENERAL.—Subsection (a) of section 86 (relating to 
social security and tier 1 railroad retirement benefits) is 
-^ 
amended by adding at the end the following new paragraph: 
"(2) ADDITIONAL AMOUNT.—In the case of a taxpayer with 
respect to whom the amount determined under subsection 
(b)(lXA) exceeds the adjusted base amount, the amount 
included in gross income under this section shall be equal 
to the lesser of— 
"(A) the sum of— 
"(i) 85 percent of such excess, plus 
"(ii) the lesser of the amount determined under 
paragraph (1) or an amoimt equal to one-half of the 
difference between the a4justed base amount and the 
base amount of the taxpayer, or 
"(B) 85 percent of the social security benefits received 
during the taxable year." 
(2) CONFORMING AMENDMENTS.—Subsection (a) of section 
86 is amended— 
(A) by striking "Gross" and inserting: 
107 STAT. 476 
PUBLIC LAW 103-66—AUG. 10, 1993 
"(1) IN GENERAL.—^Except as provided in paragraph (2), 
gross", and 
(B) by redesignating paragraphs (1) and (2) as subpara-
graphs (A) and (B), respectively. 
26 use 86. 
(b) ADJUSTED BASE AMOUNT.—Section 86(c) (defining base 
amount) is amended to read as follows: 
"(c) BASE AMOUNT AND ADJUSTED BASE AMOUNT.—^For purposes 
of this section— 
"(1) BASE AMOUNT.—The term *base amount' means— 
"(A) except as otherwise provided in this paragraph, 
$25,000, 
*
*
(
B
) $32,000 in the case of a joint return, and 
"(C) zero in the case of a taxpayer who— 
"(i) is married as of the close of the taxable year 
(within the meaning of section 7703) but does not 
file a joint return for such year, and 
"(ii) does not live apart firom his spouse at all 
times diuring the taxable year. 
"(2) ADJUSTED BASE AMOUNT.—^The term 'adjusted base 
amount' means— 
"(A) except as otherwise provided in this paragraph, 
$34,000, 
"(B) $44,000 in the case of a joint return, and 
"(C) zero in the case of a taxpayer described in para-
graph (IXC)." 
(c) TRANSFERS TO THE HOSPITAL INSURANCE TRUST FUND.— 
(1) IN GENERAL.—Paragraph (1) of section 121(e) of the 
42 use 401 note. 
Social Security Amendments of 1983 (Public Law 92-21) is 
amended by— 
(A) striking "There" and inserting: 
"(A) There"; 
(B) inserting "(i)" immediately following "amounts 
equivalent to"; and 
(C) striking the period and inserting the following: 
", less (ii) the amounts equivalent to the aggregate increase 
in tax liabilities imder chapter 1 of the Internal Revenue 
Code of 1986 which is attributable to the amendments 
to section 86 of such Code made by section 13215 of the 
Revenue Reconciliation Act of 1993. 
"(B) There are hereby appropriated to the hospital 
insiirance trust fund amounts equal to the increase in 
tax liabilities described in subparagraph (A)(ii). Such appro-
priated amounts shall be transferred firom the general fiind 
of the Treasury on the basis of estimates of such tax 
liabilities made by the Secretary of the Treasury. Transfers 
shall be made pursuant to a schedule made by the Sec-
retary of the Treasury that takes into account estimated 
timing of collection of such liabilities." 
(2) DEFINITION.—Paragraph (3) of section 121(e) of such 
Act is amended by redesignating subparagraph (B) as subpara-
graph (C), and by inserting after subparagraph (A) the following 
new subparagraph: 
"(B) HOSPITAL INSURANCE TRUST FUND.—^The term Tios-
pital insurance trust fund' means the fiind established 
pursuant to section 1817 of the Social Security Act.". 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 477 
(3) CONFORMING AMENDMENT.—Paragraph (2) of section 
121(e) of such Act is amended in the first sentence by striking 42 use 40i note. 
"paragraph (1)" and inserting "paragraph (IXA)". 
(4) TECHNICAL AMENDMENTS.—Paragraph (IXA) of section 
121(e) of such Act, as redesignated and amended by paragraph 
(1), is amended by striking "1954" and inserting "1986^. 
(d) EFFECTIVE DATE.—^The amendments made by subsections 42 use 86 note. 
(a) and (b) shall apply to taxable years beginning eifter December 
31,1993. 
PART II—PROVISIONS AFFECTING 
BUSINESSES 
SEC. 13221. INCREASE IN TOP MARGINAL RATE UNDER SECTION 11. 
(a) GENERAL RULE.—Paragraph (1) of section 11(b) (relating 
26 use ii. 
to amount of tax) is amended— 
(1) by striking "and" at the end of subparagraph (B), 
(2) by striking subparagraph (C) and inserting the follow-
ing: 
"(C) 34 percent of so much of the taxable income as 
exceeds $75,000 but does not exceed $10,000,000, and 
"(D) 35 percent of so much of the taxable income as 
exceeds $10,000,000.", and 
(3) by adding at the end thereof the following new sentence: 
"In the case of a corporation which has taxable income in 
excess of $15,000,000, the amount of the tax determined under 
the foregoing provisions of this paragraph shall be increased 
by an additional amoimt equal to the lesser of (i) 3 percent 
of such excess, or (ii) $ 100,000." 
(b) CERTAIN PERSONAL SERVICE CORPORATIONS.—Paragraph (2) 
of section 11(b) is amended by striking "34 percent" and inserting 
"35 percent". 
(c) CONFORMING AMENDMENTS.— 
(1) Clause (iii) of section 852(bX3XD) is amended by strik-
ing "66 percent" and inserting "65 percent". 
(2) Subsection (a) of section 1201 is amended by striking 
"34 percent" each place it appears and inserting "35 percent". 
(3) Paragraphs (1) and (2) of section 1445(e) are each 
amended by striking "34 percent" and inserting "35 percent". 
(d) EFFECTIVE DATE.—^The amendments made by this section 26 use ii note. 
shall apply to taxable years beginning on or after January 1, 1993; 
except that the amendment made by subsection (cX3) shall take 
effect on the date of the enactment of this Act. 
SEC. 13222. DENIAL OF DEDUCTION FOR LOBBYING EXPENSES. 
(a) DISALLOWANCE OF DEDUCTION.—Section 162(e) (relating to 
appearances, etc., with respect to legislation) is amended to read 
as follows: 
"(e) DENIAL OF DEDUCTION FOR CERTAIN LOBBYING AND POLITI-
C
A
L EXPENDITURES.— 
"(1) IN GENERAL.—^No deduction shall be allowed under 
subsection (a) for any amoimt paid or incurred in connection 
with— 
"(A) influencing legislation, 
"(B) participation in, or intervention in, any political 
camp£iign on behalf of (or in opposition to) any candidate 
for pubuc office, 
107 STAT. 478 
PUBLIC LAW 103-66—AUG. 10, 1993 
"(C) any attempt to influence the general public, or 
segments thereof, with respect to elections, legislative mat-
ters, or referendums, or 
"(D) any direct communication with a covered executive 
branch official in an attempt to influence the official actions 
or positions of such official. 
"(2) EXCEPTION FOR LOCAL LEGISLATION.—In the case of 
any legislation of any local council or similar governing body— 
"(A) paragraph (IXA) shall not apply, and 
"(B) the deduction allowed by subsection (a) shall 
include all ordinary and necessary expenses (including, 
but not limited to, traveling expenses described in sub-
section (aX2) and the cost of preparing testimony) paid 
or incurred during the taxable year in carrying on any 
trade or business— 
"(i) in direct connection with appearances before, 
submission of statements to, or sending communica-
tions to the committees, or individual members, of 
such council or body with respect to legislation or 
proposed legislation of direct interest to the taxpayer, 
or 
"(ii) in direct connection with communication of 
information between the taxpayer and an organization 
of which the taxpayer is a member with respect to 
any such legislation or proposed legislation which is 
of direct interest to the taxpayer anato such organiza-
tion, 
and that portion of the dues so paid or incurred with 
respect to any organization of which the taxpayer is a 
member which is attributable to the expenses of the activi-
ties described in clauses (i) and (ii) carried on by such 
organization. 
"(3) APPLICATION TO DUES OF TAX-EXEMPT ORGANIZATIONS.— 
No deduction shall be allowed under subsection (a) for the 
portion of dues or other similar amounts paid by the taxpayer 
to an organization which is exempt from tax under this subtitle 
which tne organization notifies the taxpayer under section 
6033(eXlXAXii) is allocable to expenditures to which paragraph 
(1) applies. 
"(4) INFLUENCING LEGISLATION.—For purposes of this 
subsection— 
"(A) IN GENERAL.—^The term 'influencing legislation' 
means any attempt to influence any legislation through 
commimication with any member or employee of a legisla-
tive body, or with any government official or employee 
who may participate in the formulation of legislation. 
"(B) LEGISLATION.—The term legislation' has the 
meaning given such term by section 4911(eX2). 
"(5) OTHER SPECIAL RULES.— 
"(A) EXCEPTION FOR CERTAIN TAXPAYERS.—In the case 
of any t£ucpayer engaged in the trade or business of conduct-
ing activities described in paragraph (1), paragraph (1) 
shall not apply to expenditures of the taxpayer in conduct-
ing such activities directly on behalf of another person 
(but shall apply to payments by such other person to the 
taxpayer for conducting such activities). 
"(B) DE MINIMIS EXCEPTION.— 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 479 
"(i) IN GENERAL.—Paragraph (1) shall not apply 
to any in-house expenditures tor any taxable year if 
such expenditures do not exceed $2,000. In determining 
whether a taxpayer exceeds the $2,000 limit imder 
this clause, there shall not be taken into account over-
head costs otherwise allocable to activities described 
in paragraphs (IXA) and (D). 
**(ii) IN-HOUSE EXPENDITURES.—For purposes of 
clause (i), the term *in-house expenditures means 
expenditures described in paragraphs (IXA) and (D) 
other than— 
"(I) payments by the taxpayer to a person 
engaged in the trade or business of conducting 
activities described in paragraph (1) for the con-
duct of such activities on l>ehalf of the taxpayer, 
or 
"(11) dues or other similar amoimts paid or 
incurred by the taxpayer which are allocable to 
activities described in paragraph (1). 
"(C) EXPENSES INCURRED IN CONNECTION WITH LOBBY-
ING A
N
D POLITICAL ACTIVITIES.—^Any amount paid or 
incurred for research for, or preparation, planning, or 
coordination of, any activity described in paragraph (1) 
shall be treated as paid or incurred in connection with 
such activity. 
"(6) COVERED EXECUTIVE BRANCH OFFICIAL.—For purposes 
of this subsection, the term 'covered executive branch omcial' 
means— 
*
*
(
A
) the President, 
"(B) the Vice President, 
"(C) any officer or employee of the White House Office 
of the Executive Office of the President, and the 2 most 
senior level ofiGcers of each of the other agencies in such 
Executive Office, and 
"(DXi) any individual serving in a position in level 
I of the Executive Schedule under section 5312 of title 
5, United States Code, (ii) any other individual designated 
by the President as having Cabinet level status, and (iii) 
any immediate deputy of an individual described in clause 
(i) or (ii). 
"(7) SPECIAL RULE FOR INDIAN TRIBAL GOVERNMENTS.—For 
purposes of this subsection, an Indian tribal government shall 
be treated in the same manner as a local council or similar 
governing body. 
"(8) CROSS REFERENCE.— 
Tor reporting requirements and alternative taxes related to this 
subsection, see section SOSSCe)." 
(b) DISALLOWANCE OF CHARITABLE DEDUCTION IN CERTAIN 
CASES.—Section 170(f) (relating to disallowance of deduction in 
certain cases and special rules), as amended by section 13172, 
is amended by adding at the end the following new paragraph: 
"(9) 
DENIAL OF DEDUCTION WHERE CONTRIBUTION FOR 
LOBBYING ACTIVITIES.—^No deduction shall be allowed under 
this section for a contribution to £ui organization which conducts 
activities to which section 162(eXl) applies on matters of direct 
financial interest to the donor's trade or business, if a principal 
purpose of the contribution was to avoid Federal income tax 
107 STAT. 480 
PUBLIC LAW 103-66^AUG. 10, 1993 
by securing a deduction for such activities under this section 
which woiUd be disallowed by reason of section 162(e) if the 
donor had conducted such activities directly. No deduction shall 
be allowed imder section 162(a) for any amount for which 
a deduction is disallowed under the preceding sentence." 
26 use 6033. 
(c) REPORTING REQUIREMENTS.—Section 6033 (relating to 
returns by exempt organizations) is amended by redesignating sub-
section (e) as subsection (f) and by inserting after subsection (d) 
the following new subsection: 
"(e) SPECIAL RULES RELATING TO LOBBYING ACTIYITIES.— 
"(1) REPORTING REQUIREMENTS.— 
"(A) IN GENERAL.—^If this subsection applies to an 
organization for any taxable year, such organization— 
"(i) shall include on any return required to be 
filed under subsection (a) for such year information 
setting forth the total expenditures of the organization 
to which section 162(eXl) applies and the total amoimt 
of the dues or other similar amoimts paid to the 
organization to which such expenditures are allocable, 
and 
"(ii) except as provided in paragraphs (2XAXi) and 
(3), shall, at the time of assessment or payment of 
such dues or other similar amounts, provide notice 
to each person making such payment which contains 
a reasonable estimate of the portion of such dues or 
other similar amounts to which such expenditures are 
so allocable. 
"(B) ORGANIZATIONS TO WHICH SUBSECTION APPLIES.— 
"(i) IN GENERAL.—^This subsection shall apply to 
any organization which is exempt from taxation imder 
this subtitle other than an organization described in 
section 501(cX3). 
"(ii) SPECIAL RULE FOR IN-HOUSE EXPENDITURES.— 
This subsection shall not apply to the in-house expendi-
tures (Mdthin the meaning of section 162(eX5XBXii)) 
of an organization for a taxable year if such expendi-
tures do not exceed $2,000. In determining whether 
a taxpayer exceeds the $2,000 limit imder this clause, 
there shall not be taken into account overhead costs 
otherwise allocable to activities described in subpara-
graphs (A) and (D) of section 162(eXl). 
"(C) ALLOCATION.—^For purposes of this paragraph— 
"(i) IN GENERAL.—^Expenditures to wnich section 
162(eXl) applies shall be treated as paid out of dues 
or other similar amounts to the extent thereof. 
"(ii) CARRYOVER OF LOBBYING EXPENDITURES IN 
EXCESS OF DUES.—^If expenditures to which section 
162(eXl) applies exceed the dues or other similar 
amounts for any taxable year, such excess shall be 
treated as expenditures to which section 162(eXl) 
applies which are paid or incurred by the organization 
during the following taxable year. 
"(2) TAX IMPOSED WHERE ORGANIZATION DOES NOT NOTIFY.— 
"(A) IN GENERAL.—If an organization— 
"(i) elects not to provide the notices described in 
paragraph (IXA) for any taxable yeeir, or 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 481 
"(ii) fails to include in such notices the amount 
allocable to exi)en(litures to which section 162(eXl) 
applies (determined on the basis of actual amounts 
rather than the reasonable estimates under paragraph 
(IXAXii)), 
then there is hereby imposed on such organization for 
such taxable year a tax in an amount equal to the product 
of the highest rate of tax imposed by section 11 for the 
taxable ^ear and the aggregate amount not included in 
such notices by reason of such election or failure. 
"(B) WAIVER WHERE FUTURE ADJUSTMENTS MADE.—The 
Secretary may waive the tax imposed by subparagraph 
(AXii) for any taxable year if the organization agrees to 
a4just its estimates under paragraph (IXAXii) for the fol-
lowing taxable year to correct any failures. 
"(C) TAX TREATED AS INCOME TAX.—For purposes of 
this title, the tax imposed by subparagraph (A) shall be 
treated in the same manner as a tax imposed by chapter 
1 (relating to income taxes). 
"(3) EXCEPTION WHERE DUES GENERALLY NONDEDUCTIBLE.— 
Paragraph (IXA) shall not apply to an organization which estab-
lishes to the satisfaction of tne Secretary that substantially 
all of the dues or other similar amounts paid by persons to 
such organization are not deductible without regard to section 
162(e).'' 
(d) CONFORMING AMENDMENT.—Section 7871(aX6) is amended 2
6 use 7871. 
by striking subparagraph (B) and by redesignating subparagraphs 
(C) and (D) as subparagraphs (B) ana (C), respectively. 
(e) EFFECTIVE DATE.—^The amendments made by this section 26USCi62note. 
shall apply to amounts paid or incurred after December 31, 1993. 
SEC. 13223. MARK TO MARKET ACCOUNTING METHOD FOR SECURI-
TIES DEALERS. 
(a) GENERAL RULE.—Subpart D of part II of subchapter E 
of chapter 1 (relating to inventories) is amended by admng at 
the end thereof the following new section: 
"SEC. 
4
7
6
. 
MARK TO 
MARKET 
ACCOUNTING 
METHOD 
FOR 
DEALERS 
IN 
SECURITIES. 
"(a) GENERAL RULE.—^Notwithstanding any other provision of 
this subpart, the following rules shall apply to securities held by 
a dealer in securities: 
"(1) Any security which is inventory in the hands of the 
dealer shall be included in inventory at its fair market value. 
"(2) In the case of any security which is not inventory 
in the hands of the dealer and which is held at the close 
of any taxable year— 
"(A) the dealer shall recognize gain or loss as if such 
seciuity were sold for its fair market value on the last 
business day of such taxable year, and 
"(B) any gain or loss shall be taken into account for 
such taxable year. 
Proper adjustment shall be made in the amount of any gain 
or loss subsequently realized for gain or loss taken into account 
under the preceding sentence. "Hie Secretary may provide by 
regulations for the application of this paragraph at times other 
than the times provided in this paragraph. 
"(b) EXCEPTIONS.— 
107 STAT. 482 
PUBLIC LAW 103-66—AUG. 10, 1993 
**(1) IN GENERAL.—Subsection (a) shall not apply to— 
"(A) any security held for investment, 
"(BXi) any securitv described in subsection (cX2XC) 
which is acquired (including originated) by the taxpayer 
in the ordinary course of a trade or business of the taxpayer 
and which is not held for sale, and (ii) any obligation 
to acquire a security described in clause (i) if such obliga-
tion is entered into in the ordinary course of such trade 
or business and is not held for sale, and 
"(C) any security which is a hedge with respect to— 
"(i) a security to which subsection (a) does not 
apply, or 
"(ii) a position, right to income, or a liability which 
is not a security in the hands of the taxpayer. 
To the extent provided in regulations, subparagraph (C) shall 
not apply to any security held by a person in its capacity 
as a dealer in securities. 
"(2) IDENTIFICATION REQUIRED.—A security shall not be 
treated as described in subparagraph (A), (B), or (C) of para-
graph (1), as the case may be, unless such security is clearlv 
identified in the dealer's records as being descril>ed in such 
subparagraph before the close of the day on which it was 
acquired, originated, or entered into (or such other time as 
the Secretary may by regulations prescribe). 
"(3) SECURITIES SUBSEQUENTLY NOT EXEMPT.—If a security 
ceases to be described in paragraph (1) at any time after 
it was identified as such under paragraph (2), subsection (a) 
shall apply to any changes in value of tne security occurring 
after the cessation. 
"(4) SPECIAL RULE FOR PROPERTY HELD FOR INVESTMENT.— 
To the extent provided in regulations, subparagraph (A) of 
paragraph (1) shall not apply to any security described in 
subparagraph (D) or (E) of subsection (cX2) which is held by 
a dealer in such securities. 
"(c) DEFINITIONS.—For piuposes of this section— 
"(1) DEALER IN SECURITIES DEFINED.—The term 'dealer in 
securities' means a taxpayer who— 
"(A) regularly purchases securities firom or sells securi-
ties to customers in the ordinary course of a trade or 
business; or 
"(B) regularly offers to enter into, assume, offset, assign 
or otherwise terminate positions in securities with cus-
tomers in the ordinary course of a trade or business. 
"(2) SECURITY DEFINED.—^The term 'security* means any— 
"(A) share of stock in a corporation; 
"(B) partnership or beneficial ownership interest in 
a widelv held or publiclv traded partnershi]) or trust; 
"(C) note, bond, debenture, or other evidence of indebt-
edness; 
"(D) interest rate, currency, or equity notional principal 
contract; 
"(E) evidence of an interest in, or a derivativie financial 
instrument in, any security described in subparagraph (A), 
(B), (C), or (D), or any currency, including any option, 
forward contract, short position, and any similar financial 
instrument in such a security or currency; £ind 
"(F) position which— 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 483 
"(i) is not a security described in subparagraph 
(A),(B),(C),(D),or(E), 
"(ii) is a hedge with respect to such a security, 
and 
"(iii) is clearly identified in the dealer's records 
as being described in this subparagraph before the 
close of the day on which it was acquired or entered 
into (or such other time as the Secretary may by regu-
lations prescribe). 
Subparagraph (E) shall not include £uiy contract to which sec-
tion 1256(a) applies. 
"(3) HEDGE.—^The term liedge* means any position which 
reduces the dealer's risk of interest rate or price changes or 
currency fluctuations, including any position which is reason-
ably expected to become a hedge within 60 days after the 
acquisition of the position. 
**(d) SPECIAL RULES.—^For purposes of this section— 
"(1) COORDINATION WITH CERTAIN RULES.—The rules of sec-
tions 263(g), 263A, and 1256(a) shall not apply to securities 
to which subsection (a) applies, and section 1091 shall not 
apply (and section 1092 shall apply) to any loss recognized 
under subsection (a). 
"(2) IMPROPER IDENTIFICATION.—If a taxpayer— 
"(A) identifies any security under subsection (bX2) as 
being described in subsection (bXD and such security is 
not so described, or 
"(B) fails imder subsection (cX2XFXiii) to identify any 
position which is described in subsection (cX2XF) (without 
regard to clause (iii) thereof) at the time such identification 
is required, 
the provisions of subsection (a) shall apply to such security 
or position, except that any loss under this section prior to 
the disposition of the security or position shall be recognized 
only to the extent of gain previously recognized under this 
section (and not previously taken into account under this para-
graph) with respect to such security or position. 
*
*
(
3
) CHARACTER OF GAIN OR LOSS.— 
"(A) IN GENERAL.—^Except as provided in subparagraph 
(B) or section 1236(b)— 
**(i) IN GENERAL.—Any gain or loss with respect 
to a seciuity under subsection (aX2) shall be treated 
as ordinary income or loss. 
"(ii) SPECIAL RULE FOR DISPOSITIONS.—If— 
"(I) gain or loss is recognized with respect 
to a security before the close of the taxable year, 
and 
"(II) subsection (aX2) would have applied if 
the security were held as of the close of the taxable 
year, 
such gain or loss shall be treated as ordinary income 
or loss. 
**(B) EXCEPTION.—Subparagraph (A) shall not apply 
to any gain or loss which is allocable to a period during 
which— 
"(i) the security is described in subsection (bXlXC) 
(without regard to subsection (bX2)), 
107 STAT. 484 
PUBLIC LAW 103-66—AUG. 10, 1993 
"(ii) the security is held by a person other than 
in connection with its activities as a dealer in securi-
ties, or 
"(iii) the security is improperly identified (within 
the meaning of subparagraph (A) or (B) of paragraph 
(2)). 
"(e) REGULATORY AUTHORITY.—The Secretarjr shall prescribe 
such regulations as m
a
^
y
r be necessary or appropriate to carry out 
the purposes of this section, including rules— 
"(1) to prevent the use of year-end transfers, related parties, 
or other arrangements to avoid the provisions of this section, 
and 
"(2) to provide for the application of this section to any 
security which is a hedge which cannot be identified with 
a specific security, position, right to income, or liability.** 
(b) CONFORMING AMENDMENTS.— 
26 use 988. 
(1) Paragraph (1) of section 988(d) is amended— 
(A) by striking "section 1256" and inserting "section 
475 or 1256", and 
(B) by striking "1092 and 1256" and inserting "475, 
1092, and 1256". 
(2) The table of sections for subpart D of part II of sub-
chapter E of chapter 1 is amended by adding at the end thereof 
the following new item: 
'^c. 475. Mark to market accounting method for dealers in securities." 
26 use 475 note. 
(c) EFFECTIVE DATE.— 
(1) IN GENERAL.—^The amendments made by this section 
shall apply to all taxable years ending on or after December 
31,1993. 
(2) CHANGE IN METHOD OF ACCOUNTING.—In the case of 
any taxpayer required bv this section to change its method 
of accounting for any taxaole year— 
(A) such change shall be treated as initiated by the 
taxpayer, 
(B) such change shall be treated as made with the 
consent of the Secretary, and 
(C) except as provided in paragraph (3), the net amount 
of the adjustments required to be taken into accoimt by 
the taxpayer under section 481 of the Internal Revenue 
Code of 1986 shall be taken into account ratably over 
the 5-taxable year period beginning with the first taxable 
year ending on or after December 31,1993. 
(3) SPECIAL RULE FOR FLOOR SPECIAUSTS AND MARKET MAK-
ERS.— 
(A) IN GENERAL.—If— 
(i) a taxpayer (or any predecessor) used the last-
in first-out (LlFO) method of accounting with respect 
to any qualified securities for the 5-taxable year period 
ending with its last taxable year ending berore Decem-
ber 31,1993, and 
(ii) any portion of the net amount described in 
paragraph (2XC) is attributable to the use of such 
method of accounting, 
then paragraph (2XC) shall be applied by taking such por-
tion into account ratably over the 15-taxable year period 
beginning with the first taxable year ending on or after 
December 31,1993. 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 485 
(B) QUALIFIED SECURITY.—^For purposes of this para-
graph, the term "qualified security^ means any security 
acquired— 
(i) by a floor specialist (as defined in section 
1236(dX2) of the Internal Revenue Code of 1986) in 
connection with the specialist's duties as a specialist 
on an exchange, but only if the security is one in 
which the specialist is registered with the exchange, 
or 
(ii) by a taxpayer who is a market maker in connec-
tion with the taiq)ayer's duties as a market maker, 
but only i
f
— 
(I) the security is included on the National 
Association of Security Dealers Automated Quota-
tion System, 
(II) the taxpayer is registered as a market 
maker in such security with the National Associa-
tion of Security Dealers, and 
(III) as of the last day of the taxable year 
preceding the taxpayer's first taxable year ending 
on or after December 31, 1993, the taxpayer (or 
any predecessor) has been actively and regularly 
engaged as a market maker in such security for 
the 2-year period ending on such date (or, if 
shorter, the period beginning 61 days £ifter the 
security was listed in such quotation system and 
ending on such date). 
SEC. 13224. CLARIFICATION OF TREATMENT OF CERTAIN FSUC 26 USC165 note. 
FINANCIAL ASSISTANCE. 
(a) GENERAL RULE.—For purposes of chapter 1 of the Internal 
Revenue Code of 198&— 
(1) any FSLIC assistance with respect to any loss of prin-
cipal, capital, or similar amoimt upon the disposition of anv 
asset shall be taken into accoimt as compensation for sucn 
loss for purposes of section 165 of such Code, and 
(2) any FSLIC assistance with respect to any debt shall 
be taken into accoimt for piu^ses of section 166, 585, or 
593 of such Code in determining whether such debt is worthless 
(or the extent to which such debt is worthless) and in determin-
ing the amount of any addition to a reserve for bad debts 
arising from the worthlessness or partial worthlessness of such 
debts. 
(b) FSLIC ASSISTANCE.—For purposes of this section, the term 
"FSLIC assistance" means any assistance (or ri^ht to assistance) 
with respect to a domestic building and loan association (as defined 
in section 7701(aX19) of such Code without regard to subparagraph 
(C) thereof) under section 406(f) of the National Housing Act or 
section 21A of the Federed Home Loan Bank Act (or under any 
similar provision of law). 
(c) EFFECTIVE DATE.— 
(1) IN GENERAL.—Except as otherwise provided in this 
subsection— 
(A) The provisions of this section shall apply to taxable 
years ending on or after March 4, 1991, out only with 
respect to FSLIC assistance not credited before March 4, 
1991. 
107 STAT. 486 
PUBLIC LAW 103-66—AUG. 10, 1993 
(B) If any FSLIC assistance not credited before 
March 4, 1991, is with respect to a loss sustained or 
charge-off in a taxable year ending before March 4, 1991, 
for purposes of determining the amount of any net operat-
ing loss carryover to a t^able year ending on or after 
March 4, 1991, the provisions of this section shall apply 
to such assistance for purposes of determining the amount 
of the net operating loss for the taxable year in which 
such loss was sustained or debt written off. Except as 
provided in the preceding sentence, this section shall not 
apply .to any FSLIC assistance with respect to a loss 
sustained or charge-off in a taxable year ending before 
March 4,1991. 
(2) EXCEPTIONS.—^The provisions of this section shall not 
apply to any assistance to which the amendments made by 
section 1401(aX3) of the Financial Institutions Reform, Recov-
ery, and Enforcement Act of 1989 apply. 
SEC. 13225. MODIFICATION OF CORPORATE ESTIMATED TAX RULES. 
(a) INCREASE IN REQUIRED INSTALLMENT BASED ON CURRENT 
YEAR TAX 
26 use 6655. 
(i) IN GENERAL.—Clause (i) of section 6655(d)(1)(B) (relat-
ing to amount of required installment) is amended by striking 
"91 percent" each place it appears and inserting "100 percent". 
(2) CONFORMING AMENDMENTS.— 
(A) Subsection (d) of section 6655 is amended— 
(i) by striking paragraph (3), and 
(ii) by striking "91 PERCENT" in the paragraph 
heading of paragraph (2) and inserting "lOO PERCENT". 
(B) Clause (ii) of section 6655(e)(2XB) is amended by 
striking the table contained therein and inserting the fol-
lowing: 
The 
"In the case of the following 
applicable 
required installments: 
percentage is: 
Ist 
25 
2nd 
50 
3rd 
75 
4th 
100." 
(C) Clause (i) of section 6655(e)(3XA) is amended by 
striking "91 percent" and inserting "100 percent". 
(b) MODIFICATION OF PERIODS FOR APPLYING ANNUALIZATION.— 
(1) Clause (i) of section 6655(eX2XA) is amended— 
(A) by striking "or for the first 5 months" in subclause 
(II), 
(B) by striking "or for the first 8 months" in subclause 
(III), and 
(C) by striking "or for the first 11 months" in subclause 
(IV). 
(2) Paragraph (2) of section 6655(e) is amended by adding 
at the end thereof the following new subparagraph: 
"(C) 
ELECTION FOR DIFFERENT ANNUALIZATION PERI-
ODS.— 
"(i) If the taxpayer makes an election under this 
clause— 
"(I) subclause (I) of subparagraph (A)(i) shall 
be applied by substituting '2 months* for '3 
months', 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 487 
"(11) subclause (II) of subparagraph (AXi) shall 
be applied by substituting '4 months' for *S 
months', 
"(III) subclause (III) of subparagraph (AXi) 
shall be applied by substituting '7 months' for '6 
months', and 
"(IV) subclause (IV) of subparagraph (AXi) 
shall be applied by substituting '10 months' for 
'9 months'. 
"(ii) If the taxpayer makes an election under this 
clause— 
"(I) subclause (II) of subparagraph (AXi) shall 
be applied by substituting '5 months' for '3 
months', 
"(II) subclause (III) of subparagraph (AXi) 
shall be applied by substituting 8 months' for '6 
months', and 
"(III) subclause (IV) of subparagraph (AXi) 
shall be applied by substituting '11 months' for 
'9 months'. 
"(iii) An election under clause (i) or (ii) shall apply 
to the taxable year for which made and such an election 
shall be effective only if made on or before the date 
required for the payment of the first required install-
ment for such taxable year." 
(3) The last sentence of section 6655(gX3) is amended by 26 use 6655. 
striking "and subsection (eX2XA)'' and inserting "and, except 
in the case of an election under subsection (eX2XC), subsection 
(eX2XA)''. 
(c) EFFECTIVE DATE.—The amendments made by this section 26 use 6655 
shall apply to taxable years beginning after December 31, 1993. note. 
SEC. 13226. MODIFICATIONS OF DISCHARGE OF INDEBTEDNESS 
PROVISIONS. 
(a) REPEAL OF STOCK FOR DEBT EXCEPTION IN DETERMINING 
INCOME FROM DISCHARGE OF INDEBTEDNESS.— 
(1) IN GENERAL.—Subsection (e) of section 108 is amended— 
(A) by striking paragraph (10) and by redesignating 
paragraph (11) as paragraph (10), and 
(B) by amending paragraph (8) to read as follows: 
"(8) INDEBTEDNESS SATISFIED BY CORPORATION'S STOCK.— 
For purposes of determining income of a debtor from discharge 
of indebtedness, if a debtor corporation transfers stock to a 
creditor in satisfaction of its indebtedness, such corporation 
shall be treated as having satisfied the indebtedness with an 
amount of money equal to the fair market value of the stock." 
(2) CONFORMING AMENDMENTS.— 
(A) Subparagraph (C) of section 382(1X5) is amended 
to read as follows: 
"(C) COORDINATION WITH SECTION IDS.-In applying sec-
tion 108(eX8) to any case to which subparagraph (A) 
applies, there shall not be taken into account any indebted-
ness for interest described in subparagraph (B)." 
(B) Section 108(eX6) is amended by striking "For" and 
inserting "Except as provided in regulations, for . 
(3) EFFECTIVE DATE.— 
2
6 use los note. 
69-194 O - 94 - 17 : QL. 3 Part 1 
107 STAT. 488 
PUBLIC LAW 103-66—AUG. 10, 1993 
(A) IN GENERAL.—^Except aa otherwise provided in this 
paragraph, the amendments made by this subsection shall 
apply to stock transferred after December 31, 1994, in 
satisfaction of any indebtedness. 
(B) EXCEPTION FOR TITLE ii CASES.—The amendments 
made by this subsection shall not apply to stock transferred 
in satisfaction of any indebtedness if such transfer is in 
a title 11 or similar case (as defined in section 368(aX3XA) 
of the Internal Revenue Code of 1986) which was filed 
on or before December 31,1993. 
(b) TAX ATTRIBUTES SUBJECT TO REDUCTION.— 
26USC108. 
(1) MINIMUM TAX CREDIT.—Section 108(bX2) (relating to 
tax attributes affected; order of reduction) is amended by 
redesignating subparagraphs (C), (D), and (E) as subparagraphs 
(D), (E), and (F) and by adding after subparagraph (B) the 
following new subparagraph: 
"(C) MINIMUM TAX CREDIT.—The amount of the mini-
mum tax credit available under section 53(b) as of the 
beginning of the taxable year immediately following the 
taxable year of the discharge." 
(2) 
PASSIVE 
ACTIYITY 
LOSSES AND CREDITS.—Section 
108(b)(2), as amended by paragraph (1), is amended by 
redesignating subparagraph (F) as subparagraph (G) and by 
adding after subparagraph (E) the following new subparagraph: 
"(F) PASSIVE ACTIVITY LOSS AND CREDIT CARRYOVERS.— 
Any passive activity loss or credit carryover of the taxpayer 
under section 469<b) from the teixable year of the dis-
charge." 
(3) CONFORMING AMENDMENTS.— 
(A) Subparagraph (B) of section 108(bX3) is amended 
to read as follows: 
"(B) CREDIT CARRYOVER REDUCTION.—The reductions 
described in subparagraphs (B), (C), and (G) shall be 33 
Vs 
cents for each dollar excluded by subsection (a). The reduc-
tion described in subparagraph (F) in any passive activity 
credit carryover shall be 33 Vs cents for each dollar excluded 
by subsection (a)." 
(B) Subparagraph (B) of section 108(bX4) is amended 
by striking "(C)" in the text and heading thereof and insert-
ing "(D)". 
(C) Subparagraph (C) of section 108(bX4) is amended 
by striking "(E)" in the text and heading thereof and insert-
ing "(G)". 
(D) Subparagraph (B) of section 108(gX3) is amended— 
(i) by striking "subparagraphs (A), (B), (C), and 
(E)" and inserting "subparagraphs (A), (B), (C), (D), 
(F),and(G)'', 
(ii) by striking "subparagraphs (B) and (E)" and 
inserting "subparagraphs (B), (C), and (G)", and 
(iii) by inserting before the period at the end the 
following: "and the attribute described in subparagraph 
(F) of subsection (bX2) to the extent attributable to 
£uiy passive activitycredit carryover". 
26 use 108 note. 
(4) EFFECTIVE DATE.—The amendments made by this sub-
section shall apply to discharges of indebtedness in taxable 
years beginning after December 31,1993. 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 489 
SEC. 13227. LIMITATION ON SECTION 936 CREDIT. 
Puerto Rico. 
(a) GENERAL RULE.—Subsection (a) of section 936 (relating 26 use 936. 
to Puerto Rico and possession tax credit) is amended— 
(1) by striking "as provided in paragraph (3)" in paragraph 
(1) and inserting "as otherwise provided in this section"; and 
(2) by adding at the end thereof the following new para-
graph: 
"(4) 
LIMITATIONS 
ON 
CREDIT 
FOR ACTIVE 
BUSINESS 
INCOME.— 
"(A) IN GENERAL.—^The amount of the credit determined 
under paragraph (1) for any taxable year with respect 
to income referred to in subparagraph (A) thereof shall 
not exceed the sum of the following amounts: 
"(i) 60 percent of the sum o
f
— 
"(I) the aggregate amount of the possession 
corporation's qualified possession wages for such 
taxable year, plus 
"(II) the allocable employee fringe benefit 
expenses of the possession corporation for the tax-
able year, 
"(ii) The sum o
f
— 
"(I) 15 percent of the depreciation allowances 
for the taxable year with respect to short-life quali-
fied tangible property, 
"(II) 40 percent of the depreciation allowances 
for the taxable year with respect to mediimi-life 
qualified tangible property, and 
"(III) 65 percent of the depreciation allowances 
for the taxable year with respect to long-life quali-
fied tangible property. 
"(iii) If the possession corporation does not have 
i 
an election to use the method described in subsection 
(hX5)(C)(ii) (relating to profit split) in effect for the 
taxable year, the amount of qualified possession income 
t£ixes for the taxable year allocable to nonsheltered 
income. 
"(B) ELECTION TO TAKE REDUCED CREDIT.— 
"(i) IN GENERAL.—If an election under this 
subparagraph applies to a possession corporation for 
any taxable year— 
"(I) subparagraph (A), and the provisions of 
subsection (i), shall not apply to such possession 
corporation for such taxable year, and 
"(II) the credit determined under paragraph 
(1) for such taxable year with respect to income 
referred to in subparagraph (A) thereof shall be 
the applicable percentage of the credit which would 
otherwise have been determined imder such para-
graph with respect to such income. 
Notwithstanding subclause (I), a possession corporation 
to which an election under this subparagraph applies 
shall be entitled to the benefits of subsection (i)(3XB) 
for taxes allocable (on a pro rata basis) to taxable 
income the tax on which is not offset by reason of 
this subparagraph. 
107 STAT. 490 
PUBLIC LAW 103-66—AUG. 10, 1993 
"(ii) 
APPLICABLE 
PERCENTAGE.—The 
term 
'applicable percentage' means the percentage deter-
mined in accordance with the following table: 
"In the case of taxable 
The 
yean begiiming in: 
percentage is: 
1994 
60 
1995 
55 
1996 
50 
1997 
45 
1998 and thereafter 
40. 
**(iii) ELECTION.— 
"(I) IN GENERAL.—An election under this 
subparagraph by anv possession corporation may 
be made only for the corporation's first taxable 
year beginning after December 31, 1993, for which 
it is a possession corporation. 
"(II) PERIOD OF ELECTION.—An election under 
this subparagraph shall apply to the taxable year 
for which made and all subsequent taxable years 
imless revoked. 
"(Ill) AFFILIATED GROUPS.—If, for any taxable 
year, an election is not in effect for any possession 
corporation which is a member of an affiliated 
group, any election imder this subparagraph for 
any other member of such group is revoked for 
such taxable year and all subsequent taxable 
years. For purposes of this subclause, members 
of an affiliated group shall be determined without 
regard to the exceptions contained in section 
1504(b) and as if the constructive ownership rules 
of section 1563(e) applied for purposes of section 
1504(a). The Secretary may prescribe regulations 
to prevent the avoidance of this subclause through 
deconsolidation or otherwise. 
"(C) CROSS REFERENCE,— 
Tor definitions and special rules applicable to this paragraph, 
see subsection (i)." 
26 use 936. 
(b) DEFINITIONS AND SPECIAL RULES.—Section 936 is amended 
by adding at the end thereof the following new subsection: 
"(i) DEFINITIONS AND SPECIAL RULES RELATING TO LIMITATIONS 
OF SUBSECTION (aX4).— 
"(1) QUALIFIED POSSESSION WAGES.—For purposes of this 
section— 
"(A) IN GENERAL.—^The term 'qualified possession 
wages' means wages paid or incurred by the possession 
corporation during the taxable year in connection with 
the active conduct of a trade or business within a possession 
of the United States to any employee for services performed 
in such possession, but only if such services are performed 
while the principal place of employment of such employee 
is within such possession. 
"(B) LIMITATION ON AMOUNT OF WAGES TAKEN INTO 
ACCOUNT.— 
"(i) IN GENERAL.—^The amount of wages which may 
be taken into account under subparagraph (A) witn 
respect to any employee for any taxable year shall 
not exceed 85 percent of the contribution and benefit 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 491 
base determined under section 230 of the Social Secu-
rity Act for the calendar year in which such taxable 
year begins. 
"(ii) TREATMENT OF PART-TIME EMPLOYEES, ETC.— 
I
f
— 
"(I) any employee is not employed by the 
possession corporation on a substantially full-time 
oasis at all times during the taxable year, or 
"(II) the principal place of employment of any 
employee with the possession corporation is not 
wiuiin a possession at all times during the taxable 
year, 
the limitation applicable under clause (i) with respect 
to such employee shall be the appropriate portion (as 
determined by the Secretary) or the limitation which 
would otherwise be in effect under clause (i). 
"(C) TREATMENT OF CERTAIN EMPLOYEES.—The term 
'qualified possession wages' shall not include any wages 
paid to employees who are assigned by the employer to 
perform services for another person, unless the principal 
trade or business of the employer is to make employees 
available for temporary periods to other persons in return 
for compensation. All possession corporations treated as 
1 corporation under paragraph (5) snail be treated as 1 
employer for piurposes of the preceding sentence. 
"(D) WAGES.— 
"(i) IN GENERAL.—Except as provided in clause 
(ii), the term ^wages' has tne meaning given to such 
term by subsection (b) of section 3306 (determined 
without regard to any dollar limitation contained in 
such section). For purposes of the preceding sentence, 
such subsection (b) snail be applied as if the term 
XTnited States' included all possessions of the United 
States. 
"(ii) SPECIAL RULE FOR AGRICULTURAL LABOR AND 
R
A
I
L
W
A
Y LABOR.—In any case to which subparagraph 
(A) or (B) of par£igrapn (1) of section 51(n) applies, 
the term 'wages' has the meaning given to such term 
by section 51(hX2). 
"(2) ALLOCABLE EMPLOYEE FRINGE BENEFIT EXPENSES.— 
"(A) IN GENERAL.—^The allocable employee fringe bene-
fit expenses of any possession corporation for any taxable 
year is an amount which bears the same ratio to the 
amoimt determined under subparagraph (B) for such tax-
able year as— 
"(i) the aggregate amoimt of the possession cor-
poration's qualified possession wages for such taxable 
year, bears to 
"(ii) the aggregate amount of the wages paid or 
incurred by sucn possession corporation (Turing such 
taxable year. 
In no event shall the amount determined under the preced-
ing sentence exceed 15 percent of the amount referred 
to in clause (i). 
"(B) EXPENSES TAKEN INTO ACCOUNT.—For purposes 
of subparagraph (A), the amoimt determined under this 
subparagraph for any taxable year is the aggregate amount 
107 STAT. 492 
PUBLIC LAW 103-66—AUG. 10, 1993 
allowable as a deduction under this chapter to the posses-
sion corporation for such taxable year with respect to— 
"(i) employer contributions under a stock bonus, 
pension, profit-sharing, or annuity plan, 
**(ii) employer-provided 
coverage 
under 
any 
accident or health plan for employees, and 
"(iii) the cost of life or disability insurance provided 
to employees. 
Any amount treated as wages under paragraph (IXD) shall 
not be taken into account under this subparagraph. 
**(3) TREATME^^^ OF POSSESSION TAXES.— 
"(A) AMOUNT OF CREDIT FOR POSSESSION CORPORATIONS 
NOT USING PROFIT SPLIT.— 
"(i) IN GENERAL.—For purposes of subsection 
(aX4XAXiii), the amount of the qualified possession 
income taxes for any taxable year allocable to 
nonsheltered income shall be an amoimt which bears 
the same ratio to the possession income taxes for such 
taxable year as— 
"(I) the increase in the tax liability of the 
possession corporation under this chapter for the 
taxable year by reason of subsection (aX4XA) 
(without regard to clause (iii) thereof), bears to 
"(II) the tax liability of the possession corpora-
tion under this chapter for the taxable year deter-
mined without regard to the credit allowable under 
this section. 
"(ii) LIMITATION ON AMOUNT OF TAXES TAKEN INTO 
ACCOUNT.—^Possession income taxes shall not be taken 
into account under clause (i) for any taxable year to 
the extent that the amoimt of such taxes exceeds 9 
percent of the amount of the taxable income for such 
taxable year. 
*
*
(
B
) DEDUCTION FOR POSSESSION CORPORATIONS USING 
PROFIT SPLIT.—^Notwithstanding subsection (c), if a posses-
sion corporation is not described in subsection (aX4XAXiii) 
for the taxable year, such possession corporation shall be 
allowed a deduction for such taxable year in an amoimt 
which bears the same ratio to the possession income tsixes 
for such taxable year as— 
"(i) the increase in the tax liability of the posses-
sion corporation under this chapter for the taxable 
year by reason of subsection (aX4XA), bears to 
"(ii) the tax liability of the possession corporation 
under this chapter for the taxable year determined 
without regard to the credit allowable under this sec-
tion. 
In determining the credit under subsection (a) and in apply-
ing the preceding sentence, taxable income shall be deter-
mined without regard to the preceding sentence. 
"(C) POSSESSION INCOME TAXES.—For purposes of this 
paragraph, the term 'possession income t£uces means any 
taxes of a possession of the United States which are treated 
as not being income, war profits, or excess profits taxes 
paid or accrued to a possession of the United States by 
reason of subsection (c). 
"(4) DEPRECIATION RULES.—For purposes of this section— 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 493 
"(A) DEPRECIATION ALLOWANCES.—The term 'deprecia-
tion allowances' means the depreciation deductions allow-
able imder section 167 to the possession corporation. 
"(B) CATEGORIES OF PROPERTY.— 
**(i) QUALIFIED TANGIBLE PROPERTY.—The term 
'qualified tangible property* means any tangible prop-
erty used by me possession corporation in a possession 
of the United States in the active conduct of a trade 
or business within such possession. 
"(ii) SHORT-UFE QUALIFIED TANGIBLE PROPERTY.— 
The term 'short-life qualified tangible ijroperty means 
any qualified tangible property to which section 168 
applies and which is 3-year property or 5-year property 
for purposes of such section. 
"(iii) MEDIUM-LIFE QUALIFIED TANGIBLE PROP-
ERTY.—^The term 'medium-life q^ualified tangible prop-
erty means any qualified tangible property to which 
section 168 applies and which is 7-year property or 
10-year property for purposes of such section. 
"(iv) LONG-LIFE QUALIFIED TANGIBLE PROPERTY.— 
The term long-life qualified tangible property* means 
any qualified tcuigible property to which section 168 
applies and which is not described in clause (ii) or 
(iii). 
"(v) TRANSITIONAL RULE.—In the case of any quali-
fied tangible property to which section 168 (as in effect 
on the day before the date of the enactment of the 
Tax Reform Act of 1986) applies, any reference in 
this paragraph to section 168 shall be treated as a 
reference to such section as so in effect. 
"(5) 
ELECTION TO COMPUTE CREDIT ON CONSOLIDATED 
BASIS.— 
"(A) IN GENERAL.—^Any affiliated group may elect to 
treat all possession corporations which woidd be members 
of isuch group but for section 1504(b) (3) or (4) as 1 corpora-
tion for purposes of this section. The credit determined 
under this section with respect to such 1 corporation shall 
be allocated among such possession corporations in such 
manner as the Secretary may prescribe. 
"(B) ELECTION.—^An election under subparagraph (A) 
shall apply to the taxable year for which made and all 
succeeding taxable years unless revoked with the consent 
of the Secretary. 
"(6) POSSESSION CORPORATION.—The term 'possession cor-
poration' means a domestic corporation for which the election 
provided in subsection (a) is in effect." 
(c) MINIMUM TAX TREATMENT.— 
(1) IN GENERAL.—Subclause (I) of section 56(g)(4XCXii) 2
6 use 56. 
(relating to special rule for certain dividends) is amended by 
striking "sections 936 and 921" and inserting "sections 936 
(including subsections (aX4) and (i) thereof) and 921". 
(2) TREATMENT OF FOREIGN TAXES.—Clause (iii) of section 
56(gX4)(C) is amended by adding at the end thereof the follow-
ing subclauses: 
"(IV) SEPARATE APPLICATION OF FOREIGN TAX 
CREDIT LIMITATIONS.—In determining the alter-
native minimmn foreign tax credit, section 904(d) 
107 STAT. 494 
PUBLIC LAW 103-66—AUG. 10, 1993 
shall be applied as if dividends from a corporation 
eligible for the credit provided by section 936 were 
a separate category of income referred to in a 
subparagraph of section 904(dX 1). 
"(V) COORDINATION WITH UMTTATION ON 936 
CREDIT.—Any reference in this clause to a dividend 
received from a corporation eligible for the credit 
provided by section 936 shall be treated as a ref-
erence to the portion of any such dividend for 
which the dividends received deduction is dis-
allowed imder clause (i) after the application of 
clause (iiXD." 
26 use 904. 
(d) CONFORMING AMENDMENT.—Paragraph (4) of section 904(b) 
is amended by inserting before the period at the end thereof the 
following: "(without regard to subsections (aX4) and (i) thereof)", 
(e) INCREASE IN LIMITATION ON COVER OVER.—Paragraph (1) 
of section 7652(f) is amended to read as follows: 
"(1) $10.50 ($11.30 in the case of distilled spirits brought 
into the United States during the 5-year period beginning on 
October 1,1993), or." 
26 use 56 note. 
(f) EFFECTIVE DATE.—The amendments made by this section 
shall apply to taxable years beginning after December 31, 1993; 
except that the amendment made by subsection (e) shall take effect 
on October 1,1993. 
SEC. 13228. MODIFICATION TO LIMITATION ON DEDUCTION FOR CER-
TAIN INTEREST. 
(a) GENERAL RULE.—Paragraph (3) of section 163(j) (defining 
disqualified interest) is amended to read as follows: 
"(3) DISQUALIFIED INTEREST.—For purposes of this sub-
section, the term 'disqualified interest' means— 
**(A) any interest paid or accrued by the taxpayer 
(directly or indirectly) to a related person if no tax is 
imposed by this subtitle with respect to such interest, 
and 
"(B) any interest paid or accrued by the taxpayer with 
respect to any indebtedness to a person who is not a 
related person if— 
"(i) there is a disqualified guarantee of such indebt-
edness, and 
"(ii) no gross basis tax is imposed by this subtitle 
with respect to such interest." 
(b) DEFINITIONS.—Paragraph (6) of section 163(j) is amended 
by adding at the end thereof the following new subparagraphs: 
"(D) DiSQUAUFIED GUARANTEE.— 
"(i) IN GENERAL.—^Except as provided in clause 
(ii), the term 'disqualified guarantee' means any 
guarantee by a related person which is— 
"(I) an organization exempt from taxation 
under this subtitle, or 
"(II) a foreign person, 
"(ii) EXCEPTIONS.—The term 'disqualified guaran-
tee' shall not include a guarantee— 
"(I) in any circumstances identified by the Sec-
retary by regulation, where the interest on the 
indebtedness would have been subject to a net 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 495 
basis tax if the interest had been paid to the 
guarantor, or 
"(11) if the taxpayer owns a controlling interest 
in the guarantor. 
For purposes of subclause (II), except as provided in 
regulations, the term 'a controlling interest' means 
direct or indirect ownership of at least 80 percent 
of the total voting power and value of all classes of 
stock of a corporation, or 80 percent of the profit and 
capital interests in any other entity. For purposes of 
the preceding sentence, the rules of paragraphs (1) 
and (5) of section 267(c) shall apply; except that such 
rules shall also apply to interest in entities other than 
corporations. 
"(iii) GUARANTEE.—^Except as provided in regula-
tions, the term 'guarantee' includes an^ arrangement 
under which a person (directly or indirectly through 
an entity or otherwise) assures, on a concUtional or 
imconditional basis, the payment of another person's 
obligation under any indebtedness. 
"(E) GROSS BASIS AND NET BASIS TAXATION.— 
"(i) GROSS BASIS TAX.—The term 'gross basis tax' 
means any tax imposed by this subtitle which is deter-
mined by reference to the gross amount of any item 
of income without any reduction for any deduction 
allowed by this subtitle. 
"(ii) NET BASIS TAX.—The term 'net basis tax' 
means any tax imposed by this subtitle which is not 
a gross basis tax." 
(c) CONFORMING AMENDMENTS.— 
(1) Subparagraph (B) of section 163(jX5) is amended by 2
6 use 163. 
striking "to a related person". 
(2) The subsection heading for subsection (j) of section 
163 is amended to read as follows: 
"(j) LIMITATION ON DEDUCTION FOR INTEREST ON CERTAIN 
INDEBTEDNESS.—". 
(d) EFFECTIVE DATE.—^The amendments made by this section 2
6 use 163 note. 
shall apply to interest paid or accrued in taxable years beginning 
after December 31,1993. 
PART III—FOREIGN TAX PROVISIONS 
Subpart A—Current Taxation of Certain Earnings 
of Controlled Foreign Corporations 
SEC. 13231. EARNINGS INVESTED IN EXCESS PASSIVE ASSETS. 
(a) GENERAL RULE.—^Paragraph (1) of section 951(a) (relating 
to amoimts included in gross income of United States shareholders) 
is amended by striking "and" at the end of subparagraph (A), . 
by striking the period at the end of subparagraph (B) and inserting 
"; and", and by adding at the end thereof the following new subpara-
graph: 
"(C) the amoimt determined under section 956A with 
respect to such shareholder for such year (but only to 
the extent not excluded from gross income imder section 
959(aX3))." 
107 STAT. 496 
PUBLIC LAW 103-66—AUG. 10, 1993 
(b) AMOUNT OF INCLUSION.—Subpart F of part III of subchapter 
N of chapter 1 is amended by mserting after section 956 the 
following new section: 
'nSEC.MeA. EARNINGS INVESTED IN EXCESS PASSIVE ASSETS. 
'"(a) GENERAL RULE.—^In the case of any controlled foreign cor-
poration, the amount determined under this section with respect 
to any United States shareholder for any taxable year is the lesser 
of— 
"(1) the excess (if any) of— 
"(A) such shareholder's pro rata share of the amount 
of the controlled foreign corporation's excess passive assets 
for such taxable year, over 
"(B) the amount of earnings and profits described in 
section 959(cXlXB) with respect to such shareholder, or 
"(2) such shareholder's pro rata share of the applicable 
earnings of such controlled foreign corporation determined after 
the application of section 951(aXlXB). 
"(b) APPLICABLE EARNINGS.—^For purposes of this section, the 
term 'applicable earnings' means, with respect to any controlled 
foreign corporation, the sum of— 
"(1) the amount referred to in section 316(aXl) to the 
extent such amount was accumulated in taxable years begin-
ning after September 30,1993, and 
"(2) the amount referred to in section 316(aX2), 
but reduced by distributions made during the taxable year and 
reduced by the earnings and jprofits described in section 959(cXl) 
to the extent that the earmngs and profits so described were 
accumulated in taxable years beginning after September 30, 1993. 
''(c) EXCESS PASSIVE ASSETS.—For purposes of this section— 
"(1) IN GENERAL.—^The excess passive assets of any con-
trolled foreign corporation for any taxable year is the excess 
(if any) of— 
"(A) the average of the amounts of passive assets held 
by such corporation as of the close of each quarter of 
such taxable year, over 
"(B) 25 percent of the average of the amounts of total 
assets held by such corporation as of the close of each 
quarter of such taxable year. 
For purposes of the preceding sentence, the amount taken 
into account with respect to any asset shall be its adjusted 
basis as determined for purposes of computing earnings and 
profits. 
"(2) PASSIVE ASSET.— 
"(A) IN GENERAL.—^Except as otherwise provided in 
this section, the term 'passive asset' means any asset held 
b^ the controlled foreim corporation which produces pas-
sive income (as defined in section 1296(b)) or is held for 
the production of such income. 
"(B) COORDINATION WITH SECTION 966.—The term 'pas-
sive asset' shall not include any United States property 
(as defined in section 956). 
"(3) CERTAIN RULES TO APPLY.—For purposes of this sub-
section, the rules of the following provisions shall apply: 
"(A) Section 1296(c) (relating to look-thru nues). 
"(B) Section 1297(d) (relating to leasing rules). 
"(C) Section 1297(e) (relating to intangible property). 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 497 
"(d) TREATMENT OP CERTAIN GROUPS OF CONTROLLED FOREIGN 
CORPORATIONS.— 
"(1) IN GENERAL.—^For purposes of applying subsection (c)— 
"(A) all controlled foreign corporations which are mem-
bers of the same CFC group shall be treated as 1 controlled 
foreign corporation, and 
"(B) the amount of the excess passive assets deter-
mined with respect to such 1 corporation shall be allocated 
among the controlled foreign corporations which are mem-
bers of such group in proportion to their respective amounts 
of applicable earnings. 
"(2) CFC GROUP.—^For purposes of paragraph (1), the term 
*CFC group' means 1 or more chains of controlled foreign cor-
porations connected through stock ownership with a top tier 
corporation which is a controlled foreign corporation, but only 
i
f
— 
"(A) the top tier corporation owns directly more than 
50 percent (by vote or value) of the stock of at least 1 
of tne other controlled foreign corporations, and 
"(B) more than 50 percent (by vote or value) of the 
stock of each of the controlled foreign corporations (other 
than the top tier corporation) is owned (directly or 
indirectly) by one or more other members of the group. 
"(e) SPECIAL RULE WHERE CORPORATION CEASES TO BE CON-
T
R
O
L
L
E
D FOREIGN CORPORATION DURING TAXABLE YEAR.—If any 
foreign corporation ceases to be a controlled foreign corporation 
during any taxable year— 
"(1) the determination of any United States shareholder's 
pro rata share shall be made on the basis of stock owned 
(within the meaning of section 958(a)) by such shareholder 
on the last day during the taxable year on which the foreign 
corporation is a controfled foreign corporation, 
"(2) the amount of such corporation's excess passive assets 
for such taxable year shall be determined by only taking into 
account quarters ending on or before such last day, and 
"(3) in determining applicable earnings, the amount taken 
into account by reason of being described in paragraph (2) 
of section 316(a) shall be the portion of the amoimt so described 
which is allocable (on a pro rata basis) to the part of such 
year during which the corporation is a controlled foreign cor-
poration. 
(f) REGULATIONS.—^The Secretary shall prescribe such regula-
tions as may be necessary to carry out the purposes of this section, 
including regulations to prevent the avoidance of the provisions 
of this section through reorganizations or otherwise." 
(c) PREVIOUSLY TAXED INCOME RULES.— 
(1) IN GENERAL.—Subsection (a) of section 959 (relating 
to exclusion from gross income of previously taxed earnings 
and profits) is amended by striking "or" at the end of paragraph 
(1), by adding "or" at the end of paragraph (2), and by inserting 
after paragraph (2) the following new paragraph: 
"(3) such amounts would, but for this subsection, be 
included under section 951(aXlXC) in the gross income of,". 
(2) ALLOCATION RULES.— 
(A) Subsection (a) of section 959 is amended by adding 2
6 use 959. 
at the end thereof the following new sentence: "The rules 
of subsection (c) shcdl apply for purposes of paragraph 
107 STAT. 498 
PUBLIC LAW 103-66—AUG. 10, 1993 
(1) of this subsection and the rules of subsection (f) shall 
apply for purposes of paragraphs (2) and (3) of this sub-
section.". 
26 use 959. 
(B) Section 959 is amended by adding at the end 
thereof the following new subsection: 
"(f) ALLOCATION RULES FOR CERTAIN INCLUSIONS.— 
**(1) IN GENERAL.—^For purposes of this section— 
"(A) amounts that would be included under subpara-
graph (B) of section 951(aXl) (determined without regard 
to this section) shall be treated as attributable first to 
earnings described in subsection (cX2), and then to earnings 
descril^d in subsection (cX3), and 
''(B) amounts that would be included under subpara-
graph (C) of section 951(aXl) (determined without regard 
to this section) shall be treated as attributeble first to 
earnings described in subsection (cX2) to the extent the 
earnings so described were accumulated in taxable years 
beginning afi^er September 30, 1993, and then to earnings 
described in subsection (cX3). 
"(2) TREATMENT OP DISTRIBUTIONS.—In applying this sec-
tion, actucd distributions shall be taken into account before 
amounts tiiat would be included under subparagraphs (B) and 
(C) of section 951(aXl) (determined without regard to this 
section).** 
(C) Paragraph (1) of section 959(c) is amended to read 
as follows: 
"(1) 
first 
to 
the aggregate of— 
"(A) e£umings and profits attributeble to amounts 
included in gross income under section 951(aXlXB) (or 
which would have been included except for subsection (aX2) 
of this section), and 
"(B) earnings and profite attributeble to amounte 
included in gross income under section 951(aXlXC) (or 
which would have been included except for subsection (a)(3) 
of this section), 
with any distribution being allocated between earnings and 
profite described in subparagraph (A) and earnings and profite 
described in subparagraph (B) proportionately on the basis 
of the respective amounte of such earnings and profite,**. 
(3) CfooRDiNATlON W
I
T
H PFic INCLUSIONS.—Subsection (c) 
of section 1293 is amended by adding at the end thereof the 
following new sentence: "If the passive foreign investment com-
pany is a controlled foreign corporation (as defined in section 
957(a)), the preceding sentence shall not apply to any United 
Stetes sharenolder (as defined in section 951(b)) in such cor-
poration, and, in applying section 959 to any such shareholder, 
any inclusion under this section shall be treated as an inclusion 
imder section 951(aXlXA).'*. 
(4) CONFORMING AMENDMENTS.— 
(A) Subsections (a) and (b) of section 959 are each 
amended by striking "earnings and profite for a taxable 
year** and inserting "earnings and profite**. 
(B) Paragraph (2) of section 959(c) is amended to read 
as follows: 
"(2) then to earnings and profite attributeble to amounte 
included in gross income under section 951(aXlXA) (but reduced 
by amounte not included under subparagraph (B) or (C) of 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 499 
section 951(aXl) because of the exclusions in paragraphs (2) 
and (3) of subsection (a) of this section), and" 
(C) Subsection (b) of section 989 is amended by striking 26 use 989. 
"section 951(aXlXB)'' and inserting "subparagraph (B) or 
(C) of section SSKaXD". 
(d) MODIFICATIONS TO PASSIVE FOREIGN INVESTMENT COMPANY 
RULES.— 
(1) ADJUSTED BASIS USED IN CERTAIN DETERMINATIONS.— 
Subsection (a) of section 1296 is amended by striking the mate-
rial following paragraph (2) and inserting the following: 
"In the case of a controlled foreign corporation (or any other foreign 
corporation if such corporation so elects), the determination under 
paragraph (2) shall be based on the a4justed bases (as determined 
for purposes of computing earnings and profits) of its assets in 
lieu of their value. Such an election, once made, may be revoked 
only with the consent of the Secretary." 
(2) TREATMENT OF CERTAIN SUBPART F INCLUSIONS.—Sub-
section (b) of section 1297 is amended by adding at the end 
thereof the following new paragraph: 
"(9) TREATMENT OF CERTAIN SUBPART F INCLUSIONS.—Any 
amount included in gross income under subparagraph (B) or 
(C) of section 951(aXl) shall be treated as a distribution 
received with respect to the stock." 
(3) TREATMENT OF CERTAIN DEALERS IN SECURITIES.—Sub-
section (b) of section 1296 is amended by adding at the end 
thereof the following new paragraph: 
"(3) TREATMENT OF CERTAIN DEALERS IN SECURITIES.— 
"(A) IN GENERAL.—In the case of any foreign corpora-
tion which is a controlled foreign corporation (as defined 
in section 957(a)), the term 'passive income' does not 
include any income derived in the active conduct of a 
securities business by such corporation if such corporation 
is registered as a securities broker or dealer under section 
15(a) of the Securities Exchange Act of 1934 or is registered 
as a Government securities broker or dealer under section 
15C(a) of such Act. To the extent provided in regulations, 
such term shall not include any income derived in the 
active conduct of a securities business by a controlled for-
eign corporation which is not so registered. 
"(B) APPLICATION OF LOOK-THRU RULES.—For purposes 
of paragraph (2XC), rules similar to the rules of subpara-
graph (A) of this paragraph shall apply in determining 
whether any income of a related person (whether or not 
a corporation) is passive income. 
"(C) LIMITATION.—^The preceding provisions of this 
paragraph shall only apply in the case of persons who 
are United States shareholders (as defined in section 
951(b)) in the controlled foreign corporation." 
(4) LEASING AND INTANGIBLE ASSET RULES.—Section 1297 
is amended by redesignating subsection (d) as subsection (f) 
and by inserting after subsection (c) the following new sub-
sections: 
"(d) TREATMENT OF CERTAIN LEASED PROPERTY.—^For purposes 
of this part— 
"(1) IN GENERAL.—^Any tangible personal property with 
respect to which a foreign corporation is the lessee imder a 
107 STAT. 500 
PUBLIC LAW 103-66—AUG. 10, 1993 
lease with a term of at least 12 months shall be treated as 
an asset actually held by such corporation. 
"(2) DETERMINATION OP ADJUSTED BASIS.— 
"(A) IN GENERAL.—^The adjusted basis of any asset 
to which paragraph (1) applies shall be the unamortized 
portion (as determined imder regulations prescribed by 
the Secretary) of the present value of the payments under 
the lease for the use of such property. 
Regulations. 
«(B) PRESENT VALUE.—For purposes of Subparagraph 
(A), the present value of payments described in subpara-
graph (A) shall be determined in the manner provided 
in regulations prescribed by the Secretary— 
"(i) as of the beginning of the lease term, and 
"(ii) except as provided in such regulations, by 
using a discount rate equal to the applicable Federal 
rate determined under section 1274(d>--
"(I) by substituting the lease term for the term 
of the debt instrument, and 
"(II) without regard to paragraph (2) or (3) 
thereof. 
"(3) EXCEPTIONS.—^This subsection shall not apply in any 
case where— 
"(A) the lessor is a related person (as defined in section 
954(dX3)) with respect to the foreign corporation, or 
"(B) a principal purpose of leasing the property was 
to avoid the provisions of this part or section 956A. 
"(e) SPECIAL RULES FOR CERTAIN INTANGIBLES.— 
"(1) RESEARCH EXPENDITURES.—The adjusted basis of the 
total assets of a controlled foreign corporation shall be increased 
by the research or experimental expenditures (within the mean-
ing of section 174) paid or inciured by such foreign corporation 
during the taxable year and the preceding 2 taxable years. 
Any expenditure otherwise taken into account under the preced-
ing sentence shall be reduced by the £unount of any reimburse-
ment received by the controlled foreign corporation with respect 
to such expenditure. 
"(2) CERTAIN UCENSED INTANGIBLES.— 
"(A) IN GENERAL.—In the case of any intangible prop-
erty (as defined in section 936(hX3XB)) with respect to 
which a controlled foreign corporation is a licensee and 
which is used by such foreign corporation in the active 
conduct of a trade or business, the adjusted basis of the 
total assets of such foreign corporation shall be increased 
by an amount equal to 300 percent of the payments made 
during the taxable year by such foreign corporation for 
the use of such intangible property. 
"(B) EXCEPTIONS.—Subparagraph (A) shall not apply 
to— 
"(i) any payments to a foreign person if such for-
eign person is a related person (as defined in section 
954(dX3)) with respect to the controlled foreign corpora-
tion, and 
"(ii) any payments under a license if a principal 
purpose of entering into such license was to avoid 
the provisons of this part or section 956A 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 501 
"(3) CONTROLLED FOREIGN CORPORATION.—For punwses of 
this subsection, the term 'controlled foreign corporation' has 
the meaning given such term by section 957(8)." 
(e) EFFECTIVE DATE.—The amendments made by this section 
26 use 95i note. 
shall apply to taxable years of foreign corporations beginning after 
September 30, 1993, and to taxable years of United States share-
holders in which or with which such taxable years of foreign corpora-
tions end. 
SEC. 13232. MODIFICATION TO TAXATION OF INVESTMENT IN UNITED 
STATES PROPERTY. 
(a) GENERAL RULE.—Section 956 (relating to investment of 
earnings in United States property) is amended— 
26 use 956. 
(1) by redesignating subsections (b) and (c) as subsections 
(c) and (d), respectively, and 
(2) by striking subsection (a) and inserting the following: 
"(a) GENERAL RULE.—In the case of any controlled foreign cor-
poration, the amount determined under this section with respect 
to any United States shareholder for any taxable year is the lesser 
of— 
"(1) the excess (if any) of— 
"(A) such shareholder's pro rata share of the average 
of the amounts of United States property held (directly 
or indirectly) by the controlled foreign corporation as of 
the close of each quarter of such taxable year, over 
"(B) the amount of earnings and profits described in 
section 959(cXlXA) with respect to such shareholder, or 
"(2) such shareholder's pro rata share of the applicable 
earnings of such controlled foreign corporation. 
The amount taken into accoimt vmder paragraph (1) with respect 
to any property shall be its adjusted basis as determined for pur-
poses of computing earnings and profits, reduced by any liability 
to which the property is subject. 
"(b) SPECIAL RULES.— 
"(1) APPLICABLE EARNINGS.—For purposes of this section, 
the term 'applicable earnings' has the meaning given to such 
term by section 956A(b), except that the provisions of such 
section excluding earnings and profits accumulated in taxable 
years beginning before October 1, 1993, shall be disregarded. 
"(2) SPECIAL RULE FOR U.S. PROPERTY ACQUIRED BEFORE 
CORPORATION IS A CONTROLLED FOREIGN CORPORATION.—IN 
applying subsection (a) to any taxable year, there shall be 
disregarded any item of United States property which was 
acquired by the controlled foreign corporation before the first 
day on which such corporation was treated as a controlled 
foreign corporation. The aggregate amount of property dis-
regarded imder the preceding sentence shall not exceed the 
portion of the applicable earnings of such controlled foreign 
corporation which were acciunulated during periods before such 
first day. 
"(3) SPECIAL RULE WHERE CORPORATION CEASES TO BE CON-
TROLLED FOREIGN CORPORATION.—Rules similar to the rules 
of section 956A(e) shall apply for purposes of this section." 
(b) REGULATORY AUTHORITY.—iSection 956 is amended by add-
ing at the end thereof the following new subsection: 
"(e) REGULATIONS.—^The Secretary shall prescribe such regula-
tions as may be necessary to carry out the purposes of this section, 
107 STAT. 502 
PUBLIC LAW 103-66—AUG. 10, 1993 
including regulations to prevent the avoidance of the provisons 
of this section through reorganizations or otherwise." 
(c) CONFORMING AMENDMENTS.— 
26 use 951. 
(1) Subparagraph (B) of section 951(aXl) is amended to 
read as follows: 
"(B) the amount determined under section 956 with 
respect to such shareholder for such year 0>ut only to 
the extent not excluded from gross income under section 
959(aX2)); and" 
(2) Subsection (a) of section 951 is amended by striking 
paragraph (4). 
26 use 951 note. 
(d) E
F
F
E
C
T
I
V
E DATE.—The amendments made by this section 
shall apply to taxable years of controlled foreign corporations begin-
ning after September 30, 1993, and to taxable years of United 
States shareholders in which or with which such taxable years 
of controlled foreign corporations end. 
SEC. 13233. O
T
H
E
R MODIFICATIONS T
O SUBPART F. 
(a) SAME COUNTRY EXCEPTION NOT TO APPLY TO CERTAIN DIVI-
DENDS.— 
(1) IN GENERAL.—^Paragraph (3) of section 954(c) (relating 
to certain income received from redated persons) is amended 
by adding at the end thereof the following new subparagraph: 
"(C) EXCEPTION FOR CERTAIN DIVIDENDS.—Subpara-
graph (AXi) shall not apply to any dividend with respect 
to any stock which is attributable to earnings and profits 
of the distributing corporation accumulated during any 
period during which the person receiving such dividend 
did not hold such stock either directly, or indirectly through 
a chain of one or more subsidiaries each of which meets 
the requirements of subparagraph (AXi)." 
26 use 954 note. 
(2) E
F
F
E
C
T
I
V
E DATE.—The amendment made by paragraph 
(1) shall apply to taxable years of controlled foreign corporations 
beginning after September 30, 1993, and to taxable years of 
United States shareholders in which or with which such taxable 
years of controlled foreign corporations end. 
(b) AMENDMENTS TO SECTION 960(b).— 
(1) IN GENERAL.—Subsection (b) of section 960 is 
amended— 
(A) by redesignating paragraphs (3) and (4) as para-
graphs (4) and (5), respectively, and 
(B) by striking paragraphs (1) and (2) cmd inserting 
the following new paragraphs: 
"(1) INCREASE IN SECTION 904 LIMITATION.—In the case of 
any taxpayer who— 
"(A) either (i) chose to have the benefits of subpart 
A of this part for a taxable year beginning after September 
30, 1993, in which he was required under section 951(a) 
to include any amount in his gross income, or (ii) did 
not pay or accrue for such taxable year any income, war 
profits, or excess profits taxes to any foreign country or 
to any possession of the United States, 
"(B) chooses to have the benefits of subpart A of this 
part for any taxable year in which he receives 1 or more 
distributions or amoimts which are excludable from gross 
income under section 959(a) and which are attributable 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 503 
to amounts included in his gross income for taxable years 
referred to in subparagraph (A), and 
"(C) for the taxable year in which such distributions 
or amounts are received, pays, or is deemed to have paid, 
or accrues income, war profits, or excess profits taxes to 
a foreign country or to any possession of the United States 
with respect to such distributions or amounts, 
the limitation under section 904 for the taxable year in which 
such distributions or amoimts are received shall be increased 
by the lesser of the amount of such taxes paid, or deemed 
paid, or accrued with respect to such distributions or amounts 
or the amount in the excess limitation account as of the begin-
ning of such taxable year. 
"(2) EXCESS LIMITATION ACCOUNT.— 
**(A) ESTABUSHMENT OF ACCOUNT.—Each taxpayer 
meeting the requirements of paragraph (IXA) shall estab-
lish an excess limitation account. The opening balance of 
such account shall be zero. 
"(B) INCREASES IN ACCOUNT.—For each taxable year 
beginning after September 30, 1993, the taxpayer shall 
increase the amoimt in the excess limitation account by 
the excess (if any) of— 
"(i) the amount by which the limitation under sec-
tion 904(a) for such taxable year was increased by 
reason of the total amoimt of the inclusions in gross 
income imder section 951(a) for such taxable year, 
over 
"(ii) the amount of any income, war profits, and 
excess profits taxes paid, or deemed paid, or accrued 
to any foreign country or possession of the United 
States which were allowable as a credit under section 
901 for such taxable year and which would not have 
been allowable but for the inclusions in gross income 
described in clause (i). 
Proper reductions in the amount added to the account 
under the preceding sentence for any taxable year shall 
be made for any increase in the credit allowable under 
section 901 for such taxable year by reason of a carryback 
if such increase would not have been allowable but for 
the inclusions in gross income described in clause (i). 
"(C) DECREASES IN ACCOUNT.—For each taxable year 
beginning afl;er September 30, 1993, for which the limita-
tion under section 904 was increased under paragraph 
(1), the taxpayer shall reduce the amount in the excess 
limitation account by the amount of such increase. 
"(3) DISTRIBUTIONS OF INCOME PREVIOUSLY TAXED IN YEARS 
BEGINNING BEFORE O
C
T
O
B
E
R 1, 1993.—If the tfixpayer receives 
a distribution or amoimt in a taxable year beginning after 
September 30, 1993, which is excluded 
fi*om 
gross income under 
section 959(a) and is attributable to any amoimt included in 
gross income under section 951(a) for a taxable year beginning 
before October 1, 1993, the limitation under section 904 for 
the taxable year in which such amount or distribution is 
received shall be increased by the amount determined under 
this subsection as in efiect on the day before the date of the 
enactment of the Revenue Reconcilation Act of 1993." 
107 STAT. 504 
PUBLIC LAW 103-66—AUG. 10, 1993 
26 use 960 note. 
(2) EFFECTIVE DATE.—The amendment made by paragraph 
(1) shall apply to taxable years beginning after September 
30,1993. 
Subpart B—Allocation of Research and 
Experimental Expenditures 
SEC. 13234. ALLOCATION 
OF 
RESEARCH 
AND 
EXPERIMENTAL 
EXPENDITURES. 
26 use 864. 
(a) GENERAL RULE.—Subparagraph (B) of section 864(fXl) 
(relating to allocation of research and experimental expenditures) 
is Eimended by striking "64 percent" each place it appears and 
inserting "50 percent". 
(b) CONFORMING AMENDMENTS.— 
(1) Subsection (f) of section 864 is amended by striking 
paragraph (5) and inserting the following new paragraphs: 
^5) REGULATIONS.—^The Secretary shall prescribe such 
regulations as may be appropriate to cany out the purposes 
of this subsection, including regulations relating to the deter-
mination of whether any expenses are attributable to activities 
conducted in the United States or outside the United States 
and regulations providing such adjustments to the provisions 
of this subsection as may be appropriate in the case of cost-
sharing arrangements and contract research. 
"(6) APPLICABILITY.—This subsection shall apply to the tax-
payer's first taxable year (beginning on or before August 1, 
1994) following the t««payer's last taxable year to which Reve-
nue Procedure 92-56 applies or would apply if the taxpayer 
elected the benefits of such Revenue Procedure." 
(2) Subpsiragraph (D) of section 864(f)(4) is amended by 
striking "subparagraph (C)" and inserting "subparagraph (B) 
or(C)". 
Subpart C—Other Provisions 
SEC. 13235. REPEAL OF CERTAIN EXCEPTIONS FOR WORKING CAP-
FTAL. 
(a) PROVISIONS RELATING TO OIL AND GAS INCOME.— 
(1) AMENDMENTS TO SECTION 907.— 
(A) Paragraph (1) of section 907(c) is amended by add-
ing at the end thereof the following new flush sentence: 
"Such term does not include any dividend or interest income which 
is passive income (as defined in section 904(d)(2)(A)).". 
(B) Paragraph (2) of section 907(c) is amended by add-
ing at the end thereof the following new flush sentence: 
"Such term does not include any dividend or interest income which 
is passive income (as defined in section 904(dX2)(A)).". 
(2) SEPARATE APPLICATION OF FOREIGN TAX CREDIT.—Clause 
(iii) of section 904(dX2XA) is amended by inserting "and" at 
the end of subclause (II), by striking ", and" at flie end of 
subclause (III) and inserting a period, and by striking subclause 
(IV). 
(3) TREATMENT UNDER SUBPART F.— 
(A) Paragraph (1) of section 954(g) is amended by 
adding at the end thereof the following new flush sentence: 
"Such term shall not include any foreign personal holding company 
income (as defined in subsection (c)).". 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 505 
(B) Paragraph (8) of section 954(b) is amended by 26 use 954. 
striking "(1)/'. 
(b) TREATMENT OF SHIPPING INCOME.—Subsection (f) of section 
954 is amended by adding at the end thereof the following new 
sentence: "Except as provided in paragraph (1), such term shall 
not include any dividend or interest income which is foreign per-
sonal holding company income (as defined in subsection (c)).". 
(c) EFFECTIVE DATE.—The amendments made by this section 26 use 904 note. 
shall apply to taxable years beginning after December 31, 1992. 
SEC. 13236. MODIFICATIONS OF ACCURACY-RELATED PENALTY. 
(a) 
THRESHOLD 
REQUIREMENT.—Clause 
(ii) 
of 
section 
6662(eXlXB) (relating to substantial valuation misstatement imder 
chapter 1) is amended to read as follows: 
''(ii) the net section 482 transfer price adjustment 
for the taxable year exceeds the lesser of $5,000,000 
or 10 percent of the taxpayer's gross receipts." 
(b) CERTAIN ADJUSTMENTS EXCLUDED IN DETERMINING THRESH-
OLD.—Subparagraph (B) of section 6662(eX3) is amended to read 
as follows: 
**(B) CERTAIN ADJUSTMENTS EXCLUDED IN DETERMINING 
THRESHOLD.—For purposes of determining whether the 
threshold requirements of paragraph (lXB)(ii) are met, the 
following shall be excluded: 
"(i) Any portion of the net increase in taxable 
income referred to in subparagraph (A) which is attrib-
utable to any redetermination of a price if— 
''(I) it is established that the taxpayer deter-
mined such price in accordance with a specific 
pricing method set forth in the regulations pre-
scribed under section 482 and that the taxpayer's 
vise of such method was reasonable, 
"(II) the taxpayer has documentation (which 
was in existence as of the time of filing the return) 
which sets forth the determination of such price 
in accordance with such a method and which estab-
lishes that the use of such method was reasonable, 
and 
"(III) the taxpayer provides such documenta-
tion to the Secretary within 30 days of a request 
for such documentation. 
"(ii) Any portion of the net increase in taxable 
income referred to in subparagraph (A) which is attrib-
utable to a redetermination of price where such price 
was not determined in accordance with such a specific 
pricing method if— 
"(I) the taxpayer establishes that none of such 
pricing methods was likely to result in a price 
that would clearly reflect income, the taxpayer 
used another pricing method to determine such 
price, and such other pricing method was likely 
to result in a price that would clearly reflect 
income, 
"(II) the taxpayer has documentation (which 
was in existence as of the time of filing the return) 
which sets forth the determination of such price 
in accordance with such other method and which 
107 STAT. 506 
PUBLIC LAW 103-66—AUG. 10, 1993 
establishes that the requirements of subclause (I) 
were satisfied, and 
''(III) the taxpayer provides such documenta-
tion to the Secretary within 30 days of request 
for such documentation. 
"(iii) Any portion of such net increase which is 
attributable to any transaction solely between foreign 
corporations unless, in the case of any such corpora-
tions, the treatment of such transaction affects the 
determination of income from sources within the 
United States or taxable income effectively connected 
with the conduct of a trade or business within the 
United States." 
(c) COORDINATION WITH REASONABLE CAUSE EXCEPTION.—Para-
26 use 6662. 
graph (3) of section 6662(e) is am^ided by adding at the end 
thereof the following new subparagraph: 
"(D) COORDINATION WITH REASONABLE CAUSE EXCEP-
TION.—^For purposes of section 6664(c) the taxpayer shall 
not be treated as having reasonable cause for any portion 
of an underpayment attributable to a net section 482 trans-
fer price a4ju8tment unless such taxpayer meets the 
requirements of clause (i), (ii), or (iii) of subparagraph 
(B) with respect to such portion." 
(d) 
CONFORMING 
AMENDMENT.—Clause 
(iii) 
of 
section 
6662(hX2XA) is amended to read as follows: 
"(iii) in paragraph (IXBXii)— 
"(I) '$20,000,000' for '$5,000,000', and 
"(II) *20 percent' for '10 percent'." 
26 use 6662 
(e) EFFECTIVE DATE.—^The amendments made by this section 
"°^^ 
shall apply to taxable years beginning after December 31, 1993. 
SEC. 13237. DENIAL OF PORTFOUO INTEREST EXEMPTION FOR 
CONTINGENT INTEREST. 
(a) GENERAL RULE.— 
(1) Subsection (h) of section 871 (relating to repeal of tax 
on interest of nonresident alien individuals received from cer-
tain portfolio debt investments) is amended by redesignating 
paragraphs (4), (5), and (6) as paragraphs (5), (6), and (7), 
respectively, and by inserting after paragraph (3) the following 
new paragraph: 
'^(4) PORTFOLIO INTEREST NOT TO INCLUDE CERTAIN CONTIN-
GENT INTEREST.—For purposes of this subsection— 
"(A) IN GENERAL.—^Except as otherwise provided in 
this paragraph, the term 'portfolio interest shall not 
incluae— 
"(i) any interest if the amount of such interest 
is determined by reference to— 
"(I) any receipts, sales or other cash flow of 
the debtor or a related person, 
"(II) any income or profits of the debtor or 
a related person, 
"(III) any change in value of any property 
of the debtor or a related person, or 
"(IV) any dividend, partnership distributions, 
or similar payments made by the debtor or a 
related person, or 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 507 
"(ii) any other type of contingent interest that is 
identified by the Secretary by regulation, where a 
denial of the portfolio interest exemption is necessary 
or appropriate to prevent avoidance of Federal income 
tax. 
"(B) RELATED PERSON.—The term 'related person' 
means any person who is related to the debtor within 
the meaning of section 267(b) or 707(bXl), or who is a 
party to any arrangement undertaken for a purpose of 
avoiding the application of this paragraph. 
**(C) EXCEPTIONS.—Subparagraph (AXi) shall not apply 
to— 
"(i) any amount of interest solely by reason of 
the fact that the timing of any interest or principal 
pa3rment is subject to a contingency, 
"(ii) any amoimt of interest solely by reason of 
the fact that the interest is paid with respect to 
nonrecourse or limited recourse indebtedness, 
"(iii) any amount of interest all or substantially 
all of which is determined by reference to any other 
amount of interest not described in subparagraph (A) 
(or by reference to the principal amount of indebted-
ness on which such other interest is paid), 
**(iv) any amount of interest solely by reason of 
the fact that the debtor or a related person enters 
into a hedging transaction to reduce the risk of interest 
rate or currency fluctuations with respect to such 
interest, 
"(v) any amount of interest determined by ref-
erence to— 
**(!) changes in the value of property (including 
stock) that is actively traded (within the mecming 
of section 1092(d)) other than property described 
in section 897(c)(1) or (g), 
''(II) the yield on property described in 
subclause (I), other than a debt instrument that 
pays interest described in subparagraph (A), or 
stock or other property that represents a beneficial 
interest in the debtor or a related person, or 
"(III) changes in any index of the value of 
property described in subclause (I) or of the yield 
on property described in subclause (II), and 
"(vi) any other type of interest identified by the 
Secretary by regulation. 
"(D) EXCEPTION FOR CERTAIN EXISTING INDEBTED-
NESS.—Subparagraph (A) shall not apply to any interest 
paid or accrued with respect to any indebtedness with 
a fixed term— 
"(i) which was issued on or before April 7, 1993, 
or 
"(ii) which was issued after such date pursuant 
to a written binding contract in effect on such date 
and at tdl times thereafter before such indebtedness 
was issued." 
(2) Subsection (c) of section 881 is amended by redesignat- 26 use 881. 
ing paragraphs (4), (5), and (6) as paragraphs (5), (6), and 
107 STAT. 508 
PUBLIC LAW 103-66—AUG. 10, 1993 
(7), respectively, and by inserting after paragraph (3) the follow-
ing new paragraph: 
"(4) PORTFOLIO INTEREST NOT TO INCLUDE CERTAIN CONTIN-
GENT INTEREST.—^For purposes of this subsection, the term 'port-
folio interest' shall not include any interest which is treated 
as not being portfolio interest under the rules of section 
871(hX4).'' 
26 use 2105. 
(b) ESTATE TAX TREATMENT.—Subsection (h) of section 2105 
is amended— 
(1) by striking 'Mliis subchapter'' in the material preceding 
paragraph (1) and. inserting "this subchapter, the following 
shall not be deemied property within the United States", and 
(2) by striking paragraph (3) and all that follows down 
through the period at the end thereof and inserting the follow-
ing: 
"(3) debt obligations, if, without regard to whether a state-
ment meeting the requirements of section 871(hX5) has been 
received, any interest thereon would be eligible for the exemp-
tion from tax under section 871(hXl) were such interest 
received by the decedent at the time of his death. 
Notwithstanding the preceding sentence, if any portion of the 
interest on an obligation referred to in paragraph (3) would not 
% 
be eligible for the exemption referred to in paragraph (3) by reason 
of section 871(hX4) if the interest were received by the decedent 
at the time of his death, then an appropriate portion (as determined 
in a manner prescribed by the Secretary) of the value (as determined 
for purposes of this chapter) of such debt obligation shall be deemed 
property within the United States." 
(c) CONFORMING AMENDMENTS.— 
(1) Clause (ii) of section 871(hX2XB) is amended by striking 
''paragraph (4)" and inserting "paragraph (5)". 
(2) Clause (ii) of section 881(cX2XB) is amended by striking 
"section 871(hX4)" and inserting "section 871(hX5)". 
(3) Paragraph (6) of section 881(c) (as redesignated by 
subsection (a)) is amended by striking "section 871(hX5)" each 
place it appears and inserting "section 871(hX6)". 
(4) Paragraph (9) of section 1441(c) is amended by striking 
"section 871(hX3)" and inserting "section 871(hX3) or (4)". 
(5) Subsection (a) of section 1442 is amended— 
(A) by striking "871(hX3)" and inserting "871(hX3) or 
(4)", and 
(B) by striking "881(cX3)" and inserting "881(cX3) or 
(4)". 
(d) EFFECTIVE DATE.—^The amendments made by this section 
shall apply to interest received after December 31, 1993; except 
that the amendments made by subsection (b) shall apply to the 
estates of decedents dying after December 31,1993. 
SEC. 13238. REGULATIONS DEALING WITH CONDUIT ARRANGEMENTS. 
Section 7701 is amended by redesignating subsection (1) as 
subsection (m) and by inserting after subsection (k) the following 
new subsection: 
"(1) REGULATIONS RELATING TO CONDUIT ARRANGEMENTS.—The 
Secretary may prescribe regulations recharacterizing any multiple-
party financing transaction as a transaction directly among any 
2 or more of such parties where the Secretary determines tiiat 
PUBLIC LAW 103-66—AUG. 10,1993 
107 STAT. 509 
such recharacterization is appropriate to prevent avoidance of any 
tax imposed by this title." 
SEC. 13239. TREATMENT OF EXPORT OF CERTAIN SOFTWOOD LOG& 
(a) FOREIGN SALES CORPORATIONS.—Paragraph (2) of section 
927(a) (relating to exclusion of certain property) is amended by 26 use 927. 
striking ''or^ at the end of subparagraph (C), by striking the period 
at the end of subparagraph (D) and inserting ", or", and by adding 
at the end the following: 
"(E) any unprocessed timber which is a softwood. 
For purposes of subparagraph (E), the term 'unprocessed tim-
ber* means any log, cant, or similar form of timber." 
(b) DOMESTIC INTERNATIONAL SALES CORPORATIONS.—Para-
graph (2) of section 993(c) (relating to exclusion of certain property) 
is amended— 
(1) by striking "or" at the end of subparagraph (C), by 
striking the period at the end of subparagraph (D) and inserting 
**, or", and by adding after subpeu*agraph (D) the following 
new subparagraph: 
''(E) any unprocessed timber which is a softwood.", 
and 
(2) by adding at the end the following new sentence: Tor 
purposes of subparagraph (E), the term 'improcessed timber* 
means any log, cant, or similar form of timber." 
(c) SOURCE RULE.—-Subsection (b) of section 865 (relating to 
source rules for personal property sales) is amended by adding 
at the end the following: "Notwithstanding the preceding sentence, 
any income from the sale of any unprocessed timber which is 
a softwood and was cut from an area in the United States shall 
be sourced in the United States and the rules of sections 862(aX6) 
and 863(b) shall not apply to any such income. For purposes of 
the preceding sentence, the term 'unprocessed timber* means any 
log, cant, or similar form of timber." 
(d) ELIMINATION OF DEFERRAL.—Subsection (d) of section 954 
is amended by adding at the end Uie following new paragraph: 
"(4) SPECIAL RULE FOR CERTAIN TIMBER PRODUCTS.—For 
purposes of subsection (aX2), the term foreign base company 
sales income' includes any income (whether in the form of 
profits, commissions, fees, or otherwise) derived in connection 
with— 
"(A) the sale of any unprocessed timber referred to 
in section 865(b), or 
"(B) the milling of any such timber outside the United 
States. 
Subpart G shall not apply to any amount treated as subpart 
F income by reason of this paragraph." 
(e) EFFECTIVE DATE.—^The amendments made by this section 2
6 use 865 note. 
shall apply to sales, exchanges, or other dispositions after the 
date of the enactment of this Act. 
107 STAT. 510 
PUBLIC LAW 103-66—AUG. 10, 1993 
PART IV—TRANSPORTATION FUELS 
PROVISIONS 
Subpart A—Transportation Fuels Tax 
SEC. 13241. T
R
A
N
S
P
O
R
T
A
T
I
O
N FUELS TAX. 
(a) GASOLINE.—Clause (iii) of section 4081(aX2XB) (relating 
26 use 4081. 
to rates of tax) is amended to read as follows: 
''(iii) the deficit reduction rate is 6.8 cents per 
gallon." 
(b) DIESEL FUEL AND NONCOMMERCIAL AVIATION FUEL.— 
(1) DIESEL FUEL.—Paragraph (4) of section 4091(b) (relating 
to rate of tax) is amended by striking "2.5 cents" and inserting 
"6.8 cents". 
(2) AVIATION FUEL.— 
(A) GASOLINE IN NONCOMMERCIAL AVIATION.—Para-
graph (3) of section 4041(c) is amended to read as follows: 
"(3) RATE OF TAX.—^The rate of tax imposed by paragraph 
(2) on any gasoline is 1 cent per gallon." 
(B) FUEL OTHER THAN GASOLINE.— 
(i) Clause (ii) of section 4091(bXlXA) is amended 
by inserting "and the aviation fiiel deficit reduction 
rate" after "financing rate". 
(ii) Subsection (b) of section 4091 is amended by 
redesignating paragraph (6) as paragraph (7) and by 
inserting after paragraph (5) the following new para-
graph: 
"(6) AVIATION FUEL DEFICIT REDUCTION RATE.—For pur-
poses of paragraph (1), the aviation fiiel deficit reduction rate 
is 4.3 cents per gallon." 
(iii) Paragraph (1) of section 4041(c) is amended— 
(I) by striking "of 17.5 cents a gallon", and 
(II) by inserting before the last sentence the 
following new sentence: 
"The rate of the tax imposed by tiiis paragraph shall be the 
sum of the Airport and Airway Trust Fund financing rate 
and the aviation fiiel deficit reduction rate in effect under 
section 4091 at the time of such sale or use." 
(c) 
CERTAIN ALCOHOL FUELS.—Section 4041(mXlXA) is 
amended to read as follows: 
"(A) under subsection (aX2)— 
"(i) the Highway Trust Fund financing rate shall 
be 5.75 cents per gallon, and 
"(ii) the deficit reduction rate shall be 5.55 cents 
per gallon." 
(d) FUEL USED IN COMMERCUL TRANSPORTATION ON INLAND 
WATERWAYS.— 
(1) IN GENERAL.—Section 4042(bXl) (relating to amount 
oftax) is amended— 
(A) by striking "and" at the end of subparagraph (A), 
(B) by striking the period at the end of subparagraph 
(B) and inserting ", and", and 
(C) by adding at the end thereof the following new 
subparagraph: 
"(C) the deficit reduction rate." 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 511 
(2) RATE.—Section 4042(bX2) (relating to rates) is amended 26 use 4042. 
by adding at the end the following new subparagraph: 
(C) The deficit reduction rate is 4.3 cents per gallon." 
(e) COMPRESSED NATURAL GAS.— 
(1) IN GENERAL.—Subsection (a) of section 4041 is amended 
by adding at the end thereof the following new paragraph: 
"(3) COMPRESSED NATURAL GAS.— 
"(A) IN GENERAL.—^There is hereby imposed a tax on 
compressed natural gas— 
"(i) sold by any person to an owner, lessee, or 
other operator of a motor vehicle or motorboat for 
use as a fuel in such motor vehicle or motorboat, or 
"(ii) used by any person as a fuel in a motor 
vehicle or motorboat unless there was a taxable sale 
of such gas under claiise (i). 
The rate of the tax imposed by this paragraph shall be 
48.54 cents per MCF (determined at standard temperature 
and pressure). 
(B) Bus USES.—^No tax shall be imposed by this para-
graph on any sale for use, or use, described in subpara-
graph (B) or (C) of section 6427(bX2) (relating to school 
bus and intracity transportation). 
"(C) ADMINISTRATIVE PROVISIONS.—For purposes of 
applying this title with respect to the taxes imposed by 
this subsection, references to any liquid subject to tax 
imder this subsection shall be treated as including ref-
erences to compressed natural gas subject to tax under 
this paragraph, and references to gallons shall be treated 
as including references to MCF with respect to such gas." 
(2) EXEMPTION FROM LEAKING UNDERGROUND STORAGE TANK 
TRUST FUND TAX.—^Paragraph (1) of section 4041(d) is amended 
by striking "subsection (a)" the second place it appears in 
the text and inserting "subsection (aXD or (2)". 
(f) CONFORMING AMENDMENTS.— 
(1) Paragraph (3) of section 4041(0 is hereby repealed. 
(2) Subsection (g) of section 4041 is amended by striking 
the last sentence 
(3) Subparagraphs (A) and (B) of section 4093(cX2) are 
amended to read as follows: 
"(A) No EXEMPTION FROM CERTAIN TAXES ON FUEL USED 
IN DIESEL-POWERED TRAINS.—In the case of fuel sold for 
use in a diesel-powered train, paragraph (1) shall not apply 
to so much of uie t£uc imposed by section 4091 as is attrib-
utable to the Leaking Underground Storage Tank Trust 
Fund financing rate and the diesel fuel deficit reduction 
rate imposed under such section. The preceding sentence 
shall not apply in the case of fuel sold for exclusive use 
by a State or any political subdivision thereof. 
"(B) No EXEMPTION F
R
O
M LEAKING UNDERGROUND 
S
T
O
R
A
G
E T
A
N
K TRUST FUND TAXES ON FUEL USED IN 
C
O
M
M
E
R
C
I
A
L AVIATION.—^In the case of fuel sold for use 
in commercial aviation (other than supplies for vessels 
or aircraft within the meaning of section 4221(dX3)), para-
graph (1) also shall not apply to so much of the tax imposed 
by section 4091 as is attributable to the Leaking Under-
groimd Storage Tank Trust Fimd financing rate imposed 
by such section. For purposes of the preceding sentence. 
107 STAT. 512 
PUBLIC LAW 103-66—AUG. 10, 1993 
the term 'commercial aviation' means any use of an aircraft 
other than in noncommercial aviation (as defined in section 
4041(cX4)).'' 
(4) Section 4093(d) is amended by inserting "and the avia-
tion fiiel deficit reduction rate" after "rate". 
(5) Section 6420 is amended by striking subsection (h). 
(6) Paragraph (3) of section 6421(f) is amended by inserting 
"and at the deficit reduction rate" after "financing rate", and 
by inserting "AND DEFICIT REDUCTION TAX" after "TAX" in the 
heading. 
(7) Section 6421 is amended by striking subsection (i). 
(8) Paragraph (2) of section 6427(b) is amended— 
(A) Dv striking "3.1 cents" in subparagraph (A) and 
inserting 7.4 cents^, and 
(B) by striking "3-CENT REDUCTION" in the paragraph 
heading and inserting "REDUCTION". 
(9) Section 6427(1) is amended by striking paragraphs (3) 
and (4) and inserting the foUoMdng new paragraphs: 
"(3) No REFUND OF CERTAIN TAXES ON FUEL USED IN DIESEL-
P
O
W
E
R
E
D TRAINS.—^In the case of fiiel used in a diesel-powered 
train, paragraph (1) shall not apply to so much of the tax 
imposeci by section 4091 as is attributable to the Leaking 
Underground Storage Tank Trust Fund financing rate and 
the diesel fuel deficit reduction rate imposed by such section. 
The preceding sentence shall not apply in the case of fuel 
sold for exclusive use by a State or any political subdivision 
thereof. 
"(4) No REFUND OF LEAKING UNDERGROUND STORAGE TANK 
TRUST FUND TAXES ON FUEL USED IN C
O
M
M
E
R
C
I
A
L AVIATION.— 
In the case of fuel used in commercial aviation (as defined 
in section 4093(cX2XB)) (otiier than supplies for vessels or 
aircraft within the meaning of section 4221(dX3)), paragraph 
(1) shall not apply to so much of the tax imposed by section 
4091 as is attributable to the Leaking Underground Storage 
Tank Trust Fimd financing rate imposed by such section." 
(10) Section 6427 is amended by striking subsections (m) 
and (o). 
26 use 4041 
(g) EFFECTIVE DATE.—^The amendments made by this section 
no^^e 
shall take effect on October 1,1993. 
26 use 4081 
(h) FLOOR STOCKS TAXES.— 
^°*^- 
(1) IMPOSITION OF TAX.—In the case of gasoline, diesel 
fuel, and aviation fuel on which tax was imposed under section 
4081 or 4091 of the Internal Revenue Code of 1986 before 
October 1, 1993, and which is held on such date by any person, 
there is hereby impoised a floor stocks tax of 4.3 cents per 
gallon on such gasohne, diesel fuel, and aviation fuel. 
(2) LlABIUTY FOR TAX AND M
E
T
H
O
D OF PAYMENT.— 
(A) LIABILITY FOR TAX.—A person holding gasoline, 
diesel fuel, or aviation fuel on October 1, 1993, to which 
the tax imposed by paragraph (1) applies shall be liable 
for such tax. 
(B) METHOD OF PAYMENT.—^The tax imposed by para-
graph (1) shall be paid in such manner as the Secretary 
shall prescribe. 
(C) TIME FOR PAYMENT.—The tax imposed by para-
graph (1) shall be paid on or before November 30, 1993. 
(3) DEFINITIONS.—^For purposes of this subsection— 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 513 
(A) HELD BY A PERSON.—Gasoline, diesel fuel, and avia-
tion fuel shall be considered as lield by a person" if title 
thereto has passed to such person (whether or not delivery 
to the person has been made). 
(B) GASOLINE.—^The term "gasoline" has the meaning 
given such term by section 4082 of such Code. 
(C) DIESEL FUEL.—The term "diesel fuel" has the mean-
ing given such term by section 4092 of such Code. 
(D) AVIATION FUEL.—The term "aviation fuel" has the 
meaning given such term by section 4092 of such Code. 
(E) SECRETARY.—The term "Secretary" means the Sec-
ret£iry of the Treasury or his delegate. 
(4) EXCEPTION FOR EXEMPT USES.—The tax imposed by 
paragraph (1) shall not apply to gasoline, diesel fuel, or aviation 
fuel held by any person exclusively for any use to the extent 
a credit or refund of the tax imposed by section 4081 or 4091 
of such Code, as the case may oe, is allowable for such use. 
(5) EXCEPTION FOR FUEL HELD IN VEHICLE TANK.—NO tax 
shall be imposed by paragraph (1) on gasoline or diesel fuel 
held in the tank of a motor vehicle or motorboat. 
(6) EXCEPTION FOR CERTAIN AMOUNTS OF FUEL.— 
(A) IN GENERAL.—No tax shall be imposed by para-
graph (1)— 
(i) on gasoline held on October 1, 1993, by any 
person if the aggregate amoimt of gasoline held by 
such person on such date does not exceed 4,000 gallons, 
and 
(ii) on diesel fuel or aviation fuel held on October 
1, 1993, by any person if the aggregate amount of 
diesel fuel or aviation fuel held by such person on 
such date does not exceed 2,000 gallons. 
The preceding sentence shall apply only if such person 
submits to the Secretary (at the time and in the manner 
required by the Secretary) such information as the Sec-
retary shall require for purposes of this paragraph. 
(B) EXEMPT FUEL.—^For purposes of subparagraph (A), 
there shall not be taken into account fuel held by any 
person which is exempt from the tax imposed by paragraph 
(1) by reason of paragraph (4) or (5). 
(C) 
CONTROLLED GROUPS.—^For purposes of this 
paragraph— 
(i) CORPORATIONS.— 
(I) IN GENERAL.—All persons treated as a con-
trolled group shall be treated as 1 person. 
(II) 
CONTROLLED GROUP.—The term "con-
trolled group" has the meaning given to such term 
by subsection (a) of section 1563 of such Code; 
except that for such purposes the phrase "more 
than 50 percent" shall be substituted for the 
phrase "at least 80 percent" each place it appears 
in such subsection. 
(ii) NONINCORPORATED PERSONS UNDER COMMON 
CONTROL.—^Under regulations prescribed by the Sec- Regulations. 
retary, principles similar to the principles of clause 
(i) shall apply to a group of persons under common 
control where 1 or more of such persons is not a 
corporation. 
107 STAT. 514 
PUBLIC LAW 103-66—AUG. 10, 1993 
(7) OTHER LAW APPUCABLE.—All provisions of law, includ-
ing penalties, applicable with respect to the taxes imposed 
by section 4081 of such Code in the case of gasoline and 
section 4091 of such Code in the case of diesel fuel and aviation 
fuel shall, insofar as applicable and not inconsistent with the 
provisions of this subsection, apply with respect to the floor 
stock taxes imposed by paragraph (1) to the same extent as 
if such taxes were imposed by such section 4081 or 4091. 
Subpart B—^Modifications to Tax on Diesel Fuel 
SEC. 13242. MODIFICATIONS TO TAX ON DIESEL FUEL. 
(a) IN GENERAL.—Subparts A and B of part III of subchapter 
A of chapter 32 (relating to manufacturers excise taxes), as amended 
by subpart A, are amended to read as follows: 
^Subpart A—Gasoline and Diesel Fuel 
"Sec. 4081. Imposition of tax. 
"Sec. 4082. Exemptions for diesel fuel. 
"Sec. 4083. Defimtions; special rule; administrative authority. 
"Sec. 4084. Cross references. 
•nSEC. 4081. IMPOSITION OF TAX. 
"(a) TAX IMPOSED.— 
"(1) TAX ON REMOVAL, ENTRY, OR SALE.— 
"(A) IN GENERAL.—^There is hereby imposed a tax at 
the rate specified in paragraph (2) on— 
"(i) the removal of a taxable fuel from any refinery, 
"(ii) the removal of a taxable fuel from any termi-
nal, 
"(iii) the entry into the United States of any tax-
able fuel for consumption, use, or warehousing, and 
"(iv) the sale of a t€ucable fiiel to any person who 
is not registered under section 4101 imless there was 
a prior taxable removal or entry of such fuel under 
clause (i), (ii), or (iii). 
*
*
(
B
) EXEMPTION FOR BULK TRANSFERS TO REGISTERED 
T
E
R
M
I
N
A
L
S O
R R
E
F
I
N
E
R
I
E
S
.
—
^
T
h
e tax imposed by this para-
graph shall not applv to any removal or entry of a taxable 
fuel transferred m bulk to a terminal or refinery if tiie 
person removing or entering Uie taxable fuel and the opera-
tor of such terminal or refinery are registered under section 
4101. 
"(2) RATES OF TAX.— 
"(A) IN GENERAL.—The rate of the tax imposed by 
this section is— 
"(i) in the case of gasoline, 18.3 cents per gallon, 
and 
"(ii) in the case of diesel fuel, 24.3 cents per gallon. 
"(B) LEAKING UNDERGROUND STORAGE TANK TRUST 
F
U
N
D T
A
X
.
—
^
T
h
e rates of tax specified in subparagraph 
(A) shall each be increased by 0.1 cent per gallon. Tiie 
increase in tax under this subparagraph shall m this title 
be referred to as the Leaking Underground Storage Tank 
Trust Fund financing rate. 
"(b) 
TREATMENT OF REMOVAL OR SUBSEQUENT SALE BY 
BLENDER.— 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 515 
**(1) IN GENERAL.—^There is hereby imposed a tax at the 
rate determined tmder subsection (a) on taxable fuel removed 
or sold by the blender thereof. 
*
*
(
2
) CREDIT FOR TAX PREVIOUSLY PAID.—If— 
''(A) tax is imposed on the removal or sale of a taxable 
fuel by reason of paragraph (1), and 
*'(B) the blender establishes the amount of the tax 
paid with respect to such fuel by reason of subsection 
(a), 
the amount of the tax so paid shall be allowed as a credit 
against the tax imposed by reason of paragraph (1). 
"(c) TAXABLE FUELS MIXED WITH ALCOHOL.—Under regulations Regulations. 
prescribed by the Secretary— 
"(1) IN GENERAL.—^The rate of tax under subsection (a) 
shall be the alcohol mixture rate in the case of the removal 
or entry of any qualified alcohol mixture. 
"(2) TAX PRIOR TO MIXING.— 
*
*
(
A
) IN GENERAL.—In the case of the removal or entry 
of any taxable fuel for use in producing at the time of 
such removal or entry a qualified alcohol mixture, the 
rate of tax under subsection (a) shall be the applicable 
fraction of the alcohol mixture rate. Subject to such terms 
and conditions as the Secretary may prescribe (including 
the application of section 4101), the treatment under the 
preceding sentence also shall apply to use in producing 
a qualified alcohol mixture after the time of such removal 
or entry. 
"(B) APPLICABLE FRACTION.—^For purposes of subpctra-
graph (A), the applicable fraction is— 
"(i) in Uie case of a qualified alcohol mixture which 
contains gasoline, the fraction the numerator of which 
is 10 and the denominator of which is— 
"(I) 9 in the case of 10 percent gasohol, 
"(II) 9.23 in the case of 7.7 percent gasohol, 
and 
"(III) 9.43 in the case of 5.7 percent gasohol, 
and 
"(ii) in the case of a qualified alcohol mixture which 
does not contain gasoline, WB. 
"(3) ALCOHOL; QUALIFIED ALCOHOL MIXTURE.—For purposes 
of this subsection— 
"(A) ALCOHOL.—^The term 'alcohol' includes methanol 
and ethanol but does not include alcohol produced from 
petroleum, natural gas, or coal (including peat). Such term 
does not include alcohol with a proof of less than 190 
(determined without regard to any added denaturants). 
"(B) QUALIFIED ALCOHOL MIXTURE.—The term 'qualified 
alcohol mixture' means— 
"(i) any mixture of gasoline with alcohol if at least 
5.7 percent of such mixture is alcohol, and 
"(ii) any mixture of diesel fuel with alcohol if at 
least 10 percent of such mixture is alcohol. 
"(4) ALCOHOL MIXTURE RATES FOR GASOLINE MIXTURES.— 
For purposes of this subsection— 
"(A) IN GENERAL.—^The alcohol mixture rate for a quali-
fied alcohol mixture which contains gasoline is the excess 
107 STAT. 516 
PUBLIC LAW 103-66—AUG. 10, 1993 
of the rate which would (but for this paragraph) be deter-
mined under subsection (a) over— 
"(i) 5.4 cents per gallon for 10 percent gasohol, 
"(ii) 4.158 cents per gallon for 7.7 percent gasohol, 
and 
"(iii) 3.078 cents per gallon for 5.7 percent gasohol. 
In the case of a nuxture none of the alcohol in which 
consists of ethanol, clauses (i), (ii), and (iii) shall be applied 
by substituting '6 cents' for '5.4 cents', '4.62 cents for 
'4.158 cents', and '3.42 cents' for '3.078 cents'. 
"(B) 10 PERCENT GASOHOL.—The term '10 percent gas-
ohol' means any mixture of gasoline with alcohol if at 
least 10 percent of such mixture is alcohol. 
"(C) 7.7 PERCENT GASOHOL.—^The term '7.7 percent gas-
ohol' means any mixture of gasoline with alcohol if at 
least 7.7 percent, but not 10 percent or more, of such 
mixture is alcohol. 
"(D) 5.7 PERCENT GASOHOL.—The term '5.7 percent gas-
ohol' means any mixture of gasoline with alcohol if at 
least 5.7 percent, but not 7.7 percent or more, of such 
mixture is alcohol. 
"(5) ALCOHOL MIXTURE RATE FOR DIESEL FUEL MIXTURES.— 
The alcohol mixture rate for a qualified alcohol mixture which 
does not contain gasoline is the excess of the rate which would 
(but for this paragraph) be determined imder subsection (a) 
over 5.4 cents per gallon (6 cents per gallon in the case of 
a qualified alcohol mixture none of the alcohol in which consists 
of ethanol). 
"(6) LIMITATION.—In no event shall any alcohol mixture 
rate determined under this subsection be less than 4.3 cents 
per gallon. 
^(7) LATER SEPARATION OF FUEL FROM QUALIFIED ALCOHOL 
MIXTURE.—^If any person separates the taxable fuel from a 
qualified alcohol mixture on which tax was imposed under 
subsection (a) at a rate determined under paragraph (1) or 
(2) (or with respect to which a credit or payment was allowed 
or made by reason of section 6427(fXl)), such person shall 
be treated as the refiner of such taxable fuel. The amount 
of tax imposed on any removal of such fuel by such person 
shall be reduced by the amount of tax imposed (and not credited 
or refunded) on any prior removal or entry of such fuel. 
"(8) TERMINATION.—Paragraphs (1) and (2) shall not apply 
to aiw removal, entry, or sale after September 30, 2000. 
"(d) TERMINATION.— 
"(1) IN GENERAL.—On and after October 1, 1999, each rate 
of tax specified in subsection (aX2XA) shall be 4.3 cents per 
gallon. 
"(2) LEAKING UNDERGROUND STORAGE TANK TRUST FUND 
FINANCING RATE.—^The Leaking Underground Storage Tank 
Trust Fund financing rate under subsection (aX2) snail not 
apply after December 31,1995. 
Regulations. 
"(e) REFUNDS IN CERTAIN CASES.—Under regulations prescribed 
by the Secretaiy, if any person who paid the tax imposed by 
this section with respect to any taxable fuel establishes to the 
satisfaction of the Sescretary that a prior tax was paid (and not 
credited or refunded) with respect to such taxable fuel, then an 
amount equal to the tax paid by such person shall be allowed 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 517 
as a refund (without interest) to such person in the same manner 
as if it were an overpayment of tax imposed by this section. 
*«£€. 4082. EXEMPTIONS FOR DIESEL FUEL. 
''(a) IN GENERAL.—The tax imposed by section 4081 shall not 
apply to diesel fuel— 
"(1) which the Secretary determines is destined for a non-
taxable use, 
"(2) which is indelibly dyed in accordance with regulations 
which the Secretary shall prescribe, and 
"(3) which meets such marking requirements (if any) as 
may be prescribed by the Secretary in regulations. 
Such regulations shall allow an individual choice of dye color 
approved by the Secretary or chosen from any list of approved 
dye colors that the Secreta^ may publish. 
"(b) NONTAXABLE USE.—^For purposes of this section, the term 
'nontaxable use' means— 
"(1) any use which is exempt from the tax imposed by 
section 4041(aXl) other than by reason of a prior imposition 
of tax, 
"(2) any use in a train, and 
"(3) any use described in section 6427(bXl) (after the 
application of section 6427(bX3)). 
"(c) REGULATIONS.—^The Secretary shall prescribe such reg^a-
tions as may be necessary to carry out this section, including 
regulations requiring the conspicuous labeling of retail diesel ftiel 
pimips and other delivery facilities to assure that persons are 
aware of 
which fuel is available only for nontaxable uses. 
"(d) CROSS REFERENCE.— 
Tor tax on train and certain bus uses of fuel purchased tax-free, 
see section 4041(a)(1). 
'nSEC. 4083. DEFINITIONS; SPECIAL RULE; ADMINISTRATIVE AUTHOR-
ITY. 
"(a) TAXABLE FUEL.—^For purposes of this subpart— 
"(1) IN GENERAL.—The term taxable fuel' means— 
"(A) gasoline, and 
"(B) diesel fuel. 
"(2) GASOLINE.—^The term 'gasoline' includes, to the extent 
prescribed in regulations— 
"(A) gasoline blend stocks, and 
"(B) products commonly used as additives in gasoline. 
For purposes of subparagraph (A), the term 'gasoline blend 
stocK means any petroleimi product component of gasoline. 
"(3) DIESEL FUEL.—^The term 'diesel fuel' means any liquid 
(other than gasoUne) which is suitable for use as a fuel in 
a diesel-powered highway vehicle, a diesel-powered train, or 
a diesel-powered boat. 
"(b) CERTAIN USES DEFINED AS REMOVAL.—If any person uses 
taxable fdel (other than in the production of gasoline, diesel fuel, 
or special fuels referred to in section 4041), such use shall for 
the purposes of this chapter be considered a removal. 
"(c) ADMINISTRATIVE AuTHORrry.— 
"(1) IN GENERAL.—In addition to the authority otherwise 
granted by this title, the Secretary may in administering 
compliance with this subpart, section 4041, and penalties and 
other administrative provisions related thereto— 
107 STAT. 518 
PUBLIC LAW 103-66—AUG. 10, 1993 
"(A) enter any place at which taxable fiiel is produced 
or is stored (or ma^ be stored) for piirposes of— 
"(i) examining the equipment used to determine 
the amount or composition of such fuel and the equip-
ment used to store such fuel, and 
"(ii) taking and remo^ong samples of such fuel, 
and 
, 
"(B) detain, for the purposes referred in subparagraph 
(A), any container which contains or may contain any tax-
able fuel. 
"(2) INSPECTION SITES.—The Secretary may establish 
inspection sites for purposes of carrying out the Secrettuys 
aumority under paragraph dXB). 
"(3) PENALTY FOR REFUSAL OF ENTRY.—The penalty pro-
vided by section 7342 shall apply to any refusal to admit 
entry or other refusal to permit an action by the Secretary 
auUiorized by paragraph (1), except that section 7342 shall 
be applied by substituting '$1,000' for '$500' for each such 
refusal. 
*«£€. 4084. CROSS REFERENCES. 
"(1) For provisions to relieve formers firom excise tax in the case 
of gasoline used on the form for forming purposes, see section 6420. 
"(2) For provisions to relieve purchasers of gasoline from excise 
tax in the case <^ gasoline used for certain nonhighway purposes, 
used by local transit •ystems, or sold for certain exempt purposes, 
see section 6421. 
"(3) For provisions to relieve purchasers from excise tax in the 
case of taxable foel not used for taxable purposes, see section 6427. 
''Subpart B—Aviation Fuel 
"Sec. 4091. Imposition of tax. 
"Sec. 4092. Exemptions. 
"Sec. 4093. Definitions. 
'«EC. 4081. IMPOSITION OF TAX. 
"(a) TAX ON SALE.— 
"(1) IN GENERAL.—^There is hereby imposed a tax on the 
sale of aviation fuel by the producer or the importer thereof 
or by any producer of aviation fuel. 
**(2) USE TREATED AS SALE.—^For purposes of paragraph 
(1), if any producer uses aviation fuel (other than for a non-
taicable use as defined in section 6427(1X2XB)) on which no 
tax has been imposed under such paragraph, then such use 
shall be considered a sale. 
"(b) RATE OF TAX.— 
"(1) IN GENERAL.—^The rate of the tax imposed by subsection 
(a) shall be 21.8 cents per gallon. 
'K2) LEAKING UNDERGROUND STORAGE TANK TRUST FUND 
T
A
X
.
—
^
T
h
e rate of tax specified in paragraph (1) shall be 
increased by 0.1 cent per gallon. The increase in tax under 
this paragraph shall in this title be referred to as the Leaking 
Underground Storage Tank Trust Fund financing rate. 
"(3) TERMINATION.— 
"(A) On and after January 1, 1996, the rate of tax 
specified in paragraph (1) shall be 4.3 cents per gallon. 
''(B) The Leaking Underground Storage Tank Fund 
financing rate shall not apply during any period during 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 519 
which the Leaking Underground Storage Tank Trust Fund 
financing rate under section 4081 does not apply. 
"(c) REDUCED RATE OF TAX FOR AVIATION FUEL IN ALCOHOL Regulations. 
MIXTURE, ETC.—^Under regulations prescribed by the Secretary— 
"(1) IN GENERAL.—^The rate of tax under subsection (a) 
shall be reduced by 13.4 cents per gallon in the case of the 
sale of any mixture of aviation fuel i
f
— 
"(A) at least 10 percent of such mixture consists of 
alcohol (as defined in section 4081(cX3)), and 
"(B) the aviation fiiel in such mixture was not taxed 
under paragraph (2). 
In the case of such a mixture none of the alcohol in which 
is ethanol, the preceding sentence shall be applied by substitut-
ing *14 cents' for *13.4 cents'. 
"(2) TAX PRIOR TO MIXING.—In the case of the sale of 
aviation fuel for use (at the time of such sale) in producing 
a mixture described in paragraph (1), the rate of tax imder 
subsection (a) shall be i% of the rate which would (but for 
this paragraph) have been applicable to such mixture had such 
mixture been created prior to such sale. 
"(3) LATER SEPARATION.—If any person separates the avia-
tion fuel from a mixture of the aviation fiiel and alcohol on 
which tax was imposed under subsection (a) at a rate deter-
mined under paragraph (1) or (2) (or with respect to which 
a credit or payment was allowed or made by reason of section 
6427(fKl)), such person shall be treated as the producer of 
such aviation fuel; The amoiuit of tax imposed on any sale 
of such aviation fuel by such person shall be reduced by the 
amount of tax imposed (and not credited or refunded) on any 
prior sale of such fiiel. 
"(4) LIMITATION.—In no event shall any rate determined 
under paragraph (1) be less than 4.3 cents per gallon. 
"(5) TERMINATION.—Paragraphs (1) and (2) shall not apply 
to £uiy sale after September 30, 2000. 
«SEC. 4092. EXEMPTIONS. 
"(a) NONTAXABLE USES.—^No tax shall be imposed by section 
4091 on aviation fiiel sold by a producer or importer for use by 
the purchaser in a nontaxable use (as defined in section 
6427(1X2XB)). 
"(b) No EXEMPTION FROM CERTAIN TAXES ON FUEL USED IN 
COMMERCIAL AVIATION.—^In the case of fuel sold for use in commer-
cial aviation (other than supplies for vessels or aircrafi; within 
the meaning of section 4221(dX3)), subsection (a) shall not apply 
to so much of the tax imposed by section 4091 as is attributable 
to— 
"(1) the Leaking Underground Storage Tank Trust Fimd 
financing rate imposed by such section, and 
"(2) in the case of fuel sold after September 30, 1995, 
4.3 cents per gallon of the rate specified in section 4091(bXl). 
For purposes of the preceding sentence, the term 'commercial avia-
tion' means any use of an aircraft other than in noncommercial 
aviation (as defined in section 4041(cX4)). 
"(c) SALES TO PRODUCER.—Under regulations prescribed by the Regulations. 
Secret£ury, the tax imposed by section 4091 shall not apply to 
aviation fuel sold to a producer of such fiiel. 
69-194 O - 94 - 18 : QL. 3 Part 1 
107 STAT. 520 
PUBLIC LAW 103-66—AUG. 10, 1993 
'nSEC. 4003. DEFINITIONS. 
"(a) AVIATION FUEL.—^For purposes of this subpart, the term 
'aviation fuel' means any liquid (other than any product taxable 
under section 4081) wblch is suitable for use as a fuel in an 
aircraft. 
"(b) PRODUCER.—^For purposes of this subpart— 
*
*
(
1
) CERTAIN PERSONS TREATED AS PRODUCERS.— 
*
*
(
A
) IN GENERAL.—^The term 'producer* includes any 
person described in subparagraph (B) and registered under 
section 4101 with respect to tne tax imposed by section 
4091. 
"(B) PERSONS DESCRIBED.—A person is described in 
this subparagraph if such person is— 
"(i) a refiner, blender, or wholesale distributor of 
aviation fuel, or 
"(ii) a dealer selling aviation fiiel exclusively to 
producers of aviation fuel. 
'(C) REDUCED RATE PURCHASERS TREATED AS PRODUC-
ERS.—Any person to whom aviation fuel is sold at a reduced 
rate under this subpart shall be treated as the producer 
of such fuel. 
"(2) WHOLESALE DISTRIBUTOR.—^For purposes of paragraph 
(1), the term 'wholesale distributor* includes any person who 
sells aviation fuel to producers, retailers, or to users who pur-
chase in bulk quantities and accept delivery into bulk storage 
tanks. Such term does not include any person who (excluding 
the term 'wholesale distributor* from paragraph (1)) is a pro-
ducer or importer." 
(b) CIVIL PENALTY FOR USING REDUCED-RATE FUEL FOR TAX-
ABLE USE, ETC.— 
(1) IN GENERAL.—Part I of subchapter B of chapter 68 
(relating to assessable penalties) is amended by adding at the 
end thereof the following new section: 
•^EC. 6714. DYED FUEL SOLD FOR USE OR USED IN TAXABLE USE, 
ETC. 
"(a) IMPOSITION OF PENALTY.—If— 
"(1) any dyed fuel is sold or held for sale by any person 
for any use which such person knows or has reason to know 
is not a nontaxable use of such fuel, 
"(2) any dyed fuel is held for use or used by any person 
for a use other than a nontaxable use and such person knew, 
or had reason to know, that such fuel was so dyed, or 
I 
"(3) any person willfully alters, or attempts to alter, the 
strength or composition of any dye or marking done pursuant 
to section 4082 in any dyed fuel, 
then such person shall pay a penalty in addition to the tax (if 
any). 
"(b) AMOUNT OF PENALTY.— 
"(1) IN GENERAL.—^Except as provided in paragraph (2), 
the amount of the penalty under subsection (a) on each act 
shall be the greater of— 
"(A) $1,000, or 
"(B) $10 for each gallon of the dyed fuel involved. 
"(2) MULTIPLE VIOLATIONS.—^In determining the penalty 
under subsection (a) on any person, paragraph (1) shall be 
applied by increasing the amount in paragraph (IXA) by the 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 521 
product of such amount and the number of prior penalties 
(if any) imposed by this section on such person (or a related 
person or any predecessor of such person or related person). 
"(c) DEFINITIONS.—^For purposes of this section— 
"(1) DYED FUEL.—^The term 'dyed fuel' means any dyed 
diesel fuel, whether or not the fuel was dyed pursuant to 
section 4082. 
"(2) NONTAXABLE USE.—The term 'nontaxable use' has the 
meaning given such term by section 4082(b). 
"(d) JOINT AND SEVERAL LIABILITY OF CERTAIN OFFICERS AND 
EMPLOYEES.—If a penalty is imposed under this section on any 
, 
business entity, each officer, employee, or agent of such entity 
' 
who willfully participated in any act giving rise to such penalty 
shall be jointly and severally liable with such entity for such pen-
alty." 
(2) CLERICAL AMENDMENT.—The table of sections for such 
part I is amended by adding at the end thereof the following 
new item: 
"Sec. 6714. Dyed fuel sold for use or used in taxable use, etc." 
(c) REGISTERED VENDORS TO ADMINISTER CLAIMS FOR CERTAIN 
REFUNDS OF DIESEL FUEL.— 
(1) IN GENERAL.—Section 6427(1) (relating to nontaxable 
uses of diesel fuel and aviation fuel) is amended by adding 26 use 6427. 
at the end the following new paragraph: 
"(5) REGISTERED VENDORS TO ADMINISTER CLAIMS FOR 
REFUND OF DIESEL FUEL SOLD TO FARMERS AND STATE AND 
LOCAL GOVERNMENTS.— 
"(A) IN GENERAL.—^Paragraph (1) shall not apply to 
diesel fiiel used— 
"(i) on a farm for farming purposes (within the 
meaning of section 6420(c)), or 
"(ii) by a State or local government. 
"(B) PAYMENT TO ULTIMATE, REGISTERED VENDOR.—^The 
amount which would (but for subparagraph (A)) have been 
paid under paragraph (1) with respect to any fuel shall 
be paid to the ultimate vendor of such fuel, if such vendor— 
"(i) is registered under section 4101, and 
"(ii) meets the requirements of subparagraph (A), 
(B), or (D) of section 6416(aXl).*' 
(2) SPECIAL REFUND RULES.— 
(A) Subsection (i) of section 6427 is amended by adding 
at the end thereof the following new paragraph: 
"(5) SPECIAL RULE FOR VENDOR REFUNDS.— 
"(A) IN GENERAL.—^A claim may be filed imder sub-
section (1X5) by any person with respect to fuel sold by 
such person for any period— 
"(i) for which $200 or more is payable under sub-
section (1X5), and 
"(ii) which is not less than 1 week. 
Notwithstanding subsection (IX1), paragraph (3XB) shall 
apply to cl£dms filed under the preceding sentence. 
"(B) TIME FOR FIUNG CLAIM.—^No claim filed under 
this paragraph shall be allowed unless filed on or before 
tiie last day of the first quarter following the earliest quar-
ter included in the claim. 
107 STAT. 522 
PUBLIC LAW 103-66—AUG. 10, 1993 
26 use 6427. 
(B) Paragraph (1) of section 6427(i) is amended by 
striking 'provided in paragraphs (2), (3), and (4)" and 
inserting otherwise provided in this subsection". 
(C) Paragraph (2) of section 6427(k) is amended by 
striking "or (4)" and inserting "(4), or (5)". 
(D) Paragraph (3) of section 6427(i) is amended by 
adding at the end thereof the following new subparagraph: 
"(C) TIME FOR FILING CLAIM.—NO claim nled under 
this paragraph shall be allowed unless filed on or before 
the last day of the first quarter following the earliest quar-
ter included in the claim. 
(d) TECHNICAL AND CONFORMING AMENDMENTS.— 
(1) Sections 4101(a) and 4103 are each amended by striking 
"4081" and inserting "4041(aXl), 4081,". 
(2) Section 4102 is sunended by striking "gasoline" and 
inserting "any taxable fuel (as defined in section 4083)". 
(3) Paragraph (1) of section 4041(a), as amended by sub-
chapter A, is amended to read as follows: 
"(1) TAX ON DIESEL FUEL IN CERTAIN CASES.— 
"(A) IN GENERAL.—^There is hereby imposed a tax on 
any liquid other than gasoline (as defined in section 4083)— 
"(i) sold by any person to an owner, lessee, or 
other operator of a diesel-powered highway vehicle, 
a diesel-powered train, or a diesel-powered boat for 
use as a mel in such vehicle, train, or Doat, or 
"(ii) used by any person as a fuel in a diesel-
powered highway vehicle, a diesel-powered train, or 
a diesel-powered boat unless there was a taxable sale 
of such fuel imder clause (i). 
"(B) EXEMPTION FOR PREVIOUSLY TAXED FUEL.—NO tax 
shall be imposed by this paragraph on the sale or use 
of any liquid if tax was imposed on such liquid imder 
section 4081 and the tax thereon was not credited or 
refunded. 
"(C) RATE OF TAX.— 
"(i) IN GENERAL.—^Except as otherwise provided 
in this subparagraph, the rate of the tax imposed by 
this paragraph shall be the rate of tax specified in 
section 4081(aX2XA) on diesel fuel which is in effect 
at the time of such sale or use. 
"(ii) RATE OF TAX ON TRAINS.—In the case of any 
sale for use, or use, of diesel fuel in a train, the 
rate of tax imposed by this paragraph shall be— 
"(I) 6.8 cents per gallon after September 30, 
1993, and before October 1,1995, 
"(II) 5.55 cents per gallon after September 30, 
1995, and before October 1,1999, and 
"(III) 4.3 cents per gallon after September 30, 
1999. 
"(iii) RATE OF TAX ON CERTAIN BUSES.— 
"(I) IN GENERAL.—^Except as provided in 
subclause (II), in the case of fuel sold for use 
or used in a use described in section 6427(bXl) 
(after the application of section 6427(bX3)), the 
rate of tax imposed by this paragraph shall be 
7.3 cents per gallon (4.3 cents per gallon after 
September 30,1999). 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 523 
**(II) SCHOOL BUS AND iNTRAcrry TRANSPOR-
TATION.—^No tax shall be imposed by this para-
graph on any sale for use, or use, described in 
subparagraph (B) or (C) of section 6427(bX2). 
**(D) DIESEL FUEL USED IN MOTORBOATS.—In the case 
of any sale for use, or use, of fuel in a diesel-powered 
motorboat— 
"(i) effective during the period after September 
30, 1999, and before January 1, 2000, the rate of 
tax imposed by this paragraph is 24.3 cents per gallon, 
and 
''(ii) the termination of the tax under subsection 
(d) shall not occur before January 1, 2000." 
(4) Paragraph (2) of section 4041(a) is amended— 
(A) by striking "or paragraph (1) of this subsection", 
and 
(B) by striking the last sentence and inserting the 
following new flush sentence: 
The rate of the tax imposed by this paragraph shall be the 
rate of tax specified in section 4081(aX2XA) on gasoline whidi 
is in effect at the time of such sale or use." 
(5XA) Subparagraph (B) of section 4041(bXl) is amended 
by striking "paragraph (IXB) or (2XB)" and inserting "para-
graph (IXB), (2XB), or (3XAXii)" and by inserting before the 
period "(if any)". 
(B) Subparagraph (C) of section 4041(bXl) is amended by 
inserting before the period "; except that such term shall not, 
for purposes of subsection (aXD, include vise in a diesel-powered 
train". 
(C) Clause (i) of section 4041(bX2XA) is amended by strik-
ing "Highway Trust Fund financing". 
(6) Paragraph (1) of section 4()41(c), as amended by subpart 
A, is amended by striking the next to the last sentence and 
inserting the following new flush sentence: 
"The rate of the tax imposed by this paragraph shall be the 
rate of tax specified in section 4091(bXl) wMch is in effect 
at the time of such sale or use." 
(7) Paragraph (2) of section 4041(c) is amended by striking 
"any product taxable under section 4081" and inserting "gaso-
line (as defined in section 4083)". 
(8) Paragraph (5) of section 4041(c) is amended by adding 
at the end thereof the following: "The termination under the 
preceding sentence shall not apply to so much of the tax 
imposed by paragraph (1) as does not exceed 4.3 cents per 
gallon.". 
(9) Subsection (d) of section 4041 is amended by striking 
paragraph (2) and by redesignating paragraphs (3) and (4) 
as paragraphs (2) and (3), respectively. 
(10) Paragraph (2) of section 4041(d), as redesignated by 
the preceding paragraph, is amended by striking "(other than 
any product taxable imder section 4081)" and inserting "(other 
than gasoline (as defined in section 4083))". 
(11) Subparagraph (A) of section 4041(kXl) is amended— 
(A) by striking "Highway Trust Fimd financing", and 
(B) bv striking "sections 4081(c) and 4091(c), as the 
case may be" and inserting "section 4081(c)". 
Effective date. 
Termination 
date. 
26 use 4041. 
107 STAT. 524 
PUBLIC LAW 103-66—AUG. 10, 1993 
26 use 4041. 
(12) Subparagraph (B) of section 4041(kXl) is amended 
by striking *'4091(dr and inserting "4091(0)". 
(13) Subparagraphs (A) and (B) of section 4041(mXl) are 
amended to read as follows: 
"(A) the rate of the tax imposed by subsection (aX2) 
shall be— 
"(i) 11.3 cents per gallon after September 30, 1993, 
and before October 1,1999, and 
"(ii) 4.3 cents per gallon after September 30, 1999, 
and 
"(B) the rate of the tax imposed by subsection (cXD 
shall be the comparable rate under section 4091(0X1)." 
(14) Section 6206 is amended by striking "4041 or 4091" 
and inserting "4041, 4081, or 4091". 
(15) The heading for subsection (f) of section 6302 is 
amended by inserting "AND DIESEL FUEL" after "GASOLINE". 
(16) Paragraph (1) of section 6412(a) is amended by striking 
"gasoline" each place it appears (including the heading) and 
inserting "taxable fuel". 
(17XA) Subparagraph (A) of section 6416(aX4) is amended 
by striking "product" each place it appears and inserting "gaso-
line". 
(B) Subparagraph (B) of section 6416(aX4) is amended— 
(i) by striking "section 4092(bX2)" and inserting "sec-
tion 4093(bX2)", and 
(ii) by striking all that follows "substituting" and 
inserting "'any gasoline taxable under section 4081' for 
'aviation fuel' therein)." 
(18) The material following the first sentence of section 
6416(b)(2) is amended by inserting "any tax imposed under 
section 4041(aXl) or 4081 on diesel fuel and" after "This para-
graph shall not apply in the case or. 
(19XA) Subparagraph (A) of section 6416(bX3) is amended 
by striking "gasoline taxable under section 4081 and other 
than any ftiel tcucable under section 4091" and inserting "any 
fuel taxable under section 4081 or 4091". 
(B) Subparagraph (B) of section 6416(bX3) is amended by 
striking "gasoline taxable under section 4081 or any fuel taxable 
under section 4091, such gasoline or fuel" and inserting "any 
fuel taxable under section 4081 or 4091, such fuel". 
(20) Sections 6420(cX5) and 6421(eXl) are each amended 
by striking "section 4082(b)" and inserting "section 4083(a)". 
(21) Subsections (a) and (c) of section 6427 are each amend-
ed by striking "section 4041(a) or (c)" and inserting "paragraph 
(2) or (3) of section 4041(a) or section 4041(c)". 
(i22) Subsection (c) of section 6421 is amended by adding 
at the end thereof the following: "The preceding sentence shall 
apply notwithstanding paragraphs (2XA) and (3) of subsection 
if)." 
(23) Subparagraph (B) of section 6421(fK2) is amended 
by inserting before the period "and, in the case of 
ftiel 
pvirchased 
after September 30, 1995, at so much of the rate specified 
in section 4081(aX2XA) as does not exceed 4.3 cents per gallon". 
(24) Paragraph (3) of section 6421(f), as amended by sub-
part A, is amended to read as follows: 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 525 
"(3) GASOLINE USED IN TRAINS.—In the case of gasoline 
used as a fuel in a train, this section shall not apply with 
respect to— 
"(A) the Leaking Underground Storage Tank Trust 
Fluid financing rate under section 4081, and 
"(B) so much of the rate specified in section 
4081(a)(2XA) as does not exceed— 
"(i) 6.8 cents per gallon after September 30, 1993, 
and before October 1,1995, 
"(ii) 5.55 cents per gallon after September 30,1995, 
and before October 1,1999, and 
"(iii) 4.3 cents per gallon after September 30, 
1999." 
(25) Subsisction (b) of section 6427 is amended— 
26 use 6427. 
(A) by striking "if any fuel" in paragraph (1) and insert-
ing "if any fuel other than gasoline (as defined in section 
4083(a))", and 
(B) by striking "4091" each place it appears and insert-
ing "408r. 
(26XA) Paragraph (1) of section 6427(f) is amended by 
striking ", 4091(cXlXA), or 4091(dXlXA)" and inserting "or 
4091(cXlXA)". 
(B) Paragraph (2) of section 6427(f) is amended to read 
as follows: 
"(2) DEFINITIONS.—^For purposes of paragraph (1)— 
"(A) REGULAR TAX RATE.—The term 'regular tax rate' 
means— 
"(i) in the case of gasoline or diesel fuel, the aggre-
gate rate of tax imposed by section 4081 determined 
without regard to subsection (c) thereof, and 
"(ii) in the case of aviation fuel, the aggregate 
rate of tax imposed by section 4091 determined without 
regard to subsection (c) thereof. 
"(B) INCENTIVE TAX RATE.—The term "incentive tax 
rate* means— 
"(i) in the case of gasoline or diesel fuel, the aggre-
gate rate of tax imposed by section 4081 with respect 
to fuel described in subsection (cX2) thereof, and 
"(ii) in the case of aviation fuel, the aggregate 
rate of tax imposed by section 4091 with respect to 
fuel described in subsection (cX2) thereof." 
(27) Subsection (h) of section 6427 is amended by striking 
"section 4082(b)" and inserting "section 4083(aX2)". 
(28) Paragraph (3) of section 6427(i) is amended— 
(A) by striking "
G
A
S
O
H
O
L
" in the heading and inserting 
"ALCOHOL MIXTURE", and 
(B) by striking "gasoline used to produce gasohol (as 
defined in section 4081(cXl))'' in subparagraph (A) and 
inserting "gasoline or diesel fael used to produce a qualified 
alcohol mixture (as defined in section 4081(cX3))". 
(29) Paragraph (1) of section 6427(j) is amended by striking 
"section 404r and inserting "sections 4041, 4081, and 4091 . 
(30) The heading of paragraph (4) of section 6427(i) is 
amended by inserting "4081 O
R
" before "4091". 
(31) So much of subsection (1) of section 6427, as previously 
amended by this part, as precedes paragraph (5) is amended 
to read as follows: 
107 STAT. 526 
PUBLIC LAW 103-66—AUG. 10, 1993 
"(1) NONTAXABLE USES OF DIESEL FUEL AND AVL^TION FUEL.— 
"(1) IN GENERAL.—^Except as otherwise provided in this 
subsection and in subsection (k), if— 
"(A) any diesel fuel on which tax has been imposed 
by section 4041 or 4081, or 
"(B) any aviation ^el on which tax has been imposed 
by section 4091, 
is used by any person in a nontaxable use, the Secretary 
shall pay (without interest) to the ultimate purchaser of such 
fuel an amount equal to the aggregate amount of tax imposed 
on such fael under section 4041, 4081, or 4091, as the case 
maybe. 
"(2) NONTAXABLE USE.—^For purposes of this subsection, 
the term'nontaxable use'means— 
"(A) in the case of diesel fuel, any use which is exempt 
from the tax imposed by section 4041(aXl) other than 
by reason of a prior imposition of tax, and 
"(B) in the case of aviation fuel, any use which is 
exempt from the tax imposed by section 4041(cXl) other 
than oy reason of a prior imposition of tax. 
"(3) REFUND OF CERTAIN TAXES ON FUEL USED IN DIESEL-
P
O
W
E
R
E
D T
R
A
I
N
S
.
—
^
F
o
r purposes of this subsection, the term 
'nontaxable use' includes fuel used in a diesel-powered train. 
The preceding sentence shall not apply with respect to— 
"(A) the Leaking Underground Storage Tank Trust 
Fund financing rate under sections 4041 and 4081, and 
"(B) so much of the rate specified in section 
4081(a)(2XA) as does not exceed— 
"(i) 6.8 cents per gallon after September 30, 1993, 
and before October 1,1995, 
"(ii) 5.55 cents per gallon after September 30,1995, 
and before October 1,1999, and 
"(iii) 4.3 cents per gallon after September 30,1999. 
The preceding sentence shall not apply in the case of fuel 
sold for exclusive use by a State or any political subdivision 
thereof. 
"(4) 
No REFUND OF CERTAIN TAXES ON FUEL USED IN 
C
O
M
M
E
R
C
I
A
L A
V
I
A
T
I
O
N
.
—
^
I
n the case of fuel used in commercial 
aviation (as defined in section 4092(b)) (other than supplies 
for vessels or aircraft within the meaning of section 4221(dX3)), 
E
aragraph (1) shall not apply to so much of the tax imposed 
y section 4091 as is attributable to^ 
"(A) the Leaking Underground Storage Tank Trust 
Fund 
financing 
rate imposed by such section, and 
"(B) in the case of fuel purchased after September 
30, 1995, so much of the rate of tax specified in section 
4091(bXl) as does not exceed 4.3 cents per gallon." 
26 use 9502. 
(32) Section 9502 is amended by adding at the end thereof 
the following new subsection: 
"(0 DEFINITION OF AIRPORT AND AIRWAY TRUST FUND FINANC-
ING RATE.—For purposes of this section— 
"(1) IN GENERAL.—^Except as otherwise provided in tliis 
subsection, ihe Airport and Airway Trust Fimd financing rate 
"(A) in the case of fuel used in an aircraft in non-
commercial aviation (as defined in section 4041(cX4)), 17.5 
cents per gallon, and 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 527 
"(B) in the case of fuel used in an aircraft other than 
in noncommercial aviation (as so defined), zero. 
"(2) ALCOHOL FUELS.—^If the rate of tax on any fuel is 
determined under section 4091(c), the Airport and Airway Trust 
Fund financing rate is the excess (if any) of the rate of tax 
determined under section 4091(c) over 4.4 cents per gallon 
(
^
% of 4.4 cents per gallon in the case of a rate of tax deter-
mined under section 4091(cX2)). 
"(3) TERMINATION.—^Notwithstanding the preceding provi-
sions of this subsection, the Airport and Airway Trust Fund 
financing rate is zero with respect to tax received after Decem-
ber 31 1995." 
(33) Paragraph (2) of section 9502(b) is amended by striking 26 use 9502. 
"(to the extent attributable to the Highway Trust Fund financ-
ing rate and the deficit reduction rate) and inserting "(to 
the extent of 14 cents per gallon)". 
(34) Paragraph (1) of section 9503(b) is amended— 
(A) by striking "gasoline)," in subparagraph (E) and 
inserting gasoline and diesel fuel), and", 
(B) by striking subparagraph (F), and 
(C) by redesignatmg subparagraph (G) as subpara-
graph (F). 
(35XA) Subparagraph (B) of section 9503(bX4) is amended 
by striking ", 4081, and 4091" and inserting "and 4081" and 
by striking "rates under such sections" and inserting "rate". 
(B) Subparagraph (C) of section 9503(bX4), as amended 
by subchapter A, is amended by striking "4091" and inserting 
"4081". 
(36) Paragraph (5) of section 9503(b) is amended by striking 
", (E), and (F)*^and inserting "and (E)". 
(37) Subparagraph (D) of section 9503(cX6) is amended 
by striking ", 4081, and 4091" and inserting "and 4081". 
(38) Subparagraph (D) of section 9503(cX4) is amended 
by striking "rates under such sections" and inserting "rate". 
(39) subparagraph (B) of section 9503(cX5) is amended 
by striking "rate imder such section" and inserting "rate". 
(40) Paragraph (2) of section 9503(e) is amenofed— 
(A) by striking ", 4081, and 4091" and inserting "and 
4081", and 
(B) by striking ", 4081, or 4091" and inserting "or 
4081". 
(41) Section 9503 is amended by adding at the end thereof 
the following new subsection: 
"(f) DEFINITION OF HIGHWAY TRUST FUND FINANCING RATE.— 
For purposes of this section— 
"(1) IN GENERAL.—^Except as otherwise provided in this 
subsection, the Highway Trust Fund financing rate is— 
"(A) in the case of gasoline and special motor fuels, 
11.5 cents per gallon (14 cents per gallon after September 
30,1995), and 
"(B) in the case of diesel fuel, 17.5 cents per gallon 
(20 cents per gallon after September 30,1995). 
"(2) CERTAIN USES.— 
"(A) TRAINS.—^In the case of fuel used in a train, the 
Highway Trust Fund financing rate is zero. 
"(B) CERTAIN BUSES.—In the case of diesel fuel used 
in a use described in section 6427(bXl) (after the applica-
107 STAT. 528 
PUBLIC LAW 103-66—AUG. 10, 1993 
tion of section 6427(bX3)), the Highway Trust Fund financ-
ing rate is 3 cents per gallon. 
"(C) CERTAIN BOATS.—^In the case of diesel fuel used 
in a boat described in clause (iv) of section 6421(eX2XB), 
the Highway Trust Fund 
financing 
rate is zero. 
"(D) COMPRESSED NATURAL GAS.—In the case of the 
tax imposed by section 4041(aX3), the Highway Trust Fund 
financing rate is zero. 
"(E) CERTAIN OTHER NONHIGHWAY USES.—In the case 
of gasoline and special motor fiiels used as described in 
paragraph (4XD), (5XB), or (6XD) of subsection (c), the 
Highway Trust Fund 
financing 
rate is 11.5 cents per gallon; 
and, in the case of diesel fiiel used as described in sub-
section (cX6XD), the Highway Trust Fund financing rate 
is 17.5 cents per gallon. 
"(3) ALCOHOL FUELS.— 
"(A) IN GENERAL.—If the rate of tax on any fiiel is 
determined under section 4041(bX2XA), 4041(k), or 4081(c), 
the Highway Trust Fund financing rate is the excess (if 
any) of the rate so determined over— 
''(i) 6.8 cents per gallon afl;er September 30, 1993, 
and before October 1,1999, 
"(ii) 4.3 cents per gallon after September 30, 1999. 
In the case of a rate of tax determined under section 
4081(c), the preceding sentence shall be applied by increas-
ing the rates specified in clauses (i) and (ii) by 0.1 cent. 
"(B) FUELS USED TO PRODUCE MIXTURES.—In the case 
of a rate of tax determined under section 4081(cX2), 
subparagraph (A) shall be applied by substituting rates 
which are ^
% of the rates otherwise applicable imder 
clauses (i) and (ii) of subparagraph (A). 
"(C) PARTIALLY EXEMPT METHANOL OR ETHANOL FUEL.— 
In the case of a rate of tax determined under section 
4041(m), the Highway Trust Fund financing rate is the 
excess (if any) of the rate so determined over— 
"(i) 5.55 cents per gallon after September 30, 1993, 
and before October 1,1995, and 
"(ii) 4.3 cents per gallon after September 30, 1995. 
"(4) TERMINATION.—^Notwithstanding the preceding provi-
sions of this subsection, the Highway Trust Fund financing 
rate is zero with respect to taxes received in the Treasury 
after June 30, 2000." 
26 use 9508. 
(42) Subsection (b) of section 9508 is amended— 
(A) by inserting "and diesel fuel" after "gasoline" in 
psuragraph (2), 
(B) oy striking "diesel fuel and" in paragraph (3), and 
(C) by striking "4091" in the last sentence, as added 
by subtitle A, and inserting "4081". 
(43) The table of subparts for part III of subchapter A 
of chapter 32 is amended by striking the items relating to 
subparts A and B and inserting the following new items: 
'Subpart A. Gasoline and diesel fuel. 
'Subpart B. Aviation fuel." 
26 use 4041 
(e) EFFECTIVE DATE.—The amendments made by this section 
"°*® 
shall take effect on January 1,1994. 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 529 
SEC. 18248. FLOOR STOCKS TAIL 
26 USC 4081 
(a) IN GENERAL.—^There is hereby imposed a floor stocks tax 
on diesel fuel held by any person on January 1,1994, i
f
— 
(1) no tax was imposed on such fuel under section 4041(a) 
or 4091 of the Internal Revenue Code of 1986 as in effect 
on December 31,1993, and 
(2) tax would have been imposed by section 4081 of such 
Code, as amended by this Act, on any prior removal, entry, 
or sale of such fuel had such section 4081 applied to such 
fuel for periods before January 1,1994. 
(b) RATE OF TAX.—^The rate of the tax imposed by subsection 
(a) shall be the amount of tax which would be imposed imder 
section 4081 of the Internal Revenue Code of 1986 if there were 
a taxable sale of such fuel on such date. 
(c) LIABILITY AND PAYMENT OF TAX.— 
(1) LIABILITY FOR TAX.—A person holding the diesel fuel 
on January 1, 1994, to which the tax imposed by this section 
applies shall be liable for such tax. 
(2) METHOD OF PAYMENT.—^The tax imposed by this section 
shall be paid in such manner as the Secretary shall prescribe. 
(3) TIME FOR PAYMENT.—The tax imposed by this section 
shall be paid on or before July 31,1994. 
(d) DEFINITIONS.—^For purposes of this section— 
(1) DIESEL FUEL.—^The term "diesel fuel" has the meaning 
given such term by section 4083(a) of such Code. 
(2) SECRETARY.—^The term "Secretary" means the Secretary 
of the Treasury or his delegate. 
(e) EXCEPTIONS.— 
(1) PERSONS ENTITLED TO CREDIT OR REFUND.—The tax 
imposed by this section shall not apply to fuel held by any 
person exclusively for any use to the extent a credit or refimd 
of the tax imposed by section 4081 is allowable for such use. 
(2) COMPLIANCE WITH DYEING REQUIRED.—Paragraph (1) 
shall not apply to the holder of any fuel if the holder of such 
fuel fails to comply with any requirement imposed by the Sec-
retary with respect to dyeing and marking such fuel. 
(f) OTHER LAWS APPLICABLE.—^Ail provisions of law, including 
penalties, applicable with respect to the taxes imposed by section 
4081 of such Code shall, insofar as applicable and not inconsistent 
with the provisions of this section, apply with respect to the floor 
stock taxes imposed by this section to the same extent as if such 
taxes were imposed by such section 4081. 
Subpart C—Other Provisions 
SEC 13244. INCREASED DEPOSITS INTO MASS TRANSIT ACCOUNT. 
(a) IN GENERAL.—Paragraph (2) of section 9503(e) is amended 
by striking "1.5 cents" and inserting "2 cents". 
(b) EFFECTIVE DATE.—^The amendment made by this section 
shall apply to amoimts attributable to taxes imposed on or after 
October 1,1995. 
SEC. 13245. FLOOR STOCKS TAX ON COMMERCIAL AVIATION FUEL 26 USC 4091 
HELD ON OCTOBER 1,1995. 
^°^^-
(a) IMPOSITION OF TAX.—In the case of commercial aviation 
fuel on which tax was imposed under section 4091 of the Internal 
Revenue Code of 1986 before October 1, 1995, and which is held 
26 use 9503. 
26 use 9503 
note. 
107 STAT. 530 
PUBLIC LAW 103-66—AUG. 10, 1993 
on such date by any person, there is hereby imposed a floor stocks 
tax of 4.3 cents per gallon. 
(b) LIABILITY FOR TAX AND METHOD OF PAYMENT.— 
(1) LIABILITY FOR TAX.—^A person holding aviation fuel on 
October 1, 1995, to which the tax imposed by subsection (a) 
applies shall be liable for such tax. 
(2) METHOD OF PAYMENT.—^The tax imposed by subsection 
(a) shall be paid in such manner as the Secretary shall pre-
scribe. 
(3) TIME FOR PAYMENT.—^The tax imposed by subsection 
(a) shall be paid on or before April 30,1996. 
(c) DEFINITIONS.—For purposes of this subsection— 
(1) HELD BY A PERSON.—^Aviation fuel shall be considered 
as **held by a person" if title thereto has passed to such person 
(whether or not delivery to the person has been made). 
(2) COMMERCIAL AVIATION FUEL.—The term "commercial 
aviation fuel" means aviation fuel (as defined in section 4093 
of such Code) which is held on October 1, 1995, for sale or 
use in commercial aviation (as defined in section 4092(b) of 
such Code). 
(3) SECRETARY.—^The term "Secretary" means the Secretary 
of the Treasury or his delegate. 
(d) EXCEPTION FOR EXEMPT USES.—The tax imposed by sub-
section (a) shall not apply to aviation fuel held by any person 
exclusively for any use for which a credit or refund of the entire 
tax imposed by section 4091 of such Code is allowable for aviation 
fuel purchased after September 30,1995, for such use. 
(e) EXCEPTION FOR CERTAIN AMOUNTS OF FUEL.— 
(1) IN GENERAL.—No tax shall be imposed by subsection 
(a) on aviation fuel held on October 1, 1995, by any person 
if the aggregate amoimt of commercial aviation fuel held by 
such person on such date does not exceed 2,000 gallons. The 
preceding sentence shall apply only if such person submits 
to the l^cretary (at the time and in the manner required 
by the Secretary) such information as the Secretary shall 
require for purposes of this paragraph. 
(2) EXEMPT FUEL.—For purposes of paragraph (1), there 
shall not be taken into account mel held by any person which 
is exempt from the tax imposed by subsection (a) by reason 
of subsection (d). 
(3) 
CONTROLLED 
GROUPS.—For 
purposes 
of 
this 
subsection— 
(A) CORPORATIONS.— 
(i) IN GENERAL.—^All persons treated as a controlled 
group shall be treated as 1 person. 
(ii) CONTROLLED GROUP.—The term "controlled 
group" has the meaning given to such term by sub-
section (a) of section 1563 of such Code; except that 
for such purposes the phrase "more than 50 percent" 
shall be substituted for the phrase "at least 80 percent" 
each place it appears in such subsection. 
(B) NONINCORPORATED PERSONS U
N
D
E
R C
O
M
M
O
N CON-
Reguiations. 
TROL.—^Under regulations prescribed by the Secretary, prin-
ciples similar to the principles of subparagraph (A) shall 
apply to a group of persons imder common control where 
1 or more of such persons is not a corporation. 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 531 
(f) OTHER LAW APPLICABLE.—^All provisions of law, including 
penalties, applicable with respect to tne taxes imposed by section 
4091 of sucn Code shall, insoiar as applicable and not inconsistent 
with the provisions of this section, apply with respect to the floor 
stock taxes imposed by subsection (a) to the same extent as if 
such taxes were imposed by such section 4091. 
PART V—COMPLIANCE PROVISIONS 
SEC. 13251. MODIFICATIONS TO SUBSTANTIAL UNDERSTATEMENT 
PENALTY. 
(a) REASONABLE BASIS REQUIRED.—Clause (ii) of section 
6662(dX2XB) (relating to reduction for imderstatement due to posi-
tion of taxpayer or msclosed item) is amended to read as follows: 2
6 use 6662. 
**(ii) any item i
f
— 
"(I) the relevant facts affecting the item's tax 
treatment are adequately disclosed in the return 
or in a statement attached to the return, and 
"(II) there is a reasonable basis for the tax 
treatment of such item by the taxpayer." 
(b) EFFECTIVE DATE.—^The amendment made by this section 
2
6 use 6662 
shall apply to returns the due dates for which (determined without 
"°^^ 
regard to extensions) are after December 31,1993. 
SEC. 13252. RETURNS RELATING TO THE CANCELLATION OF INDEBT-
EDNESS BY CERTAIN FINANCIAL ENTITIES. 
(a) IN GENERAL.—Subpart B of part III of subchapter A of 
chapter 61 (relating to information concerning transactions with 
other persons) is amended by adding at the end thereof the following 
new section: 
'^EC. 6050P. RETURNS RELATING TO THE CANCELLATION OF INDEBT-
EDNESS BY CERTAIN FINANCIAL ENTITIES. 
"(a) IN GENERAL.—^Any applicable financial entity which dis-
charges (in whole or in part) the indebtedness of any person during 
any calendar year shall make a return (at such time and in such 
form as the Secretary may by regulations prescribe) setting forth— 
"(1) the name, address, and TIN of each person whose 
indebtedness was discharged during such calendar year, 
"(2) the date of the discharge and the amount of the indebt-
edness discharged, and 
"(3) such other information as the Secretary may prescribe, 
"(b) EXCEPTION.—Subsection (a) shall not apply to any discharge 
ofless than $600. 
"(c) DEFINITIGNS AND SPECIAL RULES.—For purposes of this 
section— 
"(1) APPLICABLE FINANCIAL ENTITY.—The term 'applicable 
financial entity* means— 
"(A) any financial institution described in section 581 
or 591(a) and any credit union, 
"(B) the Federal Deposit Insurance Corporation, the 
Resolution Trust Corporation, the National Credit Union 
Administration, and any other Federal executive agency 
(as defined in section 6050M), and any successor or subunit 
of any of the foregoing, and 
(C) any other corporation which is a direct or indirect 
subsidiary of an entity referred to in subparagraph (A) 
but only if, by virtue of being affiliated with such entity. 
107 STAT. 532 
PUBLIC LAW 103-66—AUG. 10, 1993 
such other corporation is subject to supervision and exam-
ination by a Federal or State agency which regulates enti-
ties referred to in subparagraph (A). 
"(2) GOVERNMENTAL UNITS.—In the case of an entity 
described in paragraph (IXB), any return under this section 
shall be made by the officer or employee appropriately des-
ignated for the purpose of making such return. 
"(d) STATEMENTS TO BE FURNISHED TO PERSONS WITH RESPECT 
TO WHOM INFORMATION IS REQUIRED TO BE FURNISHED.—Every 
applicable financial entity required to make a return under sub-
section (a) shall furnish to each person whose name is required 
to be set forth in such return a written statement showing— 
"(1) the name and address of the entity required to make 
such return, and 
"(2) the information required to be shown on the return 
with respect to such person. 
The written statement required under the preceding sentence shall 
be furnished to the person on or before January 31 of the year 
following the calendar year for which the return under subsection 
(a) was made." 
(b) PENALTIES — 
26 use 6724. 
(1) RETURNS.—Suboaragraph (B) of section 6724(dXl) is 
amended by inserting after clause (vii) the following new clause 
(and by redesignating the following clauses accordingly): 
"(viii) section 6050P (relating to returns relating 
to the cancellation of indebtedness by certain financial 
entities),". 
(2) STATEMENTS.—Paragraph (2) of section 6724(d) is 
amended by redesignating subparagrai)hs (P) through (S) as 
subparagraphs (Q) througn (T), respectively, and by inserting 
after subparagraph (O) the following new subparagraph: 
(P) section 6050P(d) (relating to returns relating to 
the cancellation of indebtedness by certain financial enti-
ties),". 
(c) CLERICAL AMENDMENT.—^The table of sections for subpart 
B of part III of subchapter A of chapter 61 is amended by adding 
at the end thereof the following new item: 
"Sec. 6050P. Returns relating to the cancellation of indebtedness by certain 
financial entities. 
26 use 6050P 
(d) EFFECTIVE D A T E . — 
"°*^^ 
(1) IN GENERAL.—Except as provided in paragraph (2), the 
amendments made by this section shall apply to discharges 
of indebtedness after December 31,1993. 
(2) (JOVERNMENTAL ENTITIES.—In the case of an entity 
referred to in section 6050P(cXlXB) of the Internal Revenue 
Code of 1986 (as added bv this section), the amendments made 
by this section shall apply to discharges of indebtedness after 
the date of the enactment of this Act. 
PART VI—TREATMENT OF INTANGIBLES 
SEC. 13261. AMORTIZATION OF GOODWILL AND CERTAIN OTHER 
INTANGIBLES. 
(a) GENERAL RULE.—Part VI of subchapter B of chapter 1 
(relating to itemized deductions for individuals and corporations) 
is amended by adding at the end thereof the following new section: 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 533 
<^EC. 197. AMORTIZATION OF GOODWILL AND CERTAIN OTHER 
INTANGIBLES. 
"(a) GENERAL RULE.—^A taxpayer shall be entitled to an 
amortization deduction with respect to any amortizable section 
197 intangible. The amount of such deduction shall be determined 
by amortizing the adjusted basis (for purposes of determining gain) 
of such intangible ratably over the 15-year period beginning with 
the month in which such intangible was acquired. 
"(b) No OTHER DEPRECIATION OR AMORTIZATION DEDUCTION 
ALLOWABLE.—^Except as provided in subsection (a), no depreciation 
or amortization deduction shall be allowable with respect to any 
amortizable section 197 intangible. 
"(c) AMORTIZABLE SECTION 197 INTANGIBLE.—For purposes of 
this section— 
"(1) IN GENERAL.—Except as otherwise provided in this 
section, the term 'amortizable section 197 intangible' means 
any section 197 intangible— 
"(A) which is acquired by the taxpayer after the date 
of the enactment of this section, and 
"(B) which is held in connection with the conduct of 
a trade or business or an activity described in section 
212. 
"(2) EXCLUSION OF SELF-CREATED INTANGIBLES, ETC.—The 
term 'amortizable section 197 intangible' shall not include any 
section 197 intangible— 
"(A) which is not described in subparagraph (D), (E), 
or (F) of subsection (dX 1), and 
"(B) which is created by the taxpayer. 
This para^aph shall not apply if the intangible is created 
in connection with a transaction (or series of related trans-
actions) involving the acquisition of assets constituting a trade 
or business or subst£uitial portion thereof. 
"(3) ANTI-CHURNING RULES.— 
Tor exclusion of intangibles acquired in certain transactions, 
see subsection (f)(9). 
**(d) SECTION 197 INTANGIBLE.—For purposes of this section-
ed) IN GENERAL.—Except as otherwise provided in this 
section, the term 'section 197 intangible' means— 
"(A) goodwill, 
"(B) going concern value, 
*\C) any of the following intangible items: 
"(i) workforce in place including its composition 
and terms and conditions (contractual or otherwise) 
of its emplo)rment, 
"(ii) business books and records, operating systems, 
or any other information base (inclumng lists or other 
information with respect to current or prospective cus-
tomers), 
"(iii) any patent, copjrright, formula, process, 
design, pattern, knowhow, format, or other similar 
item, 
"(iv) any customer-based intangible, 
"(v) any supplier-based intangible, and 
"(vi) any other similar item, 
"(D) any license, permit, or other ri^ht granted by 
a governmental unit or an agency or instrumentality 
thereof. 
107 STAT. 534 
PUBLIC LAW 103-66—AUG. 10, 1993 
"(E) any covenant not to compete (or other arrangement 
to the extent such arrangement has substantially the same 
effect as a covenant not to compete) entered into in connec-
tion wiUi an acquisition (directly or indirectly) of an interest 
in a trade or business or substantial portion thereof, and 
"(F) any franchise, trademark, or trade name. 
*
*
(
2
) CUSTOMER-BASED INTANGIBLE.— 
"(A) IN GENERAL.—^The term 'customer-based intangi-
ble' means— 
"(i) composition of market, 
"(ii) market share, and 
"(iii) any other value resulting from future provi-
sion of goods or services pursuant to relationships 
(contractual or otherwise) m the ordinary course of 
business with customers. 
"(B) SPECIAL RULE FOR FINANCIAL INSTITUTIONS.—In 
the case of a financial institution, the term 'customer-
based intangible' includes deposit base and similar items. 
"(3) SUPPLIER-BASED INTANGIBLE.—The term 'supplier-
based intangible' means any value resulting fii^m future 
acquisitions of goods or services pursuant to relationships 
(contractual or otherwise) in the ordinary course of business 
with suppliers of goods or services to be used or sold by the 
t€ucpayer. 
"(e) EXCEPTIONS.—^For purposes of this section, the term 'section 
197 intangible' shall not include any of the following: 
"(1) FINANCIAL INTERESTS.—Any interest— 
"(A) in a corporation, partnership, trust, or estete, 
or 
"(B) under an existing futures contract, foreign cur-
rency contract, notional principal contract, or other similar 
financial contract. 
"(2) LAND.—Any interest in land. 
"(3) COMPUTER SOFTWARE.— 
"(A) IN GENERAL.—Any— 
"(i) computer software which is readily available 
for purchase by the general public, is subject to a 
nonexclusive license, and has not been substentially 
modified, and 
"(ii) other computer software which is not acquired 
in a transaction (or series of related transactions) 
involving the acquisition of assete constituting a trade 
or business or substantial portion thereof. 
"(B) COMPUTER SOFTWARE DEFINED.—For purposes of 
subparagraph (A), the term 'computer software' means any 
program designed to cause a computer to perform a desired 
function. Sudi term shall not include any date base or 
similar item unless the date base or item is in the public 
domain and is incidentel to the operation of otherwise 
qualifying computer software. 
'X4) CERTAIN INTERESTS OR RIGHTS ACQUIRED SEPA-
RATELY.—Any of the following not acauired in a transaction 
(or series of related transactions) involving the acquisition of 
assete constituting a trade business or substantial portion 
thereof: 
"(A) Any interest in a film, sound recording, video 
tepe, book, or similar property. 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 535 
"(B) Any right to receive tangible property or services 
under a contract or granted by a governmental unit or 
agency or instrumentality thereof. 
"(C) Any interest in a patent or copjrright. 
"(D) To the extent provided in regulations, any right 
under a contract (or granted by a governmental unit or 
an agency or instrumentality thereof) if such right— 
"(i) has a fixed duration of less than 15 years, 
or 
"(ii) is fixed as to amount and, without regard 
to this section, would be recoverable under a method 
similar to the unit-of-production method. 
"(5) INTERESTS UNDER LEASES AND DEBT INSTRUMENTS.— 
Any interest imder— 
"(A) an existing lease of tangible property, or 
"(B) except as provided in subsection (dX2XB), any 
existing indebtedness. 
"(6) TREATMENT OF SPORTS FRANcmsES.—A firanchise to 
engage in professional football, basketball, baseball, or other 
professional sport, and any item acquired in connection with 
such a franchise. 
"(7) MORTGAGE SERVICING.—^Any right to service indebted-
ness which is secured by residential real property unless such 
right is acquired in a transaction (or series of related trans-
actions) involving the acquisition of assets (other than rights 
described in this paragraph) constituting a trade or business 
or substantial portion thereof. 
"(8) CERTAIN TRANSACTION COSTS.—Any fees for profes-
sional services, and any transaction costs, incurred by parties 
to a transaction with respect to which any portion of the gain 
or loss is not recognized under part III of subchapter C. 
"(£) SPECIAL RULES.— 
*
*
(
1
) TREATMENT OF CERTAIN DISPOSITIONS, ETC.— 
"(A) IN GENERAL.—^If there is a disposition of any 
amortizable section 197 intangible acquired in a transaction 
or series of related transactions (or any such intangible 
becomes worthless) and one or more other amortizable 
section 197 intangibles acquired in such transaction or 
series of related transactions are ret£uned— 
"(i) no loss shall be recognized by reason of such 
disposition (or such worthlessness), and 
"(ii) appropriate adijustments to the adjusted bases 
of such retained intangibles shall be made for any 
loss not recognized imder clause (i). 
"(B) SPECIAL RULE FOR COVENANTS NOT TO COMPETE.— 
In the case of any section 197 intangible which is a cov-
enant not to compete (or other arrangement) described 
in subsection (dXlXE), in no event shall such covenant 
or other arrangement be treated as disposed of (or becoming 
worthless) before the disposition of the entire interest 
described in such subsection in connection with which such 
covenant (or other arrangement) was entered into. 
"(C) SPECIAL RULE.—^All persons treated as a single 
taxpayer under section 41(fXl) shall be so treated for pur-
poses of this paragraph. 
"(2) TREATMENT OF CERTAIN TRANSFERS.— 
107 STAT. 536 
PUBLIC LAW 103-66—AUG. 10, 1993 
"(A) IN GENERAL.—^In the case of any section 197 intan-
gible transferred in a transaction described in subpara-
graph (B), the transferee shall be treated as the transferor 
for purposes of applying this section with respect to so 
much of the a4justed basis in the hands of the transferee 
as does not exceed the ac^usted basis in the hands of 
the transferor. 
"(B) 
TRANSACTIONS 
COVERED.—The 
transactions 
described in this subpara^aph are— 
"(i) any transaction described in section 332, 351, 
361, 721, 731,1031, or 1033, and 
"(ii) any transaction between members of the same 
affiliated group during any taxable year for which a 
consolidated return is made by such group. 
•*(3) TREATMENT OF AMOUNTS PAID PURSUANT TO COVENANTS 
NOT TO COMPETE, ETC.—Any amoimt paid or incurred pursuant 
to a covenant or arrangement referred to in subsection (d)(1)(E) 
shall be treated as an amoimt chargeable to capital account. 
"(4) TREATMENT OF FRANCHISES, ETC.— 
"(A) FRANCHISE.—^The term 'franchise' has the meaning 
given to such term by section 1253(bXl). 
"(B) TREATMENT OF RENEWALS.—Any renewal of a fran-
chise, trademark, or trade name (or of a license, a permit, 
or other right referred to in subsection (dXlXD)) shall 
be treated as an acquisition. The preceding sentence shall 
only apply with respect to costs incurred in connection 
witn such renewal. 
"(C) CERTAIN AMOUNTS NOT TAKEN INTO ACCOUNT.— 
Any amount to which section 1253(dXl) applies shall not 
be taken into account under this section. 
"(5) TREATMENT OF CERTAIN REINSURANCE TRANSACTIONS.— 
In the case of any amortizable section 197 intangible resulting 
from an assumption reinsurance transaction, the amoimt taken 
into account as the adjusted basis of such intangible under 
this section shall be the excess o
f
— 
"(A) the amount paid or incurred by the acquirer under 
the assumption reinsurance transaction, over 
"(B) the amount required to be capitalized under sec-
tion 848 in connection with such transaction. 
Subsection (b) shall not apply to any amount required to be 
capitalized under section 848. 
"(6) TREATMENT OF CERTAIN SUBLEASES.—For purposes of 
this section, a sublease shall be treated in the same manner 
as a lease of the underlying property involved. 
"(7) TREATMENT AS DEPRECIABLE.—For purposes of this 
chapter, any amortizable section 197 intangible shall be treated 
as property which is of a character subject to the allowance 
for depreciation provided in section 167. 
"(8) TREATMENT OF CERTAIN INCREMENTS IN VALUE.—This 
section shall not apply to any increment in value if, without 
regard to this section, such increment is properly taken into 
account in determining the cost of property which is not a 
section 197 intangible. 
"(9) ANTI-CHURNING RULES.—For purposes of this section— 
"(A) IN GENERAL.—The term 'amortizable section 197 
intangible' shall not include any section 197 intangible 
which is described in subparagraph (A) or (B) of subsection 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 537 
(dXl) (or for which depreciation or amortization would not 
have been allowable but for this section) and which is 
acquired by the taxpayer after the date of the enactment 
of this section, if— 
''(i) the intangible was held or used at any time 
on or after Julv 25, 1991, and on or before such date 
of enactment oy the taxpayer or a related person, 
"(ii) the intangible was acquired from a person 
who held such intcingible at any time on or after July 
25, 1991, and on or before such date of enactment, 
and, as part of the transaction, the user of such intangi-
ble does not change, or 
"(iii) the taxpayer grants the right to use such 
intangible to a person (or a person related to such 
person) who held or used such intangible at any time 
on or after July 25, 1991, and on or before sucn date 
of enactment. 
For purposes of this subparagraph, the determination of 
whetner the user of property changes as part of a trans-
action shall be determined in accordance with regulations 
prescribed by the Secretary. For purposes of this subpara-
graph, deductions allowable under section 1253(d) shall 
be treated as deductions allowable for amortization. 
"(B) EXCEPTION WHERE GAIN RECOGNIZED.—If— 
**(i) subparagraph (A) would not apply to an intan-
gible acquired by the taxpayer but for the last sentence 
of subparagraph (CXi), and 
**(ii) the person firom whom the taxpayer acquired 
the intangible elects, notwithstanding any other provi-
sion of this title— 
"(I) to recognize gain on the disposition of the 
intangible, and 
"(II) to pay a tax on such gain which, when 
added to any other income tax on such gain under 
this title, equals such gain multiplied by the high-
est rate of income tax applicable to such person 
imder this title, 
then subparagraph (A) shall apply to the intangible 
only to the extent that the taxpayer's adjusted basis 
in the intangible exceeds the gain recognized under 
clause (iiXD. 
"(C) RELATED PERSON DEFINED.—For purposes of this 
paragraph— 
"(i) RELATED PERSON.—^A person (hereinafter in 
this paragraph referred to as the 'related person') is 
related to any person if— 
"(I) the related person bears a relationship 
to such person specified in section 267(b) or section 
707(bXl), or 
"(II) the related person and such person are 
engaged in trades or businesses under common 
control (within the meaning of subparagraphs (A) 
and (B) of section 41(0(1)). 
For purposes of subclause (I), in applying section 267(b) 
or 707(bXl), '20 percent' shall be substituted for '50 
percent'. 
107 STAT. 538 
PUBLIC LAW 103-66—AUG. 10, 1993 
**(ii) TIME FOR MAKING DETERMINATION.—A person 
shall be treated as related to another person if such 
relationship exists immediately before or immediately 
after the acquisition of the intangible involved. 
"(D) ACQUISITIONS BY REASON OF DEATH.—Subpara-
graph (A) shall not apply to the acquisition of any property 
by the taxpayer if the basis of the property in the hands 
of the taxpayer is determined imder section 1014(a). 
"(E) SPECIAL RULE FOR PARTNERSHIPS.—With respect 
to any increase in the basis of partnership property under 
section 732, 734, or 743, determinations imder this para-
graph shall be made at the partner level and each partner 
shall be treated as having owned and used such partner's 
proportionate share of the partnership assets. 
"(F) ANTI-ABUSE RULES.—The term 'amortizable section 
197 intangible' does not include any section 197 intangible 
acquired m a transaction, one of the principal purposes 
of which is to avoid the requirement of subsection (cXD 
that the intangible be acquired after the date of the enact-
ment of this section or to avoid the provisions of subpara-
graph (A). 
"(g) REGULATIONS.—^The Secretary shall prescribe such regula-
tions as may be appropriate to carry out the purposes of this 
section, including such regulations as may be appropriate to prevent 
avoidance of the purposes of this section through related persons 
or otherwise." 
(b) MODIFICATIONS TO DEPRECIATION RULES.— 
(1) TREATMENT OF CERTAIN PROPERTY EXCLUDED FROM SEC-
26 use 167. 
TioN 197.—Section 167 (relating to depreciation deduction) is 
amended by redesignating subsection (i) as subsection (g) and 
by inserting after subsection (e) the following new subsection: 
"(f) TREATMENT OF CERTAIN PROPERTY EXCLUDED FROM SEC-
TION 197.— 
"(1) COMPUTER SOFTWARE.— 
"(A) IN GENERAL.—If a depreciation deduction is allow-
able under subsection (a) with respect to any computer 
software, such deduction shall be computed by using the 
straight line method and a useful life of 36 months. 
'\B) COMPUTER SOFTWARE.—For purposes of this sec-
tion, the term 'computer software' has the meaning given 
to such term by section 197(e)(3XB); except that suoi term 
shall not include any such software which is an amortizable 
section 197 intangible. 
"(2) 
CERTAIN INTERESTS OR RIGHTS ACQUIRED SEPA-
RATELY.—If a depreciation deduction is allowable under sub-
section (a) with respect to any property described in subpara-
graph (B), (C), or (D) of section 197(eX4), such deduction shall 
be computed in accordance with regulations prescribed by the 
Secretary. 
"(3) MORTGAGE SERVICING RIGHTS.—If a depreciation deduc-
tion is allowable imder subsection (a) with respect to any right 
described in section 197(eX7), such deduction shall be computed 
by using the straight line method and a useftil life of 108 
months. 
(2) ALLOCATION OF BASIS IN CASE OF LEASED PROPERTY.— 
Subsection (c) of section 167 is amended to read as follows: 
"(c) BASIS FOR DEPRECIATION.— 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 539 
**(1) IN GENERAL.—^The basis on which exhaustion, wear 
and tear, and obsolescence are to be allowed in respect of 
any property shall be the adjusted basis provided in section 
1011, for the purpose of determining the gain on the sale 
or other disposition of such property. 
"(2) SPECIAL RULE FOR PROPERTY SUBJECT TO LEASE.—If 
any property is acquired sublect to a lease— 
"(A) no portion of tne adjusted basis shall be allocated 
to the leasehold interest, and 
"(B) the entire adjusted basis shall be taken into 
account in determining the depreciation deduction (if any) 
with respect to the property subject to the lease." 
(c) AMENDMENTS TO SECTION 1253.—Subsection (d) of section 
1253 is amended by striking paragraphs (2), (3), (4), and (5) and 
26 use 1253. 
inserting the following: 
"(2) OTHER PAYMENTS.—Any amoimt paid or incurred on 
account of a transfer, sale, or other disposition of a franchise, 
trademark, or trade name to which paragraph (1) does not 
apply shall be treated as an amount chargeable to capital 
account. 
"(3) RENEWALS, ETC.—^For purposes of determining the term 
of a transfer agreement under this section, there shall be t£iken 
into account all renewal options (and any other period for 
which the parties reasonably expect the agreement to be 
renewed)." 
(d) AMENDMENT TO SECTION 848.—Subsection (g) of section 
848 is amended by striking "this section" and inserting "this section 
or section 197". 
(e) AMENDMENTS TO SECTION 1060.— 
(1) Paragraph (1) of section 106(Kb) is amended by striking 
"goodwill or going concern value" and inserting "section 197 
intangibles". 
(2) Paragraph (1) of section 106(Xd) is amended by striking 
"goodwill or going concern value (or similar items)" cuid insert-
ing "section 197 intangibles". 
(f) TECHNICAL AND CONFORMING AMENDMENTS.— 
(1) Subsection (g) of section 167 (as redesignated by sub-
section (b)) is amended to read as follows: 
"(g) CROSS REFERENCES.— 
"(1) For additional rule applicable to depreciation of improve-
ments in the case of mines, oil and gas wells, other natural deposits, 
and timber, see section 611. 
"(2) For amortization of goodwill and certain other intangibles, 
see section 197." 
(2) Subsection (f) of section 642 is amended by striking 
"section 169" and inserting "sections 169 and 197". 
(3) Subsection (a) of section 1016 is amended by striking 
paragraph (19) and by redesignating the following paragraphs 
accordingly. 
(4) Subparagraph (C) of section 1245(aX2) is amended by 
striking "193, or 1253(d) (2) or (3)" and inserting "or 193". 
(5) Paragraph (3) of section 1245(a) is amended oy striking 
"section 185 or 1253(d) (2) or (3)". 
(6) The table of sections for part VI of subchapter B of 
chapter 1 is amended by adding at the end thereof the following 
new item: 
"Sec. 197. Amortization of goodwill and certain other intangibles.". 
107 STAT. 540 
PUBLIC LAW 103-66—AUG. 10, 1993 
26 use 197 note. 
(g) EFFECTIVE DATE.— 
(1) IN GENERAL.—^Except as otherwise provided in this sub-
section, the amendments made by this section shall apply with 
respect to property acquired after the date of the enactment 
of this Act. 
(2) ELECTION TO HAVE AMENDMENTS APPLY TO PROPERTY 
ACQUIRED AFTER JULY 25, 1991.— 
(A) IN GENERAL.—If an election under this paragraph 
applies to the taxpayer— 
(i) the amendments made by this section shall 
apply to property acquired by the taxpayer after July 
25,1991, 
(ii) subsection (cXlXA) of section 197 of the 
Internal Revenue Code of 1986 (as added by this sec-
tion) (and so much of subsection (fX9XA) of such section 
197 as precedes clause (i) thereof) shall be applied 
with respect to the taxpayer by treating July 25, 1991, 
as the date of the enactment of such section, and 
(iii) in applying subsection (fX9) of such section, 
with respect to any property acquired by the taxpayer 
on or before the date of the enactment of this Act, 
only holding or use on July 25, 1991, shall be taken 
into account. 
(B) ELECTION.—An election under this paragraph shall 
be made at such time and in such manner as the Secretary 
of the Treasury or his delegate may prescribe. Such an 
election by any taxpayer, once made— 
(i) may be revoked only with the consent of the 
Secret£ury, and 
(ii) shall apply to the taxpayer making such elec-
tion and any other taxpayer under common control 
with the taxpayer (within the meaning of subpara-
graphs (A) and (B) of section 41(fXl) of such Code) 
at any time after August 2, 1993, and on or before 
the date on which such election is made. 
(3) ELECTIVE BINDING CONTRACT EXCEPTION.— 
(A) IN GENERAL.—^The amendments made by this sec-
tion shall not apply to any acquisition of property by the 
taxpayer i
f
— 
(i) such acquisition is pursuant to a written binding 
contract in effect on the date of the enactment of 
this Act and at all times thereafter before such acquisi-
tion, 
(ii) an election under paragraph (2) does not apply 
to the taxpayer, and 
(iii) the taxpayer makes an election imder this 
paragraph with respect to such contract. 
(B) ELECTION.—An election under this paragraph shall 
be made at such time and in such manner as the Secretary 
of the Treasury or his delegate shall prescribe. Such an 
election, once made— 
(i) may be revoked only with the consent of the 
Secretary, and 
(ii) shall apply to all property acquired pursuant 
to the contract with respect to whicn such election 
was made. 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 541 
SEC. 13262. TREATMENT OF CERTAIN PAYMENTS TO RETIRED OR 
DECEASED PARTNER. 
(a) SECTION 736(b) NOT TO APPLY IN CERTAIN CASES.—Sub-
section (b) of section 736 (relating to payments for interest in 
partnership) is amended by adding at the end thereof the following 26 use 736. 
new paragraph: 
**(3) LIMITATION ON APPUCATION OF PARAGRAPH (2).—Para-
graph (2) shall apply only i
f
— 
"(A) capital is not a material income-producing factor 
for the partnership, and 
"(B) the retiring or deceased partner was a general 
partner in the partnership." 
(b) LIMITATION ON DEFINITION OF UNREALIZED RECEIVABLES.— 
(1) IN GENERAL.—Subsection (c) of section 751 (defining 
unrealized receivables) is amended— 
(A) by striking ''sections 731, 736, and 741" each place 
they appear and inserting ", sections 731 and 741 (but 
not for purposes of section 736)", and 
(B) by striking "section 731, 736, or 741" each place 
it appears and inserting "section 731 or 741". 
(2) TECHNICAL AMENDMENTS.— 
(A) Subsection (e) of section 751 is amended by striking 
"sections 731, 736, and 741" and inserting "sections 731 
and 741". 
(B) Section 736 is amended by striking subsection (c). 
(c) EFFECTIVE DATE.— 
26 use 736 note. 
(1) IN GENERAL.—^The amendments made by this section 
shall apply in the case of partners retiring or dying on or 
after January 5,1993. 
(2) BINDING CONTRACT EXCEPTION.—The amendments made 
by this section shall not apply to any partner retiring on or 
after January 5, 1993, if a written contract to purchase such 
partner's interest in the partnership was binding on January 
4, 1993, and at all times thereafter before such purchase. 
PART VII—MISCELLANEOUS PROVISIONS 
SEC. 13271. DISALLOWANCE OF INTEREST ON CERTAIN OVERPAY-
MENTS OF TAX. 
(a) GENERAL RULE.—Subsection (e) of section 6611 is amended 
to read as follows: 
"(e) DISALLOWANCE OF INTEREST ON CERTAIN OVERPAYMENTS.— 
"(1) REFUNDS WITHIN 46 DAYS AFTER RETURN IS FILED.— 
If any overpayment of tax imposed by this title is refunded 
within 45 days after the last day prescribed for filing the 
return of such tax (determined without regard to any extension 
of time for filing the return) or, in the case of a return filed 
after such last date, is refunded within 45 days after the 
date the return is filed, no interest shall be allowed under 
subsection (a) on such overpa3nnent. 
"(2) REFUNDS AFTER CLAIM FOR CREDIT OR REFUND.—If— 
"(A) the taxpayer files a claim for a credit or refund 
for any overpayment of tax imposed by this title, and 
"(B) such overpayment is refunded within 45 days after 
such claim is filed, 
107 STAT. 542 
PUBLIC LAW 103-66—AUG. 10, 1993 
no interest shall be allowed on such overpayment from the 
date the claim is filed imtil the day the refund is made. 
"(3) IRS I
N
I
T
I
A
T
E
D ADJUSTMENTS.—If an adjustment initi-
ated by the Secretary, results in a refund or credit of an 
overpa3rment, interest on such overpayment shall be computed 
by subtracting 45 days from the number of days interest would 
otherwise be allowed with respect to such overpayment." 
2
6 use 6
6
1
1 
(b) EFFECTIVE DATES.— 
"°^® 
(1) Paragraph (1) of section 6611(e) of the Internal Revenue 
Code of 1986 (as amended by subsection (a)) shall apply in 
the case of returns the due date for which (determined without 
regard to extensions) is on or after January 1,1994. 
(2) Paragraph (2) of section 6611(e) of such Code (as so 
amended) shall apply in the case of claims for credit or refund 
of any overpajrment filed on or after January 1,1995, regardless 
of the taxable period to which such refund relates. 
(3) Paragraph (3) of section 6611(e) of such Code (as so 
amended) shall apply in the case of any refund paid on or 
after January 1, 1995, regardless of the taxable period to which 
such refund relates. 
SEC. 13272. DENIAL OF DEDUCTION R
E
L
A
T
I
N
G TO T
R
A
V
E
L EXPENSES. 
(a) IN GENERAL.—Section 274(m) (relating to additional limita-
26 use 274. 
tions on travel expenses) is amended by adding at the end thereof 
the following new paragraph: 
*
*
(
3
) TRAVEL EXPENSES OF SPOUSE, DEPENDENT, OR OTH-
ERS.—^No deduction shall be allowed under this chapter (other 
than section 217) for travel expenses paid or incurred with 
respect to a spouse, dependent, or other individual accompany-
ing the taxpayer (or an officer or employee of the taxpayer) 
on business travel, iinless— 
"(A) the spouse, dependent, or other individual is an 
employee of the taxpayer, 
"(B) the travel of the spouse, dependent, or other 
individual is for a bona 
fide 
business purpose, and 
"(C) such expenses would otherwise be deductible by 
the spouse, dependent, or other individual." 
26 use 274 note. 
(b) E
F
F
E
C
T
I
V
E DATE.—^The amendment made by this section 
shall apply to amounts pedd or incurred after December 31, 1993. 
SEC. 13273. INCREASE IN W
I
T
H
H
O
L
D
I
N
G F
R
O
M SUPPLEMENTAL W
A
G
E 
PAYMENTS. 
If an employer elects under Treasury Regulation 31.3402 
(g)-l to determine the amount to be deducted and withheld from 
any supplemental wage payment by using a flat percentage rate, 
the rate to be used in determining the amount to be so deducted 
and withheld shall not be less than 28 percent. "Hie preceding 
sentence shall apply to payments made after December 31, 1993. 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 543 
Subchapter C—^Empowerment Zones, Enterprise 
Communities, Rural Development Investment Areas, Etc. 
PART I—EMPOWERMENT ZONES, ENTERPRISE ii^^r-
COMMUNITIES, AND RURAL DEVELOPMENT 
^ 1 ^ ' " 
INVESTMENT AREAS 
SEC. 13301. DESIGNATION AND TREATMENT OF EMPOWERMENT 
ZONES, ENTERPRISE COMMUNITIES, AND RURAL DEVEL-
OPMENT INVESTMENT AREAS. 
(a) IN GENERAL.—Chapter 1 (relating to normal taxes and 
surtaxes) is amended by inserting after subchapter T the following 
new subchapter: 
^Subchapter U—^Designation and Treatment of Empower-
ment Zones, Enterprise Communities, and Rural Develop-
ment Investment Areas 
Tart I. Designation. 
Tart 11. Tax-exemi>t facility bonds for empowerment zones and enterprise 
communities. 
Tart III. Additional incentives for empowerment zones. 
Tart IV. Regulations. 
**PART I—DESIGNATION 
"Sec. 1391. Designation procedure. 
"Sec. 1392. Eligibility criteria. 
"Sec. 1393. Definitions and special rules. 
'nSEC. 1391. DESIGNATION PROCEDURE. 
"(a) IN GENERAL.—^From among the areas nominated for des-
ignation under this section, the appropriate Secretaries may des-
ignate empowerment zones and enterprise communities. 
"(b) NUMBER OF DESIGNATIONS.— 
"(1) ENTERPRISE COMMUNITIES.—The appropriate Secretar-
ies may designate in the aggregate 95 nominated areas as 
enterprise communities imder this section, subject to the avail-
ability of eligible nominated areas. Of that number, not more 
than 65 may be designated in urban areas and not more than 
30 may be designated in rural areas. 
"(2) E
M
P
O
W
E
R
M
E
N
T ZONES.—The appropriate Secretaries 
may designate in the aggregate 9 nominated areas as 
empowerment zones under tlus section, subject to the availabil-
ity of eligible nominated areas. Of that number, not more 
than 6 may be designated in urban areas and not more than 
3 may be designated in rural areas. If 6 empowerment zones 
are designated in iu>ban areas, no less than 1 shall be des-
ignated m an urban area the most populous city of which 
has a population of 500,000 or less and no less than 1 shall 
be a nominated area which includes areas in 2 States and 
which has a population of 50,000 or less. The Secretary of 
Housing and Urban Development shall designate empowerment . 
zones located in urban areas in such a manner that the aggre-
gate population of all such zones does not exceed 750,000. 
n[c) PERIOD DESIGNATIONS M
A
Y BE MADE.—A designation may 
be made under this section only after 1993 and before 1996. 
**(d) PERIOD FOR WHICH DESIGNATION IS IN EFFECT.— 
107 STAT. 544 
PUBLIC LAW 103-66—AUG. 10, 1993 
"(1) IN GENERAL.—^Any designation under this section shall 
remain in effect during the period beginning on the date of 
the designation and ending on the e£u:liest o
f
— 
"(A) the close of the 10th calendar year beginning 
on or after such date of designation, 
"(B) the termination date designated by the State and 
local governments as provided for in their nomination, 
or 
*
*
(
C
) the date the appropriate Secretary revokes the 
designation. 
"(2) REVOCATION OF DESIGNATION.—The appropriate Sec-
retary may revoke the designation under this section of an 
area if such Secretary determines that the local government 
or the State in which it is located— 
"(A) has modified the boundaries of the area, or 
"(B) is not complying substantially with, or fails to 
make progress in achieving the benchmarks set forth in, 
the strategic plan under subsection (fX2). 
"(e) LIMITATIONS ON DESIGNATIONS.—No area may be des-
ignated under subsection (a) unless— 
"(1) the area is nominated by 1 or more local governments 
and the State or States in whicn it is located for designation 
under this section, 
"(2) such State or States and the local governments have 
the auttiority— 
"(A) to nominate the area for designation imder this 
section, and 
"(B) to provide the assurances described in paragraph 
(3), 
"(3) such State or States and the local governments provide 
written assurances satisfactory to the appropriate ScK^retary 
that the strategic plan described in the application under sub-
section (fX2) for such area will be implemented, 
"(4) tiie appropriate Secretary determines that any informa-
tion furnished is reasonably accurate, and 
"(5) such State or States and local governments certify 
that no portion of the area nominated is already included 
in an empowerment zone or in an enterprise community or 
in an area otherwise nominated to be designated under this 
section. 
"(f) APPLICATION.—^No area may be designated under subsection 
(a) unless the application for such designation— 
"(1) demonstrates that the nominated area satisfies the 
eUgibility criteria described in section 1392, 
"(2) includes a strategic plan for accomplishing the purposes 
of this subchapter that— 
"(A) describes the coordinated economic, human, 
community, and physical development plan and related 
activities proposed for the nominated area, 
"(B) describes the process by which the affected commu-
nity is a full partner in the process of developing and 
implementing the plan and the extent to wmch local 
institutions and organizations have contributed to the plan-
ningprocess, 
(C) identifies the amount of State, local, and private 
resources that will be available in the nominated area 
and the private/public pcurtnerships to be used, which may 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 545 
include participation by, and cooperation with, universities, 
medical centers, and other private and public entities, 
"(D) identifies the funding requested under any Federal 
program in support of the proposed economic, hiunan, 
community, and physical development and related 
activities, 
"(E) identifies baselines, methods, and benchmarks for 
measuring the success of carrying out the strategic plan, 
including the extent to which poor persons and families 
will be empowered to become economically self-sufficient, 
and 
"(F) does not include any action to assist any establish-
ment in relocating from one area outside the nominated 
area to the nominated area, except that assistance for 
the expansion of an existing business entity through the 
establishment of a new branch, affiliate, or subsidiary is 
permitted if— 
"(i) the establishment of the new branch, affiliate, 
or subsidiary will not result in a decrease in employ-
ment in the area of original location or in any other 
area where the existing business entity conducts busi-
ness operations, and 
"(li) there is no reason to believe that the new 
branch, afiiliate, or subsidiary is being established with 
the intention of closing down the oi)erations of the 
existing business entity in the area of its original loca-
tion or in any other area where the existing business 
entity conducts business operation, and 
"(3) includes such other information as may be required 
by the appropriate Secretary. 
'^EC. 1392. EUGmnJTY CRITERIA. 
"(a) IN GENERAL.—A nominated area shall be eligible for des-
ignation under section 1391 only if it meets the following criteria: 
"(1) POPULATION.—^The nominated area has a maximum 
population of— 
''(A) in the case of an urban area, the lesser of— 
"(i) 200,000, or 
**(ii) the greater of 50,000 or 10 percent of the 
population of the most populous city located within 
the nominated area, and 
''(B) in the case of a rural area, 30,000. 
"(2) DISTRESS.—^The nominated area is one of pervasive 
poverty, unemployment, and general distress. 
**(3) SIZE.—^The nominated area— 
"(A) does not exceed 20 square miles if an urban area 
or 1,000 square miles if a rural area, 
"(B) has a boundary which is continuous, or, except 
in the case of a rural area located in more than 1 State, 
consists of not more than 3 noncontiguous parcels, 
"(CXi) in the case of an urban area, is located entirely 
within no more than 2 contiguous Stetes, and 
"(ii) in the case of a rural area, is located entirely 
within no more than 3 contiguous Stetes, and 
"(D) does not include any portion of a central business 
district (as such term is used for purposes of the most 
recent Census of Reteil Trade) unless the poverty rate 
107 STAT. 546 
PUBLIC LAW 103-66—AUG. 10, 1993 
for each population census tract in such district is not 
less than 35 percent (30 percent in the case of an enterprise 
community). 
"(4) POVERTY RATE.—The poverty rate— 
"(A) for each population census tract within the nomi-
nated area is not less than 20 percent, 
"(B) for at least 90 percent of the population census 
tracts within the nominated area is not less than 25 per-
cent, and 
"(C) for at least 50 percent of the population census 
tracts within the nominated area is not less than 35 
gsrcent. 
F
E
C
I
A
L RULES RELATING TO DETERMINATION OF POVERTY 
RATE.—^For purposes of subsection (aX4)— 
"(1) TREATMENT OF CENSUS TRACTS WITH SMALL POPU-
LATIONS.— 
"(A) TRACTS WITH NO POPULATION.—In the case of a 
population census tract with no population— 
"(i) such tract shall be treated as having a poverty 
rate which meets the requirements of subparagraphs 
(A) and (B) of subsection (aX4), but 
"(ii) such tract shall be treated as having a zero 
poverty rate for purposes of appljdng subparagraph 
(C) thereof. 
**(B) TRACTS WITH POPULATIONS OF LESS THAN 2,000.— 
A population census tract with a population of less than 
2,000 shall be treated as having a poverty rate which 
meets the requirements of subparagraphs (A) and (B) of 
subsection (aX4) if more than 75 percent of such tract 
is zoned for commercial or industrial use. 
*
*
(
2
) DISCRETION TO ADJUST REQUIREMENTS FOR ENTERPRISE 
COMMUNITIES.—In determining whether a nominated area is 
eligible for designation as an enterprise community, the appro-
priate Secretary may, where necessary to carry out the purposes 
of this subchapter, reduce by 5 percentage points one of the 
following thresholds for not more than 10 percent of the popu-
lation censiis tracts (or, if fewer, 5 population census tracts) 
in the nominated area: 
"(A) The 20 percent threshold in subsection (aX4XA). 
"(B) The 25 percent threshold in subsection (aX4XB). 
"(C) The 35 percent threshold in subsection (aX4XC). 
If the appropriate Secretary elects to reduce the threshold 
tmder subparagraph (C), such Secretary may (in lieu of appljdng 
the preceding sentence) reduce by 10 percentage points the 
threshold under subparagraph (C) for 3 population census 
tracts. 
"(3) EACH NONCONTIGUOUS AREA MUST SATISFY POVERTY 
R
A
T
E RULE.—A nominated area may not include a noncontig-
uous parcel unless such parcel separately meets (subject to 
paragraphs (1) and (2)) Uie criteria set forth in subsection 
(aX4). 
"(4) AREAS NOT WITHIN CENSUS TRACTS.—In the case of 
an area which is not tracted for population census tracts, the 
equivalent county divisions (as defined by the Bureau of the 
Census for purposes of defining poverty areas) shall be used 
for purposes of determining poverty rates. 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 547 
*
*
(
c
) FACTORS TO CONSIDER.—^From among the nominated areas 
eligible for designation under section 1391 by the appropriate Sec-
retary, such appropriate Secretary shall make designations of 
empowerment zones and enterprise communities on the basis o
f
— 
"(1) the efiTectiveness of the strategic plan submitted pursu-
ant to section 1391(fX2) and the assurances made pursuant 
to section 1391(eX3), and 
**(2) criteria specified by the appropriate Secretary. 
"SEC. 1393. DEFINITIONS AND SPECIAL RULES. 
"(a) IN GENERAL.—For purposes of this subchapter— 
**(1) APPROPRIATE SECRETARY.—The term 'appropriate Sec-
retary* means— 
"(A) the Secretary of Housing and Urban Development 
in the case of any nominated area which is located in 
an urban area, and 
"(B) the Secretary of Agrictdture in the case of any 
nominated area which is located in a rural area. 
"(2) RURAL AREA.—^The term 'rural area' means any area 
which is— 
"(A) outside of a metropolitan statistical area (within 
the meaning of section 143(kX2XB)), or 
**(B) determined by the Seoretary of Agriculture, after 
consultation with the Secretary of Commerce, to be a rural 
area. 
"(3) URBAN AREA.—^The term 'urban area* means an area 
which is not a rural area. 
"(4) SPECIAL RULES FOR INDIAN RESERVATIONS.— 
"(A) IN GENERAL.—^No empowerment zone or enter-
prise community may include any area within an Indi£in 
reservation. 
"(B) INDIAN RESERVATION DEFINED.—The term 'Indian 
reservation* has the meaning given such term by section 
1680X6). 
"(5) LOCAL GOVERNMENT.—The term 'local government' 
means— 
"(A) any coimty, city, town, township, parish, village, 
or other general purpose political subdivision of a State, 
and 
"(B) any combination of political subdivisions described 
in subparagraph (A) recognized by the appropriate 
Secretary. 
"(6) NOMINATED AREA.—^The term 'nominated area* means 
an area which is nominated by 1 or more local governments 
and the State or States in which it is located for designation 
under section 1391. 
"(7) GOVERNMENTS.—^If more than 1 State or local govern-
ment seeks to nominate an area under this part, any reference 
to, or requirement of, this subchapter shall apply to all such 
governments. 
"(8) SPECIAL RULE.—An area shall be treated as nominated 
by a State and a local government if it is nominated by an 
economic development corporation chartered by the State. 
"(9) USE OF CENSUS DATA.—^Population and poverty rate 
shall be determined by the most recent decennial census data 
available. 
107 STAT. 548 
PUBLIC LAW 103-66-^AUG. 10, 1993 
"(b) EMPOWERMENT ZONE; ENTERPRISE COMMUNITY.—For pur-
poses of this title, the terms 'empowerment zone' and 'enterprise 
commimity* mean areas designated as such under section 1391. 
**PART II—TAX-EXEMPT FACILITY BONDS FOR 
EMPOWERMENT ZONES AND ENTERPRISE 
COMMUNITIES 
"Sec. 1394. Tax-exempt enterprise zone facility bonds. 
"SEC. 1394. TAX-EXEMPT ENTERPRISE ZONE FACILITY BONDS. 
"(a) IN GENERAL.—^For purposes of part IV of subchapter B 
of this chapter (relating to tax exemption requirements for State 
and local bonds), the term 'exempt facility bond' includes any bond 
issued as part of an issue 95 percent or more of the net proceeds 
(as definea in section 150(aX3)) of which are to be used to provide 
any enterprise zone facility. 
"(b) ENTERPRISE ZONE FACIUTY.—For purposes of this section— 
"(1) IN GENERAL.—^The term 'enterprise zone facility means 
any qualified zone property the principal user of which is 
an enterprise zone business, and any land which is functionally 
related and subordinate to such property. 
"(2) QUAUFIED ZONE PROPERTY.—The term 'qualified zone 
pTopeity* has the meaning given such term by section 1397C; 
except that the references to empowerment zones shall be treat-
ed as including references to enterprise communities. 
"(3) ENTERPRISE ZONE BUSINESS.—The term 'enterprise 
zone business' has the meaning given to such term by section 
1397B, except that— 
"(A) references to empowerment zones shall be treated 
as including references to enterprise communities, and 
"(B) such term includes any trades or businesses which 
would qualify as an enterprise zone business (determined 
after the modification of subparagraph (A)) if such trades 
or businesses were separately incorporated, 
"(c) LIMITATION ON AMOUNT OF BONDS.— 
"(1) IN GENERAL.—Subsection (a) shall not apply to any 
issue if the aggregate amoimt of outstanding enterprise zone 
facility bonds allocable to any person (taking mto accoimt siuch 
issue) exceeds— 
"(A) $3,000,000 with respect to any 1 empowerment 
zone or enterprise community, or 
"(B) $20,000,000 with respect to all empowerment 
zones and enterprise communities. 
"(2) AGGREGATE ENTERPRISE ZONE FACILITY BOND BENE-
FIT.—^For purposes of subparagraph (A), the aggregate amount 
of outstanding enterprise zone faciUty bonds allocable to any 
person shall be determined under rules similar to the rules 
of section 144(aX10), taking into account only bonds to which 
subsection (a) applies. 
"(d) 
ACQUISITION OF LAND AND EXISTING PROPERTY PER-
MITTED.—^The requirements of sections 147(cXlXA) and 147(d) shall 
not apply to any bond described in subsection (a). 
"(e) PENALTY FOR CEASING TO MEET REQUIREMENTS.— 
"(1) FAILURES CORRECTED.—An issue which fails to meet 
1 or more of the requirements of subsections (a) and (b) shall 
be treated as meeting such requirements i
f
— 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 549 
"(A) the issuer and any principal user in good faith 
attempted to meet such requirements, and 
"(B) any failure to meet such requirements is corrected 
within a reasonable period after such failure is first 
discovered. 
"(2) Loss OF DEDUCTIONS W
H
E
R
E FACILITY CEASES TO BE 
QUALIFIED.—^No deduction shall be allowed under this chapter 
for interest on any financing provided fi:om any bond to wnich 
subsection (a) applies with respect to any facility to the extent 
such interest accrues during tne period beginning on the first 
day of the calendar year which includes the date on which— 
"(A) substantially all of the facility with respect to 
which the financing was provided ceases to be used in 
an empowerment zone or enterprise community, or 
"(B) the principal user of such facility ceases to be 
an enterprise zone business (as defined in subsection (b)). 
**(3) EXCEPTION IF ZONE CEASES.—Paragraphs (1) and (2) 
shall not apply solely by reason of the termination or revocation 
of a designation as an empowerment zone or an enterprise 
community. 
"(4) EXCEPTION FOR BANKRUPTCY.—Paragraphs (1) and (2) 
shall not apply to any cessation resulting from bankruptcy. 
"PART III—ADDITIONAL INCENTIVES FOP 
EMPOWERMENT ZONES 
"SUBPART A. Empowerment zone employment credit. 
"SUBPART B. Admtional expensing. 
"SUBPART C. General provisions. 
''Subpart A—^Empowerment Zone Emplojmient 
Credit 
"Sec. 1396. Empowerment zone employment credit. 
"Sec. 1397. Other definitions and special rules. 
<«EC. 1396. EMPOWERMENT ZONE EMPLOYMENT CREDIT. 
"(a) AMOUNT OF CREDIT.—For purposes of section 38, the 
amount of the empowerment zone employment credit determined 
under this section with respect to any employer for any taxable 
year is the applicable percentage of the qualified zone wages paid 
or incurred during the calendar year which ends with or within 
such taxable year. 
**(b) APPLICABLE PERCENTAGE.—^For purposes of this section, 
the term 'applicable percentage' means the percentage determined 
in accordance with the following table: 
I n the case of wages paid or 
The applicable 
incurred during calendar year: 
percentage is: 
1994 through 2001 
20 
2002 
15 
2003 
10 
2004 
5 
**(c) QUALIFIED ZONE WAGES.— 
"(1) IN GENERAL.—For purposes of this section, the term 
'qualihed zone wages' means any wages paid or incurred by 
107 STAT. 550 
PUBLIC LAW 103-66—AUG. 10, 1993 
an employer for services performed by an employee while such 
employee is a qualified zone employee. 
**(2) ONLY FIRST $15,000 OF WAGES PER YEAR TAKEN INTO 
ACCOUNT.—^With respect to each qualified zone employee, the 
amount of qualified zone wages which may be taken into 
account for a calendar year shall not exceed $15,000. 
"(3) COORDINATION WITH TARGETED JOBS CREDIT.— 
"(A) IN GENERAL.—^The term 'qualified zone wages' 
shall not include wages taken into account in determining 
the credit under section 51. 
**(B) COORDINATION WITH PARAGRAPH (2).—The $15,000 
amount in paragraph (2) shall be reduced for any calendar 
year by the amoimt of wages paid or incurred during such 
year which are taken into accoimt in determining the credit 
under section 51. 
"(d) QUALIFIED ZONE EMPLOYEE.—For purposes of this section— 
"(1) IN GENERAL.—Except as otherwise provided in this 
subsection, the term 'qualified zone emplovee' means, with 
respect to any period, any employee of an employer i
f
— 
"(A) substantially all of the services performed during 
such period by such employee for such employer are per-
formed within an empowerment zone in a trade or business 
of the employer, and 
"(B) the principal place of abode of such employee 
while 
performing 
such 
services 
is 
within 
such 
empowerment zone. 
"(2) CERTAIN INDIVIDUALS NOT EUGIBLE.—The term 'quali-
fied zone employee' shall not include^ 
"(A) any individual described in subparagraph (A), (B), 
or (C) of section 51(iXl), 
"(B) any 5-percent owner (as defined in section 
416(iXlXB)), 
"(C) any individual employed by the employer for less 
than 90 days, 
"(D) any individual employed by the employer at any 
facility described in section 144(cX6XB), and 
"(E) any individual employed by the employer in a 
trade or business the principal activity of which is farming 
(within the meaning of subparagraph (A) or (B) of section 
2032A(eX5)), but only if, as of the close of the taxable 
year, the sum o
f
— 
"(i) the aggregate unadjusted bases (or, if greater, 
the fair market value) of the assets owned by the 
employer which are used in such a trade or business, 
and 
"(ii) the aggregate value of assets leased by the 
employer which are used in such a trade or business 
(as determined under regulations prescribed by the 
Secretary), 
exceeds $500,000. 
"(3) SPECIAL RULES RELATED TO TERMINATION OF EMPLOY-
MENT.— 
"(A) IN GENERAL.—Paragraph (2XC) shall not apply 
to— 
"(i) a termination of employment of £ui individual 
who before the close of the period referred to in para-
graph (2XC) becomes disabled to peiform the services 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 551 
of such employment unless such disability is removed 
before the close of such period and the taxpayer fails 
to offer reemployment to such individual, or 
"(ii) a termination of employment of an individual 
if it is determined under the applicable State 
unemplo3mient compensation law that the termination 
was due to the misconduct of such individual. 
''(B) CHANGES IN FORM OF BUSINESS.—For purposes 
of paragraph (2XC), the employment relationship between 
the taxpayer and an employee shall not be treated as 
terminated— 
"(i) by a transaction to which section 381(a) applies 
if the employee continues to be employed by the acquir-
ing corporation, or 
"(ii) by reason of a mere change in the form of 
conducting the trade or business of the taxpayer if 
the employee continues to be employed in such trade 
or business and the taxpayer retains a substantial 
interest in such trade or business. 
"SEC. 1397. O
T
H
E
R DEFINITIONS AND SPECIAL RULES. 
"(a) WAGES.—^For purposes of this subpart— 
"(1) IN G
E
N
E
R
A
L
.
—
^
T
h
e term Vages' has the same meaning 
as when used in section 51. 
"(2) CERTAIN TRAINING AND EDUCATIONAL BENEFITS.— 
"(A) IN GENERAL.—^The following amounts shall be 
treated as wages paid to an employee: 
**(i) ^ y amount paid or incurred by an employer 
which is excludable from the gross income of an 
employee under section 127, but only to the extent 
paid or incurred to a person not related to the 
employer. 
''(ii) In the case of an employee who has not 
attained the age of 19, any amoimt paid or incurred 
by an employer for any youth training program oper-
ated by such employer in coi\junction with local edu-
cation ofi&cials. 
"(B) RELATED PERSON.—^A person is related to any other 
person if the person bears a relationship to such other 
person specified in section 267(b) or 707(bXl), or such 
person and such other person are engaged in trades or 
businesses under common control (within the meaning of 
subsections (a) and (b) of section 52). For purposes of the 
preceding sentence, in applying section 267(b) or 707(bXl), 
'10 percent' shall be substituted for '50 percent'. 
"(b) CONTROLLED GROUPS.—For purposes of this subpart— 
"(1) all employers treated as a single employer under sub-
section (a) or (b) of section 52 shall be treated as a single 
employer for purposes of this subpart, and 
"(2) the credit (if any) determined under section 1396 with 
respect to each such employer shall be its proportionate share 
of the wages giving rise to such credit. 
"(c) CERTAIN OTHER RULES MADE APPLICABLE.—For purposes 
of this subpart, rules similar to the rules of section 51(k) and 
subsections (c), (d), and (e) of section 52 shall apply. 
69-194 O - 94 - 19 : QL. 3 Part 1 
107 STAT. 552 
PUBLIC LAW 103-66—AUG. 10, 1993 
''Subpart B—Additional Expensing 
"Sec. 1397A. Increase in expensing under section 179. 
'^EC. 1397A. INCBEASE IN EXPENSING UNDER SECTION 179. 
"(a) GENERAL RULE.—^In the case of an enterprise zone business, 
for purposes of section 179^ 
"(1) the limitation under section 179(bXl) shall be increased 
by the lesser o
f
— 
"(A) $20,000, or 
''(B) the cost of section 179 property which is qualified 
zone property placed in service during the taxable year, 
and 
"(2) the amount taken into account under section 179(bX2) 
with respect to anv section 179 property which is qualified 
zone property shall be 50 percent of the cost thereof. 
"(b) RECAPTURE.—^Rules similar to the rules under section 
179(dX10) shall apply with respect to any qualified zone property 
which ceases to be used in an empowerment zone by an enterprise 
zone business. 
''Subpart C—General Provisions 
"Sec. 1397B. Enterprise zone business defined. 
"Sec. 1397C. Qualified zone property defined. 
'^EC. 1397B. ENTERPRISE ZONE BUSINESS DEFINED. 
"(a) IN GENERAL.—^For purposes of this part, the term 'enter-
prise zone business' means— 
"(1) any qualified business entity, and 
"(2) any qualified proprietorship. 
*
*
(
b
) QUALIFIED BUSINESS ENTITY.—For purposes of this section, 
the term 'qualified business entity* means, with respect to any 
taxable year, any corporation or partnership if for such year— 
(1) every trade or business of such entity is the active 
conduct of a qualified business within an empowerment zone, 
"(2) at least 80 percent of the total gross income of such 
entibr is derived firom the active conduct of such business, 
(3) substantially all of the use of the tan|^ble property 
of such entity (whether owned or leased) is within an 
empowerment zone, 
"(4) substanticdly all of the intangible property of such 
entity is used in, ana exclusively related to, the active conduct 
of any such business, 
"(5) substantially all of the services performed for such 
entity by its employees are performed in an empowerment 
zone, 
"(6) at least 35 percent of its employees are residents 
of an empowerment zone, 
"(7) less than 5 percent of the average of the aggregate 
unadjusted bases of the property of such entity is attributable 
to collectibles (as defined in section 408(mX2)) other than 
collectibles that are held primarily for sale to customers in 
the ordinary course of such business, and 
"(8) less than 5 percent of the average of the aggregate 
unadjusted bases of the property of such entity is attributable 
to nonqualified 
financial 
property. 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 553 
"(c) QUALIFIED PROPRIETORSHIP.—For ptirposes of this section, 
the term 'qucQified proprietorship' means, with respect to any tax-
able year, any quahfied business carried on by an individual as 
a proprietorship if for such year— 
"(1) at least 80 percent of the total gross income of such 
individual from such business is derived from the active conduct 
of such business in an empowerment zone, 
"(2) substantially all of the use of the tangible property 
of such individual in such business (whether owned or leased) 
is within an empowerment zone, 
"(3) substantially all of the intangible property of such 
business is used in, and exclusively related to, the active con-
duct of such business, 
"(4) subst£uitially all of the services performed for such 
individual in such business by employees of such business 
are performed in an empowerment zone, 
"(5) at least 35 percent of such employees are residents 
of an empowerment zone, 
"(6) less than 5 percent of the average of the aggregate 
unadjusted bases of the property of such individual which is 
used in such business is attributable to collectibles (as defined 
in section 408(mX2)) other than collectibles that are held pri-
marily for sale to customers in the ordinary course of such 
business, and 
"(7) less than 5 percent of the average of the aggregate 
unadjusted bases of ^ e property of such individual which is 
used in such business is attributable to nonqualified financial 
property. 
For purposes of this subsection, the term 'employee' includes the 
proprietor. 
"(d) QUALIFIED BUSINESS.—For purposes of this section— 
"(1) IN GENERAL.—^Except as otherwise provided in this 
subsection, the term 'qualified business' means any trade or 
business. 
"(2) RENTAL OF REAL PROPERTY.—The rental to others of 
real property located in an empowerment zone shall be treated 
as a qualified business if and only if— 
"(A) the property is not residential rental property 
(as defined in section 168(eX2)), and 
"(B) at least 50 percent of the gross rental income 
from the real property is from enterprise zone businesses. 
"(3) RENTAL OF TANGIBLE PERSONAL PROPERTY.—The rental 
to others of tangible personal property shall be treated as 
a qualified business if and only if substantially all of the 
rental of such property is by enterprise zone businesses or 
by residents of an empowerment zone. 
"(4) TREATMENT OF BUSINESS HOLDING INTANGIBLES.—The 
term 'qualified business' shall not include any trade or business 
consisting predominantly of the development or holding of 
intangibles for sale or license. 
"(5) CERTAIN BUSINESSES EXCLUDED.—The term 'qualified 
business' shall not include— 
"(A) any trade or business consisting of the operation 
of any facility described in section 144(cX6XB), and 
"(B) any trade or business the principal activity of 
which is farming (within the meaning of subparagraphs 
107 STAT. 554 
PUBLIC LAW 103-66—AUG. 10, 1993 
(A) or (B) of section 2032A(eX5)), but only if, as of the 
close of the preceding, taxable year, the sum of— 
"(i) the aggregate unadjusted bases (or, if greater, 
the fair market value) of the assets owned by the 
taxpayer which are used in such a trade or busmess, 
and 
"(ii) the aggregate value of assets leased hy the 
taxpayer which are used in such a trade or busmess, 
exceeds $500,000. 
For purposes of subparagraph (B), rules similar to the rules 
of section 1397(b) shall apply. 
"(e) NONQUALIFIED FINANCIAL PROPERTY.—For purposes of this 
section, the term 'nonqualified financial property^ means debt, stock, 
partnership interests, options, futures contracts, forward contracts, 
warrants, notional principal contracts, annuities, and other similar 
property specified m regulations; except that such term shall not 
mclude— 
"(1) reasonable amounts of working capital held in cash, 
cash equivalents, or debt instruments with a term of 18 months 
or less, or 
"(2) debt instruments described in section 1221(4). 
••SEC. 1397C. QUALIFED ZONE PROPERTY DEFINED. 
"(a) GENERAL RULE.—^For piuposes of this part— 
"(1) IN GENERAL.—^The term 'qualified zone property* means 
any property to which section 168 applies (or would apply 
but for section 179) if— 
"(A) such property was acquired by the taxpayer by 
purchase (as defined in section 179(d)(2)) afi^er the date 
on which the designation of the empowerment zone took 
efiTect, 
"(B) the original use of which in an empowerment 
zone commences with the taxpayer, and 
"(C) substantially all of the use of which is in an 
empowerment zone and is in the active conduct of a quali-
fiea business by the taxpayer in such zone. 
"(2) SPECIAL RULE FOR SUBSTANTIAL RENOVATIONS.—In the 
case of any property which is substantially renovated by the 
taxpayer, the requirements of subparagraphs (A) and (B) of 
paragraph (1) shall be treated as satisfied. For purposes of 
the preceding sentence, property shall be treated as substan-
tially renovated by the taxpayer if, during any 24-month period 
beginning after the date on which the designation of the 
empowerment zone took efiTect, additions to basis vdth respect 
to such property in the hands of the ta»)ayer exceed the greater 
of (i) an amount equal to the adjusted basis at the beginning 
of such 24-month period in the hands of the taxpayer, or (iO 
$5,000. 
"(b) SPECIAL RULES FOR SALE-LEASEBACKS.—For purposes of 
subsection (aXlXB), if property is sold and leased back by the 
taxpayer withhi 3 montns after the date such property was origi-
nally placed in service, such property shall be treated as originally 
placed in service not earlier than the date on which such property 
IS used under the leaseback. 
"PART IV—REGULATIONS 
"Sec. 1397D. Regulations. 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 555 
^^EC. 1397D. REGULATIONS. 
"The Secretary shall prescribe such regulations as may be 
necessaipr or appropriate to carry out the purposes of parts II 
and III, including— 
"(1) regulations limiting the benefit of parts II and III 
in circumstances where such benefits, in combination with bene-
fits provided vmder other Federal programs, would result in 
an activity being 100 percent or more subsidized by the Federal 
Grovemment, 
"(2) regulations preventing abuse of the provisions of parts 
II and III, and 
"(3) regi:Qations dealing with inadvertent failures of entities 
to be enterprise zone businesses." 
(b) CLERICAL AMENDMENT.—The table of subchapters for chap-
ter 1 is amended by inserting after the item relating to subchapter 
T the following new item: 
"Subchapter U. Designation and treatment of empowerment zones, enter-
prise communities, and rural development investment areas." 
SEC. 13302. TECHNICAL AND CONFORMING AMENDMENTS. 
(a) EMPOWERMENT ZONE EMPLOYMENT CREDIT PART OF GEN-
ERAL BUSINESS CREDIT.— 
(1) Subsection (b) of section 38 (relating to current year 
26 use 38. 
business credit) is amended by striking "plus" at the end of 
paragraph (7), by striking the period at the end of paragraph 
(8) and mserting ", and", and by adding at the end the following 
new paragraph: 
(9) the empowerment zone employment credit determined 
under section 1396(a).'' 
(2) Subsection (d) of section 39 is amended by adding 
at the end the following new paragraph: 
"(4) EMPOWERMENT ZONE EMPLOYMENT CREDIT.—NO portion 
of the unused business credit which is attributable to the credit 
determined under section 1396 (relating to empowerment zone 
emplojonent credit) may be carried to any taxable year ending 
before January 1,1994." 
(b) DENIAL OF DEDUCTION FOR PORTION OF WAGES EQUAL TO 
EMPOWERMENT ZONE EMPLOYMENT CREDIT.— 
(1) Subsection (a) of section 280C (relating to rule for 
targeted jobs credit) is amended— 
(A) by striking "the amoimt of the credit determined 
for the taxable year under section 51(a)" and inserting 
"the simi of the credits determined for the taxable year 
under sections 51(a) and 1396(a)", and 
(B) by striking TARGETED JOBS CREDIT" in the sub-
section heading and inserting "EMPLOYMENT CREDITS". 
(2) Subsection (c) of section 196 (relating to deduction for 
certain unused business credits) is amended by striking "and" 
at Uie end of paragraph (4), by striking the period at the 
end of paragraph (5) and inserting ", and", and by adding 
at the end the following new paragraph: 
"(6) the empowerment zone emplo3rment credit determined 
under section 1396(a)." 
(c) EMPOWERMENT ZONE EMPLOYMENT CREDIT MAY OFFSET 25 
PERCENT OF MINIMUM TAX.— 
(1) IN GENERAL.—Section 38(c) (relating to limitation based 
on amount of tax) is amended by redesignating paragraph 
107 STAT. 556 
PUBLIC LAW 103-66—AUG. 10, 1993 
(2) as paragraph (3) and by inserting after paragraph (1) the 
following new paragraph: 
"(2) EMPOWERMENT ZONE EMPLOYMENT CREDIT MAY OFFSET 
25 PERCENT OF MINIMUM TAX.— 
"(A) IN G
E
N
E
R
A
L
.
—
^
I
n the case of the empowerment 
zone employment credit credit— 
"(i) this section and section 39 shall be applied 
separately witii respect to such credit, and 
"(ii) 
for 
purposes of applying paragraph (1) to such 
credit— 
"(1) 75 percent of the tentative minimum tax 
shall be substituted for the tentative minimum 
tax under subparagraph (A) thereof, and 
"(11) the limitation under paragraph (1) (as 
modified by subclause (I)) shall be reduced by the 
credit allowed under subsection (a) for the taxable 
year (other than the empowerment zone employ-
ment credit). 
"(B) EMPOWERMENT ZONE EMPLOYMENT CREDIT.—For 
purposes of this paragraph, the term 'empowerment zone 
employment credit' means the portion of the credit under 
subsection (a) which is attributable to the credit determined 
under section 1396 (relating to empowerment zone employ-
ment credit)." 
(d) AMENDMENT OF TARGETED JOBS CREDIT.—Subparagraph 
(A) of section 51(iXl) is amended by inserting ", or, if the taxpayer 
is an entity other than a corporation, to any individual who owns, 
directly or indirectly, more than 50 percent of the capital and 
profits interests in the entity," after "of tne corporation". 
26 use 381. 
(e) CARRYOVERS.—Subsection (c) of section 381 (relating to 
carryovers in certain corporate acquisitions) is amended by adding 
at the end the following new paragraph: 
"(26) ENTERPRISE ZONE PROVISIONS.—The acquiring cor-
poration shall take into account (to the extent proper to carry 
out the purposes of this section and subchapter U, and under 
such regulations as may be prescribed by the Secretary) the 
items required to be taken into accoiuit for purposes of 
subchapter U in respect of the distributor or transferor corpora-
tion." 
26 use 38 note. 
SEC. 13308. EFFECTIVE DATE. 
The amendments made by this part shall take effect on the 
date of the enactment of this Act. 
PART 11—CREDIT FOR CONTRIBUTIONS TO 
CERTAIN COMMUNITY DEVELOPMENT COR-
PORATIONS 
26 use 38 note. 
SEC. 13311. CREDIT FOR CONTRIBUTIONS TO CERTAIN COMMUNITY 
DEVELOPMENT CORPORATIONS. 
(a) IN GENERAL.—For purposes of section 38 of the Internal 
Revenue Code of 1986, the current year business credit shall include 
the credit determined iinder this section. 
(b) DETERMINATION OF CREDIT.—The credit determined under 
this section for each taxable year in the credit period with respect 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 557 
to any qualified CDC contribution made by the taxpayer is an 
amount equal to 5 percent of such contribution. 
(c) CREDIT PERIOD.—^For purposes of this section, the credit 
period with respect to any qualified CDC contribution is the period 
of 10 taxable years beginning with the taxable year during which 
such contribution was made. 
(d) QUALIFIED CDC CONTRIBUTION.—For purposes of this 
section— 
(1) IN GENERAL.—The term "qualified CDC contribution" 
means any transfer of cash— 
(A) which is made to a selected community develop-
ment corporation during the 5-year period beginning on 
the date such corporation was selected for purposes of 
this section, 
(B) the amount of which is available for use by such 
corporation for at least 10 vears, 
(C) which is to be used by such corporation for qualified 
low-income assistance within its operational area, and 
(D) which is designated by such corporation for pur-
poses of this section. 
(2) LIMITATIONS ON AMOUNT DESIGNATED.—The aggregate 
amount of contributions to a selected community devdopment 
corporation which may be designated by such corporation shall 
not exceed $2,000,000. 
(e) SELECTED COMMUNITY DEVELOPMENT CORPORATIONS.— 
(1) IN GENERAL.—For purposes of this section, the term 
"selected community development corporation" means any 
corporation— 
(A) which is described in section 501(cX3) of such Code 
and exempt fi*om tax under section 501(a) of such Code, 
(B) the principal purposes of which include promoting 
employment of, and business opportimities for, low-income 
individuals who are residents of the operational area, and 
(C) which is selected by the Secretary of Housing and 
Urban Development for purposes of this section. 
(2) ONLY 20 CORPORATIONS MAY BE SELECTED.—The Sec-
retary of Housing and Urban Development may select 20 cor-
porations for purposes of this section, subject to the availability 
of eligible corporations. Such selections may be made only 
before July 1, 1994. At least 8 of the operational areas of 
the corporations selected must be rural areas (as defined by 
section 1393(aX3) of such Code). 
(3) OPERATIONAL AREAS MUST HAVE CERTAIN CHARACTERIS-
TICS.—A corporation may be selected for purposes of this section 
only if its operational area meets the following criteria: 
(A) The area meets the size requirements under section 
1392(aX3). 
(B) The unemployment rate (as determined by the 
appropriate available data) is not less than the national 
unemployment rate. 
(C) The median family income of residents of such 
area does not exceed 80 percent of the median gross income 
of residents of tiiie jurisdiction of the local government 
whicli includes such area. 
(f) QUALIFIED LOW-INCOME ASSISTANCE.—For purposes of this 
section, the term "qualified low-income assistance" means 
assistance— 
107 STAT. 558 
PUBLIC LAW 103-66—AUG. 10, 1993 
(1) which is designed to provide employment of, and busi-
ness opportunities for, low-income indiviauals who are residents 
of the operational area of the community development corpora-
tion, and 
(2) which is approved by the Secretary of Housing and 
Urban Development. 
Part m—^Investment in Indian Reservations 
SEC. 13321. ACCELERATED DEPBECIATION FOR PROPERTY ON INDIAN 
RESERVATIONS. 
26 use 168. 
(a) IN GENERAL.—Section 168 is amended by adding at the 
end the following new subsection: 
"(j) PROPERTY ON INDIAN RESERVATIONS.— 
"(1) IN GENERAL.—^For purposes of subsection (a), the 
applicable recovery period for qualified Indian reservation prop-
erty shall be determined in accordance with the table contained 
in paragraph (2) in lieu of the table contained in subsection 
(0. 
"(2) APPUCABLE RECOVERY PERIOD FOR INDIAN RESERVATION 
PROPERTY.—^For purposes of paragraph (1)— 
The 
applicable 
'In the case at. 
recovery 
period ia: 
3-year property 
2 years 
5-year property 
3 years 
7-year property 
4 years 
10-year property 
6 years 
15-year property 
9 years 
20-year property 
12 years 
Nonresidential real property 
22 years. 
"(3) DEDUCTION ALLOWED IN COMPUTING MINIMUM TAX.— 
For purposes of determining alternative minimum taxable 
income under section 55, the deduction under subsection (a) 
for property to which paragraph (1) applies shall be determined 
under this section without regard to any adjustment under 
section 56. 
"(4) QUALIFIED INDIAN RESERVATION PROPERTY DEFINED.— 
For purposes of this subsection— 
"(A) IN GENERAL.—^The term '(jualified Indian reserva-
tion property' means property which is property described 
in the teble in paragraph (2) and which is— 
"(i) used by the taxpayer predominantly in the 
active conduct of a trade or business within an Indian 
reservation, 
"(ii) not used or located outoide the Indian reserva-
tion on a regular basis, 
"(iii) not acquired (directly or indirectly) by the 
taxpayer from a person who is related to the taxpayer 
(within the meaning of section 465(bX3XC)), and 
"(iv) not property (or any portion thereof) placed 
in service for purposes of conducting or housing class 
I, II, or III gaming (as defined in section 4 of the 
Indian Regulatory Act (25 U.S.C. 2703)). 
"(B) EXCEPTION FOR ALTERNATIVE DEPRECIATION PROP-
ERTY.—^The term 'qualified Indian reservation property* 
does not include any property to which the alternative 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 559 
depreciation 
system 
under 
subsection 
(g) 
applies, 
determined— 
**(i) without regard to subsection (gX7) (relating 
to election to use alternative depreciation system), and 
"(ii) after the application of section 280F(b) (relat-
ing to listed property with limited business use). 
**(C) SPECIAL RULE FOR RESERVATION INFRASTRUCTURE 
INVESTMENT.— 
"(i) IN GENERAL.—Subparagraph (AXii) shall not 
apply to qualified infrastructure property located out-
side of the Indian reservation if the purpose of such 
property is to connect with qualified infrastructure 
property located within the Indian reservation. 
"(ii) QuALiHED INFRASTRUCTURE PROPERTY.—For 
purposes of this subparagraph, the term 'qualified 
infrastructure property* means qualified Indian res-
ervation property (determined without regard to 
subparagraph (AXii)) which— 
"(I) benefits the tribal infrastructure, 
"(II) is available to the general public, and 
"(III) is placed in service in connection with 
the taxpayer's active conduct of a trade or business 
within an Indian reservation. 
Such term includes, but is not limited to, roads, power 
lines, water systems, railroad spurs, and communica-
tions facilities. 
"(5) REAL ESTATE RENTALS.—^For purposes of this sub-
section, the rental to others of real property located within 
an Indian reservation shall be treated as the active conduct 
of a trade or business within an Indian reservation. 
"(6) INDIAN RESERVATION DEFINED.—For purposes of this 
subsection, the term 'Indian reservation' means a reservation, 
as defined in— 
"(A) section 3(d) of the Indian Financing Act of 1974 
(25 U.S.C. 1452(d)), or 
"(B) section 4(10) of the Indian Child Welfare Act of 
1978 (25 U.S.C. 1903(10)). 
"(7) COORDINATION WITH NONREVENUE LAWS.—Any ref-
erence in this subsection to a provision not contained in this 
title shall be treated for purposes of this subsection as a ref-
erence to such provision as in effect on the date of the enact-
ment of this paragraph. 
"(8) TERMINATION.—^This subsection shall not apply to prop-
erty placed in service after December 31,2003." 
(b) EFFECTIVE DATE.—^The amendment made by this section 26USCi68note. 
shall apply to property placed in service after December 31, 1993. 
SEC. 13322. INDIAN EMPLOYMENT CREDIT. 
(a) ALLOWANCE OF INDIAN EMPLOYMENT CREDIT.—Section 38(b) 
26 use 38. 
(relating to general biisiness credits) is amended by striking "plus" 
at the end of paragraph (8), by striking the period at the end 
of paragraph (9) and inserting ", plus", and by adding after para-
graph (9) the following new paragraph: 
"(10) the Indian employment credit as determined imder 
section 45A(a)." 
(b) AMOUNT OF INDIAN EMPLOYMENT CREDIT.—Subpart D 
of 
part IV of subchapter A of chapter 1 (relating to business related 
107 STAT. 560 
PUBLIC LAW 103-66—AUG. 10, 1993 
credits) is amended by adding at the end thereof the following 
new section: 
*«£€. 45A. INDIAN EMPLOYMENT CREDIT. 
''(a) AMOUNT OF CREDIT.—^For purposes of section 38, the 
amount of the Indian employment credit determined under this 
section with respect to any employer for any taxable year is an 
amount equal to 20 percent of the excess (if any) of— 
"(1) the sum o
f
— 
"(A) the qualified wages paid or incurred during such 
taxable year, plus 
"(B) qualified employee health insurance costs paid 
or incurred during such taxable year, over 
"(2) the sum of the qualified wages and qualified employee 
hesdth insurance costs (determined as if this section were in 
effect) which were paid or incurred by the employer (or any 
predecessor) during calendar year 1993. 
"(b) QUALIFIED WAGES; QUAUFIED EMPLOYEE HEALTH INSUR-
A
N
C
E COSTS.—^For purposes of this section— 
"(1) QUALIFIED WAGES.— 
*
*
(
A
) IN G
E
N
E
R
A
L
.
—
^
T
h
e term 'qiialified wages' means 
any wages pcdd or incurred by an employer for services 
performed by an employee while such employee is a quali-
fied employee. 
*
*
(
B
) COORDINATION WITH TARGETED JOBS CREDIT.—The 
term 'qualified wages' shall not include wages attributable 
to service render^ during the 1-year period beginning 
with the day the individual begins work for the employer 
if any portion of such wages is taken into account in deter-
mining the credit under section 51. 
"(2) QUALIFIED EMPLOYEE HEALTH INSURANCE COSTS.— 
"(A) IN GENERAL.—^The term 'qualified employee health 
insurance costs' means any amount paid or incurred by 
an employer for health insurance to the extent such amount 
is attributable to coverage provided to any employee while 
such employee is a qualified employee. 
"(B) EXCEPTION FOR AMOUNTS PAID UNDER SALARY 
REDUCTION ARRANGEMENTS.—^No amount paid or incurred 
for health insurance pursuant to a salary reduction 
arrangement shall be taken into account imder subpara-
graph (A). 
"(3) LIMITATION.—^The aggregate amount of qualified wages 
and qualified employee health insurance costs taken into 
account with respect to any employee for any taxable year 
(and for the base period under subsection (aX2)) shall not 
exceed $20,000. 
"(c) QUAUFIED EMPLOYEE.—For purposes of this section— 
"(1) IN GENERAL.—^Except as otherwise provided in this 
subsection, the term 'qualified employee' means, with respect 
to any period, any employee of an employer if— 
"(A) the employee is an enrolled member of an Indian 
tribe or the spouse of an enrolled member of an Indian 
tribe, 
"(B) substantially all of the services performed during 
such period by such employee for such employer are per-
formed within an Indian reservation, and 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 561 
"(C) the principal place of abode of such employee 
while performing such services is on or near the reservation 
in which the services are performed. 
"(2) INDIVIDUALS RECEIVING WAGES IN EXCESS OF $3O,OOO 
NOT ELIGIBLE.—^An employee shall not be treated as a qualified 
employee for any taxable year of the employer if IJie toted 
amoimt of the wages paid or incurred by such employer to 
such employee during such taxable year (whether or not for 
services within an Indian reservation) exceeds the amount 
determined at an aimual rate of $30,000. 
**(3) INFLATION ADJUSTMENT.—The Secretary shall adjust 
the $30,000 amount under paragraph (2) for years beginning 
after 1994 at the same time and in the same manner as 
imder section 415(d). 
"(4) EMPLOYMENT MUST BE TRADE OR BUSINESS EMPLOY-
MENT.—An employee shall be treated as a qualified employee 
for any taxable year of the employer only if more than 50 
percent of the wages paid or incurred by the employer to 
such employee during such taxable year are for services per-
formed in a trade or business of the employer. Any determina-
tion as to whether the preceding sentence applies with respect 
to any employee for any taxable year shall be made without 
regard to subsection (eX2). 
"(5) CERTAIN EMPLOYEES NOT EUGIBLE.—The term 'quali-
fied employee' shall not include— 
"(A) any individual described in subparagraph (A), (B), 
or (C) of section 5 
l(iX 1), 
"(B) any 5-percent owner (as defined in section 
416(iXlXB)),and 
"(C) any individual if the services performed by such 
individual for the employer involve the conduct of class 
I, II, or III gaming as defined in section 4 of the Indian 
Gaming Regulatory Act (25 U.S.C. 2703), or are performed 
in a building housing such gaming activity. 
"(6) INDIAN TRIBE DEFINED.—The term 'Indian tribe' means 
any Indian tribe, band, nation, pueblo, or other organized group 
or community, including any Alaska Native village, or regional 
or village corporation, as defined in, or established pursuant 
to, the Alaska Native Claims Settlement Act (43 U.S.C. 1601 
et seq.) which is recognized as eligible for the special programs 
and services provided by the United States to Indians b^ause 
of their status as Indians. 
"(7) INDIAN RESERVATION DEFINED.—The term 'Indian res-
ervation' has the meaning given such term by section 168(jX6). 
"(d) EARLY TERMINATION OF EMPLOYMENT BY EMPLOYER.— 
"(1) IN GENERAL.—If the employment of any employee is 
terminated by the taxpayer before the day 1 year after the 
day on which such employee began work for the employer— 
"(A) no wages (or qualified employee health insurance 
costs) with respect to such employee shall be taken into 
account under subsection (a) for the taxable year in which 
such employment is terminated, and 
"(B) tiie tax under this chapter for the taxable year 
in which such emplojrment is terminated shall be increased 
by itie aggregate credits (if any) allowed under section 
38(a) for prior taxable years by reason of wages (or qualified 
107 STAT. 562 
PUBLIC LAW 103-66—AUG. 10, 1993 
employee health insurance costs) taken into account with 
respect to such employee. 
"(2) CARRYBACKS AND CARRYOVERS ADJUSTED.—In the case 
of any termination of employment to which paragraph (1) 
applies, the carrybacks and carryovers under section 39 shall 
be properly adjusted. 
"(3) SUBSECTION NOT TO APPLY IN CERTAIN CASES.— 
**(A) IN GENERAL.—Paragraph (1) shall not apply to— 
"(i) a termination of employment of an employee 
who voluntarily leaves tiie emplo3rment of the taxpaver, 
''(ii) a termination of employment of an individual 
who before the close of the period referred to in para-
graph (1) becomes disabled to perform the services 
of such employment unless such disability is removed 
before the close of such period and the taxpayer fails 
to offer reemplo^ent to such individual, or 
''(iii) a termination of employment of an individual 
if it is determined imder the applicable 
State 
unemployment compensation law that the termination 
was due to the misconduct of such individual. 
**(B) CHANGES IN FORM OP BUSINESS.—For purposes 
of paragraph (1), the employment relationship between the 
taxpayer and an employee shall not be treated as 
terminated— 
"(i) by a transaction to which section 381(a) applies 
if the employee continues to be employed by the acquir-
ing corporation, or 
"(u) by reason of a mere change in the form of 
conducting the trade or business of the taxpayer if 
the employee continues to be employed in such trade 
or business and the taxpayer retains a substantial 
interest in such trade or business. 
"(4) SPECIAL RULE.—^Any increase in tax under paragraph 
(1) shall not be treated as a tax imposed by this chapter 
for purposes of— 
"(A) determining the amount of any credit allowable 
under this chapter, and 
"(B) determining the amoiint of the tax imposed by 
section 55. 
"(e) OTHER DEFINITIONS AND SPECIAL RULES.—For purposes 
of this section— 
"(1) WAGES.—^The term 'wages' has the same meaning given 
to such term in section 51. 
**(2) CONTROLLED GROUPS.— 
"(A) All employers treated as a single employer under 
section (a) or (b) of section 52 shall be treated as a single 
employer for purposes of this section. 
"(B) The cre^lit (if any) determined under this section 
with respect to each such employer shall be its propor-
tionate share of the wages and qualified employee health 
insurance costs giving rise to such credit. 
"(3) CERTAIN OTHER RULES MADE APPLICABLE.—Rules simi-
lar to the rules of section 51(k) and subsections (c), (d), and 
(e) of section 52 shall apply. 
"(4) COORDINATION WITH NONREVENUE LAWS.—Any ref-
erence in this section to a provision not contained in tiiis 
title shall be treated for purposes of this section as a reference 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 563 
to such provision as in effect on the date of the enactment 
of this paragraph. 
"(5) SPECIAL RULE FOR SHORT TAXABLE YEARS.—For any 
taxable year having less than 12 months, the amount deter-
mined imder subsection (aX2) shall be miiltiphed by a fraction, 
the numerator of which is the nimiber of days in the taxable 
vear and the denominator of 
which is 365. 
\f) TERMINATION.—^This section shall not apply to taxable years 
beginning after December 31,2003." 
(c) DENIAL OP DEDUCTION FOR PORTION OF WAGES EQUAL TO 
INDIAN EMPLOYMENT CREDIT.— 
(1) Subsection (a) of section 280C (relating to rule for 
targeted jobs credit) is amended by striking "51(a)" and insert-
ing "45A(a), 51(a), and". 
(2) Subsection (c) of section 196 (relating to deduction for 
certain imused business credits) is amended by striking "and" 
at the end of paragraph (5), by striking the period at the 
end of paragraph (6) and inserting ", and", and by adding 
at the end the following new paragraph: 
"(7) the Indian employment credit determined under section 
45A(a)." 
(d) DENIAL OF CARRYBACKS TO PREENACTMENT YEARS.—Sub-
section (d) of section 39 is amended by adding at the end thereof 
the following new paragraph: 
"(5) No C
A
R
R
Y
B
A
C
K OF SECTION 45 CREDIT BEFORE ENACT-
MENT.—No portion of the imused business credit for any taxable 
year which is attributable to the Indian emplo3rment credit 
determined under section 45A may be carried to a taxable 
year ending before the date of the enactment of section 45A." 
(e) CLERICAL AMENDMENT.—^The table of sections for subpart 
D of part IV of subchapter A of chapter 1 is amended by adding 
at the end thereof the following: 
"Sec. 45A. Indian employment credit." 
(f) EFFECTIVE DATE.—The amendments made by this section 26 use 38 note. 
shall apply to wages paid or incurred after December 31, 1993. 
Subchapter D—Other Provisions 
PART I—DISCLOSURE PROVISIONS 
SEC. 13401. DISCLOSURE OF RETURN INFORMATION FOR ADMINIS-
TRATION OF CERTAIN VETERANS PROGRAMS. 
(a) GENERAL RULE.—Subparagraph (D) of section 6103(1X7) 26 use 6103. 
(relating to disclosure of return information to Federal, State, and 
local agencies administering certain programs) is amended by strik-
ing "September 30, 1997" in the second sentence following clause 
(viii) and inserting "September 30,1998". 
(b) EFFECTIVE DATE.—The amendment made by subsection (a) 26 use 6i03 
shall take effect on the date of the enactment of this Act. 
"°^^-
SEC. 13402. DISCLOSURE OF RETURN INFORMATION TO CARRY OUT 
INCOME CONTINGENT REPAYMENT OF STUDENT LOANS. 
(a) GENERAL RULE.—Subsection (1) of section 6103 (relating 
to confidentiality and disclosure of returns and return information) 
is amended by adding at the end thereof the following new 
paragraph: 
107 STAT. 564 
PUBLIC LAW 103-66—AUG. 10, 1993 
"(13) DISCLOSURE OF RETURN INFORMATION TO CARRY OUT 
INCOME CONTINGENT REPAYMENT OF STUDENT LOANS.— 
*
*
(
A
) IN GENERAL.—The Secretary may, upon written 
request from the Secretary of Education, disclose to officers 
and employees of the Department of Education return 
information with respect to a taxpayer who has received 
an applicable student loan and whose loan repayment 
amoimts are based in whole or in part on the taxpayer's 
income. Such return information shall be limited to— 
**(i) taxpayer identity information with respect to 
such taxpayer, 
"(ii) the filing status of such taxpayer, and 
"(iii) the adjusted gross income of such taxpayer. 
"(B) RESTRICTION ON USE OF DISCLOSED INFORMA-
TION.—^Return information disclosed under subparagraph 
(A) may be used by officers and employees of the Depart-
ment of Education only for the purposes of, and to the 
extent necessary in, establishing the appropriate income 
contingent repayment amoimt for an applicable student 
loan. 
"(C) APPLICABLE STUDENT LOAN.—For purposes of this 
paragraph, the term 'applicable student loan' means— 
"(i) any loan made under the program authorized 
under part D of title IV of the Higher Education Act 
of 1965, and 
"(ii) any loan made under part B or E of title 
IV of the Higher Education Act of 1965 which is in 
default and has been assigned to the Department of 
Education. 
"(D) TERMINATION.—This paragraph shall not apply 
to any request made after September 30,1998." 
(b) CONFORMING AMENDMENTS.— 
26 use 6103. 
(1) So much of paragraph (4) of section 6103(m) as precedes 
subparagraph (B) thereof is amended to read as follows: 
"(4) INDIVIDUALS WHO OWE AN OVERPAYMENT OF FEDERAL 
PELL GRANTS OR WHO HAVE DEFAULTED ON STUDENT LOANS 
ADMINISTERED BY THE DEPARTMENT OF EDUCATION.— 
"(A) IN GENERAL.—^Upon written request by the Sec-
retary of Education, the Secretary may disclose the mailing 
address of any taxpayer— 
"(i) who owes an overpayment of a grant awarded 
to such taxpayer under subpart 1 of part A of title 
IV of the Higher Education Act of 1965, or 
"(ii) who has defaulted on a loan— 
"(I) made under part B, D, or E of title IV 
of the Higher Education Act of 1965, or 
"(II) made pursuant to section 3(aXl) of the 
Migration and Refugee Assistance Act of 1962 to 
a student at an institution of higher education, 
for use only by officers, employees, or agents of the Depart-
ment of Education for purposes of locating such taxpayer 
for purposes of collecting such overpayment or loan ." 
(2) Subparagraph (B) of section 6103(mX4) is amended— 
(A) in clause (i), lay striking "undei: part B" and insert-
ing "under part B or D ; and 
(B) in clause (ii), bv striking "under part E" and insert-
ing "under subpart 1 or part A, or part D or E,"; 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 565 
(3) Section 6103(p) is amended— 
26 use 6103. 
(A) in paragraph (3XA), by striking "(11), or (12), (m)" 
and inserting "(11), (12), or (13), (m)"; 
(B) in paragraph (4)— 
(i) in uie matter preceding subparagraph (A), by 
striking out "(ID), or (11)," and inserting ^(10), (11), 
or (13),^, and 
(ii) in subparagraph (FXii), by striking *(11), or 
(12)," and insertinpdl), (12), or (13),". 
(c) EFFECTIVE DATE.—^The amendments made by this section 26USC6i03 
shall take effect on the date of the enactment of this Act. 
"°^-
SEC. 13403. USE OF RETURN INFORMATION FOR INCOME VERIFICA-
TION UNDER CERTAIN HOUSING ASSISTANCE PRO-
GRAMS. 
(a) IN GENERAL.—Subparagraph (D) of section 6103(1X7) (relat-
ing to the disclosure of return information to Federal, State, and 
local agencies administering certain programs) is amended— 
(1) in clause (vii), by striking "and" at the end; 
(2) in clause (viii), by striking the period at the end and 
inserting *
*
; and"; 
(3) by inserting after clause (viii) the following new clause: 
"(ix) any housmg assistance program administered by the 
Department of Housing and Urban Development that involves 
initial and periodic review of an applicant's or participant's 
income, except that return information may be disclosed under 
this clause only on written request by the Secretary of Housing 
and Urban Development and only for use by officers and 
employees of the Department of Housing and Urban Develop-
ment with respect to applicants for and participants in such 
programs."; and 
(4) by adding at the end thereof the following: "Clause 
(ix) shall not apply after September 30,1998." 
(b) CONFORMING AMENDMENT.—The heading of paragraph (7) 
of section 6103(1) is amended by inserting after "CODE" the following: 
", O
R CERTAIN HOUSING ASSISTANCE PROGRAMS". 
(c) EFFECTIVE DATE.—^The amendments made by this section 26USC6103 
shall take effect on the date of the enactment of this Act. 
^°^-
PART II—PUBLIC DEBT LIMIT 
SEC. 13411. INCREASE IN PUELIC DEBT LIMIT. 
(a) GENERAL RULE.—Subsection (b) of section 3101 of title 
31, United States Code, is amended by striking out the dollar 
limitation contained in such subsection and inserting in lieu thereof 
"$4,900,000,000,000". 
(b) REPEAL OF TEMPORARY INCREASE.—^Effective on and after Effective date. 
the date of the enactment of this Act, section 1 of Public Law ^|^^Y^^ ^^^^ 
103-12 is hereby repealed. 
PART in—VACCINE PROVISIONS 
SEC. 13421. EXCISE TAX ON CERTAIN VACCINES MADE PERMANENT. 
(a) TAX.—Subsection (c) of section 4131 (relating to tax on 
certain vaccines) is amended to read as follows: 
"(c) APPLICATION OF SECTION.—^The tax imposed by this section 
shall apply— 
note. 
107 STAT. 566 
PUBLIC LAW 103-66—AUG. 10, 1993 
"(1) after December 31, 1987, and before January 1, 1993, 
and 
"(2) during periods after the date of the enactment of 
the Revenue Reconciliation Act of 1993." 
26 use 9510. 
(b) TRUST FUND.—Paragraph (1) of section 9510(c) (relating 
to expenditures from Vaccine Ii\jury Compensation Trust Fund) 
is amended by striking "and before October 1,1992,". 
26 use 4131 
(c) FLOOR STOCKS TAX.— 
^°^^- 
(1) IMPOSITION OF TAX.—On any taxable vaccine— 
(A) which was sold by the manufacturer, producer, 
or importer on or before the date of the enactment of 
this Act, 
(B) on which no tax was imposed by section 4131 
of the Internal Revenue Code of 1986 (or, if such tax 
was imposed, was credited or refunded), and 
(C) which is held on such date by any person for 
sale or use, 
there is hereby imposed a tax in the amoimt determined imder 
section 4131(b) of such Code. 
(2) LIABILITY FOR TAX AND METHOD OF PAYMENT.— 
(A) LIABILITY FOR TAX.—^The person holding any tax-
able vaccine to which the tax imposed by paragraph (1) 
applies shall be liable for such tax. 
(B) METHOD OF PAYMENT.—^The tax imposed by para-
graph (1) shall be paid in such manner as the Secretary 
shall prescribe by regulations. 
(C) TIME FOR PAYMENT.—^The tax imposed by para-
graph (1) shall be paid on or before the last day of the 
6th month beginning after the date of the enactment of 
this Act. 
(3) DEFINITIONS.—^For purposes of this subsection, terms 
used in this subsection which are also used in section 4131 
of such Code shall have the respective meanings such terms 
have in such section. 
(4) OTHER LAWS APPLICABLE.—All provisions of law, includ-
ing penalties, applicable with respect to the taxes imposed 
by section 4131 of such Code shall, insofar as applicable and 
not inconsistent with the provisions of this subsection, apply 
to the floor stocks taxes imposed by paragraph (1), to the 
same extent as if such taxes were imposed by such section 
4131. 
SEC. 13422. CONTINUATION COVERAGE UNDER GROUP HEALTH 
PLANS OF COSTS OF PEDIATRIC VACCINES. 
(a) IN GENERAL.—Paragraph (1) of section 4980B(f) is amended 
by inserting ''the coverage of the costs of pediatric vaccines (as 
defined under section 2162 of the Public Health Service Act) is 
not reduced below the coverage provided by the plan as of May 
1,1993, and only iT after "only iT. 
26 use 4980B 
(b) EFFECTIVE DATE.—The amendment made by subsection (a) 
^°^^- 
shall apply with respect to plan years beginning after the date 
of the enactment of this Act. 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 567 
PART IV—DISASTER RELIEF PROVISIONS 
SEC. 13431. MODIFICATION OF INVOLUNTARY CONVERSION RULES 
FOR CERTAIN DISASTER-RELATED CONVERSIONS. 
(a) IN GENERAL.—Section 1033 (relating to involuntary conver- 26 use 1033. 
sions) is amended by redesignating subsection (h) as subsection 
(i) and by inserting after subsection (g) the following new subsection: 
"(h) SPECIAL RULES FOR PRINCIPAL RESIDENCES DAMAGED BY 
PRESIDENTIALLY DECLARED DISASTERS.— 
**(1) IN GENERAL.—^If the taxpayer's principal residence or 
any of its contents is compulsonly or involuntarily converted 
as a result of a Presidentially declared disaster— 
**(A) TREATMENT OF INSURANCE PROCEEDS.— 
"(i) EXCLUSION FOR UNSCHEDULED PERSONAL PROP-
ERTY.—tfo gain shall be recognized by reason of the 
receipt of any insurance proceeds for personal property 
which was part of such contents and which was not 
scheduled property for purposes of such insurance. 
"(ii) 
OTHER 
PROCEEDS 
TREATED AS COMMON 
FUND.—^In the case of any insurance proceeds (not 
described in clause (i)) for such residence or contents— 
"(1) such proceeds shall be treated as received 
for the conversion of a single item of property, 
and 
"(II) any property which is similar or related 
in service or use to the residence so converted 
(or contents thereof) shall be treated for purposes 
of subsection (aX2) as property similar or related 
in service or use to such single item of property. 
"(B) EXTENSION OF REPLACEMENT PERIOD.—Subsection 
(aX2)(B) shall be applied with respect to any property so 
converted by substituting *4 years' for '2 years'. 
"(2) PRESIDENTIALLY DECLARED DISASTER.—For purposes of 
this subsection, the term 'Presidentially declared disaster' 
means any disaster which, with respect to the area in which 
the residence is located, resulted in a subsequent determination 
by the President that such area warrants assistance by the 
Federal Government under the Disaster Relief and Emergency 
Assistance Act. 
"(3) PRINCIPAL RESIDENCE.—^For purposes of this subsection, 
the term 'principal residence' has the same meaning as when 
used in section 1034, except that such term shall include a 
residence not treated as a principal residence solely because 
the taxpayer does not own the residence.". 
(b) EFFECTIVE DATE.—^The amendment made by subsection (a) 26 use 1033 
shall apply to property compulsorily or involiintarily converted as 
a result of disasters for which the determination referred to in 
section 1033(hX2) of the Internal Revenue Code of 1986 (as added 
by this section) is made on or after September 1, 1991, and to 
taxable years ending on or after such date. 
Part V—^Miscellaneous Provisions 
SEC. 13441. INCREASE IN PRESIDENTIAL ELECTION CAMPAIGN FUND 
CHECK-OFF. 
(a) IN GENERAL.—Section 6096(a) (relating to designation by 
individuals) is amended— 
note. 
107 STAT. 568 
PUBLIC LAW 103-66—AUG. 10, 1993 
(1) by striking "$1" each place it appears and inserting 
"$3", and 
(2) by striking "$2" and inserting "$6". 
26 use 6096 
(b) EFFECTIVE DATE.—The amendments made by subsection 
note. 
(a) apply with respect to tax returns required to be filed after 
December 31,1993. 
SEC. 13442. SPECIAL RULE FOR HOSPITAL SERVICES. 
26 use 162. 
(a) IN GENERAL.—Section 162 (relating to trade or business 
deductions), as amended by section 13211, is amended by 
redesignating subsection (n) as subsection (o) and by inserting 
after subsection (m) the following new subsection: 
"(n) SPECIAL RULE FOR CERTAIN GROUP HEALTH PLANS.— 
New York. 
"(1) IN GENERAL.—No deduction shall be allowed under 
this chapter to an employer for any amount paid or incurred 
in connection with a group health plan if the plan does not 
reimburse for inpatient hospital care services provided in the 
State of New York— 
''(A) except as provided in subparagraphs (B) and (C), 
at the same rate as Ucensed commercial insurers are 
required to reimburse hospitals for such services when 
' 
such reimbursement is not through such a plan, 
"(B) in the case of any reimbursement through a health 
maintenance organization, at the same rate as health 
maintenance organizations are required to reimburse hos-
pitals for such services for individuals not covered by such 
a plan (determined without regard to any government-
supported individuals exempt from such rate), or 
"(C) in the case of any reimbursement through any 
corporation organized under Article 43 of the New York 
State Insurance Law, at the same rate as any such corpora-
tion is required to reimburse hospitals for such services 
for individuals not covered by such a plan. 
"(2) STATE LAW EXCEPTION.—Paragraph (1) shall not apply 
to any group health plan which is not required under the 
laws of the State of New York (determined without regard 
to this subsection or other provisions of Federal law) to 
reimburse at the rates provided in paragraph (1). 
**(3) GROUP HEALTH PLAN.—^For purposes of this subsection, 
the term 'group health plan' means a plan of, or contributed 
to by, an employer or employee organization (including a self-
insured plan) to provide health care (directly or otherwise) 
to any employee, any former employee, the employer, or any 
other individual associated or formerly associated with the 
employer in a business relationship, or any member of their 
family." 
26 use 162 note. 
(b) EFFECTIVE DATE.—The provisions of this section shall apply 
to services provided after February 2, 1993, and on or before May 
12,1995. 
SEC. 13443. CREDIT FOR PORTION OF EMPLOYER SOCIAL SECURITY 
TAXES PAID WITH RESPECT TO EMPLOYEE CASH TIPS. 
(a) IN GENERAL.—Subpart D of part IV of subchapter A of 
chapter 1 (relating to business related credits) is amended by adding 
at the end the following new section: 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 569 
'nSEC. 45B. CREDIT FOR PORTION OF EMPLOYER SOCIAL SECURITY 
TAXES PAID WITH RESPECT TO EMPLOYEE CASH TIP& 
"(a) GENERAL RULE.—^For purposes of section 38, the employer 
social security credit determined under this section for the taxable 
year is an amount equal to the excess employer social security 
tax paid or incurred oy the taxpayer durine the taxable year, 
^(b) EXCESS EMPLOYER SOCIAL SECURITY TAX.—For purposes 
of this section— 
"(1) IN GENERAL.—^The term 'excess employer social security 
tax* means any tax paid by an employer under section 3111 
with respect to tips received by an employee during any month, 
to the extent such tips— 
"(A) are deemed to have been paid by the employer 
to the employee piirsuant to section 3121(q), and 
"(B) exceed the amount by which the wages (excluding 
tips) paid by the employer to the employee during such 
month are less than the total amount which would be 
payable (with respect to such employment) at tiie minimum 
wage rate applicable to such individual under section 
6(aXl) of the Fair Labor Standards Act of 1938 (determined 
without regard to section 3(m) of such Act). 
"(2) 
ONLY TIPS 
RECEIVED AT FOOD AND BEVERAGE 
E
S
T
A
B
L
I
S
H
M
E
N
T
S T
A
K
E
N I
N
T
O ACCOUNT.—In ai)pl3dng paragraph 
(1), there shall be taken into account only tips received from 
customers in connection with the provision of food or beverages 
for consumption on the premises of an establishment with 
respect to which the tipping of employees serving food or bev-
erages by customers is customary. 
"(c) DENIAL OF DOUBLE BENEFIT.—NO deduction shall be 
allowed under this chapter for any amount taken into accoimt 
in determining the credit under this section. 
"(d) ELECTION NOT TO CLAIM CREDIT.—This section shall not 
apply to a taxpayer for any taxable year if such taxpayer elects 
to nave this section not apply for such taxable year." 
(b) CREDIT TO BE PART OF GENERAL BUSINESS CREDIT.— 
(1) IN GENERAL.—Subsection (b) of section 38 (relating to 
current year business credit) is amended by striking "plus" 
at the end of paragraph (9), by striking tne period at the 
end of paragraph (10) and inserting ", plus", and by adding 
at the end the following new paragraph: 
"(11) the employer social security credit determined imder 
section 45B(a)." 
(2) LIMITATION ON CARRYBACKS.—Subsection (d) of section 
39 (relating to transitional rules) is sunended by adding at 
the end the following new paragraph: 
"(6) No C
A
R
R
Y
B
A
C
K O
F S
E
C
T
I
O
N 46 C
R
E
D
I
T B
E
F
O
R
E E
N
A
C
T
-
M
E
N
T
.
—
^
N
o portion of the unused business credit for any taxable 
year which is attributable to the employer social security credit 
determined under section 45B may be carried back to a taxable 
year ending before the date of the enactment of section 45B." 
(c) CLERICAL AMENDMENT.—^The table of sections for subpart 
D of part IV of subchapter A of chapter 1 is amended by adding 
at the end the following new item: 
'ISec. 45B. Credit for portion of employer social security taxes pcud with re-
spect to employee cash tipe." 
(d) EFFECTIVE DATE.—^The amendments made by this section 26 use 38 note. 
shall apply with respect to taxes padd after December 31, 1993. 
107 STAT. 570 
PUBLIC LAW 103-66—AUG. 10, 1993 
SEC. 13444. AVAILABILITY AND USE OF DEATH INFORMATION. 
(a) RESTRICTION ON DISCLOSURE OF TAX RETURN INFORMA-
26 use 6103. 
TION.—Subsection (d) of section 6103 is amended by adding at 
the end thereof the following new paragraph: 
*
*
(
4
) AVAILABILITY AND USE OF DEATH INFORMATION.— 
"(A) IN GENERAL.—^No returns or return information 
may be disclosed under paragraph (1) to any agency, body, 
or commission of any State (or any legal representative 
thereof) during any period during which a contract meeting 
the requirements of subparagraph (B) is not in effect 
between such State and the Secretary of Health and 
Human Services. 
"(B) CONTRACTUAL REQUIREMENTS.—A contract meets 
the requirements of this subparagraph if— 
"(i) such contract requires the State to furnish 
the Secretary of Health and Human Services informa-
tion concerning individuals with respect to whom death 
certificates (or equivalent documents maintained by 
the State or any subdivision thereof) have been offi-
cially 
filed 
with it, and 
"(ii) such contract does not include any restriction 
on the use of information obtained by such Secretary 
pursuant to such contract, except that such contract 
may provide that such information is only to be used 
by the Secretary (or any other Federal agency) for 
purposes of ensuring that Federtd benefits or other 
payments are not erroneously paid to deceased individ-
uals. 
Any information obtained by the Secretary of Health and 
Human Services under such a contract shall be exempt 
from disclosiu^ under section 552 of title 5, United States 
Code, and from the requirements of section 552a of such 
title 5. 
"(C) SPECIAL EXCEPTION.—The provisions of subpara-
graph (A) shall not apply to any State which on July 
1, 1993, was not, pursuant to a contract, furnishing the 
Secretary of Health and Human Services information 
concerning individuals with respect to whom death certifi-
cates (or equivalent documents maintained by the State 
or any subdivision thereof) have been officially filed with 
it." 
26 u s e 6103 
(b) EFFECTIVE D A T E . — 
"°*® 
(1) I N GENERAL.—Except as provided in paragraph (2), the 
amendment made by subsection (a) shall take effect on the 
date one year after the date of the enactment of this Act. 
(2) SPECIAL RULE.—^The amendment made by subsection 
(a) shall take effect on the date 2 years after the date of 
the enactment of this Act in the case of any State if it is 
established to the satisfaction of the Secretary of the Treasiuy 
that— 
(A) under the law of such State as in effect on the 
date of the enactment of this Act, it is impossible for 
such State to enter into an agreement meeting the require-
ments of section 6103(dX4XB) of the Internal Revenue Code 
of 1986 (as added by subsection (a)), and 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 571 
(B) it is likely that such State will enter into such 
an agreement during the extension period under tihds 
paragraph. 
CHAPTER 2—HEALTH CARE, HUMAN RESOURCES, IN-
COME SECURITY, AND CUSTOMS AND TRADE PROVI-
SIONS 
Subchapter A—^Medicare 
SEC. 13500. REFERENCES IN SUBCHAPTER; TABLE OF CONTENTS OF 
SUBCHAPTER. 
(a) AMENDMENTS TO SOCIAL SECURITY ACT.—Except as other-
wise specifically provided, whenever in this subchapter an amend-
ment is expressed in terms of an amendment to or repeal of a 
section or other provision, the reference shall be considered to 
be made to that section or other provision of the Social Security 
Act. 
(b) REFERENCES TO OBRA—In this subchapter, the terms 
"OBRA-lQSe", "GBRA-IQS?", "GBRA-IQSQ", and "GBRA-IQOO" 
refer to the Omnibus Budget Reconciliation Act of 1986 (Public 
Law 99-509), the Omnibus Budget Reconciliation Act of 1987 (Pub-
lic Law 100-203), the Omnibus Budget Reconciliation Act of 1989 
(Public Law 101-239), and the Omnibus Budget Reconciliation Act 
of 1990 (Public Law 101-508), respectively. 
(c) TABLE OF CONTENTS OF SUBCHAPTER.—The table of contents 
of this subchapter is as follows: 
SUBCHAPTER A—MEDICARE 
Sec. 13500. References in subchapter, table of contents of subchapter. 
PART I—PROVISIONS RELATING TO PART A 
Sec. 13501. Payments for PPS hospitals. 
Sec. 13502. Reductions in payments for PPS-exempt hospitals. 
Sec. 13503. Reductions in payments for skilled nursing facility services. 
Sec. 13504. Reductions in payments for hospice services. 
Sec. 13505. Hemophilia pass-through extension. 
Sec. 13506. Graduate medical education payments in hospital-owned community 
health centers. 
Sec. 13507. Extension of nural hospital demonstration. 
Sec. 13508. Reduction in part A premium for certain individuals with 30 or more 
quarters of Social Security coverage. 
PART II—PROVISIONS RELATING TO PART B 
SUBPART A—PHYSICIANS' SERVICES 
Sec. 13511. Reduction in default update for conversion factor for 1994 and 1995. 
Sec. 13512. Reduction in performance standard rate of increase and increase in 
maximum reidiiction permitted in default update. 
Sec. 13513. Practice expense relative value imits. 
Sec. 13514. Separate payment for interpretation of electrocardiograms. 
Sec. 13515. Payments for new physicians and practitioners. 
Sec. 13516. Payments for anesthesia. 
Sec. 13517. Extension of physician payment provisions to nonparticipating suppli-
ers and other persons. 
Sec. 13518. Antigens under physician fee schedule. 
SUBPART B—OUTPATIENT HOSPITAL SERVICES 
Sec. 13521. Extension of 10 percent reduction in payments for capital-related costs 
of outpatient hospital services. 
Sec. 13522. Extension of reduction in payments for other costs of outpatient hos-
pital services. 
SUBPART 0—AMBULATORY SURGICAL CENTER SERVICES 
Sec. 13531. Ambulatory svirgical center services. 
107 STAT. 572 
PUBLIC LAW 103-66—AUG. 10, 1993 
Sec. 13532. Designation of certain hospitals as eye or eye and ear hospitals. 
Sec. 13533. Reduction in payments for intraocular lenses. 
SUBPART D—DURABLE MEDICAL EQUIPMENT 
Sec. 13541. Payment for parenteral and enteral nutrients, supplies, and equipment 
during 1994 and 1995. 
Sec. 13542. Revisions to payment rules for durable medical equipment. 
Sec. 13543. Treatment or nebulizers, aspirators, and certain ventilators. 
Sec. 13544. Payment for ostomy supplies and other supplies. 
Sec. 13545. Payments for TENS devices. 
Sec. 13546. Payments for orthotics, prosthetics, and prosthetic devices. 
SUBPART E—OTHER PROVISIONS 
Sec. 13551. Payments for clinical diagnostic laboratory tests. 
Sec. 13552. Extension of Alzheimer's disease demonstration projects. 
Sec. 13553. Oral cancer drugs. 
Sec. 13554. Clarification of coverage of certified nurse-midwife services performed 
outside tile maternity cycle. 
Sec. 13555. Increase in annual cap on amoimt of medicare payment for outpatient 
physical therapy ana occupational therapy services. 
Sec. 13556. Rural health climes and federally qualified nealth centers. 
Sec. 13557. Extension of municipal health service demonstration projects. 
PART III—PROVISIONS RELATING TO PARTS A AND B 
Sec. 13561. Medicare as secondary payer. 
Sec. 13562. Physician ownership and referral. 
Sec. 13563. Direct graduate medical education. 
Sec. 13564. Reduction in payments for home health services. 
Sec. 13565. Immunosuppressive drug therapy. 
Sec. 13566. Reduction m payments tor erythropoientin. 
Sec. 13567. Extension of social health maintenance organization demonstrations. 
Sec. 13568. Timing of claims payment. 
Sec. 13569. Extension of waiver for Watts Health Foundation. 
PART IV—PROVISION RELATING TO PART B PREMIUM 
Sec. 13571. Part B premium. 
PART V—PROVISION RELATING TO DATA BANK 
Sec. 13581. Medicare and medicaid coverage data bank. 
PART I—PROVISIONS RELATING TO PART A 
SEC. 13501. PAYMENTS FOR PPS HOSPITALS. 
(a) REDUCTIONS IN PAYMENTS.— 
(1) 
REDUCTIONS 
IN 
INFLATION 
UPDATES.—Section 
1886(bX3)(BXi) (42 U.S.C. 1395ww(b)(3XB)(i)) is amended— 
(A) in subclause (IX)— 
(i) by inserting "minus 2.5 percentage points" after 
"market basket percentage increase" the first place 
it appears, and 
(ii) by striking "plus 1.5 percentage points" and 
inserting "minus 1.0 percentage point"; 
(B) in subclause (X)— 
(i) by inserting "minus 2.5 percentage points" after 
"market basket percentage increase", and 
(ii) by striking "and" at the end; 
(C) in subclause (Xl)— 
(i) by striking "and each subsequent fiscal year", 
(ii) by inserting "minus 2.0 percentage points after 
"market basket percentage increase", and 
(iii) by striking the period at the end and inserting 
a comma; and 
(D) by adding at the end the following nevtr subclauses: 
"(XII) for fiscal year 1997, the market basket percentage 
increase minus 0.5 percentage point for hospitals in all areas, 
and 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 573 
"(XIII) for fiscal year 199iB and each subsequent fiscal year, 
the market basket percentage increase for hospitals in all 
arefis.". 
(2) UPDATES FOR SOLE COMMUNITY HOSPITALS AND MEDI-
CARE-DEPENDENT, S
M
A
L
L R
U
R
A
L HOSPITALS.— 
(A) IN GENERAL.—Section 1886(bX3XB) (42 U.S.C. 
1395ww(bX3XB)) is amended by adding at the end the 
following new clause: 
"(iv) For purposes of subparagraphs (C) and (D), the 'applicable 
percentage increase' is— 
"(I) for 12-month cost reporting periods beginning during 
fiscal years 1986 through 1993, the applicable percentage 
increase specified in clause (ii), 
"(11) for fiscal year 1994, the market basket percentage 
increase minus 2.3 percentage points (taking into account any 
portion of the 12-month cost reporting period beginning during 
fiscal year 1993 that occurred during 
fiscal 
year 1994), 
"(III) for fiscal year 1995, the market basket percentage 
increase minus 2.2 percentage points, and 
"(TV) for fiscal year 19^ and each subsequent fiscal year, 
the applicable percentage increase under clause (i).". 
(B) CONFORMING AMENDMENTS.—Section 1886(bX3) (42 
U.S.C. 1395ww(bX3)) is amended— 
(i) in subparagraph (BXii), by striking ", (C), (D),"; 
(ii) in subparagraph (CXiXII), by striking "or'' at 
the end; 
(iii) in clause (ii) of subparagraph (C)— 
(I) by striking "period, the target" and insert-
ing "period beginning before fiscal year 1994, the 
target", 
(II) by striking "subparagraph (BXii)" and 
inserting "subparagraph (BXiv)", and 
(III) by striking the period at the end of such 
clause and inserting a comma; 
(iv) in subparagraph (C), by inserting after clause 
(ii) the following new clauses: 
"(iii) with respect to discharges occurring in fiscal year 
1994, the target amount for the cost reporting period beginning 
in fiscal year 1993 increased by the appUcable percentage 
increase under subparagraph (BXiv), or 
"(iv) with respect to dischcurges occurring in fiscal year 
1995 and each subsequent fiscal year, the target amount for 
the preceding year increased by the applicable percentage 
increase under subparagraph (BXiv)."; 
(v) in clause (ii) of subparagraph (D)— 
(I) by striking "period, the target" and insert-
ing "period beginning before fiscal year 1994, the 
target", 
(II) by striking "(BXii)" and inserting "(BXiv)", 
and 
(III) by striking the period at the end of such 
clause and inserting ", and"; and 
(vi) in subparagraph (D), by inserting after clause 
(ii) the following new clause: 
"(iii) with respect to discharges occurring in fiscal year 
1994, the target amount for the cost reporting period beginning 
107 STAT. 574 
PUBLIC LAW 103-66—AUG. 10, 1993 
in fiscal year 1993 increased by the applicable percentage 
increase under subparagraph (BXiv).". 
(3) REDUCTION IN FEDERAL PORTION OF CAPITAL PAYMENT 
RATE.—Section 1886(gXlXA) (42 U.S.C. 1395ww(gXlXA)) is 
amended by adding at the end the following new sentence: 
Tor discharges occurring after September 30, 1993, the Sec-
retary shall reduce by 7.4 percent the unadjusted standard 
Federal capital payment rate (as described in 42 CFR 
412.308(c), as in effect on the date of the enactment of the 
Omnibus Budget Reconciliation Act of 1993) and shall (for 
hospital cost reporting periods beginning on or after October 
1, 1993) redetermine wnich pajrment methodology is applied 
to the hospital under such system to take into account such 
reduction. . 
(b) WAGE INDEX HOLD HARMLESS PROTECTION.— 
(1) 
IN GENERAL.—Section 
1886(dX8XC) 
(42 
U.S.C. 
1395ww(dX8XC)) is amended by adding at the end the following 
new clause: 
"(iv) The application of subparagraph (B) or a decision of the 
Medicare (xeographic Classification Review Board or of the Sec-
retary imder paragraph (1) may not result in a reduction in an 
urban area's wage index if— 
"(I) the urban area has a wa^e index below the wage 
index for rural areas in the State m which it is located; or 
"(11) the urban area is located in a State that is composed 
of a single urban area.". 
42USC1395WW 
(2) NO STANDARDIZED AMOUNT ADJUSTMENT.—The Sec-
"°^- 
retary of Health and Human Services shall not revise the 
fiscal year 1992 or fiscal year 1993 standardized amounts 
pursuant to subsections (dX3XB) and (dX8XD) of section 1886 
of the Social Security Act to account for the amendment made 
by paragraph (1). 
42 use 1
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(3) EFFECTIVE DATE.—^The amendment made by paragraph 
"°*®- 
(1) shall apply to discharges occurring on or after October 
1,1991. 
(c) TRANSITION FOR HOSPITAL OUTLIER THRESHOLDS.—Section 
1886(dX5XA) (42 U.S.C. 1395ww(dX5XA)) is amended— 
(1) in clause (i), by striking The Secretarjr^ and inserting 
Tor discharges occurring during fiscal years ending on or before 
September 30,1997, the Secret«uy; 
(2) in clause (ii), by striking the period at the end and 
inserting the following: ", or, for discharges in fiscal years 
beginning on or after October 1, 1994, exceed the applicable 
DRG prospective payment rate plus a fixed dollar amount deter-
mined b]^ the Secretary."; 
(3) in clause (iii), by striking "shall approximate" and 
inserting "shall (except as payments under clause (i) are 
required to be reduced to take mto account the requirements 
of clause (v)) approximate"; and 
(4) by adding at the end the following new clauses: 
"(v) The Secretary shall provide that— 
"(I) the day outlier percentage for fiscal year 1995 shall 
be 75 percent of the day outlier percentage for fiscal year 
1994; 
"(II) the day outlier percentage for fiscal year 1996 shall 
be 50 percent of the day outlier percentage for fiscsd year 
1994; and 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 575 
"(III) the day outlier percentage for fiscal year 1997 shall 
be 25 percent of the day outlier percentage for fiscal year 
1994. 
"(vi) For purposes of this subparagraph, the term 'day outlier 
percentage' means, for a fiscal year, the percentage of ihe total 
additional pa3rments made by the Secretaipr under this subpara-
graph for (uscharges in that fiscal year which are additional pay-
ments under clause (i).". 
(d) EXTENSION FOR REGIONAL REFERRAL CENTERS.— 
42 use i395ww 
(1) EXTENSION OF CLASSIFICATION THROUGH FISCAL YEAR "
°
*
® 
1994.—Any hospital that is classified as a regional referral 
center under section 1886(dX5XC) of the Social Security Act 
as of September 30, 1992, shall continue to be so classified 
for cost reporting periods beginning during fiscal year 1993 
or fiscal year 1994, unless the area in which the hospital 
is located is redesignated as a Metropolitan Statistical Area 
by the Office of Management and Budget for such a fiscal 
year. 
(2) PERMITTING HOSPITALS TO DECLINE RECLASSIFICATION.— 
If any hospital fails to qualify as a rural referral center under 
section 1886(dX5XC) of the Social Security Act as a result 
of a decision by the Medicare Geographic Classification Review 
Board under section 1886(dX10) of such Act to reclassify the 
hospital as being located in an urban area for fiscal year 
1993 or fiscal year 1994, the Secretary of Health and Human 
Services shall— 
(A) notify such hospital of such failure to qualify, 
(B) provide an opportunity for such hospital to decline 
such reclassification, and 
(C) if the hospital— 
(i) declines such reclassification, administer the 
Social Security Act (other than section 1886(dX8XD)) 
for such fiscal year as if the decision by the Review 
Board had not occurred, or 
(ii) fails to decline such reclassification, administer 
the Social Security Act without regard to paragraph 
(1). 
(3) REQUIRING LUMP-SUM RETROACTIVE PAYMENT FOR HOS-
PITALS LOSING CLASSIFICATION.— 
(A) IN GENERAL.—In the case of a hospital described 
in paragraph (1), the Secretary of Health and Human Serv-
ices shall make a limip-sum payment to the hospital equal 
to the difference between tne aggregate payment made 
to the hospital under section 1886 of such Act (excluding 
outlier pajrments under subsection (dX5XA) of such section) 
during the period of applicability described in subparagraph 
(B) and the aggregate payment that would have been made 
to the hospital under such section if, during the period 
of applicability, the hospital was classified a regional refer-
ral center under section 1886(dX5XC) of such Act. 
(B) PERIOD OF APPLICABILITY.—In subparagraph (A), 
the "period of applicability'' is the period that begins on 
October 1, 1992, and ends on the date of the enactment 
of this Act. 
(e) EXTENSION FOR MEDICARE-DEPENDENT, SMALL RURAL HOS-
PITALS.— 
107 STAT. 576 
PUBLIC LAW 103-66—AUG. 10, 1993 
42 u s e 1
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note. 
(1) 
EXTENSION 
OF 
ADDITIONAL 
PAYMENTS.—Section 
1886(dX5XG) (42 U.S.C. 1395ww(dX5XG)) is amended— 
(A) in clause (i) in the matter preceding subclause 
(I), by striking ''en(Ung on or before March 31, 1993," and 
all that follows and inserting the following: 'Isefore October 
1, 1994, in the case of a subsection (d) hospital which 
is a medicare-dependent, small rural hospital, payment 
under paragraph (IXA) shall be equal to the simi of the 
amount determined under clause (ii) and the amount deter-
mined imder paragraph (IXAXiii)."; 
(B) by redesignating clauses (ii) and (iii) as clauses 
(iii) and (iv); and 
(C) by inserting after clause (i) the following new 
clause: 
"(ii) The amount determined imder this clause is— 
"(I) for discharges occurring during the first 3 12-month 
cost reporting periods that begin on or after April 1, 1990, 
the amount by which the hospital's target amoimt for the 
cost reporting period (as defined m subsection (bX3XD)) exceeds 
the amount determined imder paragraph (lXA)(iii); and 
"(II) for discharges occurring during any subsequent cost 
reporting period (or portion thereof) and before October 1, 1994, 
50 percent of the amount by which the hospital's target amount 
for the cost reporting period (as defined in subsection (bX3XD)) 
exceeds the amount determined imder paragraph (IXAXiii).". 
(2) PERMITTING HOSPITALS TO DECLINE RECLASSIFICATION.— 
If any hospital fails to qualify as a medicare-dependent, small 
rural hospital under section 1886(d)(5XGXi) of the Social Secu-
rity Act as a result of a decision by the Medicare Geographic 
Classification Review Board under section 1886(dX10) of such 
Act to reclassify the hospital as being located in an urban 
area for fiscal year 1993 or fiscal ye£ur 1994, the Secretary 
of Health and Human Services shall— 
(A) notify such hospital of such failure to qualify, 
(B) provide an opportunity for such hospital to decline 
such reclassification, and 
(C) if the hospital declines such reclassification, admin-
ister the Social 
Security Act (other 
than 
section 
1886(dX8XD)) for such fiscal year as if the decision by 
the Review Board had not occurred. 
(3) REQUIRING LUMP-SUM RETROACTIVE PAYMENT.— 
(A) IN GENERAL.—In the case of a hospital treated 
as a medicare-dependent, small rural hospital under section 
1886(dX5XG) of the Social Security Act, the Secretary of 
Health and Human Services shall make a lump-sum pay-
ment to the hospital equal to the difference between the 
aggregate payment made to the hospital under section 
1886 of such Act (excluding outlier payments under sub-
section (dX5XA) of such section) during the period of 
applicability described in subparagraph (B) and the aggre-
gate pajrment that would have been made to the hospital 
under such section if, during the period of applicability, 
section 1886(dX5XG) of such Act had been applied as if 
the amendments made by paragraph (1) had been in effect. 
(B) PERIOD OF APPUCABILITY.—In subparagraph (A), 
the "period of applicability" is, with respect to a hospital, 
the period that begins on the first day of the hospital's 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 577 
first 12-month cost reporting period that begins after April 
1, 1992, and ends on the date of the enactment oi tiiis 
Act. 
(£) EXTENSION OP REGIONAL FLOOR.-—Section 1886(dXlXAXiii) 
(42 U.S.C. 1395ww(dXlXAXiii)) is amended to read as follows: 
"(iii) beginning on or after April 1, 1988, is equal to— 
"(I) the national adjusted DRG prospective payment 
rate determined under paragraph (3) for such discharges, 
or 
''(II) for discharges occurring during a fiscal year end-
ing on or before September 30, 1996, the simi of 85 percent 
of the national adjusted DRG prospective payment rate 
determined under paragraph (3) for such discnarges and 
15 percent of the regional adjusted DRG prospective pay-
ment rate determined under such paragraph, but only if 
the average standardized amount (described in clause (iXD 
or clause (iiXI) of paragraph (3XD)) for hospitals within 
the region of, and in the same large urban or other area 
(or, for discharges occurring during a fiscal year ending 
on or before September 30, 1994, the same rural, large 
urban, or other urban area) as, the hospital is greater 
than the average standardized amount (described in the 
respective clause) for hospitals within the United States 
in that type of area for discharges occurring during such 
fiscal year.". 
SEC. 13502. REDUCTIONS IN PAYMENTS FOR PPS-EXEMPT HOSPITALS. 
(a) 
IN 
GENERAL.—Section 
1886(bX3XB) 
(42 
U.S.C. 
1395ww(bX3XB)), as amended by section 13501(aX2XBXi), is 
amended— 
(1) in clause (ii)— 
(A) by striking "and" at the end of subclause (III); 
(B) in subclause (IV)— 
(i) by striking "subsequent fiscal years" and insert-
ing "a subsequent fiscal year ending on or before 
September 30,1993,", and 
(ii) by striking the period at the end and inserting 
a comma; and 
(C) by adding at the end the following new subclauses: 
"(V) 
fiscal 
years 1994 through 1997, is the market basket 
percentage increase minus the applicable reduction (as defined 
in clause (vXID), or in the case of a hospital for a fiscal year 
for which the hospital's update a^ustment percentage (as 
defined in clause (vXD) is at least 10 percent, the market 
basket percentage increase, and 
"(VI) subsequent fiscal years is the market basket percent-
age increase."; and 
(2) by ad(Ung at the end the following new clause: 
"(v) For purposes of clause (ii)(V)— 
"(I) a hospital's 'update a4justment percentage' for a fiscal 
year is the percentage by which the hospital's allowable operat-
ing costs of inpatient hospital services recognized under this 
tiUe for the cost reporting period beginning in fiscal ye£ir 1990 
exceeds the hospital's target amoimt (as determined under 
subparagraph (A)) for such cost reporting period, increased 
for each fiscal year (beginning with fiscal year 1994) by the 
107 STAT. 578 
PUBLIC LAW 103-66—AUG. 10, 1993 
42 u s e 1395yy 
note. 
42 u s e 1395yy 
note. 
42 u s e 1395yy 
note. 
sum of any of the hospital's applicable reductions under 
subclause (V) for previous 
fiscal 
^ears; and 
"(11) the 'applicable reduction' with respect to a hospital 
for a fiscal year is the lesser of 1 percentage point or the 
percentage point difference between 10 percent and the hos-
pital's update a(^ustment percentage for the 
fiscal 
year.", 
(b) EFFECT OF PAYMENT REDUCTION ON EXCEPTIONS AND 
ADJUSTMENTS.-^Section 1886(bX4XA) (42 U.S.C. 1395ww(bX4XA)) 
is amended— 
(1) by inserting "(i)" after ''(A)", and 
(2) by adding at the end the following: 
**(ii) The payment reductions under paragraph (3XBXiiXV) shall 
not be considered by the Secretary in making a<$ustments pursuant 
to clause (i).". 
SEC. 13503. REDUCTIONS IN PAYMENTS FOR SKILLED NURSING 
FACILnY SERVICES. 
(a) PAYMENTS BASED ON COST LIMITS.— 
(1) No C
H
A
N
G
E
S IN C
O
S
T LIMITS.—The Secretary of Health 
and Human Services may not provide for any change in the 
limits on per diem routine service costs for extended care serv-
ices under section 1888 of the Social Security Act for cost 
reporting periods beginning during fiscal years 1994 and 1995, 
except as mav be necessary to take into account the amend-
ments made by paragraph (3XA). The effect of the preceding 
sentence shall not be considered by the Secretary in making 
adjustments pursuant to section 1888(c) of such Act to the 
payment limits for such services during such 
fiscal 
years. 
(2) DELAY IN UPDATES.—The last sentence of section 1888(a) 
(42 U.S.C. 1395yy(a)) is amended by inserting after "October 
1,1992" the following:", on or after October 1,1995,". 
(3) REPEAL OF EXCESS OVERHEAD ALLOCATIONS FOR HOS-
PITAL-BASED FACILITIES.— 
(A) IN GENERAL.—Section 1888(b) (42 U.S.C. 1395yy(b)) 
is amended— 
(i) by striking ''shall recognize" and inserting "may 
not recognize"; and 
(ii) by striking "(as determined by" and all that 
follows and inserting a period. 
(B) EFFECTIVE DATE.—^The amendments made by 
subparagraph (A) shall apply to cost reporting periods 
beginning on or after October 1,1993. 
(b) PAYMENTS DETERMINED ON PROSPECTIVE BASIS.—The Sec-
retary of Health and Human Services may not change the amount 
of any prospective payment paid to a skilled nursing facility under 
section 1888(d) of the Social Security Act for services fiumished 
during cost reporting periods beginning during fiscal years 1994 
and 1995, except as may be necessary to take into account the 
amendment made by subsection (cXlXA). 
(c) EUMINATION OF RETURN ON EQUITY FOR PROPRIETARY 
SKILLED NURSING FACILITIES.— 
(1) REPEAL OF REQUIREMENT FOR RETURN ON EQUITY.— 
(A) Section 1861(vXlXB) (42 U.S.C. 1395x(vXlXB)) is amended 
to read as follows: 
"(B) In the case of extended care services, the regulations 
under subparagraph (A) shall not include provision for specific 
recognition of a return on equity capital.". 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 579 
(B) Section 1878(fX2) (42 U.S.C. 1395oo(fX2)) is amended 
by striking "the rate of return on equity capital established 
by regulation pursuant to section 1861(vXl)(B) and in effect 
at the time" and inserting "the rate of interest on obligations 
issued for purchase by the Federal Hospital Insurance Trust 
Fund for the month in which". 
(2) EFFECTIVE DATE.—^The amendments made by paragraph 
(1) shall take effect October 1,1993. 
SEC. 13504. REDUCTIONS IN PAYMENTS FOR HOSPICE SERVICES. 
Section 1814(iXlXC) (42 U.S.C. 1395f(iXlXC)) is amended by 
striking "increased by" and all that follows and inserting the follow-
ing: "increased by— 
"(I) for a fiscal year ending on or before September 30, 
1993, the market basket percentage increase (as defined in 
section 1886(bX3XBXiii)) for the fiscal year; 
"(II) for fiscal year 1994, the market basket percentage 
increase for the fiscal year minus 2.0 percentage pointe; 
"(III) for fiscal vear 1995, the market basket percentage 
increase for the fiscal year minus 1.5 percentage points; 
"(IV) for fiscal vear 1996, the market basket percentage 
increase for the fiscal year minus 1.5 percentage points; 
"(V) for fiscal year 1997, the market basket percentage 
increase for the fiscal year minus 0.5 percentage point; and 
"(VI) for a subsequent fiscal year, the market basket 
percentage increase for the fiscal year.". 
SEC. 13505. HEMOPHILIA PASS-THROUGH EXTENSION. 
Effective as if included in the enactment of OBRA-1989, section 
6011(d) of such Act is amended by striking "2 years after the 
date of enactment of this Act" and inserting "September 30, 1994". 
SEC. 13606. GRADUATE MEDICAL EDUCATION PAYMENTS IN HOS-
PITAL-OWNED COMMUNITY HEALTH CENTERS. 
Section 1886(dX5XBXiv) (42 U.S.C. 1395ww(dX5XBXiv)) is 
amended by inserting after "the hospital" the following: "or provid-
ing services at any entity receiving a grant under section 330 
of the Public Health Service Act that is under the ownership or 
control of the hospital (if the hospital incurs all, or substantially 
all, of the costs of the services furnished by such interns and 
residents)". 
SEC. 13607. EXTENSION OF RURAL HOSPITAL DEMONSTRATION. 
Section 4008(iXl) of OBRA-1990 is amended by adding at 
the end the following new sentence: "The Secretary shall contmue 
any such demonstration project until at least July 1,1997.". 
SEC. 13508. REDUCTION IN PART A PREMIUM FOR CERTAIN INDIVID-
UALS WITH 30 OR MORE QUARTERS OF SOCIAL SECURITY 
COVERAGE. 
(a) IN GENERAL.—Section 1818(d) (42 U.S.C. 1395i-2(d)) is 
amended— 
(1) in the second sentence of paragraph (2), bv striking 
"Such amount" and inserting "Subject to paragrapth (4), the 
amount of an individual's monthly premium under this section"; 
and 
(2) by adding at the end the following new paragraph: 
42 use 1395x 
note. 
42 use 1
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note. 
42 use 1395b-l 
note. 
107 STAT. 580 
PUBLIC LAW 103-66—AUG. 10, 1993 
''(4XA) In the case of an individual described in subparagraph 
(B), the monthly premium for a month shall be reduced by the 
applicable reduction percent specified in the following table: 
The applicable 
reduction 
Tor a month in: 
percient is: 
1994 
25 percent 
1995 
30 percent 
1996 
35 percent 
1997 
40 percent 
1998 or subsequent year 
45 percent. 
''(B) An individual described in this subparagraph with respect 
to a month is an individual who establishes to the satisfaction 
of the Secretary that, as of the last day of the previous month, 
the individual— 
"(i) had at least 30 quarters of coverage under title II; 
"(ii) was married (and had been married for the previous 
1-year period) to an individual who had at least 30 quarters 
of coverage under such title; 
"(iii) had been married to an individual for a period of 
at least 1 year (at the time of such individusd's death) if 
at such time the individual had at least 30 quarters of coverage 
under such title; or 
"(iv) is divorced from an individual and had been married 
to the individual for a period of at least 10 years (at the 
time of the divorce) if at such time the individual had at 
least 30 quarters of coverage imder such title.". 
42 use i395i-2 
(b) EFFECTIVE DATE.—^The amendments made by this section 
"° 
shall apply to monthly premiums under section 1818 of the Social 
Security Act for months beginning with January 1,1994. 
PART II—PROVISIONS RELATING TO PART B 
Subpart A—^Physicians' Services 
SEC. 13511. REDUCTION IN DEFAULT UPDATE FOR CONVERSION FAC-
TOR FOR 1994 AND 1995. 
(a) IN GENERAL.—Section 1848 (42 U.S.C. 1395w-4) is 
£unended— 
(1) in subsection (dX3XA)— 
(A) in clause (i), by striking "clause (iii)" and inserting 
"clauses (iii) through (v)", and 
(B) by adding at the end the following new clauses: 
**(iv) ADJUSTMENT IN PERCENTAGE INCREASE FOR 
1994.—^In applying clause (i) for services furnished in 
1994, the percentage increase in the appropriate 
update index shall be reduced by— 
"(I) 3.6 percentage points for services included 
in the category of surgical services (as defined 
for purposes of subsection (jXD), and 
"(II) 2.6 percentage points for other services. 
"(v) ADJUSTMENT IN PERCENTAGE INCREASE FOR 
1995.—^In applying clause (i) for services furnished in 
1995, the percentage increase in the appropriate 
update index shall be reduced by 2.7 percentage points. 
"(vi) EXCEPTION FOR CATEGORY OF PRIMARY CARE 
SERVICES.—Clauses (iv) and (v) shall not apply to serv-
PUBLIC LAW 103-66-AUG. 10, 1993 
107 STAT. 581 
ices included in the category of i)rimary care services 
(as defined for purposes of subsection (jXl))."; and 
(2) in subsection (i)(l), by striking "Secretary)" and insert-
ing "Secretary and including anesthesia services), primary care 
services (as defined in section 1842(iX4)),''. 
(b) EFFECTIVE DATES.—The amendments made by this section 42 use i395w-4 
shall apply to services furnished on or after January 1, 1994; "
°
*
® 
except that amendment made by subsection (aX2) shall not apply— 
(1) to voliune performance standard rates of increase estab-
lished imder section 1848(f) of the Social Security Act for fiscal 
years before fiscal year 1994, and 
(2) to acijustment in updates in the conversion factors for 
physicians' services under section 1848(dX3XB) of such Act 
for physicians' services to be fiimished in c£dendar years before 
1996. 
SEC. 13512. REDUCTION IN PERFORMANCE STANDARD RATE OF 
INCREASE AND INCREASE IN MAXIMUM REDUCTION 
PERMITTED IN DEFAULT UPDATE. 
(a) REDUCTION IN PERFORMANCE STANDARD FACTOR.—Section 
1848(fX2XB) (42 U.S.C. 1395w-4(£X2XB)) is amended— 
(1) by striking "and" at the end of clause (ii), and 
(2) by striking clause (iii) and inserting the following: 
"(iii) for 1993 is 2 percentage points, 
"(iv) for 1994 is 3V2 percentage points, and 
"(v) for each succeeding year is 4 percentage 
points.". 
(b) INCREASE IN MAXIMUM REDUCTION PERMITTED IN DEFAULT 
UPDATE.-^Section 1848(dX3XBXii) (42 U.S.C. 1395w-4(dX3XBXii)) 
is amended— 
(1) in subclause (II), by striking "or 1995", and 
(2) in subclause (III), by striking "3" and inserting "5". 
SEC. 13613. PRACTICE EXPENSE RELATIVE VALUE UNITS. 
Section 1848(cX2) (42 U.S.C. 1395w-4(cX2)) is amended by 
adding at the end the following new subparagraph: 
"(E) REDUCTION IN PRACTICE EXPENSE RELATIVE VALUE 
UNITS FOR CERTAIN SERVICES.— 
"(i) IN GENERAL.—Subject to clause (ii), the Sec-
retary shall reduce the practice expense relative value 
units applied to services described in clause (iii) fiir-
nished in— 
"(I) 1994, bv 25 percent of the number by 
which the number of practice expense relative 
value units (determined for 1994 without regard 
to tiiis subparagraph) exceeds the number of work 
relative value units determined for 1994, 
"(II) 1995, by an additional 25 percent of such 
excess, and 
"(III) 1996, by an additional 25 percent of such 
excess. 
"(ii) FLOOR ON REDUCTIONS.—The practice expense 
relative value units for a physician's service shall not 
be reduced under this subparagraph to a number less 
ihan 128 percent of the number or work relative value 
units. 
"(iii) SERVICES COVERED.—^For purposes of clause 
(i), the services described in this clause are physicians' 
107 STAT. 582 
PUBLIC LAW 103-66—AUG. 10, 1993 
services that are not described in clause (iv) and for 
which— 
"(I) there are work relative value units, and 
''(II) the number of practice expense relative 
value units (determined for 1994) exceeds 128 per-
cent of the number of work relative value units 
(determined for such year), 
"(iv) EXCLUDED SERVICES.—^For purposes of clause 
(iii), the services described in this clause are services 
which the Secretary determines at least 75 percent 
of which are provided under this title in an ofiEice 
setting.". 
SEC. 13514. SEPARATE PAYMENT FOR INTERPRETATION OF ELECTRO-
CARDIOGRAMS. 
(a) IN GENERAL.—Paragraph (3) of section 1848(b) (42 U.S.C. 
1395w-4(b)) is amended to read as follows: 
"(3) TREATMENT OF INTERPRETATION OF ELECTROCARDIO-
GRAMS.—The Secretary-
"(A) shall make separate payment under this section 
for the interpretation of electrocardiograms performed or 
ordered to be performed as part of or in coi\junction with 
a visit to or a consultation with a physician, and 
"(B) shall adjust the relative values established for 
visits and consultations imder subsection (c) so as not 
to include relative value units for interpretations of electro-
cardiograms in the relative value for visits and consulta-
tions.". 
(b) ASSURING BUDGET NEUTRALITY.—Section 1848(cX2) (42 
U.S.C. 1395w-4(cX2)), as amended by section 13513, is further 
amended by adding at the end the following new subparagraph: 
"(F) 
BUDGET 
NEUTRALITY 
ADJUSTMENTS.—The 
Secretary— 
"(i) shall reduce the relative values for all services 
(other than anesthesia services) established under this 
paragraph (and, in the case of anesthesia services, 
the conversion factor established by the Secretary for 
such services) by such percentage as the Secretary 
determines to be necessary so that, beginning in 1996, 
the amendment made by section 13514(a) of the Omni-
bus Budget Reconciliation Act of 1993 would not result 
in expenditures under this section that exceed the 
amoimt of such expenditures that would have been 
made if such amendment had not been made, and 
"(ii) shall reduce the amounts determined under 
subsection (aX2XBXiiXI) by such percentage as the 
Secretary determines to be required to assure that, 
t£iking into account the reductions made under clavise 
(i), the amendment made by section 13514(a) of the 
Omnibus Budget Reconciliation Act of 1993 would not 
result in expenditures under this section in 1994 that 
exceed the amount of such expenditures that would 
have been made if such amendment had not been 
made.". 
(c) CONFORMING AMENDMENTS.—Section 1848 (42 U.S.C. 
1395w-4) is amended— 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 583 
(1) in subsection (aX2XBXiiXI), by inserting "and as 
adjusted under subsection (cX2XFXiir after "for 1994**; 
(2) in subsection (cX2XAXi), by adding at the end the 
following: "Such relative values are subject to ac^ustment under 
subparagraph (FXi)."; and 
(3) in subsection (iXlXB), by adding at the end "including 
adjustments under subsection (cX2XF),''. 
(d) EFFECTIVE DATE.—^The amendments made by this section 
shall apply to services furnished on or after January 1, 1994. 
SEC. 13515. PAYMENTS FOR NEW PHYSICIANS AND PRACTITIONERS. 
(a) EQUAL TREATMENT OF NEW PHYSICIANS AND PRACTITION-
ERS.—(1) Section 1848(a) (42 U.S.C. 1395w-^a)) is amended by 
striking paragraph (4). 
(2) Section 1842(bX4) (42 U.S.C. 1395u(bX4)) is amended by 
strUdng subparagraph (F). 
(b) BUDGET NEUTRALITY ADJUSTMENT.—^Notwithstanding any 
other provision of law, the Secretary of Health and Human Services 
shall reduce the following values and amounts for 1994 (to be 
applied for that year and subsequent years) by such uniform 
percentage as the Secretary determines to be required to assure 
that the amendments made by subsection (a) will not result in 
expenditures under part B of title XVIH of the Social Security 
Act in 1994 that exceed the amount of such expenditures that 
would have been made if such amendments had not been made: 
(1) The relative values established under section 1848(c) 
of such Act for services (other than anesthesia services) and, 
in the case of anesthesia services, the conversion factor estab-
lished imder section 1848 of such Act for such services. 
(2) 
The 
amounts 
determined 
under 
section 
1848(aX2XBXiiXI) of such Act. 
(3) llie prevailing charges or fee schedule amounts to be 
applied under such part for services of a health care practitioner 
(as defined in section 1842(bX4XFXiiXI) of such Act, as in 
effect before the date of the enactment of this Act). 
(c) CONFORMING AMENDMENTS.—Section 1848 (42 U.S.C. 
1395w-4), as amended by section 13514(c), is amended— 
(1) in subsection (aX2XBXiiXI), by inserting "and imder 
section 13515(b) of the Omnibus Budget Reconciliation Act 
of 1993" after "subsection (cX2XFXii)''; 
(2) in subsection (cX2XAXi), by inserting "and section 
13515(b) of the Omnibiis Budget Reconciliation Act of 1993" 
after "imder subparagraph (FXi/*; and 
(3) in subsection (iXlXB), b^ inserting "and section 13515(b) 
of the Omnibus Budget Reconciliation Act of 1993" after "under 
subsection (cX2XF)". 
(d) EFFECTIVE DATE.—^The amendments made by subsection 
(a) shall apply to services furnished on or after January 1, 1994. 
SEC. 13516. PAYMENTS FOR ANESTHESIA. 
(a) PAYMENT TO A PHYSICIAN FOR MEDICAL DIRECTION.— 
(1) IN GENERAL.—Section 1848(a) (42 U.S.C. 1395w-4(a)), 
as amended bv section 13515(aXl), is amended by adding at 
the end the following new paragraph: 
"(4) SPECIAL RULE FOR MEDICAL DIRECTION.— 
"(A) IN GENERAL.—^With respect to physicians' services 
furnished on or after January 1, 1994, and consisting of 
medical direction of two, three, or four concurrent anesthe-
42 u s e 1395W-4 
note. 
42 u s e 1395u 
note. 
42 use 1395u 
note. 
69-194 O - 94 - 20 : QL. 3 Part 1 
107 STAT. 584 
PUBLIC LAW 103-66—AUG. 10, 1993 
sia cases, the fee schedule amount to be applied shall 
be equal to one-half of the amount described in subpara-
graph (B). 
"(B) AMOUNT.—^The amount described in tiiis subpara-
graph, for a physician's medical direction of the perform-
ance of anesthesia services, is the following percentage 
of tiie fee schedule amoimt otherwise appUcable vmder 
this section if the anesthesia services were personally per-
formed by the physician alone: 
(i) For services furnished during 1994, 120 per-
cent. 
**(ii) For services furnished during 1995, 115 per-
cent. 
"(iii) For services furnished during 1996, 110 per-
cent. 
"(iv) For services furnished during 1997, 105 per-
cent. 
*
*
(
v
) For services furnished after 1997, 100 per-
cent.". 
(2) ELIMINATION OF REDUCTION FOR MEDICAL DIRECTION 
OF MULTIPLE NURSE ANESTHETISTS AND ESTABUSHMENT OF 
CONSISTENT B
A
S
E A
N
D TIME UNITS.—Paragraph (13) of section 
1842(b) (42 U.S.C. 1395u(b)) is amended— 
(A) by striking subparagraphs (A) and (B) and inserting 
the following: 
"(ISXA) In determining payments under section 1833(1) and 
section 1848 for anesthesia services furnished on or after January 
1, 1994, the methodology for determining the base and time imits 
used shall be the same for services furnished by physicians, for 
medical direction by physicians of two, three, or four certified reg-
istered nurse anesthetists, or for services furnished by a certified 
registered nurse anesthetist (whether or not medically directed) 
and shall be based on the methodology in effect, for anesthesia 
services furnished by physicians, as of the date of the enactment 
of the Omnibus Budget Reconciliation Act of 1993."; 
(B) by redesignating subparagraph (C) as subpara-
graph (B); and 
(C) by striking "subparagraph (A) or (B)" in subpara-
graph (B) (as so redesignated) and inserting "subparagraph 
(A)-*. 
(b) PAYMENT TO A CERTIFIED REGISTERED NURSE ANESTHETIST 
FOR MEDICALLY DIRECTED SERVICES.—Section 1833(1X4XB) (42 
U.S.C. 13951(1X4XB)) is amended— 
(1) in clause (i), by inserting "and before January 1, 1994," 
after "1991,"; 
(2) in clause (ii)— 
(A) by adding "and" at the end of subclause (II), 
(B) by striking the comma at the end of subclause 
(III) and inserting a period, and 
(C) by striking subclauses (IV) through (VII); and 
(3) by adding at the end the following new clause: 
"(iii) In the case of services of a certified registered nurse 
anesthetist who is medically directed or medically supervised by 
a physician which are furnished on or after January 1, 1994, the 
fee schedvde amoimt shall be one-half of the amount described 
in section 1848(aX5XB) with respect to the physician.". 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 585 
SEC. 13517. EXTENSION OF PHYSICIAN PAYMENT PROVISIONS TO 
NONPARTICIPATING SUPPLIERS AND OTHER PERSONS. 
(a) IN GENERAL.—Section 1848 (42 U.S.C. 1395w-4) is 
amended— 
(1) in subsection (aX3)— 
(A) in the heading, by inserting "AND SUPPUERS" after 
"PHYSICIANS", 
(B) by inserting "or a nonparticipating supplier or other 
person" alter "nonparticipating physician , and 
(C) b^ adding at the end the following: "In the case 
of physici£uis' services (including services which the Sec-
retary excludes pursuant to subsection (jX3)) of a 
nonparticipating physician, supplier, or other person for 
which payment is made under this part on a basis other 
than the fee schedule amount, the pajrment shall be based 
on 95 percent of the pa3anent basis for such services 
furnished by a participating physician, supplier, or other 
person."; 
(2) in subsection (gXl)— 
(A) by inserting "or nonparticipating supplier or other 
person 
(as 
defined 
in 
section 
1842(iX2))" 
after 
nonparticipating physician", 
(B) by insertmg including services which the Secretary 
excludes pursuant to subsection (jX3)," after "physician^ 
services ( , 
(C) by inserting ", supplier, or other person" after 
"such phvsician", and 
(D) by adding at the end the following: "In applying 
this subparagraph, any reference in such section to a physi-
cian is deemed also to include a reference to a supplier 
or other person under this subparagraph."; 
(3) 
in 
subsection 
(gX2XC), 
by 
inserting 
"or 
for 
nonparticipating 
suppliers 
or 
other 
persons" 
after 
"nonparticipating physicians"; 
(4) in subsection (gX2XD), by inserting "(or, if payment 
under this part is made on a basis other than the fee schedule 
under this section, 95 percent of the other pajrment basis)" 
after "subsection (a)"; 
(5) in subsection (h)— 
(A) by inserting "or nonparticipating suppUer or other 
person furnishing physicians services (as denned in section 
1848(jX3))" after "physician" the first place it appears, 
(B) by inserting ", supplier, or other person" after 
"physician" the second place it appears, and 
(C) by inserting ", suppliers, and other persons" after 
"physicians" the second place it appears; and 
(6) in subsection (jX3), W inserting ", except for purposes 
of subsections (aX3), (g), and (h)" after "tests and . 
(b) CONFORMING DEFINITION.—Section 1842(iX2) (42 U.S.C. 
1395u(iX2)) is amended— 
(1) by striking ", and the term" and inserting "; the term", 
and 
(2) by inserting before the period at the end the following: 
"; and the term inonparticipating supplier or other person' 
means a supplier or other person (excluding a provider of 
services) that is not a participating physician or supplier (as 
defined in subsection (h)(1))". 
107 STAT. 586 
PUBLIC LAW 103-66—AUG. 10, 1993 
42 use 1395W-4 
note. 
42 use 1395W-4 
note. 
42 use 1395W-4 
(c) EFFECTIVE DATE.—^The amendments made by subsection 
"ote 
(a) shall apply to services furnished on or after January 1, 1994. 
SEC. 13518. ANTIGENS UNDER PHYSICIAN FEE SCHEDULE. 
(a) IN GENERAL.—Section 1848(jX3) (42 U.S.C. 1395w-4(jX3)) 
is amended by inserting "(2XG)," after "(2X0),". 
(b) BUDGET NEUTRALITY ADJUSTMENT IN 1995.—Notwithstand-
ing any other provision of law, the Secretary of Health and Human 
Services shall implement the amendment made by subsection (a) 
in a manner to assure that such amendment will result in expendi-
tures under part B of title XVIII of the Social Security Act in 
1995 for services described in such amendment that shall be equal 
to the amount of expenditures for such services that would have 
been made if such amendment had not been made. 
(c) EFFECTIVE DATE.—^The amendment made by subsection (a) 
shall apply to services furnished on or after January 1, 1995. 
Subpart B—Outpatient Hospital Services 
SEC. 13521. EXTENSION OF 10 PERCENT REDUCTION IN PAYMENTS 
FOR CAPITAL-RELATED COSTS OF OUTPATIENT HOS-
PITAL SERVICES. 
Section 1861(vXlXSXiiXI) (42 U.S.C. 1395x(vXlXSXiiXI)) is 
amended by striking "fiscal year 1992, 1993, 1994, or 1995" and 
inserting "fiscal years 1992 through 1998". 
SEC. 13522. EXTENSION OF REDUCTION IN PAYMENTS FOR OTHER 
COSTS OF OUTPATIENT HOSPITAL SERVICES. 
Section 1861(vXlXSXiiXII) (42 U.S.C. 1395x(vXlXSXiiXII)) is 
amended by striking ", 1992, 1993, 1994, or 1995" and inserting 
"through 1998". 
Subpart C—Ambulatory Surgical Center Services 
SEC. 13531. AMBULATORY SURGICAL CENTER SERVICES. 
The Secretary of Health and Human Services shall not provide 
for any inflation update in the pajrment amounts under subpara-
graphs (A) and (B) of section 1833(iX2) of the Social Security Act 
for fiscal year 1994 or for fiscal year 1995. 
SEC. 13532. DESIGNATION OF CERTAIN HOSPITALS AS EYE OR EYE 
AND EAR HOSPITALS. 
42 use 1395/. 
(a) IN GENERAL.—Section 1833(i) (42 U.S.C. 13951(i)) is 
amended— 
(1) in paragraph (3XBXii)— 
(A) in the matter preceding subclause (I), by striking 
"the last sentence of this clause^ and inserting "paragraph 
(4)", and 
(B) by striking the last sentence; and 
(2) by inserting after paragraph (3) the following new para-
graph: 
"(4XA) In the case of a hospital that— 
"(i) makes application to the Secretary and demonstrates 
that it specializes in eye services or eye and ear services (as 
determined by the Secretary), 
"(ii) receives more than 30 percent of its total revenues 
fi:x)m outpatient services, and 
"(iii) on October 1,1987— 
42 use 1395/ 
note. 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 587 
42 use 1395/ 
note. 
**(!) was an eye specialty hospital or an eye and ear 
specialty hospital, or 
"(11) was operated as an eye or eye and ear unit (as 
defined in subparagraph (B)) of a general acute care hos-
pital which, on the date of the application described in 
clause (i), operates less than 20 percent of the beds that 
the hospital operated on October 1, 1987, and has sold 
or otherwise disposed of a substantial portion of the hos-
pital's other acute care operations, 
the cost proportion and ASC proportion in effect under subclauses 
(I) and (II) of paragraph (3XB)(ii) for cost reporting periods begin-
ning in fiscal ^ear 1988 shall remain in effect for cost reporting 
periods beginning on or after October 1, 1988, and before January 
1,1995. 
"(B) For purposes of this subparagraph (AXiii)(II), the term 
'eye or eye and ear unit* means a physically separate or distinct 
unit containing separate surgical suites devotea solely to eye or 
eye and ear services.". 
(b) EFFECTIVE DATE.—^The amendments made by subsection 
(a) shall apply to portions of cost reporting periods beginning on 
or after January 1,1994. 
SEC. 13533. REDUCTION IN PAYMENTS FOR INTRAOCULAR LENSES. 
Notwithstanding section 1833(iX2XAXiii) of the Social Security 
Act, the amoimt of payment determined under such section for 
an intraocular lens inserted subsequent to or during cataract sur-
genr in an ambulatory surgical center on or after January 1, 1994, 
and before January 1,1999, shall be equal to $150. 
Subpart D—^Durable Medical Equipment 
SEC. 13641. PAYMENT FOR PARENTERAL AND ENTERAL NUTRIENTS, 42 USC 1395m 
SUPPLIES, AND EQUIPMENT DURING 1994 AND 1996. 
note. 
In determining the amount of payment imder part B of title 
XVIII of the Social Security Act with respect to parenteral and 
enteral nutrients, supplies, and equipment during 1994 and 1995, 
the charges determined to be reasonable with respect to such nutri-
ents, supplies, and equipment may not exceed the charges deter-
mined to be reasonaole with respect to such nutrients, supplies, 
and equipment during 1993. 
SEC. 13642. REVISIONS TO PAYMENT RULES FOR DURABLE MEDICAL 
EQUIPMENT. 
(a) BASING NATIONAL PAYMENT LIMITS ON MEDIAN OF LOCAL 
PAYMENT AMOUNTS.— 
(1) INEXPENSIVE AND ROUTINELY PURCHASED ITEMS; ITEMS 
REQUIRING FREQUENT AND SUBSTANTIAL SERVICING.—<A) PARA-
graphs (2XCXiXII) and (SXCXiXII) of section 1834(a) (42 U.S.C. 
1395m(a)) are each amended— 
(i) by striking ''1992'' the first place it appears and 
inserting "1992,1993, and 1994"; and 
(ii) by striking "1992" the second place it appears and 
inserting "the year'. 
(B) Paragraphs (2XCXii) and (3XCXii) of section 1834(a) 
(42 U.S.C. 1395m(a)) are each amended— 
(i) bv striking "and" at the end of subclause (I); 
(ii) Dy redesignating subclause (II) as subclause (IV); 
and 
107 STAT. 588 
PUBLIC LAW 103-66—AUG. 10, 1993 
(iii) by inserting after subclause (I) the following new 
8U.Dcl&'LLS68 
* 
"(ID for 1992 and 1993, the amount deter-
mined under this clause for the preceding year 
increased by the covered item update for such 
subsequent year, 
"(III) for 1994, the local payment amount 
determined under clause (i) for such item or device 
for that year, except that the national limited pay-
ment amount may not exceed 100 percent of the 
median of all local payment amoimts determined 
under such clause for such item for that year and 
may not be less than 85 percent of the median 
of all local payment amounts determined under 
such clause for such item or device for that year, 
and". 
(2) 
MISCELLANEOUS 
DEVICES 
AND 
ITEMS.—Section 
1834(aX8) (42 U.S.C. 1395m(aX8)) is amended— 
(A) in subparagraph (AXiiXHI), by striking "1992'' and 
inserting "1992,1993, and 1994"; and 
(B) m subparagraph (B)— 
(i) by striking "and" at the end of clause (i), 
(ii) by redesignating clause (ii) as (iv), and 
(iii) by inserting after clause (i) the following new 
clauses: 
"(ii) for 1992 and 1993, the amount determined 
under this subparagraph for the preceding year 
increased by the covered item update for such subse-
quent year; 
"(iii) for 1994, the local purchase price computed 
under subparagraph (AXii) for the item for the year, 
except that such national limited purchase price may 
not exceed 100 percent of the median of all local pur-
chase prices computed for the item imder such 
subparagraph for the year and may not be less than 
85 percent of the me^an of all local purchase prices 
computed under such subparagraph for the item for 
the year; and". 
(3) OXYGEN AND OXYGEN EQUIPMENT.—Section 1834(aX9) 
(42 U.S.C. 1395m(aX9)) is amended— 
(A) in subparagraph (AXiiXII), by striking "1991 and 
1992" and inserting ^991, 1992, 1993, and 1994"; and 
(B) in subpara^aph (B)— 
(i) by striking "and" at the end of clause (i), 
(ii) by redesignating clause (ii) as (iv), and 
(iii) Dy inserting after clause (i) the following new 
clauses: 
"(ii) for 1992 and 1993, the amount determined 
under this subparagraph for the preceding year 
increased by the covered item update for such subse-
quent year; 
"(iii) for 1994, the local monthly payment rate 
computed under subparagraph (AXii) for the item for 
the year, except that such national limited monthly 
payment rate mav not exceed 100 percent of the 
median of all local monthly payment rates computed 
for the item under such subparagraph for ^e year 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 589 
note. 
42 u s e 1395m 
note. 
£uid may not be less than 85 percent of the median 
of all local monthly pajrment rates computed for the 
item under such subparagraph for the year; and", 
(b) EFFECTIVE DATE.—The amendments made by this section 42 use i395m 
shall apply to items furnished on or after January 1,1994. 
SEC. 13543. T
R
E
A
T
M
E
N
T OF NEBULIZERS, ASPIRATORS, AND CERTAIN 
VENTILATORS. 
(a) 
IN 
GENERAL.—Section 
1834(aX3)(A) 
(42 
U.S.C. 
1395m(aX3XA)) is amended by striking 'Ventilators, aspirators, 
IPPB machines, and nebulizers" and inserting "IPPB machines 
and ventilators, excluding ventilators that are either continuous 
airway pressure devices or intermittent assist devices with continu-
ous airway pressure devices". 
(b) PAYMENT FOR ACCESSORIES RELATING TO NEBULIZERS, 
ASPIRATORS, AND CERTAIN VENTILATORS.—Section 1834(aX2XA) (42 
U.S.C. 1395m(a)) is amended— 
(1) by striking "or" at the end of clause (i), 
(2) by adding "or" at the end of clause (ii), and 
(3) by inserting after clause (ii) the following new clause: 
"(iii) which is an accessory used in com'imction 
with a nebulizer, aspirator, or a ventilator excluded 
under paragraj^ (3XA),". 
(c) EFFECTIVE DATE.—^e amendments made by this section 
shall apply to items furnished on or after January 1,1994. 
SEC. 13544. P
A
Y
M
E
N
T FOR O
S
T
O
M
Y SUPPLIES AND O
T
H
E
R SUPPLIES. 
(a) 
OSTOMY 
SUPPUES, 
TRACHEOSTOMY 
SUPPLIES, AND 
UROLOGICALS.— 
(1) 
IN 
GENERAL.—Section 
1834(hXl) 
(42 
U.S.C. 
1395m(hXl)) is amended by adding at the end the following 
new subparagraph: 
"(E) EXCEPTION FOR CERTAIN ITEMS.—Payment for 
ostomv supplies, tracheostomy supplies, and urologicals 
shall be made in accordance with subparagraphs (B) and 
(C) of section 1834(aX2).". 
(2) CONFORMING AMENDMENT.—Section 1834(hXlXB) (42 
U.S.C. 1395m(hXlXB)) is amended by striking "subparagraph 
(C)," and inserting "subparagraphs (C) and (E), . 
(3) EFFECTIVE DATE.—^The amendments made by this sub-
section shall apply to items furnished on or after January 
1,1994. 
(b) SURGICAL DRESSINGS.— 
(1) IN GENERAL.—Section 1834 (42 U.S.C. 1395m) is 
amended by adding at the end the following new subsection: 
"(i) PAYMENT FOR SURGICAL DRESSINGS.— 
"(1) IN GENERAL.—^Payment under this subsection for sur-
gical dressings (described in section 1861(sX5)) shall be made 
m a lump sum amount for the purchase of the item in an 
amount equal to 80 percent of the lesser o
f
— 
"(A) the actual charge for the item; or 
"(B) a payment amoimt determined in accordance with 
the methodology described in subparagraphs (B) and (C) 
of subsection (aX2) (except that in applying such methodol-
ogy, the national limited payment amount referred to in 
such subparagraphs shall be initially computed based on 
local payment amounts using average reasonable charges 
for the 12-month period ending December 31, 1992, 
42 u s e 1395m 
note. 
107 STAT. 590 
PUBLIC LAW 103-66—AUG. 10, 1993 
increased by the covered item updates described in such 
subsection for 1993 and 1994). 
"(2) EXCEPTIONS.—^Paragraph (1) shall not apply to surgical 
dressings that are— 
"(A) furnished as an incident to a physician's profes-
sional service; or 
"(B) furnished by a home health agency.". 
(2) CONFORMING AMENDMENT.—Section 1833(aXl) (42 
42 use 1395/. 
U.S.C. 13951(aXl)) is amended— 
(A) by striking "and" before "(N)"; 
(B) with respect to the matter inserted by section 
4155(bX2XB) of OBRA-1990— 
(i) by striking "(M)" and inserting ", (O)", and 
(ii) by transferring it and inserting it (as amended) 
immediately before the semicolon at the end; and 
(C) by inserting before the semicolon at the end the 
following: **, and (P) with respect to surgical dressings, 
the amounts paid shall be the amounts determined under 
section 1834(1)". 
42 use 1395/ 
(3) EFFECTIVE DATE.—The amendments made by this sub-
"
°
^
^
- 
section shall apply to items furnished on or after January 
1,1994. 
SEC. 13545. PAYMENTS FOR TENS DEVICES. 
(a) 
IN 
GENERAL.—Section 
1834(aXlXD) 
(42 
U.S.C. 
1395m(aXlXD)) is amended by striking "15 percent" the second 
place it appears and inserting "45 percent". 
42 use 1
3
9
5
m 
(b) E
F
F
E
C
T
I
V
E D
A
T
E
.
—
^
T
h
e amendment made by subsection (a) 
^°^^- 
shall apply to items furnished on or after January 1,1994. 
SEC. 13546. PAYMENTS FOR ORTHOTICS, PROSTHETICS, AND PROS-
THETIC DEVICES. 
Section 1834(hX4XA) (42 U.S.C. 1395m(hX4XA)) is amended— 
(1) in clause (i), by striking "and"; 
(2) in clause (ii), by striking "a subsequent year" and insert-
ing "1992 and 1993"; and 
(3) by adding at the end the following new clauses: 
"(iii) for 1994 and 1995, 0 percent, and 
"(iv) for a subsequent year, the percentage increase 
in the consumer price index for all urban consumers 
(United States dty average) for the 12-month period 
ending with June of the previous year;". 
Subpart E—Other Provisions 
SEC. 13551. PAYMENTS FOR CLINICAL DIAGNOSTIC LABORATORY 
TESTS. 
42 use 1395/. 
(a) UPDATE FREEZE.—Section 1833(hX2XAXii) (42 U.S.C. 
13951(hX2XAXii)) is amended— 
(1) by striking "and" at the end of subclause (II), 
(2) by striking the period at the end of subclause (III) 
and inserting ", and", and 
(3) by adding at the end the following new subclause: 
"(IV) the annual adjustment in the fee sdiedules deter-
mined under clause (i) for each of the years 1994 and 1995 
shall be 0 percent.". 
42 use 1395/. 
(b) 
LOWER 
CAP.—Section 
1833(hX4XB) 
(42 
U.S.C. 
13951(hX4XB)) is amended— 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 591 
42 u s e 1395b-l 
note. 
(1) by striking "and" at the end of clause (iii), 
(2) by striking clause (iv) and inserting the following: 
**(iv) after December 31, 1990, and before January 1, 1994, 
is equal to 88 percent of such median, 
"(v) after December 31, 1993, and before January 1, 1995, 
is equal to 84 percent of such median, 
"(vi) after December 31, 1994, and before January 1, 1996, 
is equal to 80 percent of such median, and 
"(vii) after December 31, 1995, is equal to 76 percent of 
such median.". 
SEC. 13562. EXTENSION OF ALZHEIMER'S DISEASE DEMONSTRATION 
PROJECTS. 
Section 9342 of OBRA-1986, as amended by section 4164(aX2) 
of OBRA-1990, is amended— 
(1) in subsection (cXD, by striking "4 years" and inserting 
"5 years"; and 
(2) in subsection (f)— 
(A) 
by 
striking 
"$55,000,000" 
and 
inserting 
"$58,000,000", and 
(B) by striking "$3,000,000" and inserting "$5,000,000". 
SEC. 13663. ORAL CANCER DRUGS. 
(a) 
NEW 
COVERAGE 
OF 
CERTAIN 
SELF-ADMINISTERED 
A
N
T
I
C
A
N
C
E
R DRUGS.—Section 1861(sX2) (42 U.S.C. 1395(sX2)) is 42USCi395x. 
amended— 
(1) by striking "and" at the end of subparagraph (O); 
(2) by adding "and" at the end of subparagraph (P); and 
(3) by adding at the end the following new subparagraph: 
"(Q) an oral drug (which is approved by the Federal Food 
and Drug Administration) prescribed for use as an anticancer 
chemotherapeutic agent for a ^ven indication, and containing 
an active ingredient (or ingredients), which is the same indica-
tion and active ingredient (or ingredients) as a drug which 
the carrier determines would be covered pursuant to subpara-
graph (A) or (B) if the drug could not be self-administered;". 
(b) U
N
I
F
O
R
M COVERAGE OF "OFF-LABEL" ANTICANCER DRUGS.— 
Section 1861(t) (42 U.S.C. 1395x(t)) is amended— 
(1) by inserting "(1)" after "(t)"; 
(2) by striking "(mX5) of this section" and inserting "(mX5) 
and paragraph (2r; and 
(3) by adding at the end the following new paragraph: 
"(2XA) For purposes of para^aph (1), the term 'drugs' also 
includes any drugs or biologicals used in an anticancer 
chemotherapeutic regimen for a medically accepted indication (as 
described in subparagraph (B)). 
"(B) In subparagraph (A), the term 'medically accepted indica-
tion', with respect to the use of a drug, includes any use which 
has been approved by the Food and Drug Administration for the 
drug, and includes another use of the drug I
f
— 
"(i) the drug has been approved by the Food and Drug 
Administration; and 
"(iiXD such use is supported by one or more citations which 
are included (or approved for inclusion) in one or more of 
the following compendia: the American Hospital Formulary 
Service-Drug Information, the American Mecucal Association 
Drug Evaluations, the United States Pharmacopoeia-Drug 
Information, and other authoritative compendia as identified 
107 STAT. 592 
PUBLIC LAW 103-66—AUG. 10, 1993 
42 u s e 1395x 
note. 
42 u s e 1395x 
note. 
42 u s e 1395Z 
note. 
42 u s e 1395x 
note. 
42 u s e 1395b-l 
note. 
that 
by the Secretary, unless the Secretary has determined that 
the use is not medically appropriate or the use is identified 
as not indicated in one or more such compendia, or 
''(II) the C£urrier involved determines, based upon guidance 
provided by the Secretary to carriers for determining accepted 
uses of drugs, that such use is medically accepted based on 
supportive clinical evidence in peer reviewed medical literature 
appearing in publications which have been identified for pur-
poses of mis subclause by the Secretcuy. 
The Secretary may revise the list of compendia in clause (iiXD 
as is appropriate for identifying medically accepted indications for 
drugs. . 
(c) EFFECTIVE DATE.—^The amendments made by subsections 
(a) and (b) shall apply to items fiimished on or after January 
1,1994. 
SEC. 13554. CLARIFICATION OF COVERAGE OF CERTIFIED NURSE-MID-
WIFE SERVICES PERFORMED OUTSIDE THE MATERNITY 
CYCLE. 
(a) IN GENERAL.—Section 1861(afX2) (42 U.S.C. 1395x(j 
is amended by striking ", and penorms services" and all 
follows and inserting a period. 
(b) EFFECTIVE DATE.—^The amendment made by subsection (a) 
shall apply to services fiimished on or after January 1, 1994. 
SEC. 13655. INCREASE IN ANNUAL CAP ON AMOUNT OF MEDICARE 
PAYMENT FOR OUTPATIENT PHYSICAL THERAPY AND 
OCCUPATIONAL THERAPY SERVICES. 
(a) INCREASE IN ANNUAL LIMITATION.—Section 1833(g) (42 
U.S.C. 13951(g)) is amended by striking "$750" and inserting ^$900" 
each place it appears. 
(b) EFFECTIVE DATE.—^The amendment made by subsection (a) 
shall apply to services furnished on or afi^er January 1, 1994. 
SEC. 13556. RURAL HEALTH CLINICS AND FEDERALLY QUALIFIED 
HEALTH CENTERS. 
(a) IN GENERAL.—Paragraph (4) of section 1861(aa) (42 U.S.C. 
1395x(aa)) is amended— 
(1) by striking "or" at the end of subparagraph (B); 
(2) by striking the period at the end of subpars^aph (C) 
and inserting "; or"; and 
(3) by adding at the end the following new subparagraph: 
"(D) is an outpatient health program or facility operated 
by a tribe or tribal organization under the Indian Self-Deter-
mination Act or by an urban Indian organization receiving 
fimds under title V of the Indian Health Care Improvement 
Act.". 
(b) EFFECTIVE DATE.—^The amendments made by subsection 
(a) shall take efiTect as if included in the enactment of section 
4161(aX2XC) of OBRA-1990. 
SEC. 13557. EXTENSION OF MUNICIPAL HEALTH SERVICE DEM-
ONSTRATION PROJECTS. 
Section 9215 of the Consolidated Omnibus Budget Reconcili-
ation Act of 1985, as amended by section 6135 of OBRA-1989, 
is amended— 
(1) by striking "December 31, 1993" and inserting "Decem-
ber 31,1997", andT 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 593 
(2) in the second sentence, by inserting after ''beneficiary 
costs," the following: "costs to the medicaid program and other 
payevB, access to care, outcomes, beneficiary satisfaction, utili-
zation differences among the different populations served by 
the projects,". 
PART ra—PROVISIONS RELATING TO PARTS A 
ANDB 
SEC. 13661. MEDICAKE AS SECONDARY PAYER. 
(a) EXTENSION OF AND MODIFICATIONS TO DATA MATCH PRO-
GRAM.— 
(1) Section 1862(bX5XCXiii) (42 U.S.C. 1395y(bX5XCXm)) • 
is amended by striking "1995" and inserting "1998 . 
(2) Section 6103(1X12) of the Internal Revenue Code of 26 use 6103. 
1986 is amended— 
(A) in subparagraph (BXi), by inserting ", above an 
amount (if any) specified by the Secretary of Health and 
Human Services," afl«r "section 3401(a))"; 
(B) in subparagraph (BXii), in the matter preceding 
subclause (I) by inserting ", above an amount (if aiv^ 
specified by the Secretary of Health and Human Services," 
after "wages"; and 
(C) in subparagraph (F)— 
(i) in clause (i), by striking "1995" and inserting 
"1998", 
(ii) in clause (iiXD, by striking "1994" and inserting 
"1997", and 
(iii) in clause (iiXII), by striking "1995" and insert-
ing "1998". 
(b) EXTENSION OF MEDICARE SECONDARY PAYER TO DISABLED 
BENEFICIARIES.—Section 
1862(bXlXBXiii) 
(42 
U.S.C. 
1395y(bXlXBXiii)) is amended by striking "1995" and inserting 
"1998". 
(c) EXTENSION OF 18-MONTH RULE FOR ESRD BENEFICIARIES.— 
Section 1862(bXl) (42 U.S.C. 1395y(bXl)) is amended— 
(1) in the second sentence of subparagraph (C), by striking 
"on or before January 1, 1996" and inserting '^fore October 
1,1998"; 
(2) in each of subparagraphs (AXiv) and (BXii)— 
(A) by striking "Clause (i) shall not apply" and insert-
ing "Subparagraph (C) shall apply instead of clause (i)", 
and 
(B) by inserting "(without regard to entitlement under 
section 226)" after 'individual is, or^; and 
(3) in subparagraph (C), by striking "benefits under this 
title solely by reason or and inserting 'lor eligible for benefits 
under this title under" each place it appears. 
(d) APPUCATION OF AGGREGATION RULES.— 
(1) IN GENERAL.-^Section 1862(bXl) (42 U.S.C. 1395y(bXl)) 
is amended by adding at the end the following new subpara-
graph: 
"(E) GENERAL PROVISIONS.—For purposes of this sub-
section: 
"(i) AGGREGATION RULES.— 
"(I) All employers treated as a single employer 
under subsection (a) or (b) of section 52 of the 
107 STAT. 594 
PUBLIC LAW 103-66—AUG. 10, 1993 
Internal Revenue Code of 1986 shall be treated 
as a single employer. 
"(II) All employees of the members of an affili-
ated service group (as defined in section 414(m) 
of such Code) shall be treated as employed by 
a single employer. 
"(Ill) Leased employees (as defined in section 
414(nX2) of such Code) shall be treated as employ-
ees of the person for whom they perform services 
to the extent they are so treated under section 
414(n) of such Code. 
In applying sections of the Internal Revenue Code of 
1986 under this clause, the Secretary shall rely upon 
regulations and decisions of the Secretary of the Treas-
ury respecting such sections.". 
26 use 5000. 
(2) CONFORMING AMENDMENT.—Section 5000(bX2) of the 
Internal Revenue Code of 1986 (relating to large group health 
plans) is amended by adding at the end the following: "For 
purposes of the preceding sentence— 
"(A) all employers treated as a single employer under 
subsection (a) or (b) of section 52 shall be treated as a 
single employer, 
"(B) all employees of the members of an affiliated serv-
ice group (as defined in section 414(m)) shall be treated 
as employed by a single employer, and 
"(C) leased employees (as defined in section 414(nX2)) 
shall be treated as emplovees of the person for whom 
they perform services to the extent they are so treated 
under section 414(n).". 
fF?fci^®r:nn<^® 
(3) The amendments made by this subsection shall take 
note 
®*^®c* ^0 ^y^ 
^ ^ ^ ^^^ ^^^ 
0^ *^® enactment of this Act. 
(e) UNIFORM TREATMENT O F CURRENT EMPLOYMENT STATUS.— 
(1) I N GENERAL.—Section 1862(bXl) (42 U.S.C. 1395y(bXl)) 
is amended— 
(A) in subparagraph (AXi), by amending subclauses 
(I) and (II) to read as follows: 
"(I) may not take into accoimt that an individ-
ual (or the individual's spouse) who is covered 
under the plan by virtue of the individual's current 
emplojrment status with an employer is entitled 
to benefits under this title imder section 226(a), 
and 
"(II) shall provide that any individual age 65 
or over (and the individual's spouse age 65 or 
older) who is covered under the plan by virtue 
of the individual's current employment status with 
an employer shall be entitled to the same benefits 
under the plan imder the same conditions as any 
such individual (or spouse) under age 65."; 
(B) in subparagraph (AXii), by striking "unless the 
plan" and all that follows through "employees" and insert-
ing "imless the plan is a plan of, or contributed to by, 
an employer or employee organization that has 20 or more 
individuals in current employment status"; 
(C) in subparagraph (AXiii), by striking "by virtue of 
employment" and all that follows throi^h "calendar year 
or" and inserting "by virtue of current emplojnnent status 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 595 
with an employer that does not have 20 or more individuals 
in current employment status for each working day in 
each of 20 or more calendar weeks in the current calendar 
year and"; 
(D) in subparagraph (AXv), by inserting *
*
, without 
regard to section 5000(d) of such Code" before the period 
at the end of each subparagraph; 
(E) in the heading of subparagraph (B), by striking 
"ACTIVE"; 
(F) in subparagraph (BXi), by striking "clause (ivXH)) 
may not t£ike into account that an active individual (as 
defined in clause (ivXI))" and inserting "clause (iv)) may 
not take into accoimt that an individual (or a member 
of the individual's family) who is covered under the plan 
by virtue of the individual's current emplojmaent status 
with an employer"; 
(G) by amending clause (iv) of subpcuragraph (B) to 
read as follows: 
"(iv) LARGE GROUP HEALTH PLAN DEFINED.—In this 
subparagraph, the term 'large group health plan' has 
the meaning given such term in section 5000(bX2) 
of the Internal Revenue Code of 1986, without regard 
to section S
O
C
X
X
d
) of such Code."; and 
(H) by adding at the end of subparagraph (E), as 
added by subsection (dXD, the following: 
"(ii) CURRENT EMPLOYMENT STATUS DEFINED.—An 
individual has 'current employment status' with an 
employer if tiie individual is an employee, is the 
employer, or is associated with the employer in a busi-
ness relationship. 
"(iii) TREATMENT OF SELF-EMPLOYED PERSONS AS 
EMPLOYERS.—^The term 'employer* includes a self-
employed person.". 
(2XA) Section 5000 of the Internal Revenue Code of 1986 
is amended— 
(i) in subsection (a), by inserting "(including a self-
employed person)" after "employer", 
(ii) by amending paragraph (1) of subsection (b) to 
read as follows: 
"(1) GROUP HEALTH PLAN.—The term 'group health plan* 
means a plan (including a self-insured plan) of, or contributed 
to by, an employer (including a self-employed person) or 
employee organization to provide health care (cUrectly or other-
wise) to the employees, former employees, the employer, others 
associated or formerly associated with the employer in a busi-
ness relationship, or tneir families.", and 
(iii) in subsection (c), by striking "of section 1862(bXl)'' 
and inserting "of paragraph (1), or with the requirements 
of paragraph (2), of section 1862(b)". 
(B) Section 6103(lX12XEXii) of such Code is amended to 
read as follows: 
"(ii) GROUP HEALTH PLAN.—The term 'CTOUD health 
plan' means any group health plan (as dennea in sec-
tion 5000(bXl)).". 
(f) RETROACTIVE EXEMPTION FOR CERTAIN SITUATIONS INVOLV- 42 use i395y 
ING RELIGIOUS ORDERS.—Section 1862(bXlXD) of the Social Security »
°
*
® 
Act applies, with respect to items and services furnished before 
107 STAT. 596 
PUBLIC LAW 103-66—AUG. 10, 1993 
October 1, 1989, to any claims that the Secretary of Health and 
Human Services had not identified as of that date as subject to 
the provisions of section 1862(b) of such Act. 
SEC. 13562. PHYSICIAN OWNERSHIP AND REFERRAL. 
(a) IN GENERAL.—Section 1877 (42 U.S.C. 1395nn) is 
amended— 
(1) by amending subsections (a) through (e) to read as 
follows: 
"(a) PROHIBITION OF CERTAIN REFERRALS.— 
"(1) IN GENERAL.—^Except as provided in subsection (b), 
if a physician (or an immediate family member of such physi-
cian) has a financial relationship with an entity specified in 
paragraph (2), then— 
"(A) the physician may not make a referral to the 
entity for the fimiishing of designated health services for 
whicn payment otherwise may be made under this title, 
and 
"(B) the entity may not present or cause to be presented 
a claim under this title or bill to any individual, third 
party payor, or other entity for designated health services 
fiimished pursuant to a referral proMbited under subpara-
graph (A). 
"(2) FINANCIAL RELATIONSHIP SPECIFIED.—For purposes of 
this section, a 
financial 
relationship of a physician (or an imme-
diate family member of such physician) with an entity specified 
in this paragraph is— 
"(A) except as provided in subsections (c) and (d), an 
ownership or mvestment interest in the entity, or 
"(B) except as provided in subsection (e), a compensa-
tion arrangement (as defined in subsection (hXD) between 
the physician (or an immediate family member of such 
physician) and the entity. 
An ownership or investment interest described in subparagraph 
(A) may be uirough equity, debt, or other means and includes 
an interest in an entity that holds an ownership or investment 
interest in any entity providing the designated health service, 
''(b) GENERAL EXCEPTIONS T
O BOTH OWNERSHIP A
N
D COMPENSA-
TION ARRANGEMENT PROHmmoNS.—Subsection (aXD shall not 
apply in the following cases: 
"(1) PHYSICIANS' SERVICES.—In the case of physicians' serv-
ices (as defined in section 1861(q)) provided personally by (or 
under the personal supervision of) another physician in tiie 
same group practice (as defined in subsection (hX4)) as the 
referring physician. 
"(2) IN-OFFICE A
N
C
I
L
L
A
R
Y SERVICES.—In the case of services 
(other than durable medical equipment (excluding infiision 
pumps) and parenteral and enteral nutrients, equipment, and 
supplies)— 
"(A) that are fiimished— 
**(i) personally by the referring physician, person-
ally by a physician who is a member of the same 
group practice as the referring physician, or personsdly 
by individuals who are directly supervised by the physi-
cian or by another phjrsician in the group practice, 
and 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 597 
"(iiXD in a building in which the referring physi-
cian (or another physician who is a member of the 
same group practice) furnishes physicians' services 
imrelated to the furnishing of designated health serv-
ices, or 
"(11) in the case of a referring physician who is 
a member of a group practice, in another building 
which is used by the group practice— 
"(aa) for the provision of some or all of the 
group's clinical laboratory services, or 
"(bb) for the centralized provision of the 
group's designated health services (other than 
clinical laboratory services), 
unless the Secretary determines other terms and condi-
tions under which the provision of such services does 
not present a risk of program or patient abuse, and 
"(B) that are billed by the physician performing or 
supervising the services, by a group practice of which such 
physician is a member under a billing number assigned 
to the group practice, or by an entity that is wholly owned 
by such physician or such group practice, 
if the ownership or investment interest in such services meets 
such other requirements as the Secretary may impose by regu-
lation as needed to protect against program or patient abuse. 
"(3) PREPAID PLANS.—In the case of services furnished by 
an organization— 
"(A) with a contract under section 1876 to an individual 
enrolled with the organization, 
"(B) described in section 1833(aXlXA) to an individual 
enrolled with the organization, 
"(C) receiving payments on a prepaid basis, imder a 
demonstration project imder section 402(a) of the Social 
Security Amendments of 1967 or under section 222(a) of 
the Social Security Amendments of 1972, to an individual 
enrolled with the organization, or 
"(D) that is a qualified health maintenance organiza-
tion (within the meaning of section 1310(d) of the Public 
Health Service Act) to an individual enrolled with the 
organization. 
"(4) OTHER PERMISSIBLE EXCEPTIONS.—In the case of any 
other financial relationship which the Secretary determines, 
and specifies in regulations, does not pose a risk of program 
or patient abuse. 
"(c) GENERAL EXCEPTION RELATED ONLY TO OWNERSHIP OR 
INVESTMENT PROHIBITION FOR OWNERSHIP IN PUBLICLY TRADED 
SECURITIES AND MUTUAL FUNDS.—Ownership of the following shall 
not be considered to be an ownership or investment interest 
described in subsection (aX2XA): 
"(1) Ownership of investment securities (including shares 
or bonds, debentures, notes, or other debt instruments) which 
mav be purchased on terms generally available to the public 
and whi(ui are— 
"(AXi) securities listed on the New York Stock 
Exchange, the American Stock Exchange, or any regional 
exchange in which quotations are published on a daily 
basis, or foreign securities listed on a recognized foreign, 
107 STAT. 598 
PUBLIC LAW 103-66—AUG. 10, 1993 
national, or regional exchange in which quotations are 
published on a daily basis, or 
"(ii) traded under an automated interdealer quotation 
system operated by the National Association of Securities 
Dealers, and 
"(B) in a corporation that had, at the end of the corpora-
tion's most recent fiscal year, or on average during the 
previous 3 fiscal years, stockholder eqmty exceeding 
$75,000,000. 
"(2) Ownership of shares in a regulated investment com-
pany as defined m section 851(a) of the Internal Revenue 
Code of 1986, if such company had, at the end of the company's 
most recent fiscal year, or on average during the previous 
3 fiscal years, total assets exceeding $75,000,000. 
"(d) ADDITIONAL EXCEPTIONS RELATED ONLY TO OWNERSHIP 
O
R INVESTMENT PROHIBITION.—^The following, if not otherwise 
excepted imder subsection (b), shall not be considered to be an 
ownership or investment interest described in subsection (aX2XA): 
*
%
!
) HOSPITALS IN PUERTO RICO.—In the case of designated 
health services provided by a hospital located in Puerto Rico. 
"(2) RURAL PROVIDER.—^In the case of designated health 
services fiimished in a rural area (as defined in section 
1886(dX2XD)) by an entity, if substantially all of the designated 
health services fiimished by such entity are fiimished to 
individuals residing in such a rural area. 
"(3) HOSPITAL OWNERSHIP.—In the case of designated 
health services provided by a hospital (other than a hospital 
described in paragraph (1)) if— 
"(A) the referring physician is authorized to perform 
services at the hospital, and 
"(B) the ownership or investment interest is in the 
hospital itself (and not merely in a subdivision of the 
hospital). 
''(e) EXCEPTIONS RELATING TO OTHER COMPENSATION ARRANGE^ 
M
E
N
T
S
.
—
^
T
h
e following shall not be considered to be a compensation 
arrangement described in subsection (aX2XB): 
"(1) RENTAL OF OFFICE SPACE; RENTAL OF EQUIPMENT.— 
"(A) OFFICE SPACE.—Payments made by a lessee to 
a lessor for the use of premises if— 
*\i) the lease is set out in writing, signed by the 
parties, and specifies the premises covered by the lease, 
"(ii) the space rented or leased does not exceed 
that which is reasonable and necessary for the legiti-
mate business purposes of the lease or rental and 
is used exclusively oy the lessee when being used by 
the lessee, except that the lessee may make paymente 
for the use of space consisting of common areas if 
such payments do not exceed the lessee's pro rata 
share of expenses for such space based upon the ratio 
of the space used exclusively by the lessee to the total 
amount of space (other than common areas) occupied 
by all persons using such common areas, 
'Xiii) the lease provides for a term of rental or 
lease for at least 1 year, 
"(iv) the rental charges over the term oi the lease 
are set in advance, are consistent with fair market 
value, and are not determined in a manner that takes 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 599 
into account the volume or value of any referrals or 
other business generated between the parties, 
"(v) the lease would be commercially reasonable 
even if no referrals were made between the parties, 
and 
''(vi) the lease meets such other requirements as 
the Secretary may impose by regulation as needed 
to protect against program or patient abuse. 
*
*
(
B
) EQUIPMENT.—^Pajrments made by a lessee of equip-
ment to the lessor of the equipment for the use of fiie 
equipment if— 
*'(i) the lease is set out in writing, signed by the 
parties, and specifies the equipment covered by the 
lease, 
"(ii) the equipment rented or leased does not exceed 
that which is reasonable and necessary for the legiti-
mate business purposes of the lease or rental and 
is used exclusively oy the lessee when being used by 
the lessee, 
''(iii) the lease provides for a term of rental or 
lease of at least 1 year, 
"(iv) the rental charges over the term of the lease 
are set in advance, are consistent with fair market 
value, and are not determined in a manner that takes 
into account the volume or value of any referrals or 
other business generated between the parties, 
''(v) the lease would be commercially reasonable 
even if no referrals were made between the parties, 
and 
"(vi) the lease meets such other requirements as 
the Secretary may impose by regulation as needed 
to protect against program or patient abuse. 
''(2) BONA FIDE EMPLOYMENT RELATIONSHIPS.—Any amount 
paid by an employer to a physician (or an immediate family 
member of such physician) who has a bona fide employment 
relationship with the employer for the provision of services 
if— 
"(A) the employment is for identifiable services, 
"(B) the amount of the remuneration under the 
employment— 
"(i) is consistent with the fair market value of 
the services, and 
"(ii) is not determined in a manner that takes 
into account (directly or indirectly) the volume or value 
of any referrals by the referring physician, 
"(C) the remuneration is provided pursuant to an 
ap^reement which would be commercially reasonable even 
ifno referrals were made to the employer, and 
"(D) the employment meets such other requirements . 
as the Secretary may impose by regulation as needed to 
protect against program or patient abuse. 
Subparagraph (BXii) shall not prohibit the payment of remu-
neration in the form of a productivity boniis based on services 
performed personally by the physician (or an immediate family 
member of such physician). 
*
*
(
3
) PERSONAL SERVICE ARRANGEMENTS.— 
107 STAT. 600 
PUBLIC LAW 103-66—AUG. 10, 1993 
"(A) IN GENERAL.—^Remuneration from an entity under 
an arrangement (including remuneration for specific physi-
cians' services furnished to a nonprofit blood center) if— 
''(i) the arrangement is set out in writing, signed 
by the parties, and specifies the services covered by 
tne arrangement, 
"(ii) the arrangement covers all of the services 
to be provided by the physician (or an immediiate family 
member of such physician) to the entity, 
"(iii) the aggregate services contracted for do not 
exceed those u^t are reasonable and necessary for 
the legitimate business purposes of the arrangement, 
"(iv) the term of the arrangement is for at least 
lyear, 
"(v) the compensation to be paid over the term 
of the arrangement is set in advance, does not exceed 
fair market value, and except in the case of a physician 
incentive plan described in subpara^aph (B), is not 
determined in a manner that takes into account the 
volume or value of any referrals or other business 
generated between the parties, 
"(vi) the services to be performed under the 
arrangement do not involve the coimseling or pro-
motion or a business arrangement or other activity 
that violates any State or Federal law, and 
"(vii) the arrangement meets such other require-
ments as the Secretary may impose by reflation as 
needed to protect against program or patient abuse. 
"(B) PHYSICIAN INCENTIVE PLAN EXCEPTION.— 
"(i) IN GENERAL.—^In the case of a physician incen-
tive plan (as defined in clause (ii)) between a physician 
and an entity, the compensation may be determined 
in a mcuiner (through a withhold, capitetion, bonus, 
or otherwise) that takes into account directly or 
indirectly the volume or value of any referrals or other 
business generated between the parties, if the plan 
meets the following requirements: 
"(I) No specific payment is made directly or 
indirectly under the plan to a physician or a physi-
cian group as an inducement to reduce or limit 
medi^ly necessary services provided with respect 
to a specific individual enrolled with the entity. 
"(II) In the case of a plan that places a physi-
cian or a physician group at substontial financial 
risk as determined by the Secretary pursuant to 
section 1876(iX8XAXii), the plan complies with any 
requirements the Secretory may impose pursuant 
to such section. 
**(III) Upon request by the Secretory, the entity 
provides the Secretary with access to descriptive 
information regarding the plan, in order to permit 
the Secretary to determine whether the plan is 
in compliance with the requiremento of this clause, 
"(ii) PHYSICIAN INCENTIVE PLAN DEFINED.—^For pur-
poses of this subparagraph, the term 'physician incen-
tive plan' means any compensation arrangement 
between an entity and a physician or physician group 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 601 
that may directly or indirectly have the effect of reduc-
ing or limiting services provided with respect to 
individuals enroUed with the entity. 
"(4) REMUNERATION UNRELATED TO THE PROVISION OF DES-
IGNATED H
E
A
L
T
H SERVICES.—In the case of remuneration which 
is provided by a hospital to a physician if such remuneration 
does not relate to the provision of designated health services. 
"(5) PHYSICIAN RECRUITMENT.—^In the case of remuneration 
which is provided by a hospital to a physician to induce the 
physician to relocate to the geographic area served by the 
hospital in order to be a member of the medical staff of the 
hospital, if— 
"(A) the physician is not required to refer patients 
to the hospital, 
"(B) the amount of the remuneration under the 
arrangement is not determined in a manner that takes 
into account (directly or indirectly) the volume or value 
of anv referrals by the referring physician, and 
(C) the arrangement meets such other requirements 
as the Secretary ipay impose by regulation as needed to 
protect against program or patient abuse. 
''(6) ISOLATED TRANSACTIONS.—In the case of an isolated 
financial transaction, such as a one-time sale of property or 
practice, if— 
"(A) the requirements described in subparagraphs (B) 
and (C) of paragraph (2) are met with respect to the entity 
in the same manner, as they apply to an employer, and 
"(B) Hie transaction meets such other requirements 
as the Secretary may impose by regulation as needed to 
protect against program or patient abuse. 
"(7) CERTAIN GROUP PRACTICE ARRANGEMENTS WITH A HOS-
PITAL.— 
"(A) IN GENERAL.—An arrangement between a hospital 
and a group under which designated health services are 
provided by the group but are billed by the hospital if— 
"(i) with respect to services provided to an 
inpatient of the hospital, the arrangement is pursuant 
to the provision of inpatient hospital services under 
section 1861(bX3), 
"(ii) the arrangement began before December 19, 
1989, and has continued in effect without interruption 
since such date, 
"(iii) with respect to the designated health services 
covered under the arrangement, substantially all of 
such services furnished to patients of the hospital are 
furnished by the group under the arrangement, 
"(iv) the arrangement is pursuant to an agreement 
that is set out in writing and that specifies the services 
to be provided bv the parties and the compensation 
for services provided under the agreement, 
"(v) the compensation paid over the term of the 
agreement is consistent with fair market value and 
the compensation per unit of services is fixed in 
advance and is not determined in a manner that takes 
into account the volume or value of any referrals or 
other business generated between the parties, 
107 STAT. 602 
PUBLIC LAW 103-66—AUG. 10, 1993 
"(vi) the compensation is provided pursuant to an 
agreement which would be commercially reasonable 
even if no referrals were made to the entity, £uid 
"(vii) the arrangement between the parties meets 
such other requirements as the Secretary may impose 
by relation as needed to protect against program 
or patient abuse. 
"(8) PAYMENTS BY A PHYSICIAN FOR ITEMS AND SERVICES.— 
Pa3rments made by a physician— 
"(A) to a laboratory in exchange for the provision of 
clinical laboratory services, or 
"(B) to an entity as compensation for other items or 
services if the items or services are furnished at a price 
that is consistent with fair market value.**; 
(2) by amending subsection (h) to read as follows: 
"(h) DEFINITIONS AND SPECIAL RULES.—For purposes of this 
section: 
"(1) COMPENSATION ARRANGEMENT; REMUNERATION.—(A) 
The term 'compensation arrangement' means any arrangement 
involving any remuneration between a physician (or an imme-
diate family member of such physician) and an entity other 
than an arrangement involving only remuneration described 
in subparagraph (C). 
**(B) The term ^remuneration' includes any remuneration, 
directly or indirectly, overtly or covertly, in cash or in kind. 
"(C) Remuneration described in this subparagraph is any 
remuneration consisting of any of the following: 
"(i) The forgiveness of amounts owed for inaccurate 
tests or procedures, mistakenly performed tests or proce-
dures, or the correction of minor billing errors. 
"(ii) The provision of items, devices, or supplies that 
are used solely to— 
"(I) collect, transport, process, or store specimens 
for the entity providing the item, device, or supply, 
or 
''(II) order or communicate the results of tests or 
procedures for such entity. 
"(iii) A payment made by an insurer or a self-insured 
plan to a physician to satisfy a claim, submitted on a 
fee for service basis, for the furnishing of health services 
by that physician to an individual who is covered by a 
policy with the insurer or by the self-insured plan, if— 
"(I) the health services are not furnished, and the 
payment is not made, pursuant to a contract or other 
arrangement between tiie insurer or the plan and the 
physician, 
"(11) the payment is made to the physician on 
behalf of the covered individual and would otherwise 
be made directly to such individual, 
"(III) the amount of the pajrment is set in advance, 
does not exceed fair market value, and is not deter-
mined in a manner that takes into account directly 
or indirectiy the volume or value of any referrals, €uid 
"(IV) the payment meets such other requirements 
as the Secretary may impose by regulation as needed 
to protect against program or patient abuse. 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 603 
"(2) EMPLOYEE.—^An individual is considered to be 
'employed by* or an 'employee' of an entity if the individual 
would be considered to oe an employee of the entity under 
the usual common law rules applicable in determining the 
employer-employee relationship (as applied for purposes of sec-
tion 3121(dX2) of the Internal Revenue Code of 1986). 
"(3) FAIR MARKET VALUE.—The term 'fair market value' 
mesms the value in arms length treuisactions, consistent with 
the general market value, and, with respect to rentals or leases, 
the value of rental property for general commercial purposes 
(not taking into account its intended use) and, in the case 
of a lease of space, not adjusted to reflect the additional value 
the prospective lessee or lessor would attribute to the proximity 
or convenience to the lessor where the lessor is a potential 
source ofpatient referrals to the lessee. 
"(4) CxROUP PRACTICE.— 
"(A) DEFINITION OF GROUP PRACTICE.—The term 'group 
practice' means a group of 2 or more physicians legally 
organized as a partnership, professional corporation, 
foundation, not-for-profit corporation, faculty practice plan, 
or similar association— 
"(i) in which each physician who is a member 
of the group provides substantially the full range of 
services which the physician routinely provides, includ-
ing medical care, consultation, diagnosis, or treatment, 
through the joint use of shared office space, facilities, 
equipment and personnel, 
(ii) for which substantially all of the services of 
the physicians who are members of the group are pro-
vided through the group and are billed under a billing 
number assigned to the group and amounts so received 
are treated as receipts of 
the group, 
"(iii) in which the overhead expenses of and the 
income from the practice are distributed in accordance 
with methods previously determined, 
"(iv) except as provided in subparagraph (BXi), 
in which no physician who is a member of the group 
directly or indirectly receives compensation based on 
the volume or value of referrals by tne physician, 
"(v) in which members of the group personally 
conduct no less than 75 percent of the physician-patient 
encounters of the group practice, and 
"(vi) which meets such other standards as the Sec-
retaiy may impose by regulation. 
"(B) SPECIAL RULES.— 
"(i) PROFITS AND PRODUCTIVITY BONUSES.—A physi-
cian in a group practice may be paid a share of overall 
profits of the group, or a productivity bonus based 
on services personally performed or services incident 
to such personally performed services, so long as the 
share or bonus is not determined in any manner which 
is directly related to the volume or value of referrals 
by such physician. 
"(ii) FACULTY PRACTICE PLANS.—^In the case of a 
faculty practice plan associated with a hospital, institu-
tion of higher education, or medical school with an 
approved medical residency training program in which 
107 STAT. 604 
PUBLIC LAW 103-66—AUG. 10, 1993 
physician members may provide a variety of different 
specialty services and provide professional services 
both within and outside the group, as well as perform 
other tasks such as research, subparagraph (A) shall 
be applied only with respect to the services provided 
withm the faculty practice plan. 
"(5) REFERRAL; REFERRING PHYSICIAN.— 
"(A) PHYSICIANS' SERVICES.—Except as provided in 
subparagraph (C), in the case of an item or service for 
which payment may be made under part B, the request 
by a physician for the item or service, including the request 
by a pnysician for a consultation with another physician 
(and any test or procedure ordered by, or to be performed 
by (or under the supervision of) that other physicitui), 
constitutes a Referral' by a 'referring physician'. 
"(B) OTHER ITEMS.—^Except as provided in subpara-
graph (C), the request or establishment of a plan of care 
by a physician wnich includes the provision of the des-
ignated nealUi service constitutes a 'referral' by a 'referring 
physician'. 
"(C) 
CLARIFICATION RESPECTING CERTAIN SERVICES 
INTEGRAL TO A CONSULTATION BY CERTAIN SPECIALISTS.— 
A request by a pathologist for clinical diagnostic laboratory 
tests and pathological examination services, a request by 
a radiologist for diagnostic radiologn^ services, and a request 
by a raouation oncologist for radiation therapy, if such 
services are furnished b^ (or under the supervision of) 
such pathologist, radiologist, or radiation oncologist pursu-
ant to a consultation requested by another physician does 
not constitute a *referral'by a 'referring physician'. 
"(6) DESIGNATED HEALTH SERVICES.—The term 'designated 
health services' means any of the following items or services: 
"(A) Clinical laboratory services. 
"(B) Physical therapy services. 
"(C) Occupational therapy services. 
"(D) Radiology or other diagnostic services. 
"(E) Radiation therapy services. 
"(F) Durable medical equipment. 
"(G) Parenteral and enteral nutrients, equipment, and 
supplies. 
"(H) Prosthetics, orthotics, and prosthetic devices. 
"(I) Home healUi services. 
"(J) Outpatient prescription drugs. 
"(K) Inpatient and outpatient hospital services."; 
(3) in subsection (f), by striking "clinical laboratory serv-
ices" and inserting "designated health services"; and 
(4) in para^aph (1) of subsection (g), by striking "clinical 
laboratory service and inserting "designated health service". 
42 use 1395nn 
(b) EFFECTIVE DATES.— 
"°*® 
(1) I N GENERAL.—Except as provided in paragraph (2), the 
amendments made by this section shall apply to referrals— 
(A) made on or after January 1, 1992, in the case 
of clinical laboratory services, and 
(B) made after December 31, 1994, in the case of other 
designated health services. 
(2) ElaccEPTlONS.—^With respect to referrals made for clinical 
laboratory services on or before December 31,1994— 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 605 
(A) the requirements of clauses (iv) and (v) of section 
1877(hX4XA) of the Social Security Act, as amended by 
this section, shall not apply; and 
(B) the second sentence of subsection (aX2), and sub-
sections (bX2XB), (c), (dX2), (eXD, and (hX4XB) of section 
1877 of such Act, as in effect on the day before the date 
of the enactment of this Act, shall apply (instead of the 
corresponding provision in such section as so amended). 
SEC. 13568. DIRECT GRADUATE MEDICAL EDUCATION. 
(a) ELIMINATION OF COST-OF-LIVING UPDATE IN PER RESIDENT 
AMOUNTS FOR DIRECT MEDICAL EDUCATION.—Section 1886(h) (42 
U.S.C. 1395ww(h)) is amended— 
(1) in paragraph (2XD)— 
(A) by striking 'Tor each" and inserting "(i) Except 
as provided in clause (ii), for each", and 
(B) by adding at the end the following new clause: 
"(ii) For cost reporting periods beginning during fiscal 
year 1994 or fiscal year 1995, the approved FTE resident 
amount for a hospital shall not be updated iinder clause 
(i) for a resident who is not a primary care resident (as 
defined in paragraph (5XH)) or a resident enrolled in an 
approved medical residency training program in obstetrics 
and gynecology."; and 
(2) in paragraph (5)— 
(A) by redesignating subparagraph (H) as subpara-
graph (I); and 
(B) by inserting after subparagraph (G) the following 
new subparagraph: 
"(H) PRIMARY CARE RESIDENT.—The term 'primary care 
resident' means a resident enrolled in an approved medical 
residency training program in family medicine, general 
internal medicine, general pediatrics, preventive medicine, 
geriatric medicine, or osteopathic general practice.". 
(b) INITIAL RESIDENCY PERIOD.— 
(1) IN GENERAL.—Section 
1886(hX5XF) 
(42 U.S.C. 
1395ww(hX5XF)) is amended— 
(A) by striking "plus one year", and 
(B) in clause (li), b^ inserting "or a preventive medicine 
residency or fellowship program" after "fellowship pro-
gram". 
(2) EFFECTIVE DATES.—The amendments made by para- 42USCi395ww 
graphs (IXA) and (IXB) shall take effect on July 1, 1995, ^o^ 
and the date of the enactment of this Act, respectively. 
(c) ADJUSTMENT FOR PUBUCLY-FUNDED FAMILY PRACTICE RESI-
DENCY PROGRAMS.— 
(1) 
IN 
GENERAL.—Section 
1886(hX5) 
(42 
U.S.C. 
1395ww(hX5)), as amended by subsection (a), is amended by 
adding at the end the following new subparagraph: 
"(J) ADJUSTMENTS FOR CERTAIN FAMILY PRACTICE RESI-
DENCY PROGRAMS.— 
"(i) IN GENERAL.—^In the case of an approved medi-
cal residency training pn^am (meeting the reouire-
ments of clause (ii)) of a hospital which received funds 
from the United States, a State, or a political subdivi-
sion of a State or an instrumentality of such a State 
or political subdivision (other than payments under 
107 STAT. 606 
PUBLIC LAW 103-66—AUG. 10, 1993 
this title or a State plan under title XIX) for the 
pro-am diiring the cost reporting period that began 
aunng fiscal year 1984, the Secretary shall— 
"(I) provide for an average amoirnt under para-
graph (2XA) that takes into account the Secretary's 
estimate of the amount that would have been rec-
o^zed as reasonable imder this title if the hos-
pital had not received such funds, and 
"(ID reduce the pajrment amoimt otherwise 
provided under this subsection in an amount equal 
to the proportion of such program funds received 
during the cost reporting period involved that is 
allocable to this title. 
"(ii) ADDITIONAL 
REQUIREMENTS.—A hospital's 
approved medical residency program meets the require-
ments of this clause i
f
— 
"(I) the program is limited to training for fam-
ily and community medicine; 
"(II) the program is the only approved medical 
residencyr program of the hospital; and 
"(III) the average amoimt determined under 
paragraph (2XA) for the hospital (as determined 
without regard to the increase in such amount 
described in clause (iXD) does not exceed $10,000.". 
42 use 1
3
9
5
W
W 
(2) EFFECTIVE DATE.—^The amendment made by paragraph 
^°^- 
(1) shall apply to payments under section 1886(h) of the Social 
Security Act for cost reporting periods beginning on or after 
October 1,1992. 
42 u s e 1
3
9
5
W
W 
(d) ADJUSTMENT IN GME BASE-YEAR COSTS OF FEDERAL INSUR-
^°*® 
ANCE CONTRIBUTIONS A C T . — 
(1) IN GENERAL.—In determining the amount of pa3rment 
to be made under section 1886(h) of the Social Security Act 
in the case of a hospital described in paragraph (2) for cost 
reporting periods beginning on or after October 1, 1992, the 
Secretary of Health and Human Services shall redetermine 
the approved FTE resident amount to reflect the amount that 
would have been paid the hospital if, during the hospital's 
base cost reporting period, the hospital had been liable for 
FICA taxes or for contributions to the retirement system of 
a State, a political subdivision of a State, or an instrumentality 
of such a State or political subdivision with respect to interns 
and residents in its medical residency training program. 
(2) HOSPITALS AFFECTED.—A jfiospital described in this 
paragraph is a hospital that did not pay FICA taxes with 
respect to interns and residents in its medical residency train-
ing program during the hospital's base cost reporting period, 
but is required to pay FICA taxes or m£ike contributions to 
a retirement system described in paragraph (1) with respect 
to such interns and residents because of the amendments made 
by section 11332(b) of OBRA-1990. 
(3) DEFINITIONS.—In this subsection: 
(A) The "base cost reporting period" for a hospital 
is the hospital's cost reporting period that began during 
fiscalyear 1984. 
(B) The term "FICA taxes" means, with respect to 
a hospital, the taxes under section 3111 of the Internal 
Revenue Code of 1986. 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 607 
SEC. 13564. REDUCTION IN PAYMENTS FOR HOME HEALTH SERVICES. 
(a) IN GENERAL.— 
(1) No C
H
A
N
G
E
S IN C
O
S
T LIMITS.—The Secretary of Health 
and Human Services shall not provide for any change in the 
per visit cost limits for home health services under section 
1861(vXlXL) of such Act for cost reporting periods beginning 
on or ajfter July 1, 1994, and before July 1, 1996, except as 
may be necesstiry to take into account the amendment made 
by subsection (bXl). The effect of the preceding sentence shall 
not be considered by the Secretary in making adjustments 
pursuant to section 1861(vXlXLXii) of such Act to the payment 
limits for such services during such cost reporting periods. 
(2) DELAY IN UPDATES.—Section 1861(vXlXLXiii) (42 U.S.C. 
1395x(vXlXLXiii)) is amended by striking "thereafter," and 
inserting "tiiereafter (but not for cost reporting periods begin-
ning on or after July 1, 1994, and before July 1, 1996),'*. 
(b) EUMINATION OF ADD-ON FOR OVERHEAD OF HOSPITAL-BASED 
HOME HEALTH AGENCIES.— 
(1) 
GENERAL RULE.—^The first sentence of section 
1861(vXlXLXii) (42 U.S.C. 1395x(vXlXLXii)) is amended by 
striking ", with appropriate adjustment for administrative and 
general costs of 
hospital-based agencies". 
(2) EFFECTIVE DATE.—^The amendment made by paragraph 
(1) shall apply to cost reporting periods beginning on or after 
October 1,1993. 
SEC. 1356S. IMMUNOSUPPRESSIVE DRUG THERAPY. 
Section 1861(sX2XJ) (42 U.S.C. 1395x(sX2XJ)) is amended by 
striking "title, within" and all that follows and inserting the follow-
ing: "title, but only in the case of drugs furnished— 
"(i) before 1995, within 12 months aft^er the date of 
the transplant procedure, 
"(ii) during 1995, within 18 months after the date 
of the transpl£uit procedure, 
"(iii) during 1996, within 24 months aft^er the date 
of the transplant procedure, 
"(iv) during 1997, within 30 months after the date 
of the transplant procedure, and 
"(v) during £my year after 1997, within 36 months 
aft;er the date of the transplant procedure;". 
SEC. 13566. REDUCTION IN PAYMENTS FOR ERYTHROPOIENTIN. 
(a) IN GENERAL.—Section 1881(b) (42 U.S.C. 1395rr(b)) is 
amended— 
(1) m paragraph (IXC), by striking "1861(sX2XQ)'' and 
inserting "1861(sX2XP)''; and 
(2) in paragraph (llXBXiiXI)-
(A) by striking "1991" and inserting "1994", and 
(B) by striking "$11" and inserting "$10". 
(b) 
SELF-ADMINISTRATION OF ERYTHROPOIENTIN.—Subpara-
graph (P) of section 1861(sX2) (42 U.S.C. 1395x(sX2)) is amended— 
(1) by striking "home", and 
(2) by moving such subparagraph two ems to the left. 
(c) EFFECTIVE DATE.—^The amendmente made by this section 
shall apply to erythropoietin furnished on or aft;er January 1, 1994. 
42 u s e 1395x 
note. 
42 u s e 1395x 
note. 
42 u s e 1395x 
note. 
107 STAT. 608 
PUBLIC LAW 103-66—AUG. 10, 1993 
101 Stat. 
1330-65. 
98 Stat. 1103. 
42 u s e 1395h 
note. 
42 u s e 1395mm 
note. 
SEC. 13567. EXTENSION 
OF 
SOCIAL 
HEALTH 
MAINTENANCE 
ORGANIZATION DEMONSTRATIONS. 
(a) EXTENSION OF CURRENT WAIVERS.—Section 4018(b) of 
OBRA-1987, as amended by section 4207(bX4XB) of OBRA-1990, 
is amended— 
(1) in paragraph (1) by striking "December 31, 1995" and 
inserting "December 31,1997"; and 
(2) in paragraph (4) by striking "March 31, 1996" and 
inserting "March 31,1998". 
(b) EXPANSION OF DEMONSTRATIONS.—Section 2355 of the Defi-
cit Reduction Act of 1984 is amended— 
(1) in the last sentence of subsection (a) by striking "12 
months" and inserting "36 months"; and 
(2) in subsection (bXlXB)— 
(A) by striking "oi^' at the end of clause (iii); and 
(B) by redesignating clause (iv) as clause (v) and insert-
ing after clause (iii) the following new clause: 
"(iv) integrating acute and chronic c£ure manage-
ment for patients with end-stage renal disease through 
expanded community care case management services 
(and for purposes of a demonstration project conducted 
under this clause, any requirement under a waiver 
granted under this section that a project disenroU 
individuals who develop end-stage renal disease shall 
not apply); or". 
(c) EXPANSION OF NUMBER OF MEMBERS PER SITE.—The Sec-
retary of Health and Human Services may not impose a limit 
of less than 12,000 on the number of individuals that may partici-
pate in a project conducted imder section 2355 of the Deficit Reduc-
tion Act of 1984. 
(d) EFFECTIVE DATE.—^The amendments made by this section 
shall take efiect as if included in the enactment of OBRA-1990. 
SEC. 13568. TIMING OF CLAIMS PAYMENT. 
(a) 
IN 
GENERAL.—Sections 
1816(cX3XB) 
(42 
U.S.C. 
1395h(cX3XB)) and 1842(cX3XB) (42 U.S.C. 1395u(cX3XB)) are each 
amended by striking clauses (i) and (ii) and inserting the following: 
"(i) with respect to claims submitted electronically as pre-
scribed by the Secretary, 13 days, and 
"(ii) with respect to claims submitted otherwise, 26 days.". 
(b) TIME LIMIT OF 30 DAYS FOR CLEAN CLAIMS.—Sections 
1816(cX2XBXii) (42 U.S.C. 1395h(cX2XBXii)) and 1842(cX2)(BXii) 
(42 U.S.C. 1395u(cX2XBXii)) are each amended— 
(1) in subclause (IV), by striking "period," and inserting 
"period ending on or before September 30,1993,", and 
(2) by adding at the end the following new subclause: 
"(V) with respect to claims received in the 12-month 
period beginning October 1, 1993, and claims received in 
any succeeding 12-month period, 30 calendar days.". 
(c) EFFECTIVE DATE.—^The amendments made by this section 
shall apply to claims received on or after October 1,1993. 
SEC. 13668. EXTENSION OF WAIVER FOR WATTS HEALTH FOUNDATION. 
Section 9312(cX3XD) of OBRA-1986, as added by section 
4018(d) of OBRA-1987 and as amended by section 6212(aXl) of 
OBRA-1989, is amended by striking "1994* and inserting "1996". 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 609 
PART IV—PROVISION RELATING TO PART B 
PREMIUM 
SEC. 13571. PART B PREMIUM. 
Section 1839 (42 U.S.C. 1395r) is amended— 
(1) in subsection (eXlXA), by striHng 'l^ecember 1983 and 
prior to January 1991 shall be an amount equal to 50 percent" 
and inserting ''after December 1995 and prior to January 199)9 
shall be an amount equal to 50 percent", and 
(2) in subsection (eX2), by striking "1991" and inserting 
"1998". 
PART V—PROVISION RELATING TO DATA 
BANK 
SEC. 13581. BIEDICARE AND MEDICAID COVERAGE DATA BANK. 
(a) ESTABUSHMENT OF MEDICARE AND MEDICAID COVERAGE 
DATA BANK.—Part A of title XI (42 U.S.C. 1301 et seq.) is amended 
by adding at the end the following new section: 
'IkfEDICARE AND MEDICAID COVERAGE DATA BANK 
"SEC. 1144. (a) ESTABUSHMENT OF DATA BANK.—The Secretary 42 use 
shall establish a Medicare and Medicaid Coverage Data Bank I320b-14. 
(hereafter in this section referred to as the Data Bank') to— 
"(1) further the purposes of section 1862(b) in the identifica-
tion of, and collection from, third parties responsible for 
payment for health care items and services furnished to medi-
care beneficiaries, and 
"(2) assist in the identification of, and the collection from, 
third parties responsible for the reimbursement of costs 
incurred by any State plan under title X
D
C with respect to 
medicaid benenciaries, upon re<]^uest by the State agency 
described in section 1902(a)(5) admmistering such plan. 
*
*
(
b
) INFORMATION IN DATA BANK.— 
"(1) IN GENERAL.—^The Data Bank shall contain information 
obtained pursuant to section 6103(1X12) of the Internal Revenue 
Code of 1986 and subsection (c). 
"(2) DISCLOSURE OF INFORMATION IN DATA BANK—The Sec-
retary is authorized until September 30,1998— 
''(A) (subject to the restriction in subparagraph (DXi) 
of section 6103(1X12) of the Internal Revenue Code of 1986) 
to disclose any information in the Data Bank obtained 
pursuant to such section solely for the purposes of such 
section, and 
"(B) (subject to the restriction in subsection (cX7)) to 
disclose any other information in the Data Bank to any 
State agency described in section 1902(aX5), emplover, or 
group healui plan solely for the purposes described in 
subsection (a). 
"(c) REQUIREMENT THAT EMPLOYERS REPORT INFORMATION.— 
"(1) REPORTING REQUIREMENT.— 
"(A) IN GENERAL.—Any employer described in para-
graph (2) shall report to the Secretary (in such form and 
manner as tlie Secretary determines will minimize the 
burden of such reporting) with respect to each electing 
107 STAT. 610 
PUBLIC LAW 103-66—AUG. 10, 1993 
individual the information required under paragraph (5) 
for each calendar year beginning on or after January 1, 
1994, and before January 1,1998. 
"(B) SPECIAL RULE.—TO the extent a group health plan 
provides information required under pari^aph (5) m a 
form and manner specific by the Secretary (in consultation 
with the Secretary of Labor) on behalf of an employer 
in accordance with section 101(f) of the Employee Retire-
ment Income Security Act of 1974, the employer has com-
plied with the reporting requirement under subparagraph 
(A) with respect to the reporting of such information. 
"(2) EMPLOYER DESCRIBED.—^An employer is described in 
this paragraph if such employer has, or contributes to, a group 
health plan, with respect to which at least 1 employee of 
such employer is an electing individual. 
"(3) ELECTING INDIVIDUAL.—^For purposes of this subsection, 
the .term 'electing individual' means an individual associated 
or formerly associated with the employer in a business relation-
ship who elects coverage under the employer's group health 
plan. 
"(4) CERTAIN INDIVIDUALS EXCLUDED.—For purposes of this 
subsection, an individual providing service referred to in section 
3121(aX7XB) of the Internal Revenue Code of 1986 shall not 
be considered an employee or electing individual with respect 
to an employer. 
"(5) INFORMATION REQUIRED.—^For purposes of paragraph 
(1), each employer shall provide the following information: 
"(A) "Hie name and TIN of the electing individual. 
"(B) The type of group health plan coverage (single 
or family) elected by the electing individual. 
"(C) The name, address, and identifying number of 
the group health plan elected by such electing individual. 
(D) The name and TIN of each other individual cov-
ered under the group health plan pursuant to such election. 
"(E) The period during which such coverage is elected. 
"(F) The name, address, and TIN of the emplover. 
"(6) TIME OF FILING.—^For purposes of determining the date 
for filing the report imder paragraph (1), such report shall 
be treated as a stetement described in section 6051(d) of the 
Internal Revenue Code of 1986. 
"(7) LIMITS ON DISCLOSURE OF INFORMATION REPORTED.— 
"(A) IN GENERAL.—^The disclosure of the information 
reported under paragraph (1) shall be restricted by the 
Secretary under rules similar to the rules of subsections 
(a) and (p) of section 6103 of the Internal Revenue Code 
of 1986. 
"(B) PENALTY FOR UNAUTHORIZED WILLFUL DISCLOSURE 
O
F INFORMATION.—^The unauthorized disclosure of any 
information reported imder paragraph (1) shall be subject 
to the penalty described in paragraph (1), (2), (3), or (4) 
of section 7213(a) of such Code. 
"(9) PENALTY FOR FAILURE TO REPORT.—In the case of the 
i 
failure of an employer (other than a Federal or other govern-
mental entity) to report under paragraph (IXA) with respect 
to each electing individual, the Secretary shall impose a penalty 
as described in part II of subchapter B of chapter 68 of the 
Internal Revenue Code of 1986. 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 611 
"(d) FEES FOR DATA BANK SERVICES.—The Secretary shall 
establish fees for services provided under this section which shall 
remain available, without fiscal year limitation, to the Secretary 
to cover the administrative costs to the Data Bank of providing 
such services. 
"(f) DEFINITIONS.—In this section: 
"(1) MEDICARE BENEFICIARY.—The term 'medicare bene-
ficiar/ 
means an individual entitled to benefits under part 
A, or enrolled under part B, of title XVIII, but does not include 
such an individual enrolled in part A under section 1818. 
"(2) MEDICAID BENEFICIARY.—The term 'medicaid bene-
ficiar/ means an individual entitled to benefits imder a State 
plan for medical assistance under title XIX (including a State 
plan operating under a statewide waiver under section 1115). 
"(3) GROUP HEALTH PLAN.—The term 'group health plan' 
shall have the meaning riven to such term by section 5000(D)(1) 
of the Internal Revenue Code of 1986. 
"(4) TIN.—^The term 'TIN' shall have the meaning given 
to such term by section 7701(aX41) of such Code.". 
(b) CONFORMING AMENDMENTS.— 
(1) MEDICARE.—Section 1862(bX5) (42 U.S.C. 1395y(bX5)) 
is amended— 
(A) in subparagraph (B), by striking "imder subpara-
graph (A)" and all that follows and inserting "under— 
"(i) subparagraph (A), and 
"(ii) section 1144, 
for purposes of carrying out this subsection.", and 
(B) in subparagraph (CXi), by striking "subparagraph 
(B)" and inserting "subparagraph (BXi)". 
(2) 
MEDICAID.—Section 
1902(aX25XAXi) 
(42 U.S.C. 
1396a(aX25XAXi)) is amended by striking "(as specified" and 
inserting "(including the use of information collected by the 
Medicare and Medicaid Coverage Data Bank under section 
1144 and any additional measures as specified". 
(c) CONFORMING AMENDMENT RELATING TO DATA MATCHES.— 
Subsection (aXSXB) of section 552a of title 5, United States Code, 
is amended— 
(1) in clause (v), by striking "; or" at the end; 
(2) in clause (vi), by striking the semicolon at the end 
and inserting "; or"; and 
(3) by aofdin^ at the end the following new clause: 
"(vii) matches performed pursuant to section 
6103(1X12) of the Internal Revenue Code of 1986 and 
section 1144 of the Social Security Act;". 
(d) EFFECTIVE DATE.—^The amendments made by this section 5 use 552a note. 
shall take effect on January 1,1994. 
Subchapter B—^Medicaid 
SEC. 13600. REFERENCES IN SUBCHAPTER; TABLE OF CONTENTS OF 
SUBCHAPTER. 
(a) AMENDMENTS TO SOCIAL SECURITY ACT.—Except as other-
wise specifically provided, whenever in this subchapter an amend-
ment is expressed in terms of an amendment to or repeal of a 
section or other provision, the reference shall be considered to 
be made to that section or other provision of the Social Security 
Act. 
107 STAT. 612 
PUBLIC LAW 103-66—AUG. 10, 1993 
(b) REFERENCES TO OBRA.—^In this subchapter, the terms 
"OBRA-lQSe", "OBRA-IQS?", -OBRA-lQSg", and "OBRA-IQQO" 
refer to the Omnibus Budget Reconciliation Act of 1986 (PubUc 
Law 99-509), the Omnibus Budget Reconciliation Act of 1987 (Pub-
lic Law 100-203), the Omnibus Budget Reconciliation Act of 1989 
(Public Law 101-239), and the OmniDus Budget Reconciliation Act 
of 1990 (Public Law 101-608), respectively. 
(c) TABLE OF CONTENTS OF SUBCHAPTER.—The table of contents 
of this subchapter is as follows: 
Sec. 13600. References in subchapter; table of contents of subchapter. 
PART I—SERVICES 
Sec. 13601. Personal care services furnished outside the home as optional benefit. 
Sec. 13602. Additional Federal savings through modifications to drug rebate pro-
gram. 
Sec. 13603. Optional medicaid coverage of TB-related services for certain TB-in-
) 
fected individuals. 
Sec. 13604. Limiting Federal medicaid matching payment to bona fide emergency 
services for undocumented aliens. 
Sec. 13605. Coverage of nurse-midwife services performed outside the maternity 
cycle. 
Sec. 13606. Treatment of certain clinics as Federally-qualified health centers. 
PART II—EUGIBIUTY 
Sec. 13611. Transfers of assets; treatment of certain trusts. 
Sec. 13612. Medicaid estate recoveries. 
PART III—PAYMENTS 
Sec. 13621. Assuiring proper payments to disproportionate share hospitals. 
Sec. 13622. Liability of third pturties to pay for care and services. 
Sec. 13623. Medical child support. 
Sec. 13624. Application of medicare rules Umiting certain physician referrals. 
Sec. 13625. State medicaid fraud control. 
PART IV—IMMUNIZATIONS 
Sec. 13631. Medicaid pediatric immunization provisions. 
Sec. 13632. National Vaccine Ii\jury Compensation Program amendments. 
PART V—MISCELLANEOUS 
Sec. 13641. Increase in limit (Hi Federal medicaid matching payments to Puerto 
Rico and other territories. 
Sec. 13642. Extension of moratorium on treatment of certain facilities as institu-
tions for mental diseases. 
Sec. 13643. Demonstration projects. 
Sec. 13644. Extension of period of applicability of enrollment mix requirement to 
certain health maintenance organizations providing services under 
Dayton Area Health Plan. 
PART I—SERVICES 
SEC. 13601. PERSONAL CARE SERVICES FURNISHED OUTSIDE THE 
HOME AS OPTIONAL BENEFIT. 
(a) IN GENERAL.—Section 1905(a) (42 U.S.C. 1396d(a)) is 
amended— 
(1) in pare^aph (7), by striking "including personal care 
services" and all that follows through "nursing facilit}^"; 
(2) by striking "and" at the endof paragraph (21); 
(3) in paragraph (24), by striking the comma at the end 
and inserting a semicolon; 
(4) by redesignating paragraphs (22), (23), and (24) as 
paragraphs (25), (22), and (23), respectively, by striking the 
semicolon at the end of paragraph (25), as so redesignated, 
and inserting a period, and by transferring and inserting para-
graph (25) after paragraph (23), as so redesignated; and 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 613 
(5) by inserting after paragraph (23), as so redesignated, 
the following new paragraph: 
''(24) personal care services furnished to an individual who 
is not an inpatient or resident of a hospital, nursing facility, 
intermediate care facility for the mentally retarded, or institu-
tion for mental disease that are (A) authorized for the individual 
by a physician in accordance with a plan of treatment or 
(at the option of the State) otherwise authorized for the individ-
ual in accordance with a service plan approved by the State, 
(B) provided by an individual who is qualified to provide such 
services and who is not a member of the individual's family, 
and (C) furnished in a home or other location; and". 
(b) CONFORMING AMENDMENTS.—(1) Section 1902(aX10XCXiv) 
(42 U.S.C. 1396a(aX10XCXiv)) is amended by striking "through 
(21)" and inserting "through (24)". 
(2) Section 1902(j) (42 U.S.C. 1396a(i)) is amended by striking 
"through (22)" and inserting "through (25)^. 
(c) EFFECTIVE DATE.—^The amendments made by subsections 42 use I396a 
(a) and (b) shall take effect as if included in the enactment of "°^-
section 4721(a) of OBRA-1990. 
SEC. 13602. ADDITIONAL FEDERAL SAVINGS THROUGH MODIFICA-
TIONS TO DRUG REBATE PROGRAM. 
(a) CHANGES IN REBATE PROGRAM.— 
(1) IN GENERAL.—Section 1927 (42 U.S.C. 1396r-8) is 
amended by striking subsection (c) and all that follows through 
"(2)" in subsection (fx2) and inserting the following: 
"(c) DETERMINATION OF AMOUNT OF REBATE.— 
"(1) BASIC REBATE FOR SINGLE SOURCE DRUGS AND INNOVA-
TOR M
U
L
T
I
P
L
E SOURCE DRUGS.— 
"(A) IN GENERAL.—^Except as provided in paragraph 
(2), the amount of the rebate specified in this subsection 
for a rebate period (as defined in subsection (kX8)) with 
respect to each dosage form and strength of a single soiirce 
drug or an innovator multiple source drug shall be equal 
to the product of— 
"(i) the total number of units of each dosage form 
and strength paid for under the State plan in the 
rebate period (as reported by the State); ana 
"(ii) subject to subparagraph (BXii), the greater 
of— 
"(I) the difference between the average manu-
facturer price and l^e best price (as defined in 
subparagraph (O) for the dosage form and 
strength of the drug, or 
"(II) the minimum rebate percentage (specified 
in subparagraph (BXi)) of such average manufac-
turer price, 
for the rebate period. 
"(B) RANGE OF REBATES REQUIRED.— 
"(i) MINIMUM REBATE PERCENTAGE.—For purposes 
of subparagraph (AXiiXII), the 'minimum rebate 
percentage' for rebate periods beginning— 
"(I) after December 31, 1990, and before Octo-
ber 1,1992, is 12.5 percent; 
"(II) afler September 30, 1992, and before 
January 1,1994, is 15.7 percent; 
107 STAT. 614 
PUBLIC LAW 103-66—AUG. 10, 1993 
"(in) after December 31, 1993, and before 
January 1,1995, is 15.4 percent; 
"(IV) after December 31, 1994, and before 
January 1,1996, is 15.2 percent; and 
"(V) after December 31, 1995, is 15.1 percent. 
"(ii) TEMPORARY LIMITATION ON MAXIMUM REBATE 
A
M
O
U
N
T
.
—
^
I
n no case shall the amount applied under 
subparagraph (AXii) for a rebate period beginning— 
"(I) before January 1, 1992, exceed 25 percent 
of the average manufacturer price; or 
"(II) after December 31,1991, and before Janu-
ary 1, 1993, exceed 50 percent of the average 
manufacturer price. 
"(C) BEST PRICE DEFINED.—For purposes of this 
section— 
"(i) IN GENERAL.—^The term "best price* means, with 
respect to a single source drug or innovator multiple 
source drug of a manufactiirer, the lowest price avail-
able from the manufacturer during the rebate period 
to any wholesaler, retailer, provider, health mainte-
nance organization, nonprofit entity, or governmental 
entity within the United States, excluding— 
"(I) any prices charged on or after October 
1, 1992, to the Indian Health Service, the Depart-
ment of Veterans Affairs, a State home receiving 
funds under section 1741 of title 38, United States 
Code, the Department of Defense, the Public 
Health Service, or a covered entity described in 
subsection (aX5XB); 
"(II) any prices charged under the Federal 
Supply Schedule of the (jeneral Services Adminis-
tration; 
"(III) any prices used under a State pharma-
ceutical assistance program; and 
"(IV) any depot prices and single award con-
tract prices, as defined by the Secretary, of any 
agency of the Federal Government, 
"(ii) SPECIAL RULES.—The term *best price'— 
"(I) shall be inclusive of cash discounts, free 
goods tiiat are contingent on any purchase require-
ment, volume discounts, and rebates (other than 
rebates under 
tihis 
section); 
"(II) shall be determined without regard to 
special packaging, labeling, or identifiers on the 
dos£^e form or product or package; and 
^III) shall not take into accoimt prices that 
are merely nominal in amount. 
"(2) ADDITIONAL REBATE FOR SINGLE SOURCE AND INNOVA-
TOR MULTIPLE SOURCE DRUGS.— 
"(A) IN GENERAL.—^The amount of the rebate specified 
in this subsection for a rebate period, with respect to each 
dosage form and strength of a single source drug or an 
innovator multiple source drug, shall be increased by an 
amovmt equal to the product o
f
— 
"(i) the total number of imits of such dosage form 
and strength dispensed after December 31, 1990, for 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 615 
which payment was made under the State plan for 
the rebate period; and 
**(ii) the amount (if any) by which— 
"(I) the average manufacturer price for the 
dosage form and strength of the drug for the 
period, exceeds 
''(II) the average manufacturer price for such 
dosage form and strength for the calendar quarter 
beginning July 1, 1990 (without regard to whether 
or not the drug has been sold or transferred to 
an entity, including a division or subsidiary of 
the manufactiirer, after the first day of such quar-
ter), increased by the percentage by which the 
consumer price index for all urban consumers 
(United States city average) for the month before 
the month in which the rebate period begins 
exceeds such index for September 1990. 
"(B) TREATMENT OF SUBSEQUENTLY APPROVED DRUGS.— 
In the case of a covered outpatient drug approved by the 
Food and Drug Administration after October 1,1990, clause 
(iiXII) of subparagraph (A) shall be applied by substituting 
'the first full calendar quarter after the day on which 
the drug was first marketed' for 'the calendar quarter 
beginning July 1, 1990' and the month prior to the first 
month of the first full calendar quarter after the day on 
which the drug was first marketed' for 'September 1990'. 
"(3) REBATE FOR OTHER DRUGS.— 
"(A) IN GENERAL.—^The amount of the rebate paid to 
a State for a rebate period with respect to each dosage 
form and strength of covered outpatient drugs (other than 
single source drugs and innovator multiple source drugs) 
sh£dl be equal to the product o
f
— 
"(i) the applicable percentage (as described in 
subparagraph (B)) of the average manufacturer price 
for the dosage form and strength for the rebate period, 
and 
"(ii) the total number of units of such dosage form 
and strength dispensed after December 31, 1990, for 
which pajrment was made luider the State plan for 
the rebate period. 
"(B) APPUCABLE PERCENTAGE DEFINED.—For purposes 
of subparagraph (AXi), the 'applicable percentage' for rebate 
periods beginning— 
"(i) before January 1, 1994, is 10 percent, and 
"(ii) after December 31,1993, is 11 percent. 
"(d) LIMITATIONS ON COVERAGE OF DRUGS.— 
"(1) PERMISSIBLE RESTRICTIONS.—(A) A State mav subject 
to prior authorization any covered outpatient drug. Any such 
prior authorization program shall comply with the requirements 
of paragraph (5). 
"(B) A State may exclude or otherwise restrict coverage 
of a covered outpatient drug if— 
"(i) the prescribed use is not for a medically accepted 
indication (as defined in subsection (kX6)); 
"(ii) the drug is contained in the list referred to in 
paragraph (2); 
-194 O - 94 - 21 : QL. 3 Part 1 
107 STAT. 616 
PUBLIC LAW 103-66—AUG. 10, 1993 
Regulations. 
''(iii) the drug is subject to such restrictions pursuant 
to £in agreement between a manufactiirer and a State 
authorized by the Secretary under subsection (aXl) or in 
effect pursuant to subsection (aX4); or 
"(iv) the State has excluded coverage of the drug firom 
its formulary established in accordance with paragraph 
(4). 
"(2) LIST OF DRUGS SUBJECT TO RESTRICTION.—The follow-
ing drugs or classes of drugs, or their medical uses, may be 
excluded 
from 
coverage or otherwise restricted: 
"(A) Agents when used for anorexia, weight loss, or 
weight gain. 
"(B) Agents when used to promote fertility. 
''(C) ^ents when used for cosmetic purposes or hair 
growth. 
"(D) Agents when used for the symptomatic relief of 
cough and colds. 
"(E) Agents when used to promote smoking cessation. 
**(F) Prescription vitamins and mineral products, except 
prenatal vitamins and fluoride preparations. 
"(G) Nonprescription drugs. 
"(H) Covered outpatient drugs which the manufacturer 
seeks to require as a condition of sale that associated 
tests or monitoring services be purchased exclusively from 
the manufacturer or its designee. 
"(I) Barbiturates. 
"(J) Benzodiazepines. 
"(3) UPDATE OF DRUG USTINGS.—The Secretary shall, by 
regulation, periodically update the list of dru^s or classes of 
drugs described in paragraph (2) or their medical uses, which 
the Secretary has determined, based on data collected by 
surveillance and utilization review programs of State medical 
assistcuice programs, to be subject to clinical abuse or inappro-
priate use. 
"(4) REQUIREMENTS FOR FORMULARIES.—A State may estab-
lish a formulary if the formulary meets the following 
requirements: 
"(A) The formulary is developed by a committee consist-
ing of physicians, pharmacists, and other appropriate 
individuals appointed by the Governor of the State (or, 
at the option of the State, the Stete's drug use review 
board established under subsection (gX3)). 
"(B) Except as provided in subparagraph (C), the for-
mulaiy includes tne covered outpatient drugs of any 
manufacturer which has entered into and complies witn 
an agreement under subsection (a) (other than any drug 
excluded from coverage or otherwise restricted under para-
graph (2)). 
"(C) A covered outpatient dru^ may be excluded with 
respect to the treatment of a specific msease or condition 
for an identified population (if any) only if, based on the 
drug's labeUng (or, in the case of a drug the prescribed 
use of which is not approved imder the Federal Food, 
Drug, and Cosmetic Act but is a medically accepted indica-
tion, based on information from the appropriate compendia 
described in subsection (kX6)), the excluded drug does not 
have a significant, clinically meaningful therapeutic advan-
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 617 
tage in terms of safety, effectiveness, or clinical outcome 
of such treatment for such population over other drugs 
included in the formulary and there is a written expla-
nation (available to the public) of the basis for the exclu-
sion. 
"(D) The State plan permits coverage of a drug 
excluded 
from 
the formulary (other than any drug excluded 
from coverage or otherwise restricted under paragraph (2)) 
pursuant to a prior authorization program that is consistent 
with paragraph (5). 
(E) "Die formulary meets such other requirements as 
the Secretary may impose in order to achieve program 
savings consistent with protecting the health of program 
beneficiaries. 
A prior authorization program established by a State under 
parap;raph (5) is not a formulary subject to the requirements 
of this paragraph. 
"(5) REQUIREMENTS OF PRIOR AUTHORIZATION PROGRAMS.— 
A State plan under this title may require, as a condition of 
coverage or payment for a covered outpatient drug for which 
Federcu financial participation is available in accordance with 
this section, with respect to drugs dispensed on or after July 
1, 1991, the approval of the drug before its dispensing for 
any medically accepted indication (as defined in subsection 
(kX6)) only if the system providing for such approval— 
"(A) provides response by telephone or other tele-
communication device within 24 hours of a request for 
prior authorization; and 
''(B) except with respect to the drugs on the list referred 
to in paragraph (2), provides for the dispensing of at least 
72-hour supply of a covered outpatient pirescription drug 
in an emergenc^^ situation (as defined by the Secretary). 
"(6) OTHER PERMISSIBLE RESTRICTIONS.—A State may 
impose limitations, with respect to all such drugs in a thera-
peutic class, on the minimum or maximum quantities per 
prescription or on the number of refills, if such Umitations 
are necessary to discourage waste, and may address instances 
of fraud or abuse by in£viduals in any manner authorized 
under this Act. 
"(e) TREATMENT OP PHARMACY REIMBURSEMENT LIMITS.— 
"(1) IN GENERAL.—During the period beginning on January 
1,1991, and ending on December 31,1994— 
"(A) a State may not reduce the payment limits estab-
lished by regulation under this title or any limitation 
described in paragraph (3) with respect to the ingredient 
cost of a covered outpatient drug or the dispensing fee 
for such a drug below the limits in effect as of January 
1,1991, and 
"(B) except as provided in paragraph (2), the Secretary 
may not modify by regulation the formula established 
under sections 447.331 throu^ 447.334 of title 42, Code 
of Federal Regulations, in effect on November 5, 1990, 
to reduce the limits described in subp£u*agraph (A). 
"(2) SPECIAL RULE.—If a State is not in compliance with 
the regulations described in paragraph (IXB), paragraph (IXA) 
shall not apply to such State until such State is in compliance 
with such regulations. 
107 STAT. 618 
PUBLIC LAW 103-66—AUG. 10, 1993 
"(3) EFFECT ON STATE MAXIMUM ALLOWABLE COST LIMITA-
TIONS.—^This section shall not supersede or affect provisions 
in effect prior to January 1, 1991, or after December 31, 1994, 
relating to any maximum allowable cost limitation established 
by a State for payment by the State for covered outpatient 
drugs, and rebates shall be made under this section without 
regard to whether or not payment by the State for such drugs 
is subject to such a limitation or the amount of such a limita-
tion.". 
(2) CONFORMING AMENDMENTS.—Section 1927 (42 U.S.C. 
1396r-fi) is amended as follows: 
(A) In subsection (b)— 
(i) in paragraph (IXA)— 
(I) by striking "each calendar quarter (or 
periodically in accordance with a schedide specified 
by the Secretary)" and inserting "for a rebate 
period", and 
(II) by striking "dispensed under the plan dur-
ing the quarter (or other period as the Secretary 
may specify)" and inserting "dispensed after 
December 31, 1990, for which pajonent was made 
under the State plan for such period"; 
(ii) in paragraph (2XA)— 
(I) by striking "calendar quarter" and "the 
quarter" and inserting "rebate period" and "the 
period", respectively, 
(II) by striking "dosage units" and inserting 
"units of each dosage form and strength and pack-
age size", and 
(III) by inserting "after December 31, 1990, 
for which payment was made" after "dispensed"; 
and 
(iii) in paragraph (3XAXi), by striking "quarter" 
each place it appears and inserting "rebate period 
under the agreement". 
(B) In subsection (k>— 
(i) in paragraph (1)— 
(I) by striking "calendar quarter^ and inserting 
"rebate period", and 
(II) by inserting before the period at the end 
the following: ", after deducting customary prompt 
pay discounte"; 
(ii) in paragraph (3)— 
(I) in subparagraph (E), by striking ****** 
emergency room visits", 
(II) in subparagraph (F), by striking "services" 
and inserting "services and services provided by 
an intermediate care facility for the mentally 
retarded", and 
(III) in the matter following subparagraph 
(H)— 
(aa) by striking "which is used" and insert-
ing "for which a National Drug Code nimiber 
is not required by the Food and Drug Adminis-
tration or a drug or biological used"; and 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 619 
(bb) by adding at the end the following: 
"Any drug, biological product, or insulin 
excluded from the definition of such term as 
a result of this paragraph shall be treated 
as a covered outpatient drug for purposes of 
determining the best price (as defined in sub-
section (cXlXC)) for such drug, biological prod-
uct, or insulin."; 
(iii) in paragraph (6), by striking ", which appears" 
and all that follows and inserting "or the use of which 
is supported b^ one or more citations included or 
approved for mclusion in any of the compendia 
described in subsection (gXlXBXi)."; 
(iv) in paragraph (7XAXi), by striking "calendar 
quarter" and inserting "rebate period"; and 
(v) by redesignating paragraph (8) as paragraph 
(9) and by insertmg after paragraph (7) the following 
new paragraph: 
"(8) REBATE PERIOD.—^The term 'rebate period* means, with 
respect to £in agreement under subsection (a), a calendar quar-
ter or other period specified by the Secretary with respect 
to the pa3nnent of rebates under such agreement.". 
(b) LIMITING FEDERAL PAYMENTS FOR CERTAIN DRUGS.—Para-
graph (10) of section 1903(i) (42 U.S.C. 1396b(i)) (as inserted by 
section 4401(aXlXB) of OBRA-1990) is amended to read as follows: 
"(10)(A) with respect to covered outpatient drugs unless 
there is a rebate agreement in effect imder section 1927 with 
respect to such drugs or unless section 1927(aX3) applies, and 
"(B) with respect to any amount expended for an innovator 
multiple source drug (as defined in section 1927(k)) dispensed 
on or after July 1, 1991, if, imder applicable State law, a 
less expensive multiple source drug could have been dispensed, 
but only to the extent that such amount exceeds the upper 
pajonent Umit for such multiple source drug;". 
(c) 
EUMINATION OF PROHIBITION AGAINST STATE USE OF 
FORMULARIES TO ACHIEVE FEDERAL SAVINGS.—Paragraph (54) of 
section 1902(a) (42 U.S.C. 1396a(a)) is amended to read as follows: 
"(54) in the case of a State plan that provides medical 
assistance for covered outpatient drugs (as defined in section 
1927(k)), comply with the applicable requirements of section 
1927;". 
(d) EFFECTIVE DATES.—(1) Except as provided in paragraph 42USCi396r-8 
(2), the amendments made by this section shall take effect as ^°^-
if included in the enactment of OBRA-1990. 
(2) The amendment made by subsection (aXD (insofar as such 
subsection amends section 1927(d) of the Social Security Act) and 
the amendment made by subsection (c) shall appl^^ to calendar 
quarters beginning on or after October 1, 1993, without regard 
to whether or not regulations to carry out such amendments have 
been promulgated by such date. 
SEC. 13603. OPTIONAL MEDICAID COVERAGE OF TB-RELATED SERV-
ICES FOR CERTAIN TB-INFECTED INDIVIDUALS. 
(a) COVERAGE AS OPTIONAL, CATEGORICALLY NEEDY GROUP.— 
Section 
1902(aX10XAXii) 
(42 
U.S.C. 
1396a(aX10XAXii)) 
is 
amended— 
(1) by striking "or" at the end of subclause (X), 
107 STAT. 620 
PUBLIC LAW 103-66--AUG. 10, 1993 
(2) by adding "or" at the end of subclause (XI), and 
(3) by adding at the end the following new subclause: 
'vQI) who are described in subsection (zXD 
(relating to certain TB-infected individiuds);". 
42 use 1396a. 
(b) G
R
O
U
P A
N
D BENEFIT DESCRIBED.—Section 1902 is amended 
by adding at the end the following new subsection: 
"(zXl) Individuals described in this paragraph are individuals 
not described in subsection (aXlOXAXi)— 
"(A) who are infected wilji tuberculosis; 
''(B) whose income (as determined under the State plan 
under tiiis title ¥dth respect to disabled individuals) does not 
exceed the maximum amount of income a disabled individual 
described in subsection (aXlOXAXi) may have and obtain medi-
cal assistance under the plan; and 
"(C) whose resources (as determined under the State plan 
under this title wiUi respect to disabled individuals) do not 
exceed the maximum amount of resources a disabled individual 
described in subsection (aXlOXAXi) may have and obtain medi-
cal assistance under the plan. 
"(2) For piirposes of subsection (aXlO), the term TB-related 
services' means each of the following services relating to treatment 
of infection with tuberculosis: 
"(A) Prescribed drugs. 
"(B) Physicians' services and services described in section 
1905(aX2). 
"(C) Laboratory and X-ray services (including services to 
confirm the presence of infection). 
"(D) Clinic services and Federally-qualified health center 
services. 
"(E) Case management services (as defined in section 
1915(gX2)). 
"(F) Services (other than room and board) designed to 
encourage completion of regimens of prescribed drugs by out-
patients, including services to observe directly the intake of 
nrescribed drucfs.". 
(c) LIMITATION ON BENEFITS.—Section 1902(aX10) (42 U.S.C. 
1396a(aX10)) is amended in the matter following subparagraph 
(F)— 
(1) by striking *; and (XI)" and inserting *
*
, (XI)", 
(2) by striMng 'individuals, and (XI)" and inserting 
"individuals, (XII)", and 
(3) by inserting before the semicolon at the end the follow-
ing: ", and (XIII) the medical assistance made available to 
an individual described in subsection (zXD who is eligible for 
medical assistance only because of subparagraph (AXii)(XII) 
shall be limited to medical assistance for TB-related services 
(described in subsection (2X2))". 
(d) CONFORMING EXPANSION OF CASE MANAGEMENT SERVICES 
OPTION.—Section 1915(gXl) (42 U.S.C. 1396n(gXl)) is amended by 
inserting "or to individuals described in section 1902(zXlXA)'' after 
"or with eitiier,". 
(e) CONFORMING AMENDMENT.—Section 1905(a) (42 U.S.C. 
1396d(a)) is amended— 
(1) by striking "or" at the end of clause (ix), 
(2) by adding "or" at the end of clause (x), 
(3) by inserting after clause (x) the following new clause: 
"(xi) mdividuals described in section 1902(zXl),'', and 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 621 
(4) by amending paragraph (19) to read as follows: 
"(19) case management services (as defined in section 
1915(gX2)) and TB-related services described in section 
1902(zX2XF);''. 
(f) EFFECTIVE DATE.—^The amendments made by this section 
shall apply to medical assistance furnished on or after January 
1, 1994, without regard to whether or not final regulations to 
carry out such amendments have been promulgated by such date. 
SEC. 13604. UMTIING FEDERAL MEDICAID MATCHING PAYMENT TO 
BONA FIDE EMERGENCY SERVICES FOR UNDOCU-
MENTED ALIENS. 
(a) IN GENERAL.—Section 1903(vX2) (42 U.S.C. 1396b(vX2)) 
is amended— 
(1) by striking "and" at the end of subparagraph (A), 
(2) by striking the period at the end of subparagraph (B) 
and inserting ", and", and 
(3) by adding at the end the foUovtring new subparagraph: 
"(C) such care and services are not related to an organ 
transplant procedure.". 
(b) EFFECTIVE DATES.—(1) Subject to paragraph (2), the amend-
ments made by subsection (a) shall apply as if included in the 
enactment of OBRA-1986. 
(2) The Secretary of Health and Himian Services shall not 
disallow expenditures made for the care and services described 
in section 1903(vX2XC) of the Social Security Act, as added by 
subsection (a), furnished before the date of the enactment of this 
Act. 
SEC. 1360S. COVERAGE OF NURSE-MIDWIFE SERVICES PERFORMED 
OUTSIDE THE MATERNITY CYCLE. 
(a) IN GENERAL.—Section 1905(aX17) (42 U.S.C. 1396d(aX17)) 
is amended by inserting before the semicolon at the end the follow-
ing: ", and without regard to whether or not the services are 
performed in the area of management of the care of mothers and 
babies throughout the maternity cycle". 
(b) EFFECTIVE DATE.—^The amendment made by subsection (a) 
shall apply to services furnished on or after October 1,1993. 
SEC. 13606. TREATMENT OF CERTAIN CLINICS AS FEDERALLY-QUAU-
FIED HEALTH CENTERS. 
(a) 
IN 
GENERAL.—Section 
1905(1X2XB) 
(42 
U.S.C. 
1396d(lX2XB)) is amended— 
(1) by striking "or" at the end of clause (i), 
(2) by striking the semicolon at the end of clause (iiXII) 
and inserting a comma, 
(3) by moving clause (ii) 4 ems to the left, 
(4) by adding "or" at the end of clause (iii), and 
(5) by inserting after clause (iii) the following new clause: 
"(iv) was treated by the Secretary, for puiposes of part 
B of title XVIII, as a comprehensive Fedierally mnded health 
center as of 
January 1,1990;". 
(b) EFFECTIVE DATE.—^The amendments made by subsection 
(a) shall apply to odendar quarters beginning on or after July 
1,1993. 
42 use 1396a 
note. 
42 use 1396b 
note. 
42 use 1396d 
note. 
42 use 1396d 
note. 
107 STAT. 622 
PUBLIC LAW 103-66—AUG. 10, 1993 
PART n-^ELIGIBILITY 
SEC. 13611. TRANSFERS OF ASSETS; TREATMENT OF CERTAIN TRUSTS. 
(a) PERIODS OF INEUGIBILITY FOR TRANSFERS OF ASSETS.— 
(1) IN GENERAL.—Section 1917(cXl) (42 U.S.C. 1396p(cXl)) 
is amended to read as follows: 
''(IXA) In order to meet the requirements of this subsection 
for purposes of section 1902(aX18), the State plan must provide 
that if an institutionalized individual or the spouse of such an 
individvial (or, at the option of a State, a noninstitutionalized 
individual or the spouse of such an individual) disposes of assets 
for less than fair market value on or after the look-back date 
specified in subparagraph (BXi), the individual is ineUgible for 
medical assistance for services described in subparagraph (CXi) 
(or, in the case of a noninstitutionalized individual, for the services 
described in subparagraph (CXii)) during the period beginning on 
Uie date specified in subparagraph (D) and equal to the number 
of months specified in subparagraph (E). 
"(BXi) The look-back date specified in this subparagraph is 
a date that is 36 months (or, in the case of pajmients from a 
trust or portions of a trust that are treated as assets disposed 
of by the individual pursuant to paragraph (3XAXiii) or (3XBXii) 
of subsection (d), 60 months) before the date specified in clause 
(ii). 
''(ii) The date specified in this clause, with respect to— 
''(I) an institutionalized individual is the first date as of 
which the individual both is an institutionalized individual 
and has applied for medical assistance under the Stete plan, 
or 
"(ID a noninstitutionalized individual is the date on which 
the individual applies for medical assistance under the Stete 
plan or, if later, the date on which the individual disposes 
of assete for less than fair market value. 
"(CXi) The services described in this subparagraph with respect 
to an institutionalized individual are the following: 
"(I) Nursing facility services. 
"(II) A level of care in any institution equivalent to that 
of nursing facility services. 
"(Ill) Home or commimity-based services furnished under 
a waiver granted under subsection (c) or (d) of section 1915. 
"(ii) The services described in this subparagraph with respect 
to a noninstitutionalized individual are services (not including anv 
services described in clause (i)) that are described in paragraph 
(7), (22), or (24) of section 1905(a), and, at the option of a Stete, 
other loi^-term care services for which medical assistcmce is other-
wise available under the Stete plan to individuals requiring long-
term care. 
"(D) The date spjecified in this subparagraph is the first day 
of the first month during or after which assete have been transferred 
for less than fair market value and which does not occur in any 
other periods of ineligibiHty under this subsection. 
"(EXi) With respect to an institutionalized individual, the num-
ber of months of ineligibility under this subparagraph for an individ-
ual shall be equal to— 
"(I) the total, cumidative uncompensated value of all assete 
transferred by the individual (or mdividual's spouse) on or 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 623 
after the look-back date specified in subparagraph (BXi), divided 
by 
''(II) the average monthly cost to a private patient of nurs-
ing facility services in tiie State (or, at the option of the State, 
iii the community in which the individual is institutionalized) 
at the time of application. 
''(ii) With respect to a noninstitutionalized individual, the num-
ber of months of ineligibility under this subparagraph for an individ-
ual shall not be greater than a number equal to— 
"(I) the total, cumulative uncompensated value of all assets 
transferred by the individual (or individual's spouse) on or 
after the look-back date specified in subparagraph (BXi), divided 
by 
**(II) the average monthly cost to a private patient of nurs-
ing facility services in the State (or, at the option of the State, 
in the community in which the individual is institutionalized) 
at the time of application. 
''(iii) The nimiber of months of ineligibility otherwise deter-
mined under clause (i) or (ii) with respect to the disposal of an 
asset shall be reduced— 
"(1) in the case of periods of ineligibility determined imder 
clause (i), by the number of months of ineligibility applicable 
to the individual under clause (ii) as a result of such disposal, 
and 
"(II) in the case of periods of ineligibility determined under 
clause (ii), by the number of months of ineligibility applicable 
to the individual under clause (i) as a result of such disposal. 
(2) EXCEPTIONS.—Section 1917(c) is amended— 
42 use i396p. 
(A) in paragraph (2XA), by striking "resources" and 
inserting "assets"; 
(B) by amending paragraph (2XB) to read as follows: 
**(B) the assets— 
**(i) were transferred to the individual's spouse or to 
another for the sole benefit of the individual's spouse, 
"(ii) were transferred fi'om the individual's spouse to 
another for the sole benefit of the individual's spouse, 
"(iii) were transferred to, or to a trust (including a 
trust described in subsection (dX4)) established solely for 
the benefit of, the individual's child described in subpara-
graph (AXiiXII), or 
"(iv) were transferred to a trust (including a trust 
described in subsection (dX4)) established solely for the 
benefit of an individual under 65 years of age who is 
disabled (as defined in section 1614(aX3));''; 
(C) in paragraph (2XC)— 
(i) by striking "resources" each place it appears 
and inserting "assets", 
(ii) by striking "any", 
(iii) by striking "or (ii)" and inserting "(ii)", and 
(iv) by striking "; or^ and inserting ", or (iii) all 
assets transferred for less than fair market value have 
been returned to the individiial; or"; 
(D) by amending ptaragraph (2XD) to read as follows: 
"(D) the State determines, under procedures established 
by the State (in accordance with standards specified by the 
Secretary), that the denial of eligibiUty would work an imdue 
107 STAT. 624 
PUBLIC LAW 103-66—AUG. 10, 1993 
hardship as determined on the basis of criteria established 
by tiie Secretary;"; 
(E) by striking paragraph (3) and inserting the 
following: 
''(3) For purposes of this subsection, in the case of an asset 
held by an individual in common with another person or persons 
in a joint tenancy, tenancy in common, or similar arrangement, 
the asset (or the affected portion of such asset) shall be considered 
to be transferred by such individual when any action is taken, 
either by such individual or by any other person, that reduces 
or eliminates such individual's ownership or control of such asset."; 
and 
(F) by adding at the end of paragraph (4) the following: 
Inter- 
«In the case of a transfer by the spouse of an individual 
rel^t^M^ 
which results in a period of ineligibility for medical assist-
ance under a State plan for such individual, a State shall, 
using a reasonable methodolo^ (as specified by the Sec-
retary), apportion such period ra ineligibility (or any portion 
of such period) among the individual and the individual's 
spouse if the spouse otherwise becomes eligible for medical 
assistance under the State plan.". 
(b) TREATMENT OF TRUST AMOUNTS.—Section 1917 (42 U.S.C. 
1396p) is amended by addii^ at the end the following: 
"(dXD For purposes of determining an individual's eligibility 
for, or amount of, benefits under a State plan under this title, 
subject to paragraph (4), the rules specified m paragraph (3) shall 
apply to a tnist established by such individual. 
(2XA) For purposes or this subsection, an individual shall 
be considered to nave established a trust if assets of the individual 
were used to form all or part of the corpus of the trust and 
if anv of the following individuals established such trust other 
than by will: 
"(i) The individual, 
"(ii) The individual's spouse. 
''(iii) A person, including a court or administrative body, 
with legal authorit:^ to act in place of or on behalf of the 
individual or the incuvidual's spouse. 
"(iv) A person, including any court or administrative body, 
acting at the direction or upon the request of the individual 
or the individual's spouse. 
''(B) In the case of a trust the corpus of which includes assets 
of an individual (as determined under subparagraph (A)) and assets 
of any other person or persons, the provisions of tiiis subsection 
shall apply to the portion of the trust attributable to the assets 
of the individual. 
"(C) Subject to paragraph (4), this subsection shall apply with-
out regard to— 
"(i) the purposes for which a trust is established, 
''(ii) whether the trustees have or exercise any discretion 
under the trust, 
''(iii) any restrictions on when or whether distributions 
may be made frova. the trust, or 
''(iv) any restrictions on the use of distributions from the 
trust. 
"(3XA) In the case of a revocable trust— 
• "(i) the corpus of the trust shall be considered resources 
available to the individual. 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 625 
"(ii) pajrments from the trust to or for the benefit of the 
individual shall be considered income of the individual, and 
"(iii) any other payments from the trust shcdl be considered 
assets disposed of by the individual for purposes of sub-
section (c). 
"(B) In the case of an irrevocable trust— 
"(i) if there are any circumstances under which payment 
from the trust could be made to or for the benefit of the 
individual, the portion of the corpus from which, or the income 
on the corpus from which, pajrment to the incUvidual could 
be made shall be considered resources available to the individ-
ual, and pajrments from that portion of the corpus or income— 
(I) to or for the benefit of the individual, shall be 
considered income of the individual, and 
"(11) for any other purpose, shsJl be considered a trans-
fer of assets by the individual subject to subsection (c); 
and 
"(ii) any portion of the trust from which, or any income 
on the corpus from which, no payment could under any cir-
cumstances be made to the individual shall be consiaered, 
as of the date of establishment of the trust (or, if later, the 
date on which payment to the individual was foreclosed) to 
be assets disposed by the individual for purposes of subsection 
(c), and the value of the trust shall be determined for purposes 
of such subsection by including the amount of any pajrments 
made from such portion of the trust after such date. 
"(4) This subsection shall not apply to any of the following 
trusts: 
"(A) A trust containing the assets of an individual under 
age 65 who is disabled (as defined in section 1614(aX3)) and 
M^ich is established for the benefit of such individual by a 
parent, grandparent, legal guardian of the individual, or a 
court if the State will receive all amoimts remaining in the 
trust upon the death of such individual up to an amount eauai 
to the total medical assistance paid on behalf of the individual 
under a State plan under this title. 
"(B) A trust established in a State for the benefit of an 
individual if— 
"(i) the trust is composed only of pension. Social Secu-
rity, and other income to the individiud (and accumulated 
income in the trust), 
"(ii) the State will receive all amounts remaining in 
the trust upon the death of such individual up to an amount 
equal to tne total medical assistance paid on behalf of 
the individual under a Stete plan under this title, and 
"(iii) the Stete makes medical assistance available to 
individuals described in section 1902(aX10XAXii)(V), but 
does not make such assistance available to individuals 
for nursing facility services imder section 1902(aX10XC). 
"(C) A trust containing the assete of an individual who 
is disabled (as defined in section 1614(aX3)) that meete the 
following conditions: 
"(i) The trust is esteblished and managed by a non-
profit association. 
"(ii) A separate accoimt is maintained for each bene-
ficiary of the trust, but, for purposes of investment and 
management of funds, the trust pools these accoimto. 
107 STAT. 626 
PUBLIC LAW 103-66—AUG. 10, 1993 
"(iii) Accounts in the trust are established solely for 
the benefit of individuals who are disabled (as defined 
in section 1614(aX3)) by the parent, grandparent, or legal 
guardian of such individuals, by sudi individuals, or by 
a court. 
"(iv) To the extent that amounts remaining in the 
beneficiary's account upon the death of the beneficiary 
are not retained by the trust, the trust pays to the State 
fix)m such remaining amounts in the account an amount 
equal to the total amount of medical assistance paid on 
behalf of the beneficiary under the State plan under this 
title. 
Inter- 
*«(5) The Stete agency shall estabUsh procedures (in accordance 
relatioM^ 
with standards specified by the Secretary) under which the agency 
waives the application of this subsection with respect to an individ-
ual if the individual establishes that such application would work 
an undue hardship on the individual as determined on the basis 
of criteria esteblished by the Secretary.". 
"(6) The term trust' includes any legal instrument or device 
that is similar to a trust but includes an annuity only to such 
extent and in such manner as the Secretary specifies. . 
(c) DEFINITIONS.—Section 1917 (42 U.S.C. 1396p), as amended 
by subsection (b), is fiirther amended by adding at the end the 
following new subsection: 
"(e) In this section, the following definitions shall apply: 
"(1) The term 'assete', with respect to an individual, 
includes all income and resources of the individual and of 
the individual's spouse, including any income or resources 
which the individual or such individuars spouse is entitled 
to but does not receive because of action— 
"(A) by the individual or such individual's spouse, 
"(B) by a person, including a court or administrative 
body, with legal authority to act in place of or on behalf 
of the individual or such individual's spouse, or 
**(C) by any person, including any court or administra-
tive body, acting at the direction or upon the request of 
the individual or such individual's spouse. 
"(2) The term 'income' has the meaning given such term 
in section 1612. 
"(3) The term 'institutionalized individual' means an 
individual who is an inpatient in a nursing facility, who is 
an inpatient in a medical institution and with respect to whom 
payment is made based on a level of care provided in a nursing 
facility, or who is described in section 1902(aX10XAXiiXVI). 
"(4) The term 'noninstitutionalized individual' mecuis an 
individual receiving any of the services specified in subsection 
(cXlXCXii). 
"(5) The term ^resources' has the meaning given such term 
in section 1613, without regard (in the case of an institutional-
ized individual) to the exclusion described in subsection (aXD 
of such section.". 
(d) CONFORMING AMENDMENTS.— 
(1) Section 1902 (42 U.S.C. 1396a) is amended— 
(A) in subsection (aX18), by striking "and transfers 
of assete" and inserting ", transfers of assete, and treatment 
of certain trusts"; 
(B) in subsection (aX51)— 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 627 
(i) by striking "(A)"; and 
(ii) by striking ", and (B)" and all that follows 
and inserting a semicolon; and 
(C) by striking subsection (k). 
(2) Section 1924(bX2XBXi) (42 U.S.C. 1396r-5(bX2XBXi)) 
is amended by striking *'1902(k)'' and inserting "igiTCd)". 
(e) EFFECTIVE DATES.—<1) The amendments made by this sec- 42 use I396p 
tion shall apply, except as provided in this subsection, to payments ^''^-
under title X
D
C of the Social Seciuity Act for calendar quarters 
beginning on or after October 1, 1993, without regard to whether 
or not final regulations to carry out such amendments have been 
promulgated by such date. 
(2) The amendments made by this section shall not apply— 
(A) to medical assistance provided for services furnished 
before October 1,1993, 
(B) with respect to assets disposed of on or before the 
date of the enactment of this Act, or 
(C) with respect to trusts established on or before the 
date of the enactment of this Act. 
(3) In the case of a State plan for medical assistance under 
title XIX of the Social Security Act which the Secretary of Health 
and Himian Services determines requires State legislation (other 
than legislation appropriating funds) in order for the plan to meet 
the additional requirements imposed by the amendment made by 
subsection (b), the State plan shall not be regarded as failing 
to comply with the requirements imposed by such amendment solely 
on the basis of its failure to meet these additional requirements 
before the first day of the first calendar quarter beginning after 
the close of the first regular session of the State legislature that 
begins after the date of the enactment of this Act. For purposes 
of the preceding sentence, in the case of a State that has a 2-
year legislative session, each year of such session shall be deemed 
to be a separate regular session of the State legislature. 
SEC. 13612. MEDICAID ESTATE RECOVERIES. 
(a) MANDATE TO SEEK RECOVERY.—Section 1917(bXl) (42 
U.S.C. 1396p<bXl)) is amended by striking "except—" and all that 
follows and inserting the following: "except that the State shall 
seek adjustment or recovery of any medical assistance correctly 
paid on behalf of an individual under the State plan in the case 
of the following individuals: 
"(A) In the case of an individual described in subsection 
(aXlXB), the State shall seek a4justment or recovery from 
the individual's estate or upon sale of the property subject 
to a lien imposed on account of medical assistance paid on 
behalf of the individual. 
"(B) In the case of an individual who was 55 years of 
age or older when the individual received such medical assist-
ance, the State shall seek adjustment or recovery from the 
individual's estate, but only for medical assistance consisting 
o
f
— 
"(i) nursing facility services, home and commiuiity-
based services, and related hospital and prescription drug 
services, or 
"(ii) at the option of the State, any items or services 
imder tiie State plan. 
107 STAT. 628 
PUBLIC LAW 103-66—AUG. 10, 1993 
**(CXi) In the case of an individual who has received (or 
is entitled to receive) benefits under a long-term care insurance 
policy in connection wi^ which assets or resources are dis-
regarded in the manner described in clause (ii), except as 
provided in such clause, the State shall seek a4justment or 
recovery from the individual's estate on account of medical 
assistance paid on behalf of the individual for nursing facility 
and other long-term care services. 
"(ii) Clause (i) shall not apply in the case of an individual 
who received medical assistance under a State plan of a State 
which had a State plan amendment approved as of May 14, 
1993, wluch provided for the disregard of any assets or 
resources— 
"(I) to the extent that payments are made under a 
long-term care insurance policy; or 
"(ID because an individual has received (or is entitled 
to receive) benefits under a long-term care insurance 
Dolicy.". 
(b) HARDSHIP WAIVER.—Section 1917(b) (42 U.S.C. 1396p(b)) 
is amended by adding at the end the following new paragraph: 
"(3) The State agency shall establish procedures (in accordance 
with standards specified by the Secretary) under which the agencr^r 
shall waive the application of this subsection (other than paragraph 
(IXC)) if such application would work an imdue hardship as deter-
mined on the basis of criteria established by the Secretary.". 
(c) DEFINITION OF ESTATE.—Section 1917(b) (42 U.S.C. 
1396p(b)), as amended by subsection (b), is amended by adding 
at the end the following new paragraph: 
"(4) For purposes of tms subsection, the term 'estate', with 
respect to a deceased individual— 
"(A) shall include all real and personal property and other 
assets included within the individual's estate, as defined for 
purposes of State probate law; and 
"(B) may include, at the option of the State (and shall 
include, in the case of an individual to whom paragraph (IXCXi) 
applies), any other real and personal property and other assets 
in which the individual had any legal title or interest at the 
time of death (to the extent of such interest), including such 
assets conveyed to a survivor, heir, or assign of the deceased 
individual tlurough joint tenancy, tenancy in common, survivor-
ship, life estate, Bving trust, or other arrangement.". 
42 use I396p 
(d) EFFECTIVE DATES.—(IXA) Except as provided in subpara-
note. 
graph (B), the amendments made b^ this section shall apply to 
pajrments under title XIX of the Social Security Act for calendar 
quarters beginning on or after October 1, 1993, without regard 
to whether or not final regulations to carry out such amendments 
have been promulgated by such date. 
(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 Stete legislation (other 
than legislation appropriating fimds) in order for the plan to meet 
the additional requirements imposed by the amendments made 
by this section, tne Stete plan shall not be regarded as failing 
to comply with the requirements imposed by such amendmente 
solely on the basis of its failure to meet these additional require-
mente before the first day of the first calendar quarter beginning 
after the close of the first regular session of the Stete legislature 
\ 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 629 
that begins after the date of the enactment of this Act. For purposes 
of the preceding sentence, in the case of a State that has a 2-
year legislative session, each year of such session shall be deemed 
to be a separate regular session of the State legislature. 
(2) The amendments made by this section shall not apply 
to individuals who died before October 1,1993. 
PART in—PAYMENTS 
SEC. 13621. ASSURING PROPER PAYMENTS TO DISPROPORTIONATE 
SHARE HOSPITALS. 
(a) DISPROPORTIONATE SHARE HOSPITALS REQUIRED TO PROVIDE 
MINIMUM LEVEL OF SERVICES TO MEDICAID PATIENTS.— 
(1) IN GENERAL.—Section 1923 (42 U.S.C. 1396r-4) is 
amended— 
(A) in subsection (aXlXA), by striking ''requirement" 
and inserting 'Vequirements"; 
(B) in subsection (bXD, by striking "requirement" and 
inserting **requirements"; 
(C) in the heading to subsection (d), by striking 
"REQUIREMENT" and inserting "REQUIREMENTS"; 
(D) by adding at the end of subsection (d) the following 
new paragraph: 
"(3) No hospital may be defined or deemed as a dispropor-
tionate share hospital imder a State plan under this title or 
under subsection (b) or (e) of this section imless the hospital 
has a medicaid inpatient utilization rate (as defined in sub-
section (bX2)) of not less than 1 percent."; 
(E) in subsection (eXl)— 
(i) bv striking "and" before "(B)", and 
(ii) oy inserting before the period at the end the 
following: ", ^dr (C) the plan meets the requirement 
of subsectioiv<dX3) and such pajrment a4justments are 
made consistent with the last sentence of subsection 
(c)"; and 
(F) in subsection (eX2)— 
(i) in subparagraph (A), by inserting "(other than 
the last sentence of subsection (c))" after "(c)", 
(ii) by striking "and" at the end of subparagraph 
(A), 
(iii) by striking the period at the end of subpara-
graph (B) and inserting ", and", and 
(iv) by adding at tiie end the following new 
subparagraph: 
"(C) subsection (dX3) shall apply.". 
(2) EFFECTIVE DATE.^The amendments made by this sub- 42 use i396r-4 
section shall apply to payments to States imder section 1903(a) 
of the Social Security Act for payments to hospitals made 
under State plans after— 
(A) the end of the State fiscal year that ends during 
1994, or 
(B) in the case of a State with a State legislature 
which is not scheduled to have a regular legislative session 
in 1994, the end of the State fiscal year that ends during 
1995; 
note. 
107 STAT. 630 
PUBLIC LAW 103-66—AUG. 10, 1993 
without regard to whether or not final regulations to carry 
out such amendments have been promulgated by either such 
date. 
(b) LIMITING AMOUNT OF HOSPITAL PAYMENT ADJUSTMENT TO 
UNCOVERED COSTS.— 
(1) IN GENERAL.—Section 1923 (42 U.S.C. 1396r-4) is 
amended by adding at the end the following new subsection: 
"(g) LIMIT ON AMOUNT OF PAYMENT TO HOSPITAL.— 
"(1) AMOUNT OP ADJUSTMENT SUBJECT TO UNCOMPENSATED 
COSTS.— 
"(A) IN GENERAL.—^A pajonent adjustment during a 
fiscal year shall not be considered to be consistent with 
subsection (c) with respect to a hospital if the payment 
adjustment exceeds the costs incurred during the year of 
fiirnishing hospital services (as determined by the Sec-
retary and net of payments under this title, other than 
under this section, and by iminsiired patients) by the hos-
pital to individuals who either are eligible for medical 
assistance under the State plan or have no health insurance 
(or other source of third party coverage) for services pro-
vided during the year. For purposes of the preceding sen-
tence, payments made to a hospital for services provided 
to indigent patients made by a State or a imit of local 
government within a State shall not be considered to be 
a source of third party payment. 
"(B) LIMIT TO PUBLIC HOSPITALS DURING TRANSITION 
PERIOD.—^With respect to payment adjustments during a 
State fiscal year that begins before January 1, 1995, 
subparagraph (A) shall apply only to hospitals owned or 
operated by a State (or by an instrumentality or a unit 
of government within a State). 
"(C) 
MODIFICATIONS FOR PRIVATE HOSPITALS.—With 
respect to hospitals that are not owned or operated by 
a State (or by an instrumentality or a imit of government 
within a State), the Secretary may make such modifications 
to the manner in which the limitation on payment adjust-
ments is applied to such hospitals as the Secretary consid-
ers appropriate. 
"(2) ADDITIONAL AMOUNT DURING TRANSITION PERIOD FOR 
CERTAIN HOSPITALS WITH HIGH DISPROPORTIONATE SHARE.— 
"(A) IN GENERAL.—^In the case of a hospital vdth high 
disproportionate share (as defined in subparagraph (B)), 
a payment adjustment during a State fiscal year that 
begins before January 1, 1995, shall be considered consist-
ent with subsection (c) if the payment adjustment does 
not exceed 200 percent of the costis of fiunishing hospital 
services described in paragraph (IXA) during the year, 
but only if the Governor of the Stete certifies to the satisfac-
tion of the Secretary that the hospitel's applicable mini-
mum amount is used for health services during the year. 
In determining the amoimt that is used for such services 
during a year, there shall be excluded any amounts received 
under the Public Health Service Act, title V, title XVIII, 
or fix)m third party payors (not including the Stete plan 
under this title) that are used for providing such services 
during the year. 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 631 
"(B) HOSPITALS WITH IHGH DISPROPORTIONATE SHARE 
D
E
F
I
N
E
D
.
—
^
I
n subparagraph (A), a hospital is a 'hospital 
with high disproportionate share' if— 
''(i) the hospital is owned or operated by a State 
(or by an instnunentality or a unit of government 
within a State); and 
"(ii) the hospital— 
"(I) meets the requirement described in sub-
section (bXlXA), or 
''(II) has the largest number of inpatient days 
attributable to individuals entitled to benefits 
under the State plan of any hospital in such State 
for the previous State fiscal year. 
"(C) 
APPUCABLE 
MINIMUM 
AMOUNT DEFINED.—In 
subp£uragraph (A), the 'applicable minimum amount' for 
a hospital for a 
fiscal 
year is equal to the difference between 
the amount of the hospital's pajrment adjustment for the 
fiscal year and the costs to the hospital of fiimishing hos-
pital services described in paragraph (IXA) during the fiscal 
year.". 
(2) CONFORMING AMENDMENTS.—Section 1923 is amended— 42 use i396r-4 
(A) in subsection (c) in the matter preceding paragraph 
(1), by striking "subsection (0" and inserting "subsections 
(f) and (g)"; and 
(B) in subsection (eX2) (as amended by subsection 
(aXlXF)>-
(i) by striking "and" at the end of subparagraph 
(B); 
(ii) by striking the period at the end of subpara-
graph (C) and inserting ", and"; and 
(iii) by adding at the end the following new 
subpar£igraph: 
"(D) subsection (g) shall apply.". 
(3) EFFECTIVE DATE.— 
(A) IN GENERAL.—^Except as provided in subparagraph 
(B), the amendments made by this subsection shall apply 
to payments to States under section 1903(a) of the Social 
Security Act for pajmients to hospitals made under State 
plans after— 
(i) the end of the State fiscal year that ends during 
1994, or 
(ii) in the case of a State with a State legislature 
whidi is not scheduled to have a regular legislative 
session in 1994, the end of the State fiscal year that 
ends during 1995; 
without regard to whether or not final regulations to carry 
out such amendments have been promulgated by either 
such date. 
(B) 
DELAY IN IMPLEMENTATION FOR PRIVATE HOS-
PITALS.—^With respect to a hospital that is not owned or 
operated by a State (or by an instrumentality or a unit 
of government witiiin a State), the amendments made by 
this subsection shall apply to payments to States under 
section 1903(a) for payments to hospitals made under State 
plans for State fiscal years that begin during or after 
1995, without regard to whether or not final regulations 
42 use 1396r-4 
note. 
107 STAT. 632 
PUBLIC LAW 103-66—AUG. 10, 1993 
to carry out such amendments have been promulgated 
by such date. 
SEC. 13622. LIABILITY OF THIRO PARTIES TO PAY FOR CARE AND 
SERVICES. 
(a) LIABILITY OF ERISA PLANS.—(1) Section 1902(aX25XA) (42 
U.S.C. 1396a(aX25XA)) is amended bv striking "insurers)" and 
inserting "insurers, group health plans (as defined in section 607(1) 
of the Employee Retirement Income Security Act of 1974), service 
benefit plans, and health maintenance organizations)". 
(2) Section 1903(o) (42 U.S.C. 1396b(o)) is amended by striking 
"regulation)" and inserting "regulation and including a group health 
plan (as defined in section 607(1) of the Employee Retirement 
Income Security Act of 1974)), a service benefit plan, and a health 
maintenance organization)". 
(b) REQUIRING STATE TO PROHIBIT INSURERS FROM TAKING 
MEDICAID STATUS INTO ACCOUNT.—Section 1902(aX25) (42 U.S.C. 
1396a(aX25)) is amended— 
(1) by striking "and" at the end of subparagraph (F); 
(2) by adding "and" at the end of subparagraph (G); and 
(3) by adding after subparagraph (G) the following new 
subparagraph: 
(H) that the State prohibits any health insurer (includ-
ing a group health plan, as defined in section 607(1) of 
the Employee Retirement Income Security Act of 1974, 
a service benefit plan, and a health maintenance organiza-
tion), in enrolling an individual or in making any payments 
for benefits to the individual or on the individual's behalf, 
fi:om taking into accoimt that the individual is eligible 
for or is provided medical assistance under a plan under 
this title for such State, or any other State;". 
(c) 
STATE 
RIGHT 
TO 
THIRD 
PARTY PAYMENTS.—Section 
1902(aX25) (42 U.S.C. 1396a(aX25)), as amended by subsection 
(b), is amended— 
(1) by striking "and" at the end of subparagraph (G); 
(2) by adding "and" at the end of subparagraph (H); and 
(3) by adding after subparagraph (H) the following new 
subparagraph: 
"(I) that to the extent that pa3anent has been made 
imder the State plan for medical assistance in any case 
where a third party has a legal liability to make payment 
for such assistance, the State has in effect laws under 
which, to the extent that payment has been made under 
the State plan for medical assistance for health care items 
or services fiimished to an individual, the State is consid-
ered to have acquired the rights of such individual to 
payment by any other party for such health care items 
or services;. 
42 use 1396a 
(d) EFFECTIVE DATE.—(1) Except as provided in paragraph (2), 
the amendments made by subsections (a)(1), (b), and (c) shall apply 
to calend£u: quarters begmning on or after October 1, 1993, without 
regard to whether or not final regulations to carry out such amend-
ments have been promulgated by such date. 
(2) In the case of a State plan for medical assistance under 
title XIX of the Social Security Act which the Secretary of Health 
and Human Services determines requires State legislation (other 
than legislation appropriating funds) in order for the plan to meet 
note. 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 633 
the additional requirements imposed by the amendments made 
by subsections (a) and (b), the State plan shall not be regarded 
as failing to comply with the requirements of such title solely 
on the basis of its failure to meet these additional requirements 
before the first day of the first calendar quarter beginning after 
the close of the first regular session of the State legislature that 
begins £Lfter the date of the enactment of this Act. For purposes 
of the preceding sentence, in the case of a State that has a 2-
year legislative session, each year of such session shall be deemed 
to be a separate regular session of the State legislature. 
(3) Tne amendment made by subsection (aX2) shall apply to 
items and services fiimished on or afl;er October 1,1993. 
SEC. 13823. MEDICAL CHILD SUPPORT. 
(a) STATE PLAN REQUIREMENT.—Section 1902(a) (42 U.S.C. 
1396a(a)) is amended— 
(1) by striking "and" at the end of paragraph (54); 
(2) in the paragraph (55) inserted by section 4602(a)(3) 
of OBRA-1990, by striking the period at the end and inserting 
a semicolon; 
(3) by redesignating the paragraph (55) inserted by section 
4604(bX3) of OBRA-1990 as paragraph (56), by transferring 
and inserting it aft«r the paragraph (55) inserted by section 
4602(aX3) of such Act, and by striking the period at the end 
and inserting a semicolon; 
(4) by placing paragraphs (57) and (58), inserted by section 
4751(aXlXC) of (5BRA-1990, immediately after paragraph (56), 
as redesignated by paragraph (3); 
(5) in the paragraph (58) inserted by section 4751(aXl)(C) 
of OBRA-1990, by striking the period at the end and inserting 
a semicolon; 
(6) by redesignating the paragraph (58) inserted by section 
4752(cXlXC) of OBRA-1990 as paragraph (59) and by transfer-
ring and inserting it after the paragraph (58) inserted by section 
4751(aXlXC) of such Act, and by striking the period at the 
end and inserting "; and"; and 
(7) by inserting aft;er paragraph (59) the following new 
paragraph: 
"(60) provide that the State agency shall provide assurances 
satisfactory to the Secretary that the Stete has in effect the 
laws relatmg to medical child support required under section 
1908.". 
(b) MEDICAL CHILD SUPPORT LAWS.—Title XIX (42 U.S.C 
1936 
et seq.) is amended by inserting after section 1907 the following 
new section: 
"REQUIRED LAWS RELATING TO MEDICAL CHILD SUPPORT 
"SEC. 1908. (a) IN GENERAL.—The laws relating to medical 42usci396g. 
child support, which a State is required to have in effect under 
section 1902(aX60), are as follows: 
"(1) A law that prohibits an insurer from denying enroll-
ment of a child under tiie health coverage of the cmld's parent 
on the groimd that— 
"(A) the child was bom out of wedlock, 
"(B) the child is not claimed as a dependent on the 
parent's Federal income tax return, or 
107 STAT. 634 
PUBLIC LAW 103-66—AUG. 10, 1993 
"(C) the child does not reside with the parent or in 
the insurei^s service area. 
''(2) In any case in which a parent is required by a court 
or administrative order to provide health coverage for a child 
and the parent is eligible for family health coverage through 
an insurer, a law that requires such insurer— 
"(A) to permit such parent to enroll under such familv 
coverage any such child who is otherwise eligible for such 
coverage (without regard to any enrollment season restric-
tions); 
^ 
"(B) if such a parent is enrolled but fails to make 
application to obtain coverage of such child, to enroll such 
cnUd under such family coverage upon application by the 
child's other parent or by the State agency administering 
the program under this title or part D of title IV; and 
(C) not to disenroU (or eliminate coverage of) such 
a child unless the insurer is provided satisfactory written 
evidence that— 
"(i) such court or administrative order is no longer 
in effect, or 
"(ii) the child is or will be enrolled in comparable 
health coverage through another insurer which will 
^ 
take effect not later than the effective date of such 
disenroUment. 
**(3) In any case in which a parent is required by a court 
or administrative order to provide health coverage for a child 
and the parent is eligible for family health coverage through 
an employer doing business in the State, a law that requires 
such employer— 
"(A) to permit such parent to enroll under such family 
coverage any such child who is otherwise eligible for such 
coverage (without regard to any enrollment season restric-
tions); 
"(B) if such a parent is enrolled but fails to make 
application to obtain coverage of such child, to enroll such 
child under such family coverage upon application by the 
child's other parent or by the State agency administering 
the program under this title or part D of title IV; and 
(C) not to disenroU (or eliminate coverage of) any 
such child imless— 
"(i) the employer is provided satisfactory written 
evidence that— 
"(I) such court or administrative order is no 
longer in effect, or 
"(ID the child is or will be enrolled in com-
parable health coverage which will take effect not 
later than the effective date of such disenroUment, 
or 
"(ii) the employer has eliminated family health 
coverage for aU 01 its employees; and 
"(D) to withhold from such employee's compensation 
-- 
the employee's share (if any) of premiums for health cov-
erage (except that the amount so withheld may not exceed 
the maximum amount permitted to be withheld under sec-
tion 303(b) of the Consumer Credit Protection Act), and 
to p ^ such share of premiums to the insurer, except tiiat 
the Secretaiy may provide by regulation for appropriate 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 635 
circumstances under which an employer may withhold less 
than such employee's share of such premiums. 
"(4) A law that prohibits an insurer from imposing require-
ments on a State agency, which has been assigned uie rights 
of an individual eligible for medical assistance under this title 
and covered for health benefits from the insurer, that are 
different from requirements applicable to an agent or assignee 
of any other individual so covered. 
''(5) A law that requires an insurer, in any case in which 
a child has health coverage through the insurer of a 
noncustodial parent— 
"(A) to provide such information to the custodial parent 
as may be necessary for the child to obtain benefits through 
such coverage; 
**(B) to permit the custodial parent (or provider, with 
the custodiiu parent's approval) to submit claims for cov-
ered services without the approval of the noncustodicd 
parent; and 
"(C) to make payment on claims submitted in accord-
ance with subparagraph (B) directly to such custodial 
parent, the provider, or the State agency. 
(6) A law that permits the State agency under this title 
to garnish the wages, salary, or other employment income 
of, and requires withholding amounts from State tax refunds 
to, any person who— 
"(A) is required by court or administrative order to 
provide coverage of the costs of health services to a child 
who is eligible for medical assistance under this title, 
''(B) has received payment from a third party for the 
costs of such services to such child, but 
"(C) has not used such payments to reimburse, as 
appropriate, either the other parent or guardian of such 
child or the provider of such services, 
to the extent necessary to reimburse the State agency for 
expenditures for such costs under its plan under this title, 
but any claims for current or past-due child support shall 
take priority over any such claims for the costs of sucn services. 
"(b) DEFINITION.—^For purposes of this section, the term 'insurer* 
includes a group health plan, as defined in section 607(1) of the 
Employee Retirement Income Security Act of 1974, a health mainte-
nance organization, and an entity offering a service benefit plan.". 
(c) EFFECTIVE DATE.—(1) Except as provided in paragraph (2), 42 use I396g 
the amendments made by this section apply to calendar quarters ^°^-
beginning on or after April 1, 1994, without regard to whether 
or not final regulations to carry out such amendments have been 
promulgated by such date. 
(2) In the case of a Stete plan 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 requirements imposed by the amendments made 
by this section, the Stete plan shall not be regarded as failing 
to comply with the requiremente of such title solely on the basis 
of ite failure to meet these additional requiremente before the 
first day of the first calendar quarter beginning after the close 
of tiie first regular session of the Stete legislature that begins 
after the date of enactment of this Act. For purposes of the preceding 
sentence, in the case of a Stete that has a 2-year legislative session. 
107 STAT. 636 
PUBLIC LAW 103-66—AUG. 10, 1993 
42 use 1396b 
note. 
42 use 1396a 
note. 
each year of such session shall be deemed to be a separate regular 
session of the State legislature. 
SEC. 1S«24. APPUCATION OF MEDICABE RULES LIMITING CERTAIN 
PHYSICIAN RBFERRALa 
(a) IN GENERAL.—Section 1903 (42 U.S.C. 1396b) is amended 
by inserting after subsection (r) the following new subsection: 
''(s) Notwithstanding the preceding provisions of this section, 
no payment shall be made to a State under this section for expendi-
tures for medical assistance under the State plan consistmg of 
a designated health service (as defined in subsection (hX6) of section 
1877) furnished to an individual on the basis of a referral that 
would result in the denial of pajrment for the service under title 
XVIII if such title provided for coverage of such service to the 
same extent and under the same terms and conditions as under 
the State plan, and subsections (f) and (gX5) of such section shall 
apply to a provider of such a designated health service for which 
payment may be made under this title in the same manner as 
such subsections apply to a provider of such a service for which 
payment may be made under such title.". 
(b) EFFECTIVE DATE.—^The amendment made by subsection (a) 
shall apply to referrals made on or after December 31,1994. 
SEC. 13«26. STATE MEDICAID FRAUD CONTROL. 
(a) IN GENERAL.—Section 1902(a) (42 U.S.C. 1396a(a)), as 
amended by section 13623(a), is amended— 
(1) by striking "and" at the end of paragraph (59); 
(2) by striking the period at the end of paragraph (60) 
and inserting "; and"; and 
(3) by inserting after paragraph (60) the following new 
paragrapn: 
^61) provide that the State must demonstrate that it oper-
ates a medicaid fraud and abuse control unit described in 
section 1903(q) that effectively carries out the functions and 
requirements described in such section, as determined in 
accordance with standards established by the Secretanr, unless 
the State demonstrates to the satisfaction of the Secretary 
that the effective operation of such a unit in the State would 
not be cost-effective because minimal fraud exists in connection 
with the provision of covered services to eligible individuals 
under the State plan, and that beneficiaries under the plan 
will be protected from abuse and neglect in connection with 
the provision of medical assistance under the plan without 
the existence of such a unit.". 
(b) EFFECTIVE DATE.—Section 1902(aX61) of the Social Security 
Act (as added by subsection (a)) shall take effect January 1, 1995, 
and the standards referred to in such section shall be established 
not later than March 31,1994. 
PART IV—IMMUNIZATIONS 
SEC. 13631. BIEDICAID PEDIATRIC IMMUNIZATION PROVISIONS. 
(a) STATE PLAN REQUIREMENT FOR PEDIATRIC IMMUNIZATION 
DISTRIBUTION PROGRAM.—Section 1902(a) (42 U.S.C. 1396a(a)), as 
amended by sections 13623(a) and 13625(a), is amended— 
(1) by striking "and" at the end of paragraph (60); 
(2) by^ striking the period at the end of paragraph (61) 
and inserting "; and"; and 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 637 
42 use 13968, 
1396v. 
(3) by adding at the end the following new paragraph: 
"(62) provide Tor a program for the distribution of pediatric 
vaccines to program-registered providers for the immunization 
of vaccine-eligible children in accordance with section 1928.". 
(b) 
DESCRIPTION OF REQUIRED PROGRAM.—Title XIX 
is 
amended— 
(1) by redesignating section 1928 as section 1931 and by 
moving such section to the end of such title, and 
(2) by inserting after section 1927 the following new section: 
**PROGRAM FOR DISTRIBUTION OF PEDIATRIC VACCINES 
"SEC. 1928. (a) ESTABLISHMENT OF PROGRAM.— 
"(1) IN GENERAL.—In order to meet the requirement of 42USCi396s. 
section 1902(aX62), each State shall establish a pediatric vac-
cine distribution program (which may be administered by tiie 
Stete department of health), consistent with the requirements 
of this section, under which— 
"(A) each vaccine-eligible child (as defined in subsection 
(b)), in receiving an immunization with a qualified pediatric 
vaccine (as defined in subsection (hX8)) from a program-
registered provider (as defined in subsection (c)) on or 
after October 1, 1994, is entitled to receive the immuniza-
tion without charge for the cost of such vaccine; and 
"(BXi) each program-registered provider who admin-
isters such a peoiatric vaccine to a vaccine-eligible child 
on or after such date is entitled to receive such vaccine 
under the program without charge either for the vaccine 
or its delivery to the provider, an(r(ii) no vaccine is distrib-
uted under tne program to a provider imless the provider 
is a program-registered provider. 
"(2) DELIVERY OF SUFFICIENT QUANTITIES OF PEDIATRIC VAC-
CINES TO IMMUNIZE FEDERALLY VACCINE-EUGIBLE CHILDREN.— 
"(A) IN GENERAL.—^The Secretary shall provide under 
subsection (d) for the purchase and delivery on behalf of 
each Stete meeting the requirement of section 1902(aX62) 
(or, with respect to vaccines administered by an Indian 
tribe or tribal organization to Indian children, directly to 
the tribe or organization), without charge to the State, 
of such quantities of qu£dified pediatric vaccines as may 
be necessary for the administration of such vaccines to 
all federally vaccine-eligible children in the Stete on or 
after October 1, 1994. This paragraph constitutes budget 
authority in advance of appropriations Acte, and represente 
the obligation of the Federal Government to provide for 
the purchase and delivery to Stetes of the vaccines (or 
payment under subparagraph (C)) in accordance with this 
paragraph. 
^B) SPECIAL RULES WHERE VACCINE IS UNAVAILABLE.— 
To the extent that a sufficient quantity of a vaccine is 
not available for purchase or delivery under subsection 
(d), Uie Secretory shall provide for the purchase and deliv-
ery of the available vaccine in accordance with priorities 
esteblished by the Secretory, with priority given to feder-
ally vaccine-eligible children unless the Secretory finds 
there are other public health considerations. 
"(C) SPECIAL RULES WHERE STATE IS A MANUFAC-
TURER.— 
107 STAT. 638 
PUBLIC LAW 103-66—AUG. 10, 1993 
"(i) PAYMENTS IN UEU OF VACCiNES.--In the case 
of a State that manufactures a pediatric vaccine the 
Secretary, instead of providing Uie vaccine on behalf 
of a State under subparagraph (A), shall provide to 
the State an amount equal to the value of the quantity 
of such vaccine that otherwise would have been deliv-
ered on behalf of the State under such subparagraph, 
but only if the State agrees that such payments will 
only be used for purposes relating to pediatric 
immunizations. 
**(ii) DETERMINATION OF VALUE.—In determining 
the amount to pay a State under clause (i) with respect 
to a pediatric vaccine, the value of the quantity of 
vaccine shall be determined on the basis of the price 
in effect for the qualified pediatric vaccine under con-
tracts under subsection (a). If more than 1 such con-
tract is in effect, the Secretary shall determine such 
value on the basis of the average of the prices under 
the contracts, after weighting each such price in rela-
tion to the quantity of vaccine under the contract 
involved. 
"(b) VACCINE-ELIGIBLE CHILDREN.—For purposes of this section: 
"(1) IN GENERAL.—^The term Vaccine-eligible child' means 
a child who is a federally vaccine-eligible child (as defined 
in paragraph (2)) or a State vaccine-eligible child (as defined 
in paragraph (3)). 
"(2) FEDERALLY VACCINE-EUGIBLE CHILD.— 
*
*
(
A
) IN GENERAL.—^The term 'federally vaccine-eligible 
child' means any of the following children: 
"(i) A medicaid-eligible child, 
"(ii) A child who is not insured, 
"(iii) A child who (I) is administered a qualified 
pediatric vaccine by a federally-qualified health center 
(as defined in section 1905(1X2XB)) or a rural health 
clinic (as defined in section 1905(1X1)), and (II) is not 
insured with respect to the vaccine. 
"(iv) A child who is an Indian (as defined in sub-
section (hX3)). 
"(B) DEFINITIONS.—In subparagraph (A): 
"(i) The term 'medicaid-ehgible' means, with 
respect to a child, a child who is entitled to medical 
assistance under a state plan approved under this 
title. 
"(ii) The term 'insured' means, with respect to 
a child— 
"(I) for purposes of subparagraph (AXii), that 
the child is enrolled under, and entitled to benefits 
under, a health insurance policy or plan, including 
a group health plan, a prepaid health plan, or 
an employee welfare benefit plan under the 
Employee Retirement Income Security Act of 1974; 
and 
"(II) for purposes of subparagraph (AXiiiXII) 
Mdth respect to a pediatric vaccine, that the child 
is entitled to benefits under such a health insur-
ance policy or plan, but such benefits are not 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 639 
available ¥dth respect to the cost of the pediatric 
vaccine. 
"(3) STATE VACCINE-EUGIBLE CHILD.—The tenn 'State vac-
cine-eligible child' means, ¥dth respect to a State and a qualified 
pediatric vaccine, a child who is within a class of children 
for which the State is purchasing the vaccine pursuant to 
subsection (dX4XB). 
"(c) PROGRAM-REGISTERED PROVIDERS.— 
"(1) DEFINED.—In this section, except as otherwise pro-
vided, the term 'program-registered provider* means, with 
respect to a State, any health care provider that^ 
"(A) is Ucensed or otherwise authorized for administra-
tion of pediatric vaccines under the law of the State in 
which the administration occurs (subject to section 333(e) 
of the Public Health Service Act), without regard to 
whether or not the provider participates in the plan under 
this title; 
"(B) submits to the State an executed provider agree-
ment described in paragraph (2); and 
"(C) has not been found, by the Secretary or the State, 
to have violated such agreement or other applicable 
requirements established by the Secretary or the State 
consistent with this section. 
"(2) PROVIDER AGREEMENT.—A provider agreement for a 
provider under this paragraph is an agreement (in such form 
and manner as the Secretary may require) that the provider 
agrees as follows: 
"(AXi) Before administering a qualified pediatric vac-
cine to a child, the provider will ask a parent of the child 
such questions as are necessary to determine whether the 
child is a vaccine-eligible child, but the provider need not 
independently verify the answers to such questions. 
"(ii) The provider will, for a period of time specified 
by the Secretary, maintain recor(b of responses made to 
the questions. 
(iii) The provider will, upon request, make such 
records available to the State and to the Secretary, subject 
to section 1902(aX7). 
"(BXi) Subject to clause (ii), the provider will comply 
with the schedule, regarding the appropriate periodicity, 
dosage, and contraindications applicable to pediatric vac-
cines, that is established and periodically reviewed and, 
as appropriate, revised by the advisory committee referred 
to in subsection (e), except in such cases as, in the provid-
er's medical jud^ent suoiect to accepted medic€Q practice, 
such compliance is medically inappropriate. 
"(ii) The provider will provide pediatric vaccines in 
compliance with applicable State law, including any such 
law relating to any religious or other exemption. 
"(CXi) In administering a qualified pediatric vaccine 
to a vaccine-eUgible child, the provider will not impose 
a charge for the cost of the vaccine. A program-registered 
provider is not required under this section to administer 
such a vaccine to each child for whom an immunization 
with the vaccine is sought 
firom 
the provider. 
"(ii) The provider may impose a fee for the administra-
tion of a qualified pediatric vaccine so long as the fee 
107 STAT. 640 
PUBLIC LAW 103-66—AUG. 10, 1993 
in the case of a federally vaccine-eli^ble child does not 
exceed the costs of such administration (as determined 
by the Secretary based on actual regional costs for such 
administration). 
"(iii) The provider will not deny administration of a 
qualified pediatric vaccine to a vacdne-eligible child due 
to the inability of the child's parent to pay an administra-
tion fee. 
"(3) ENCOURAGING INVOLVEMENT OF PROVIDERS.—Each pro-
gram under this section shall provide, in accordance with cri-
teria established by the Secretary— 
"(A) for encouraging the following to become program-
registered providers: private health care providers, the 
Indian Health Service, health care providers that receive 
funds under title V of the Indian Health Care Improvement 
Act, and health programs or facilities operated by Indian 
tribes or tribal orgamzations; and 
''(B) for identifying, with respect to any population 
of vaccine-eligible children a substential portion of whose 
parents have a Umited ability to speak the English lan-
guage, those program-registered providers who are able 
to communicate with the population involved in the lan-
guage and cultural context that is most appropriate. 
"(4) STATE REQUIREMENTS.—Except as the Secretary may 
permit in order to prevent fraud and abuse and for related 
purposes, a Stete may not impose additional qualifications or 
conditions, in addition to the requirements of paragraph (1), 
in order that a provider qualify as a program-registered pro-
vider under this section. This subsection does not limit the 
exercise of Stete authority under section 1915(b). 
"(d) NEGOTIATION OF CONTRACTS WITH MANUFACTURERS.— 
"(1) IN GENERAL.—^For the purpose of meeting obligations 
under this section, the Secretory shall negotiate and enter 
into contracts with manufacturers of pediatric vaccines consist-
ent Math the requiremente of this subsection and, to the maxi-
mimi extent practicable, consolidate such contracting with any 
other contracting activities conducted by the Secretory to pur-
chase vaccines. The Secretory may enter into such contracte 
under which the Federal (jrovemment is obligatod to make 
outlays, the budget authority for which is not provided for 
in advance in appropriations Acte, for the purchase and delivery 
of pediatric vaccines under subsection (aX2XA). 
"(2) AuTHORiry TO DECLINE CONTRACTS.—The Secretary 
may decline to enter into such contracte and may modify or 
extond such contracte. 
"(3) CONTRACT PRICE.— 
"(A) IN GENERAL.—^The Secretary, in negotiating the 
prices at which pediatric vaccines will be purchased and 
delivered froTa a manufacturer under this subsection, shall 
take into account quantities of vaccines to be purchased 
by Stotes under the option under paragraph (4XB). 
"(B) NEGOTIATION OF DISCOUNTED PRICE FOR CURRENT 
V
A
C
C
I
N
E
S
.
—
^
W
i
t
h respect to contracte entered into under 
this subsection for a pediatric vaccine for which the Centers 
for Disease Control and Prevention has a contract in effect 
under section 317(jXl) of the Public Health Service Act 
as of May 1, 1993, no price for the purchase of such 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 641 
vaccine for vaccine-eligible children shall be agreed to by 
the Secretary under this subsection if the price per dose 
of such vaccine (including delivery costs and any applicable 
excise tax established under section 4131 of me Internal 
Revenue Code of 1986) exceeds tlie price per dose for tlie 
vaccine in effect under such a contract as of such date 
increased by the percentage increase in the consumer price 
index for all urban consumers (all items; United States 
city average) from May 1993 to the month before the month 
in which such contract is entered into. 
"(C) NEGOTIATION OF DISCOUNTED PRICE FOR NEW VAC-
CINES.—^With respect to contracts entered into for a pedi-
atric vaccine not described in subparagraph (B), the price 
for the purchase of such vaccine shsal oe a discounted 
price negotiated by the Secretary that may be established 
without regard to such subparagraph. 
"(4) QUANTITIES AND TERMS OF DELIVERY.—Under such 
contracts— 
"(A) the Secretary shall provide, consistent with para-
graph (6), for the purchase and delivery on behalf of States 
(and tribes and tribal organizations) of quantities of pedi-
atric vaccines for federculy vaccine-eligible children; and 
"(B) each State, at the option of the State, shall be 
permitted to obtain additional quantities of pediatric vac-
cines (subject to amounts specified to the Secretary by 
the State in advance of negotiations) through purchasing 
the vaccines from the manufacturers at the applicable price 
negotiated by the Secretary consistent with paragraph (3), 
if (i) the State agrees that the vaccines will be used to 
provide immunizations only for children who are not feder-
ally vaccine-eligible children and (ii) the State provides 
to the Secretary such information (at a time and manner 
specified by the Secretary, including in advance of negotia-
tions imder paragraph (1)) as the Secretary determines 
to be necessary, to provide for quantities of p|ediatric vac-
cines for the State to purchase pursuant to this subsection 
and to determine annually the percentege of the vaccine 
market that is purchased pursuant to this section and 
this subparagraph. 
The Secretary shall enter into the initial negotiations under 
the preceding sentence not later than 180 days after the date 
of the enactment of the Omnibus Budget Reconciliation Act 
of 1993. 
"(5) CHARGES FOR SHIPPING AND HANDLING.—The Secretary 
may enter into a contract referred to in paragraph (1) only 
if me manufacturer involved agrees to submit to the Secretory 
such reports as the Secretory determines to be appropriate 
to assure compliance with the contract and if, with respect 
to a Stote program under this section that does not provide 
for the direct delivery of qualified pediatric vaccines, the manu-
facturer involved agrees that the manufacturer will provide 
for the delivery of the vaccines on behalf of the Stote in accord-
ance with such program and will not impose any charges for 
Uie coste of such deliveiy (except to the extent such coste 
are provided for in the price esteblished under paragraph (3)). 
^(6) ASSURING ADEQUATE SUPPLY OF VACCINES.—The Sec-
retory, in negotiations under paragraph (1), shall negotiate 
107 STAT. 642 
PUBLIC LAW 103-66—AUG. 10, 1993 
for quantities of pediatric vaccines such that an adequate sup-
ply of such vaccines will be maintained to meet unanticipated 
needs for the vaccines. For purposes of the preceding sentence, 
the Secretary shall negotiate for a 6-month supply of vaccines 
in addition to the quantity that the Secretary otherwise would 
provide for in such negotiations. In carrying out this paragraph, 
the Secretanr shall consider the potential for outbreaks of the 
diseases with respect to which the vaccines have been devel-
oped. 
"(7) MULTIPLE SUPPLIERS.—In the case of the pediatric 
vaccine involved, the Secretary shall, as appropriate, enter 
into a contract referred to in paragraph (1) with each manufac-
turer of the vaccine that meets the terms and conditions of 
the Secretary for an award of such a contract (including terms 
and conditions regarding safety and quality). With respect to 
multiple contracts entered into pursuant to this paragraph, 
the Secretory may have in effect different prices imder each 
of such contracts and, with respect to a purchase by Stotes 
pursuant to paragraph (4XB), tne Secretory shall determine 
which of such contracto will be applicable to the purchase, 
"(e) USE OF PEDIATRIC VACCINES LIST.—The Secretory shall 
use, for the puri>ose of the purchase, delivery, and administration 
of pediatric vaccines imder this section, the list estoblished (and 
periodically reviewed and as appropriate revised) by the Advisory 
Committee on Immimization Practices (an advisory committee 
estoblished by the Secretary, acting through the Director of the 
Centers for Disease Control and Prevention). 
"(f) REQUIREMENT OF STATE MAINTENANCE OF IMMUNIZATION 
LAWS.—^In the case of a Stote that had in effect as of Ma^ 1, 
1993, a law that requires some or all health insurance policies 
or plans to provide some coverage with respect to a pediatric vac-
cine, a Stote program under this section does not comply with 
the requiremento of this section unless the Stote certifies to the 
Secretary that the Stote has not modified or repealed such law 
in a manner that reduces the amount of coverage so required. 
"(g) TERMINATION.—^This section, and the requirement of section 
1902(aX62), shall cease to be in effect beginning on such date 
as may be prescribed in Federal law providing for immunization 
services for all children as part of a broad-based reform of the 
national health care system. 
"(h) DEFINITIONS.—^For purposes of this section: 
"(1) The term 'child' means an individual 18 years of age 
or younger. 
"(2) The term immunization' means an immimization 
against a vaccine-preventoble disease. 
"(3) The terms 'Indian', 'Indian tribe' and 'tribal organiza-
tion' have the meanings given such terms in section 4 of the 
Indian Health Care Improvement Act. 
"(4) The term 'manufacturer' means any coiporation, 
organization, or institution, whether public or private (including 
Federal, Stote, and local departmento, agencies, and instrumen-
talities), which manufactures, importe, m'ocesses, or distributes 
imder ito label any pediatric vaccine. The term 'manufacture' 
means to manufacture, import, process, or distribute a vaccine. 
"(5) The term 'parent^ includes, with respect to a child, 
an individual who qualifies as a legal guardian imder Stote 
law. 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 643 
"(6) The term 'pediatric vaccine' means a vaccine included 
on the list under subsection (e). 
**(7) The term 'program-registered provider* has the mean-
ing given such term in subsection (c). 
"(8) The term 'qualified pediatric vaccine' means a pediatric 
vaccine with respect to which a contract is in effect imder 
subsection (d). 
"(9) The terms 'vaccine-eligible child', 'federally vaccine-
eUgible child', and 'State vaccine-eligible child' have the mean-
ing given such terms in subsection (b).". 
(c) LIMITATION ON MEDICAID PAYMENTS.—Section 1903(i) (42 
U.S.C. 1396b(i)), as amended by section 2(b)(2) of the Medicaid 
Volimtary Contribution and Provider-Specific Tax Amendments of 
1991, is amended— 
(1) in the paragraph (10) inserted by section 4401(aXlXB) 
of OBRA-1990, by striking all that follows ''1927(g)'' and insert-
ing a semicolon; 
(2) by redesignating the paragraph (12) inserted by section 
4752(aX2) of OBRA-1990 as paragraph (11), by transferring 
and inserting it after the paragraph (10) inserted by section 
4401(aXlXB) of OBRA-1990, and by striking the period at 
the end and inserting a semicolon; 
(3) by redesignating the paragraph (14) inserted by section 
4752(e) of OBRA-1990 as paragraph (12), by transferring and 
inserting it after paragraph (11), as redesignated by paragraph 
(2), and by striking the period at the end and inserting a 
semicolon; 
(4) by redesignating the paragraph (11) inserted by section 
4801(eX16XA) of OBRA-1990 as paragraph (13), by transferring 
and inserting it after paragraph (12), as redesignated by para-
graph (3), and by striking the period at the end and inserting 
"; or"; and 
(5) by inserting after paragraph (13), as so redesignated, 
the following new paragrapn: 
"(14) with respect to any amount expended on administra-
tive costs to carry out the program under section 1928.". 
(d) CONTINUED COVERAGE OF COSTS OF A PEDIATRIC VACCINE 42 use 300bb-7 
UNDER CERTAIN GROUP HEALTH PLANS.— 
"
°
*
®
-
(1) REQUIREMENT.—^The requirement of this paragraph, 
with respect to a group health plan for plan years beginnmg 
after the date of the enactment of this Act, is that the group 
health plan not reduce its coverage of the costs of pediatric 
vaccines (as defined imder section 1928(hX6) of the Social Secu-
rity Act) below the coverage it provided £is of May 1, 1993. 
(2) ENFORCEMENT.—For purposes of section 2207 of the 
Public Health Service Act, the requirement of paragraph (1) 
is deemed a requirement of title XXII of such Act. 
(e) AVAILABILITY OF MEDICAID PAYMENTS FOR CHILDHOOD VAC-
CINE REPLACEMENT PROGRAMS.— 
(1) 
IN 
GENERAL.—Section 
1902(aX32) 
(42 
U.S.C. 
1396a(aX32)) is amended— 
(A) by striking "and" at the end of subparagraph (B), 
(B) by striking the period at the end of subparagraph 
(C) and inserting "; and", and 
(C) by adding at the end the following new subpara-
graph: 
107 STAT. 644 
PUBLIC LAW 103-66—AUG. 10, 1993 
42 u s e 1396a 
note. 
"(D) in the case of payment for a childhood vaccine 
administered before October 1,1994, to individiials entitled 
to medical assistance under the State plan, the State plan 
may make payment directly to the manufacturer of the 
vaccine unoer a voluntary replacement program agreed 
to by the State pursuant to which the manufacturer (i) 
supplies doses of the vaccine to providers administering 
the vaccine, (ii) periodically replaces the supply of the 
vaccine, and (iii) charges the State the manufactiu'er's price 
to the Centers for Disease Control and Prevention for the 
vaccine so administered (which price includes a reasonable 
amount to cover shipping and the handling of returns);". 
(2) EFFECJTIVE DATE.—^The amendments made by paragraph 
(1) shall take effect on the date of the enactment of this Act. 
(f) OUTREACH AND EDUCATION.— 
(1) IN GENERAL.—Section 1902(a) (42 U.S.C. 1396a(a)) is 
amended— 
(A) in paragraph (IIXB)— 
(i) by striking "effective July 1,1969,", 
(ii) bv striking "and" before "(ii)", and 
(iii) by striking "to him under section 1903" and 
inserting "to the individual under section 1903, and 
(iii) providing for coordination of information and edu-
cation on pediatric vaccinations and delivery of 
immunization services"; 
(B) in paragraph (IIXC), by inserting ", including the 
I)rovision of information and education on pediatric vaccina-
tions and the delivery of immunization services," after 
"operations imder this title"; and 
(C) in paragraph (43XA), by inserting before the comma 
at the end the following: "and the need for age-appropriate 
immunizations against vaccine-preventeble diseases". 
(2) COVERAGE OF PUBUC HOUSING HEALTH CENTERS AND 
CERTAIN INDIAN HEALTH CARE PROVIDERS AS FEDERALLY-QUALI-
FIED HEALTH CENTERS.—Section 1905(1X2XB) (42 U.S.C. 
1396d(lX2XB)) is amended— 
(A) by striking "or 340" each place it appears and 
inserting "340, or 340A", and 
(B) by inserting "or by an urban Indian organization 
receiving funds \mder title V of the Indian Health Care 
Improvement Act for the provision of primary health serv-
ices" after "93-638)". 
(3) EFFECTIVE DATES.—(A) Except as provided in subpara-
graph (B), the amendments made by this subsection shall apply 
to calendar quarters beginning on or after October 1, 1993, 
without regard to whether or not final regulations to carry 
out such amendments have been promiilgated by such date. 
(B) In the case of a Stote plan for medical assistence 
under title XIX of the Social Security Act which the Secretary 
of Health and Himian Services determines requires Stete legis-
lation (other than legislation appropriating funds) in order for 
the plan to meet the additionsu requirements imposed by the 
amendments made b^ this subsection, the Stote plan shall 
not be regarded as miling to comply with the requirements 
of such title solely on the basis of ite failure to meet these 
additional requirements before the first day of the first calendar 
quarter beginning after the close of the first regular session 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 645 
of the State legislature that begins after the date of the enact-
ment of this Act. For purposes of the previous sentence, in 
the case of a State that has a 2-year legislative session, each 
year of such session shall be deemed to be a separate regular 
session of the State legislature, 
(g) SCHEDULE OF IMMUNIZATIONS UNDER EPSDT.— 
(1) IN GENERAL.—Section 1905(rXl) (42 U.S.C. 1396d(rXl)) 
is amended^ 
(A) in subparagraph (AXi), by inserting "and, with 
respect to immunizations under subparagraph (BXiii), in 
accordance with the schedule referred to in section 
1928(cX2XBXi) for pediatric vaccines" after "child health 
care"; and 
(B) in subparagraph (BXiii), by inserting "(according 
to the schediile referred to in section 1928(cX2XBXi) for 
pediatric vaccines)" after "appropriate immunizations". 
(2) EFFECTIVE DATE.—^The amendments made by subpara-
graphs (A) and (B) of paragraph (1) shall first apply 90 days 
after the date the schedule referred to in subparagraphs (A)(i) 
and subparagraph (BXiii) of section 1905(rXl) of the Social 
Security Act (as amended by such respective subparagraphs) 
is first established. 
(h) DENIAL OF FEDERAL FINANCIAL PARTICIPATION FOR INAPPRO-
P
R
i
A
T
E ADMINISTRATION OF SINGLE-ANTIGEN VACCINE.— 
(1) IN GENERAL.—Section 1903(i) (42 U.S.C. 1396b(i)), as 
amended by subsection (c), is amended— 
(A) in paragraph (13), by striking "or" at the end, 
(B) in paragraph (14), by striking the period at the 
end and inserting "; or", and 
(C) by inserting after paragraph (14) the following 
new paragraph: 
"(15) with respect to any amount expended for a single-
antigen vaccine and its administration in any case in which 
the administration of a combined-antigen vaccine was medically 
appropriate (as determined by the Secretary).". 
(2) EFFECTIVE DATE.—^The amendments made by paragraph 
(1) shall apply to amounts expended for vaccines administered 
on or after October 1,1993. 
(i) EFFECTIVE DATE.—Except as otherwise provided in this sec-
tion, the amendments made by this section shall apply to pajrments 
under State plans approved under title XIX of the Social SBCurity 
Act for calendar quarters beginning on or after October 1, 1994. 
SEC. 13632. NATIONAL VACCINE INJURY COMPENSATION PROGRAM 
ABIENDMENTS. 
(a) AMENDMENT OF VACCINE INJURY TABLE.— 
(1) FIUNG.—Section 2116(b) of the Public Health Service 
Act (42 U.S.C. 300aa-16(b)) is amended by striking "such per-
son may file" and inserting "or to significantly increase the 
likelihood of obtaining compensation, such person may, notwith-
standing section 2111(bX2), file". 
(2) ADDITIONAL VACCINES.—Section 2114(e) of the Public 
Health Service Act (42 U.S.C. 300aa-14) is amended to read 
as follows: 
"(e) ADDITIONAL VACCINES.— 
42 use 1396s 
note. 
42 use 1396b 
note. 
42 u s e 1396a 
note. 
107 STAT. 646 
PUBLIC LAW 103-66—AUG. 10, 1993 
42 use 300aa-14 
note. 
"(1) VACCINES RECOMMENDED BEFORE AUGUST i, 1993.— 
By August 1, 1995, the Secretary shall revise the Vaccine 
Injury Table included in subsection (a) to include— 
"(A) vaccines which are recommended to the Secretary 
by the Centers for Disease Control and Prevention before 
August 1, 1993, for routine administration to children, 
"(B) the injuries, disabilities, illnesses, conditions, and 
deaths associated with such vaccines, and 
"(C) the time period in which the first sjmiptoms or 
manifestations of onset or other significant aggravation 
of such ii^jiuies, disabilities, illnesses, conditions, and 
deaths associated with such vaccines may occur. 
"(2) VACCINES RECOMMENDED AFTER AUGUST 1,1993.—When 
after August 1, 1993, the Centers for Disease Control and 
Prevention recommends a vaccine to the Secretaiy for routine 
administration to children, the Secretary shall, within 2 years 
of such recommendation, amend the Vaccine Ii\jury Table 
included in subsection (a) to include— 
''(A) vaccines which were recommended for routine 
administration to children, 
"(B) the injuries, disabilities, illnesses, conditions, and 
deaths associated with such vaccines, and 
"(C) the time period in which the first symptoms or 
manifestations of onset or other significant aggravation 
of such ii^juries, disabilities, illnesses, conditions, and 
deaths associated with such vaccines may occur.". 
(3) EFFECTIVE DATE.—A revision Iw the Secretary imder 
section 2114(e) of the Public Health Service Act (42 U.S.C. 
300aa-14(e)) (as amended by paragraph (2)) shall take effect 
upon the effective date of a tax enacted to provide funds for 
compensation paid with respect to the vaccine to be added 
to the vaccine injury table in section 2114(a) of the Public 
Health Service Act (42 U.S.C. 300aa-14(a)). 
(b) INCREASED SPENDING.—Section 21150') of the Public Health 
Service Act (42 U.S.C. 300aa-15(j)) is amended by striking 
''$80,000,000 for each succeeding fiscal year^ and inserting in lieu 
thereof "$110,000,000 for each succeeding fiscal year". 
(c) EXTENSION OF TIME FOR DECISION.—Section 2112(dX3XD) 
of the PubUc Health Service Act (42 U.S.C. 300aa-12(dX3XD)) is 
amended by striking "540 days" and inserting "30 months (but 
for not more than 6 months at a time)". 
PART V—MISCELLANEOUS 
SEC. 13641. INCREASE IN LIMIT ON FEDERAL MEDICAID MATCHING 
PAYMENTS TO PUERTO RICO AND OTHER TERRTTORIEa 
(a) IN GENERAL.—Paragraphs (1) through (5) of section 1108(c) 
(42 U.S.C. 1308(c)) are amended to read as follows: 
"(1) Puerto Rico shall not exceed (A) $116,500,000 for fiscal 
year 1994 and (B) for each succeeding fiscal year the amoimt 
provided in this paragraph for the preceding fiscal year 
increased by the percentage increase in the medical care compo-
nent of the consiuner price index for all urban consiimers 
(as published by the Bureau of Labor Statistics) for the twelve-
month period ending in March preceding the beginning of the 
fiscal year, rounded to the nearest $100,000; 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 647 
"(2) the Virgin Islands shall not exceed (A) $3,837,500 
for fiscal year 1994, and (B) for each succeeding fiscal year 
the amount provided in this paragraph for the preceding fiscal 
year increased hy the percentage increase referred to in para-
graph (IXB), rounded to the nearest $10,000; 
"(3) Guam shall not exceed (A) $3,685,000 for fiscal year 
1994, and (B) for each succeeding fiscal year the amount pro-
vided in this paragraph for the preceding fiscal year increased 
hy the percentage increase rererred to in paragraph (IXB), 
rounded to the nearest $10,000; 
"(4) Northern Mariana Islands shall not exceed (A) 
$1,110,000 for fiscal year 1994, and (B) for each succeeding 
fiscal ^ear the amount provided in this paragraph for the 
preceding fiscal year increased by the percentage increase 
referred to in paragraph (IXB), rounded to the nearest $10,000; 
and 
''(5) American Samoa shall not exceed (A) $2,140,000 for 
fiscal year 1994, and (B) for each succeeding fiscal year tiie 
amount provided in this paragraph for the preceding fiscal 
year increased by the percentage increase referred to in para-
graph (IXB), rounded to the nearest $10,000.". 
(b) EFFECTIVE DATE.—^The amendment made by subsection (a) 
shall apply beginning vdth 
fiscal 
yesu: 1994. 
SEC. 13642. EXTENSION OF MORATORIUM ON TREATMENT OF CER-
TAIN FACILITIES AS INSTITUTIONS FOR MENTAL DIS-
EASES. 
EfiTective as if included in the enactment of OBRA-1989, section 
6408(aX3) of such Act is amended by striking "180 days" and 
all that follows and inserting "December 31,1995. . 
SEC. 13643. DEMONSTRATION PROJECTS. 
(a) EXTENSION OF DEMONSTRATION PROJECT ON THE EFFECT 
O
F ALLOWING STATES TO EXTEND MEDICAID COVERAGE TO CERTAIN 
Low-INCOME FAMILIES.—^Effective as if included in the enactment 
of OBRA-1990, section 4745 of such Act is amended— 
(1) in paragraph (1) of subsection (e), by striking 
"$12,000,000 in each of fiscal years 1991, 1992, and 1993, 
and to no more than $4,000,000 in fiscal year 1994" and insert-
ing "$40,000,000"; and 
(2) in paragraph (2) of subsection (f) by striking "January 
1, 1995" and inserting "one year after the termination of the 
projects". 
(b) RENEWAL OF UNFUNDED DEMONSTRATION PROJECT FOR LOW-
INCOME PREGNANT WOMEN AND CHILDREN.—^Effective as if included 
in the enactment of OBRA-1989, section 6407 of such Act is 
amended— 
(1) in subsection (f), by striking "$10,000,000 in each of 
fiscal years 1990, 1991, and 1992" and inserting "$30,000,000"; 
and 
(2) in subsection (gX2), by striking "January 1, 1994" and 
inserting "one year after tiie termination of the demonstration 
projects . 
(c) APPUCATION OF SPOUSAL IMPOVERISHMENT RULES TO THE 
ON LOK FRAIL ELDERLY DEMONSTRATION PROJECT.—(1) Section 
1924(aX5), as added by section 4744(bXl) of OBRA-1990, is amend-
ed by striking "1986." and inserting "1986 or a waiver under section 
603(c) of the Social Security Amenchnents of 1983.". 
42 u s e 1308 
note. 
103 Stat. 2267. 
42 use 1396a 
note. 
42 u s e 1396r-7 
note. 
42 u s e 1396r-5. 
69-194 O - 94 - 22 : QL. 3 Part 1 
107 STAT. 648 
PUBLIC LAW 103-66—AUG. 10, 1993 
42 use I395b-l 
(2) Section 603(c) of the Social Security Amendments of 1983 
"°^ 
is amended— 
(A) by striking "(c)" and inserting "(cXD"; 
(B) by redesignating paragraphs (1) and (2) as subpara-
graphs (A) and (B); and 
(C) by addiing at the end the following new paragraph: 
"(2) Section 1924 of the Social Security Act shall apply to 
any individual receiving services from an organization receiving 
a waiver under this subsection.". 
Ohio. 
SEC. 13644. EXTENSION OF PERIOD OF APPUCABUJTY OF ENROLL-
MENT MIX REQUIREMENT TO CERTAIN HEALTH MAINTE-
NANCE ORGANIZATIONS PROVIDING SERVICES UNDER 
DAYTON AREA HEALTH PLAN. 
106 Stat. 126. 
Section 2 of Public Law 102-276 is amended by striking "Janu-
ary 31,1994" and inserting "December 31,1995". 
Subchapter C—^Human Resources and Income Security 
Amendments 
SEC. 13701. TABLE OF CONTENTS. 
The table of contents of this subchapter is as follows: 
Subchapter C—^Human Resources and Income Security Amendments 
Sec. 13701. Table of contents. 
Sec. 13702. References. 
PABT I—CHILD WELFARE SERVICES, FOSTER CARE, AND ADOPTION ASSISTANCE 
Sec. 13711. Entitlement funding for services designed to strengthen and preserve 
families. 
Sec. 13712. Entitlement funding for State courts to assess and improve handling of 
proceedings relating to foster care and'adoption. 
Sec. 13713. Enhanced match for automated data systems. 
Sec. 13714. Permanent extension of independent hving program. 
Sec. 13715. Training of agency staff and roster and adoptive parents. 
Sec. 13716. Moratorium on collection of disallowances. 
PART II—CHILD SUPPORT ENFORCEMENT 
Sec. 13721. State paternity establishment programs. 
PART III—SUPPLEMENTAL SECURITY INCOME 
Sec. 13731. Fees for Federal administration of State supplementary payments. 
Sec. 13732. Exclusion from income and resources of State relocation assistance. 
Sec. 13733. Prevention of adverse effects on eligibility for, and amount of, benefits 
when spouse or parent of beneficiary is abaent from the household 
due to active military service. 
Sec. 13734. Eligibility for children of Armed Forces personnel residing outside the 
IMited States other than in foreign countries. 
Sec. 13735. Valuation of certain in-kind support and maintenance when there is a 
cost of living a4justment in benefits. 
Sec. 13736. Exclusion from income of certain amounts received by Indians from in-
terests held in trust. 
PART IV—AID To FAMIUES WITH DEPENDENT CHILDREN 
Sec. 13741. 50 percent Federal match of State administrative costs. 
Sec. 13742. Increase in stepparent income disregard. 
PART V—^UNEMPLOYMENT INSURANCE 
Sec. 13751. Extension of current Federal unemployment rate. 
PART VI—SOCIAL SERVICES IN EMPOWERMENT ZONES AND ENTERPRISE COMMUNITIES 
Sec. 13761. Increase in block grants to States for social services. 
SEC. 13702. REFERENCE& 
Except as otherwise expressly provided, wherever in this sub-
chapter an amendment or repeal is expressed in terms of an amend-
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 649 
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 Social Security Act. 
PART I—CHILD WELFARE SERVICES, FOSTER 
CARE, AND ADOPTION ASSISTANCE 
SEC. 13711. ENTITLEMENT FUNDING FOR SERVICES DESIGNED TO 
STRENGTHEN AND PRESERVE FAMILIES. 
(a) IN GENERAL.—Part B of title IV (42 U.S.C. 620-628) is 
amended— 
(1) by striking the heading and inserting the following: 
"PART B-~CHILD AND FAMILY SERVICES 
''Subpart 1—Child Welfare Services"; and 
(2) by adding at the end the following: 
''Subpart 2—^Family Preservation and Support 
Services 
<«EC. 430. PURPOSES; LIMITATIONS ON AUTHORIZATIONS OF APPRO- 42 USC 629. 
PRIATIONS; RESERVATION OF CERTAIN AMOUNTS. 
"(a) PURPOSES; LIMITATIONS ON AUTHORIZATION OF APPROPRIA-
TIONS.—For the purpose of encouraging and enabling each State 
to develop and establish, or expand, and to operate a program 
of family preservation services and community-based family support 
services, there are authorized to be appropriated to the Secretary 
the amounts described in subsection (b) for the fiscal years specified 
in subsection (b). 
"(b) DESCRIPTION OF AMOUNTS.—The amoimt described in this 
subsection is— 
"(1) for fiscal year 1994, $60,000,000; 
"(2) for fiscal year 1995, $150,000,000; 
"(3) for fiscal year 1996, $225,000,000; 
•*(4) for fiscal year 1997, $240,000,000; or 
"(5) for fiscal year 1998, the greater o
f
— 
"(A) $255,000,000; or 
"(B) the amount described in this subsection for fiscal 
year 1997, increased by the inflation percentage applicable 
to fiscal year 1998. 
"(c) INFLATION PERCENTAGE.—^For purposes of subsection 
(bX5XB) of this section, the inflation percentage applicable to any 
fiscal year is the percentage (if any) by which— 
"(1) the average of the Consumer Price Index (as defined 
in section l(fK5) of the Internal Revenue Code of 1986) for 
the 12-month period ending on December 31 of the immediately 
preceding fiscal year; exceeds 
"(2) the average of the Consimier Price Index (as so defined) 
for the 12-month period ending on December 31 of the 2nd 
preceding fiscal year. 
"(d) RESERVATION OP CERTAIN AMOUNTS.— 
"(1) 
EVALUATION, RESEARCH, TRAINING, AND TECHNICAL 
ASSISTANCE.—^The Secretary shall reserve $2,000,000 of the 
amount described in subsection (b) for fiscal year 1994, and 
107 STAT. 650 
PUBLIC LAW 103-66—AUG. 10, 1993 
$6,000,000 of the amounts so described for each of fiscal years 
1995, 1996, 1997, and 1998, for expenditure by the Secretary— 
"(A) for research, training, and technical assistance 
related to the program under tms subpart; and 
''(B) for evaluation of State programs funded under 
this subpcurt and any other Federal, State, or local program, 
regardless of whether federally assisted, that is designed 
to achieve the same purposes as the program under this 
subpart. 
"(2) STATE COURT ASSESSMENTS.—The Secretary shall 
reserve $5,000,000 of the amount described in subsection (b) 
for fiscal year 1995, and $10,000,000 of the amounts so 
described for each of fiscal years 1996, 1997, and 1998, for 
grants under section 13712 of the Omnibus Budget Reconcili-
ation Act of 1993. 
**(3) INDIAN TRIBES.—^The Secretary shall reserve 1 percent 
of the amounts described in subsection (b) for each fiscal year, 
for allotment to Indian tribes in accordance with section 433(a). 
42 use 629a. 
"SEC. 431. DEFINITIONS. 
"(a) IN GENERAL.—As used in this subpart: 
"(1) FAMILY PRESERVATION SERVICES.—The term 'family 
preservation services' means services for children and families 
designed to help families (including adoptive and extended 
fcunilies) at risk or in crisis, including— 
"(A) service programs designed to help children— 
''(i) where appropriate, return to families from 
which they have been removed; or 
"(ii) be placed for adoption, with a legal guardian, 
or, if adoption or legal guardianship is determined 
not to be appropriate for a child, in some other plann^, 
permanent living arrangement; 
"(B) preplacement preventive services programs, such 
as intensive family preservation programs, designed to help 
children at risk of foster care placement remain with their 
families; 
"(C) service programs designed to provide foUowup care 
to families to whom a child has been returned after a 
foster care placement; 
''(D) respite care of children to provide temporary relief 
for parents and other caregivers (including foster parents); 
and 
"(E) services designed to improve parenting skills (by 
reinforcing parents' confidence in their stren|^s, and help-
ing them to identify where improvement is needed and 
to obtain assistance in improving those skills) with respect 
to matters such as child development, family budgeting, 
coping with stress, health, and nutrition. 
"(2) FAMILY SUPPORT SERVICES.—The term 'family support 
services' means community-based services to promote the well-
being of children and families designed to increase the strength 
and stability of families (including adoptive, foster, and 
extended families), to increase parents' confidence and com-
petence in their parenting abilities, to afford children a stable 
and supportive family environment, and otherwise to enhance 
child development. 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 651 
**(3) STATE AGENCY.—The tenn 'State agency* means the 
State agency responsible for administering the program under 
subpart 1. 
"(4) STATE.—^The term 'State' includes an Indian tribe or 
tribal organization, in addition to the meaning given such term 
for purposes of subpart 1. 
"(5) TRIBAL ORGANIZATION.—The term tribal organization' 
means the recognized governing body of any Indian tnbe. 
"(6) INDIAN TRIBE.—^The term 'Indian tribe* means any 
Indian tribe (as defined in section 482(iX5)) and any Alaska 
Native organization (as defined in section 482(iX7XA)). 
"(b) OTHER TERMS.—^For other definitions of other terms used 
in this subpart, see section 475. 
•*SEC. 432. STATE PLANS. 
42 USC 629b. 
"(a) PLAN REQUIREMENTS.—^A State plan meets the require-
ments of this subsection if the plan— 
"(1) provides that the State agency shall administer, or 
supervise the administration of, the State program under this 
subpart; 
''(2XAXi) sets forth the goals intended to be accomplished 
imder the plan by the end of the 5th fiscal year in which 
the plan is in operation in the State, and (ii) is updated periodi-
cally to set forth the goals intended to be accomplishea under 
the plan by the end of each 5th 
fiscal 
year thereafter; 
"(B) describes the methods to be used in measuring 
progress toward accomplishment of the goals; 
"(C) contains assurances that the State— 
"(i) after the end of each of the 1st 4 fiscal ye£u*s 
covered by a set of goals, will perform an interim review 
of progress toward accomplishment of the goals, and on 
the basis of the interim review will revise me statement 
of goals in the plan, if necessary, to reflect changed cir-
cumstances; and 
"(ii) after the end of tlie last fiscal year covered by 
a set of goals, will perform a final review of progress 
toward accomplishment of the goals, and on the basis of 
the final review (I) will prepare, transmit to the Secretary, 
and make available to tne public a final report on progress 
toward accomplishment of the goals, and (II) will develop 
(in consultation with the entities required to be consulted 
pursuant to subsection (b)) and add to the plan a statement 
of the goals intended to be accomplished by the end of 
the 5th succeeding 
fiscal 
year; 
"(3) provides for coordination, to the extent feasible and 
appropriate, of the provision of services under the plan and 
the provision of services or benefits under other Federal or 
federally assisted programs serving the same populations; 
"(4) contains assurances that not more man 10 percent 
of expenditures under the plan for any fiscal year with respect 
to which the State is eligible for pa3nnent under section 434 
for the fiscal year shall be for administrative costs, and that 
the remaining expenditures shall be for programs of family 
preservation services and community-based family support 
services with significant portions of such expenditures for each 
such program; 
"(5) contains assurances that the State vdll— 
107 STAT. 652 
PUBLIC LAW 103-66—AUG. 10, 1993 
Reports. 
Reports. 
*
*
(
A
) annually prepare, furnish to the Secretary, and 
make available to the pubUc a description (including sepa-
rate descriptions with respect to family preservation serv-
ices and commimity-based family support services) o
f
— 
"(i) the service programs to be made available 
under the plan in the immediately succeeding fiscal 
year; 
"(ii) the populations which the programs will serve; 
and 
"(iii) the geographic areas in the State in which 
the services will be available; and 
''(B) perform the activities described in subparagraph 
(A)-
"(i) in the case of the 1st fiscal year under the 
plan, at the time the State submits its initial plan; 
and 
"(ii) in the case of each succeeding fiscal year, 
by the end of the 3rd quarter of the immediately 
preceding 
fiscal 
year; 
"(6) provides for such methods of administration as the 
Secretary finds to be necessary for the proper and efficient 
operation of the plan; 
"(TXA) contains assurances that Federal fimds provided 
to the State under this subpart will not be used to supplant 
Federal or non-Federal funds for existing services and activities 
which promote the purposes of this subpart; and 
"(B) provides that the State will furnish reports to the 
Secretary, at such times, in such format, and containing such 
information as the Secretary may require, that demonstrate 
the State's compliance with the prohibition contained in 
subparagraph (A); and 
"(8) provides that the State agency will furnish such 
reports, containing such information, and participate in such 
evaluations, as the Secretary may require. 
"(b) APPROVAL OF PLANS.— 
**(1) IN GENERAL.—^The Secretary shall approve a plan that 
meets the requirements of subsection (a) only if the plan was 
developed jointly by the Secretary and the State, after consulta-
tion by the State agency with appropriate public and nonprofit 
private agencies and community-based organizations with 
experience in administering programs of services for children 
and families (including family preservation and family support 
services). 
"(2) PLANS OF INDIAN TRIBES.— 
"(A) 
EXEMPTION 
FROM 
INAPPROPRIATE 
REQUIRE-
MENTS.—^The Secretary may exempt a plan submitted by 
an Indian tribe from any requirement of this section that 
the Secretary determines would be inappropriate to apply 
to the Indian tribe, taking into account the resources, 
needs, and other circumstances of the Indian tribe. 
"(B) SPECIAL RULE.—^Notwithstending subparagraph 
(A) of this paragraph, the Secretary may not approve a 
plan of an Indian tribe under this subpsurt to which (but 
for this subparagraph) an allotment of less than $10,000 
would be made under section 433(a) if allotmente were 
made under section 433(a) to all Indian tribes vdth plans 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 653 
approved under this subpart with the same or larger num-
bers of children. 
<^EC. 433. ALLOTMENTS TO STATES. 
42 USC 629c. 
"(a) INDIAN TRIBES.—^From the amount reserved pursuant to 
section 430(dX3) for any fiscal year, the Secretary shall allot to 
each Indian tribe with a plan approved under tnis subpart an 
amoimt that bears the same ratio to such reserved amount as 
the number of children in the Indian tribe bears to the total number 
of children in all Indian tribes with State plans so approved, as 
determined by the Secretary on the basis of the most current 
and reliable imormation available to the Secretary. 
"(b) TERRITORIES.—^From the amoimt described in section 430(b) 
for any fiscal year that remains after applying section 43CKd) for 
the fiscal year, the Secretary shall allot to each of the jurisdictions 
of Puerto Rico, Guam, the Virgin Islands, the Northern Mariana 
Islands, and American Samoa an amoimt determined in the same 
manner as the allotment to each of such jurisdictions is determined 
under section 421. 
"(c) OTHER STATES.— 
"(1) IN GENERAL.—^From the amoimt described in section 
430(b) for any fiscal year that remains after applying section 
430(d) and subsection (b) of this section for the fiscal year, 
the Secretary shall allot to each State (other than an Indian 
tribe) which is not specified in subsection (b) of this section 
an amount equal to such remaining amount multiplied by the 
food stamp percentage of the State for the fiscal year. 
"(2) FOOD STAMP PERCENTAGE DEFINED.— 
"(A) IN GENERAL.—As used in paragraph (1) of this 
subsection, the term food stamp percentage means, with 
respect to a State and a fiscal year, the average monthly 
number of children receiving food stamp benefits in the 
State for months in the 3 fiscal years referred to in subpara-
graph (B) of this paragraph, as determined from sample 
surveys made under section 16(c) of the Food Stamp Act 
of 1977, expressed as a percentage of the average monthly 
number of children receiving food stamp benefits in the 
States described in such paragraph (1) for months in such 
3 fiscal years, as so determinedf. 
"(B) FISCAL YEARS USED IN CALCULATION.—For pur-
poses of the calculation pursuant to subparagraph (A), 
the Secretanr shall use data for the 3 most recent fiscal 
years, preceding Uie fiscal year for which the State's allot-
ment is calculated under this subsection, for which such 
data are available to the Secretary. 
'^EC. 434. PAYMENTS TO STATES. 
42 USC 629d. 
"(a) ENTITLEMENT.— 
"(1) GENERAL RULE.—^Except as provided in paragraph (2) 
of this subsection, each State y^iich has a plan approved under 
this subp£urt shall be entitled to payment of uie lesser o
f
— 
(A) 75 percent of the total expenditures by the State 
for activities under the plan during the fiscal year or the 
immediately succeeding nscal year; or 
"(B) tiie allotment of the State under section 433 for 
the fiscal year. 
"(2) SPECIAL RULE.—^Upon submission by a State to the 
Secret£ury during fiscal year 1994 of an application in such 
107 STAT. 654 
PUBLIC LAW 103-66—AUG. 10, 1993 
form and containiii£ such information as the Secretary may 
require (including, if the State is seeking payment of an amount 
pursuant to subparagraph (B) of this paragraph, a description 
of the services to be provided with the amount), the State 
shall be entitled to payment of an amount equal to the sum 
o
f
— 
"(A) such amount, not exceeding $1,000,000, from the 
allotment of the State under section 433 for fiscal year 
1994, as the State may require to develop and submit 
a plan for approval under section 432; and 
''(B) an amount equal to the lesser o
f
— 
"(i) 75 percent of the expenditures by the State 
for services to children and families in accordance with 
the application and the expenditure rules of section 
432(aX4); or 
"(ii) the allotment of the State luider section 433 
for fiscal year 1994, reduced by any amount paid to 
the State pursuant to subparagraph (A) of this para-
graph. 
"(b) PROHIBITIONS.— 
"(1) N o USE OF OTHER FEDERAL FUNDS FOR STATE MATCH.— 
Each State receiving an amount paid under paragraph (1) 
or (2XB) of subsection (a) may not expend any Federal fimds 
to meet the costs of services described in this subpart not 
covered by the amount so paid. 
"(2) AVAILABILITY OF FUNDS.—A State may not expend any 
amount paid under subsection (aXD for any fiscal year after 
the end of the immediately succeeding fiscal year. 
"(c) DIRECT PAYMENTS TO TRIBAL ORGANIZATIONS OF INDIAN 
TRIBES.—^The Secretary shall pay any apioimt to which an Indian 
tribe is entitled under this section directly to the tribal organization 
of the Indian tribe. 
42 u s e 629e. 
"SEC. 435. EVALUATIONS. 
"(a) EVALUATIONS.— 
"(1) IN GENERAL.—The Secretary shall evaluate the 
efiTectiveness of the programs carried out pursuant to this sub-
part in accomplishing the purposes of this subpart, and may 
evaluate any other Federal, State, or local program, regardless 
of whether federally assisted, that is designed to achieve the 
same piuposes as me program under this subpart, in accord-
ance with criteria established in accordance with paragraph 
(2). 
"(2) CRITEMA TO BE USED.—In developing the criteria to 
be used in evaluations under paragraph (1), the Secretary shall 
consult with appropriate parties, such as— 
"(A) State agencies administering programs under this 
part and part E; 
"(B) persons administering child and family services 
programs (including family preservation and family support 
programs) for private, nonprofit organizations with an 
mterest in child welfare; and 
"(C) other persons with recognized expertise in the 
evaluation of child and family services programs (including 
family preservation and family support programs) or other 
related programs. 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 655 
"(b) COORDINATION OF EvALUATiONS.--The Secretary shall 
develop procedures to coordinate evaluations under this section, 
to the extent feasible, with evaluations by the States of the effective-
ness of programs imder this subpart.". 
(b) CONFORMING AMENDMENTS.— 
(1) Section 422 (42 U.S.C. 622) is amended— 
(A) in subsection (a), by striking "tibis part" and insert-
ing "this subpart"; 
(B) in subsection (b), by strikinp^ "this part" each place 
such term appears and inserting "this subpart"; and 
(C) in subsection (bX2), by inserting "under the State 
plan approved under subpart 2 of this part," after "part 
A of this title,". 
(2) Section 423(a) (42 U.S.C. 623(a)) is amended by striking 
"this part" and inserting "this subpart". 
(3) Section 428(a) (42 U.S.C. 628(a)) is amended by striking 
"this part" each place such term appears and inserting "this 
subpart". 
(4) Section 471(aX2) (42 U.S.C. 671(aX2)) is amended by 
inserting "subpart 1 of* before "part B". 
(c) EFFECTIVE DATE.—The amendments made by this section 42 use 622 note. 
shall be effective with respect to calendar quarters beginning on 
or after October 1,1993. 
SEC. 13712. ENTITLEMENT FUNDING FOR STATE COURTS TO ASSESS Grants. 
AND IMPROVE HANDLING OF PROCEEDINGS RELATING 42 USC 670 note. 
TO FOSTER CARE AND ADOPTION. 
(a) IN GENERAL.—^The Secretary shall make grants, in accord-
ance with this section, to the highest State courts in States partici-
pating in the program under part E of title IV of the Social Security 
Act, for the purpose of enabling such courts— 
(1) to conduct assessments, in accordance with such 
req^uirements as the Secretary shall publish, of the role, respon-
sibilities, and effectiveness of State courts in carrying out State 
laws requiring proceedings (conducted by or under the super-
vision of 
the courts)— 
(A) that implement parts B and E of title IV of such 
Act; 
(B) that determine the advisability or appropriateness 
of foster care placement; 
(C) that determine whether to terminate parental 
rights; and 
(D) that determine whether to approve the adoption 
or other permanent placement of a child; and 
(2) to implement cnsuiges deemed necessary as a result 
of 
the assessments. 
(b) APPLICATIONS.—In order to be eligible for a grant under 
this section, a highest State court shall submit to the Secretaiy 
an application at such time, in such form, and including such 
information and assurances as the Secretary shall require. 
(c) ALLOTMENTS.— 
(1) IN GENERAL.—Each highest State court which has an 
application approved under subsection (b), and is conducting 
assessment activities in accordance with this section, shall be 
entitled to pa3anent, for each of fiscal years 1995 through 
1998, from amoimts reserved pursuant to section 43(XdX2) of 
the Social Security Act, of an amount equal to the sum o
f
— 
107 STAT. 656 
PUBLIC LAW 103-66—AUG. 10, 1993 
(A) for fiscal year 1995, $75,000 plus the amount 
described in paragraph (2) for fiscal year 1995; and 
(B) for each of fiscal years 1996 through 1998, $85,000 
plus the amount described in paragraph (2) for each of 
such fiscal years. 
(2) FORMULA.—^The amount described in this paragraph 
for any fiscal year is the amount that bears the same ratio 
to the amount reserved pursuant to section 430(dX2) of the 
Social Security Act for the fiscal year (reduced by the dollar 
amoimt specified in paragraph (1) of this subsection for the 
fiscal year) as the number of individuals in the State who 
have not attained 21 years of age bears to the total number 
of such individuals in all States the highest State courts of 
which have approved applications imder subsection (b). 
(d) USE OF GRANT FUNDS.—Each highest State court which 
receives fiinds paid under this section may use such funds to 
pay— 
(1) any or all costs of activities imder this section in fiscal 
year 1995; and 
(2) not more than 75 percent of the cost of activities under 
this section in each of fiscal years 1996,1997, and 1998. 
SEC. 18713. ENHANCED MATCH FOR AUTOMATED DATA SYSTEMS. 
(a) PAYMENTS TO STATES.— 
(1) IN GENERAL.—Section 474(aX3) (42 U.S,C. 674(aX3)) 
is amended— 
(A) by striking "and" at the end of subparagraph (B); 
(B) by redesignating subparagraph (C) as subpara-
graph (£); and 
(C) by inserting after subparagraph (B) the following: 
"(C) 75 percent of so much of such expenditures as 
are for the planning, design, development, or installation 
of statewide mechanized data collection and information 
retrieval systems (including 75 percent of the fiill amount 
of expenditures for hardware components for such systems) 
but only to the extent that such systems— 
"(i) meet the requirements imposed by regulations 
promulgated pursuant to section 479(bX2); 
"(ii) to the extent practicable, are capable of inter-
facing with the State data collection system that col-
lects information relating to child abuse and neglect; 
"(iii) to the extent practicable, have the capability 
of interfacing with, and retrieving information firom, 
the State data collection system that collects informa-
tion relating to the eligibility of individusds under part 
A (for the purposes of facilitating verification of eligi-
bility of foster children); and 
"(iv) are determined by the Secretary to be likely 
to provide more efficient, economical, and efTective 
administration of the programs carried out under a 
State plan approved under part B or this part; and 
"(D) 50 percent of so much of such expenditures as 
are for the operation of the statewide mechanized data 
collection and information retrieval systems referred to 
in subparagraph (C); and". 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 657 
(2) TREATMENT OF STATE EXPENDITURES FOR DATA COLLEC-
TION AND INFORMATION RETRIEVAL SYSTEMS.—Section 474 (42 
U.S.C. 674) is amended by adding at the end the following: 
**(e) AUTOMATED DATA COLLECTION EXPENDITURES.—The Sec-
retary shall treat as necessaiy for the proper and efficient adminis-
tration of the State plan all expenditures of a State necessary 
in order for the State to plan, design, develop, install, and operate 
data collection and information retrieval systems described in sub-
section (a)(3XC), without regard to whether the systems may be 
used with respect to foster or adoptive children other than those 
on behalf of whom foster care maintenance payments or adoption 
assistance payments may be made under this part.". 
(3) EFFECTIVE DATE.—The amendments made by this sub- 42 use 674 note. 
section shall take effect on October 1,1993. 
(b) TERMINATION OF ENHANCED MATCH.— 
(1) 
IN 
GENERAL.—Section 
474(aX3XC) 
(42 
U.S.C. 
674(a)(3XC)), as amended by subsection (a) of this section, 
is amended by striking "75 percent" each place such term 
appears and inserting "50 percent". 
(2) EFFECTIVE DATE.—^The amendment made by paragraph 42 use 674 note. 
(1) shall apply to expenditures during fiscal years beginning 
on or after October 1,1996. 
SEC. 13714. PERMANENT EXTENSION OF INDEPENDENT LIVING PRO-
GRAM. 
(a) IN GENERAL.—Section 477 (42 U.S.C. 677) is amended— 
(1) in subsection (aXl)> by striking the 3rd sentence; 
(2) in subsection (c), by striking "of the fiscal years 1988 
through 1992" and inserting "succeeding fiscal year"; 
(3) in subsection (eXlXA), by striking "each of the fiscal 
years 1987 through 1992" and inserting "fiscal year 1987 and 
any succeeding fiscal year"; 
(4) in subsection (eXlXB), by striking "fiscal years 1991 
and 1992" and inserting "fiscal year 1991 and any succeeding 
fiscal year"; and 
(5) in subsection (eXlXCXii), by striking "fiscal year 1992" 
and inserting "any succeeding fiscal year". 
(b) EFFECTIVE DATE.—The amendments made by subsection 42 use 677 note. 
(a) shall apply to activities engaged in, on, or after October 1, 
1992. 
SEC. 13715. TRAINING OF AGENCY STAFF AND FOSTER AND ADOPTIVE 
PARENTS. 
Section 8006(b) of the Omnibus Budget Reconciliation Act of 
1989 (42 U.S.C. 674 note) is amended by inserting ", and to expendi-
tures made on or after October 1,1993" before the period. 
SEC. 13716. MORATORIUM ON COLLECTION OF DISALLOWANCES. 
42 USC 627 note. 
The Secretary of Health and Human Services shall not, before 
October 1,1994— 
(1) reduce any pa3rment to, withhold any payment from, 
or seek any repayment from any State imder part B or E 
of title IV of the Socisd Security Act by reason of a determina-
tion made in connection with a review of State compliance 
with section 427 of such Act for any Federal fiscsd year before 
fiscal year 1995; or 
(2) reduce any payment to, withhold any payment from, 
or seek any repajonent from any State imder such part E 
107 STAT. 658 
PUBLIC LAW 103-66—AUG. 10, 1993 
by reason of a determination made in connection with any 
on-site Federal financial review, or any audit conducted by 
the Inspector General using similar methodologies. 
PART 
n—CHILD 
SUPPORT 
ENFORCEMENT 
SEC. 13721. STATE PATERNTIT ESTABLISHMENT PROGRAMS. 
(a) PERFORMANCE STANDARDS.—Section 452(g) (42 U.S.C. 
652(g)) is amended— 
(1) in paragraph (1)— 
(A) by striking "lOSl" and insertine "1994"; 
(B) by inserting "is based on reliable data and" before 
"equals or exceeds"; 
(C) by inserting "(rounded to the nearest whole percent-
age point)" before "equals"; and 
(D) by striking subparagraphs (A), (B), and (C) and 
inserting the foUowmg: 
"(A) 75 percent; 
"(B) for a State with a paternity establishment percentage 
of not less than 50 percent but less than 75 percent for such 
fiscal year, the paternity establishment percentage of the State 
for the immediately preceding fiscal year plus 3 percentage 
points; 
"(C) for a State with a paternity establishment percentage 
of not less than 45 percent but less than 50 percent for such 
fiscal year, the paternity establishment percentage of the State 
for the immediately preceding fiscal year plus 4 percentage 
points; 
"(D) for a State with a paternity establishment percentage 
of not less than 40 percent but less than 45 percent for such 
fiscal year, the paternity establishment percentage of the State 
for the immediately preceding fiscal year plus 5 percentage 
points; or 
"(E) for a State with a paternity establishment percentage 
of less than 40 percent for such fiscal year, the paternity 
establishment percentage of the State for the immediately 
preceding 
fiscal 
year plus 6 percentage points."; and 
(2) in paragraph (2)— 
(A) in subparagraph (A)— 
(i) by stnking "(or under all such plans)" each 
place such term appears and inserting "or E"; 
(ii) in clause (i), by inserting during the fiscal 
year" before the comma; 
(iii) in clause (ii)— 
(I) in subclause (I), by striking "for such" and 
inserting "as of the end of the"; and 
(II) in subclause (II), by striking "for the" and 
inserting "as of the end of the"; 
(iv) in clause (iii), by inserting "or acknowledged 
during the 
fiscal 
year" before the comma; and 
(v) in the matter following clause (iii)— 
(I) by striking "have been" and inserting 
"were"; 
(II) by inserting "during the immediately 
preceding 
fiscal 
year" after "wcKllock"; 
(III) by striking "is being" and inserting "was 
being"; 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 659 
(IV) by striking "for such" and inserting "as 
of the end of such preceding; 
(V) by striking "are being** and inserting "were 
bein^; and 
(VI) by striking "for the** and inserting "as 
of the end of such preceding"; 
(B) by striking subparagraph (B) and inserting the 
following: 
"(B) the term Reliable data' means the most recent 
data available which are found by the Secretary to be 
reliable for purposes of this section."; 
(C) by inserting "imless patemibr is established for 
such child" after "the death of a parent ; and 
(D) by inserting "or any child with respect to whom 
the State agency administering the plan under part E 
determines (as provided in section 454(4XB)) that it is 
against the best interests of such child to do so" after 
"cooperate under section 402(aX26)". 
(b) STATE PLAN REQUIREMENTS FOR THE ESTABUSHMENT OF 
PATERNITY.—Section 466(a) (42 U.S.C. 666(a)) is amended— 
(1) in paragraph (2)— 
(A) by striking "at the option of the State,"; and 
(B) by inserting "or paternity establishment" after 
"support order issuance and enforcement"; 
(2) in paragraph (5), by adding at the end the following: 
"(C) Proceaures for a simple civil process for volimtari^ 
acknowledging paternity under which the State must pro-
vide that the rights and responsibilities of acknowledging 
paternity are explained and ensure that due process safe-
guards are afforded. Such procedures must include a hos-
pital-based program for the voluntary acknowledgment of 
paternity during the period immediately before or after 
the birth of a chud. 
"(D) Procedures under which the voluntary acknowl-
edgment of paternity creates a rebuttable, or at the option 
of the State, conclusive presumption of paternity, and under 
which such volimtary acknowledgment is admissible as 
evidence of paternity. 
"(E) Procedures under which the volimtary acknowl-
edgment of paternity must be recognized as a basis for 
seeking a support order without requiring any further 
proceedings to estabUsh paternity. 
"(F) Procedures which provide that (i) anjr objection 
to genetic testing results must be made in writing Mdthin 
a specified number of days before any hearing at which 
sucn results may be introduced into evidence, and (ii) if 
no objection is made, the test results are admissible as 
evidence of paternity without the need for foundation testi-
mony or other proof of authenticity or accuracy. 
(G) Procedures which create a rebuttable or, at the 
option of the State, conclusive presumption of paternity 
upon genetic testing results indicating a threshold prob-
ability that the alleged father is the father of the child. 
"(H) Procedures requiring a default order to be entered 
in a paternity case upon a showing of service of process 
on the defenaent and any additional showing required by 
State law."; and 
107 STAT. 660 
PUBLIC LAW 103-66—AUG. 10, 1993 
(3) by inserting after paragraph (10) the following new 
paragraph: 
^11) Procedures under which a State must give full faith 
and credit to a determination of paternity made by any other 
State, whether established througn voluntary acknowledgment 
or through administrative or judicial processes.". 
42 use 652 note. 
(c) E
F
F
E
C
T
I
V
E D
A
T
E
.
—
^
T
h
e amendments made by this section 
shall become effective with respect to a State on the later o
f
— 
(1) October 1,1993 or, 
(2) the date of enactment by the legislature of such State 
of all laws required by such amendments, 
but in no event later than the first day of the first calendar 
quarter beginning after the close of the first regular session of 
the State legislature that begins after the date of enactment of 
this Act. For purposes of the previous sentence, in the case of 
a State that has a 2-year legislative session, each year of such 
session shall be deemed to be a separate regular session of the 
State legislature. 
PART 
ra—SUPPLEMENTAL 
SECURITY 
INCOME 
SEC. 13731. FEES FOR FEDERAL ADMINISTRATION OF STATE SUPPLE-
MENTARY PAYMENTS. 
(a) IN GENERAL.— 
(1) OPTIONAL STATE SUPPLEMENTARY PAYMENTS.—Section 
1616(d) (42 U.S.C. 1382e(d)) is amended— 
(A) by inserting "(ir after "(d)"; 
(B) by inserting ", plus an administration fee assessed 
in accordance with paragraph (2) and any additional serv-
ices fee charged in accordance with paragraph (3)" before 
the period; and 
(C) by adding after and below the end the following: 
''(2XA) The Secretary shall assess each State an administration 
fee in an amount equal to— 
"(i) the number of supplementary payments made by the 
Secretiuy on behalf of the State under this section for any 
month in a 
fiscal 
year; multiplied by 
"(ii) the applicable rate for the 
fiscal 
year. 
''(B) As used m subparagraph (A), the term 'applicable rate' 
means— 
"(i) for 
fiscal 
year 1994, $1.67; 
"(ii) for 
fiscal 
year 1995, $3.33; 
"(iii) for 
fiscal 
year 1996, $5.00; and 
"(iv) for fiscal year 1997 and each succeeding fiscal year, 
$5.00, or such difirerent rate as the Secretary (^termines is 
appropriate for the State. 
Regulations. 
"(C) Upon making a determination under subparagraph (BXiv), 
the Secretary shall promulgate the determination in regulations, 
which may take into account the complexity of administering the 
State's supplementary payment program. 
"(D) All fees assessed pursuant to this paragraph shall be 
transferred to the Secretaxy at the same time that amounts for 
such supplementary payments are required to be so transferred. 
"(3XA) The Secretary may charge a State an additional services 
fee if, at the request of the State, the Secretary provides additional 
services beyond the level customarily provided, in the administra-
tion of State supplementary payments pursuant to this section. 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 661 
"(B) The additional services fee shall be in an amount tiiat 
the Secretary determines is necessary to cover all costs (including 
indirect costs) incurred by the Federal Government in furnishing 
the additional services referred to in subparagraph (A). 
"(4) All administration fees and addition^ services fees collected 
pursuant to this subsection shall be deposited in tlie general ftuid 
of the Treasury of the United States as miscellaneous receipts.". 
(2) MANDATORY STATE SUPPLEMENTARY PAYMENTS.—Section 
212(bX3) of PubHc Law 93-66 (42 U.S.C. 1382 note) is 
amended— 
(A) by inserting "(A)" after "(3)"; 
(B) by inserting ", plus an administration fee assessed 
in accordance with subparagraph (B) and any additional 
services fee charged in accordance with subparagraph (C)" 
before the period; and 
(C) by adding after and below the end the following: 
"(BXi) The Secretary shall assess each State an administration 
fee in an amount equal to— 
"(I) the number of supplementary payments made by the 
Secretary on behalf of tne State under this subsection for 
any month in a fiscal year; multiplied by 
"(11) the applicable rate for the fiscal year. 
'Xii) As used m clause (i), the term 'applicable rate' means— 
"(I) for fiscal year 1994, $1.67; 
"(ID for fiscal year 1995, $3.33; 
"(III) for fiscal year 1996, $5.00; and 
"(IV) for fiscal year 1997 and each succeeding fiscal year, 
$5.00, or Such different rate as the Secretary determines is 
appropriate for the State, taking into account the complexity 
01 administering the State's supplementary payment program. 
"(iii) Upon making a determination imder clause (iiXIV), the Regulations. 
Secretary snail promulgate the determination in regulations, which 
may take into account the complexity of administering the State's 
supplementary pajrment program. 
"(iv) All fees assessed pursuant to this subparagraph shall 
be transferred to the Secretary at the same time that amounts 
for such supplementary payments are required to be so transferred. 
"(CXi) Tne Secretary msryr charge a State an additional services 
fee if, at the request of the State, the Secretary provides additional 
services beyond the level ciistomarily provided, in the administra-
tion of State supplementary payments pursuant to this subsection. 
"(ii) The additional services fee shall be in an amount that 
the Secretary determines is necessary to cover all costs (including 
indirect costs) incurred by the Federal Government in furnishing 
the additional services referred to in clause (i). 
"(D) All administration fees and additional services fees col-
lected pursuant to this paragraph shaXL be deposited in the general 
fund of the Treasiiry of the United States as miscellaneous 
receipts.". 
(D) EFFECTIVE DATE.—^The amendments made by this section f2 ysc I382e 
shall apply to supplementary pajrments made pursuant to section 
1616(a) of the Social Security Act or section 212(a) of Public Law 
93-66 for any calendar month beginning afi^er September 30, 1993, 
and to services furnished after such date, regardless of whether 
regulations to implement such amendments have been promulgated 
by such date, or whether any agreement entered into under such 
section 1616(a) or such section 212(a) has been modified. 
note. 
107 STAT. 662 
PUBLIC LAW 103-66—AUG. 10, 1993 
SEC. 13732. EXCLUSION FROM INCOME AND RESOURCES OF STATE 
RELOCATION ASSISTANCE. 
Section 5035(c) of the Omnibus Budget Reconciliation Act of 
1990 (42 U.S.C. 1382a note; 104 Stat. 1388-225) is amended by 
striking '^n the 3-year period that begins on" and inserting "on 
or afteir. 
SEC. 13733. PREVENTION OF ADVERSE EFFECTS ON EUGIBILnY FOR, 
AND AMOUNT OF, BENEFITS WHEN SPOUSE OR PARENT 
OF BENEFICIARY IS ABSENT FROM THE HOUSEHOLD 
DUE TO ACTIVE MILITARY SERVICE. 
(a) ABSENT PERSON GENERALLY DEEMED TO BE LIVING IN THE 
HOUSEHOLD.—Section 1614(f) (42 U.S.C. 1382c(f)) is amended by 
adding at the end the following: 
"(4) For purposes of paragraphs (1) and (2), a spouse or parent 
(or spouse of such a parent) who is absent from the household 
in which the individual lives due solely to a duty assignment 
as a member of the Armed Forces on active duty shall, in the 
absence of evidence to the contrary, be deemed to be living in 
the same household as the individual.". 
(b) EXCLUSION FROM INCOME OF HOSTILE FIRE PAY RECEIVED 
WHILE IN ACTIVE MILITARY SERVICE.—Section 1612(b) (42 U.S.C. 
1382a(b)) is amended— 
(1) in paragraph (18), by striking "and" the 2nd place 
such term appears; 
(2) in paragraph (19), by striking the period and inserting 
"; and"; ana 
(3) by adding at the end the following: 
"(20) special pay received pursuant to section 310 of title 
37, United States Code.". 
42 use 1382a 
(c) EFFECTIVE DATE.—^The amendments made by this section 
"
"
^
^
- 
shall take effect on the 1st day of the 2nd month that begins 
after the date of the enactment of this Act. 
SEC. 13734. EUdBIUTY FOR CHILDREN OF ARMED FORCES PERSON-
NEL RESIDING OUTSIDE THE UNITED STATES OTHER 
THAN IN FOREIGN COUNTRIES. 
(a) 
IN GENERAL.—Section 
1614(aXlXBXii) 
(42 U.S.C. 
1382c(aXlXBXii)) is amended by striking "the District of Columbia" 
and aJl that follows to the period and inserting "and who, for 
the month before the parent reported for such assignment, received 
a benefit under this title". 
42 use 1382c 
(b) EFFECTIVE DATE.—The amendment made by subsection (a) 
^°^^- 
shall take effect on the 1st day of the 3rd month that begins 
after the date of the enactment of this Act. 
SEC. 13735. VALUATION OF CERTAIN IN-KIND SUPPORT AND MAINTE-
NANCE WHEN THERE IS A COST OF LIVING ADJUSTMENT 
IN BENEFITS. 
(a) IN GENERAL.—Section 1611(c) (42 U.S.C. 1382(c)) is 
amended— 
(1) in paragraph (1), by striking "and (5)" and inserting 
"(5), and (6)"; and 
(2) by redesignating paragraphs (6) and (7) as paragraphs 
(7) and (8), respectively; and 
(3) by inserting after paragraph (5) the following: 
"(6) llie dollar amount in effect luider subsection (b) as a 
result of any increase in benefits under this title by reason of 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 663 
section 1617 shall be used to determine the value of any in-kind 
support and maintenance required to be taken into account in 
determining the benefit payable under this title to an individual 
(and the eligible spouse, if any, of tiie individual) for the Ist 2 
months for which the increase in benefits applies.". 
(b) EFFECTIVE DATE.—The amendments made by subsection 42usci382 
(a) shall apply to benefits paid for months after tiie calendar year ^°^-
1994. 
SEC. 13736. EXCLUSION FROM INCOME OF CERTAIN AMOUNTS 
RECEIVED BY INDIANS FROM INTERESTS HELD IN 
TRUST. 
(a) IN GENERAL.—Section 8 of the Act of October 19, 
1973, 
(25 U.S.C. 1408) is amended by inserting ", and up to $2,000 
per year of income received by individual Indians that is derived 
from such interests shall not be considered income," aft«r "resource". 
(b) EFFECTIVE DATE.—The amendment made by this section 42 use 1408 
shall take effect on January 1,1994. 
"
o
*
® 
PART IV—AID TO FAMILIES WITH DEPENDENT 
CHILDREN 
SEC. 13741. 50 PERCENT FEDERAL MATCH OF STATE ADMINISTRATIVE 
COSTS. 
(a) AFDC MATCHING.—Section 403(aX3) (42 U.S.C. 603(aX3)) 
is amended to read as follows: 
"(3) in the case of any State, 50 percent of the total amounts 
expended during such quarter as found necessary by the Sec-
retary for the proper and efficient administration of the State 
plan, except that no pa3rment shall be made with respect to 
amounts expended in connection with the provision of any 
service described in section 2002(a) other than services fiir-
nished pursuant to section 402(g); and". 
(b) TERRITORIAL PROGRAMS FOR AGED, BLIND, AND DISABLED.— 
Sections 3(aX4), 1003(aX3), 1403(aX3), and 1603(aX4) (42 U.S.C. 
303(aX3), 1203(aX3), 1353(aX3), and 1383 note) (as in effect as 
provided by section 303 of the Social Security Amendments of 
1972) are each amended by striking "the simi or and all that 
follows and inserting ''SO percent of the total amounts expended 
during such quarter as found necessary by the Secretary for the 
proper and efficient administration of the State plan.". 
(c) EFFECTIVE DATES.— 
42 use 303 note. 
(1) IN GENERAL.—^Except as provided in para^aph (2) of 
this subsection, the amendments made by subsections (a) and 
(b) shall be effective with respect to calendar quarters beginning 
on or after April 1,1994. 
(2) SPECIAL RULE.—^In the case of a State whose legislature 
meets biennially, and does not have a regular session schedtded 
in calendar year 1994, the amendmente made by subsections 
(a) and (b) shall be effective no later than the first day of 
the first calendar quarter beginning after the close of the first 
regular session of the State legislature that begins after the 
date of enactment of this Act. 
SEC. 13742. INCREASE IN STEPPARENT INCOME DISREGARD. 
(a) IN GENERAL.—Section 402(aX31) (42 U.S.C. 602(aX31)) is 
amended by striking "$75" and inserting "$90". 
107 STAT. 664 
PUBLIC LAW 103-66—AUG. 10, 1993 
42 use 602 note. 
(b) EFFECTIVE DATE.—^The amendment made by subsection (a) 
shall take effect on October 1, 1993, and shall apply to payments 
under part A of title IV of the Social Security Act for nscal year 
1994 and such pa3rments for succeeding fiscal years. 
PART V—UNEMPLOYMENT INSURANCE 
SEC. 13751. EXTENSION OF CURRENT FEDERAL UNEMPLOYMENT 
RATE. 
26 use 3301. 
Section 3301 of the Internal Revenue Code of 1986 is 
£unended— 
(1) by striking "1996" in paragraph (1) and inserting •'1998'', 
and 
(2) by striking ''1997'' in paragraph (2) and inserting "1999". 
Urban and rural PART 
VI—SOCIAL 
SERVICES 
IN 
EM-
areas. 
POWERMENT ZONES AND ENTERPRISE COM-
MUNITIES 
SEC. 13761. INCREASE IN BLOCK GRANTS TO STATES FOR SOCIAL 
SERVICES. 
Title XX (42 U.S.C. 1397-1397e) is amended by adding at 
the end the following: 
42 use 1397f. 
'^EC. 2007. ADDITIONAL GRANTS. 
"(a) ENTITLEMENT.— 
"(1) IN GENERAL.—^In addition to any payment under section 
2002, each State shall be entitled to— 
''(A) 2 grants under this section for each qualified 
empowerment zone in the State; and 
''(B) 1 grant imder this section for each qualified enter-
prise community in the State. 
"(2) AMOUNT OF GRANTS.— 
"(A) EMPOWERMENT GRANTS.^The amount of each 
grant to a State under this section for a qualified 
empowerment zone shall be— 
"(i) if the zone is designated in an urban area, 
$50,000,000, multiplied by that proportion of the popu-
lation of the zone that resides in the State; or 
"(ii) if the zone is designated in a rural area, 
$20,000,000, multiplied by such proportion. 
**(B) ENTERPRISE GRANTS.—The amount of the grant 
to a State under this section for a qualified enterprise 
community shall be Vse of $280,000,000, multiplied by that 
proportion of the population of the community that resides 
m the State. 
"(C) POPULATION DETERMINATIONS.—The Secretaiy 
shall make population determinations for purposes of tiiis 
paragraph based on the most recent decennial census data 
available. 
"(3) TIMING OF GRANTS.— 
"(A) QuAUFiED E
M
P
O
W
E
R
M
E
N
T ZONES.—With respect 
to each qualified empowerment zone, the Secretary shall 
make— 
"(i) 1 grant under this section to each State in 
which the zone Ues, on the date of the designation 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 665 
of the zone under part I of subchapter U of chapter 
1 of the Internal Revenue Code of 19^; and 
"(ii) 1 grant under this section to each such State, 
on the 1st day of the 1st fiscal year that begins after 
the date of the designation. 
**(B) 
QUAUFIED 
ENTERPRISE 
COMMUNITIES.—With 
respect to each qualified enterprise community, the Sec-
retary shall make 1 grant under this section to each State 
in which the community lies, on the date of the designation 
of the community under part I of subchapter U of chapter 
1 of the Internal Revenue Code of 1986. 
**(4) FUNDING.—$1,000,000,000 shall be made available to 
the Secretary for grants under this section. 
**(b) PROGRAM OPTIONS.—Notwithstanding section 2005(a): 
**(1) In order to prevent and remedy the neglect and abuse 
of children, a State may use amounts paid under this section 
to make grants to, or enter into contracts with, entities to 
provide residential or nonresidential drug and alcohol preven-
tion and treatment programs that offer comprehensive services 
for pregnant women and mothers, and their children. 
"(2) In order to assist disadvantaged adults and youths 
in achieving and maintaining self-sufficiency, a State may use 
amounts paid under this section to make grants to, or enter 
into contracts with— 
"(A) organizations operated for profit or not for profit, 
for the purpose of training and employing disadvantaged 
adults and youths in construction, rehabilitation, or 
improvement of affordable housing, public infrastructure, 
and community facilities; and 
"(B) nonprofit organizations and community or junior 
colleges, for the purpose of enabling such entities to provide 
short-term training courses in entrepreneurism and self-
emplojnnent, and other training that will promote individ-
ual self-sufficiency and the interests of the commimity. 
"(3) A State may use amounts paid under this section 
to make grants to, or enter into contracts with, nonprofit 
community-based organizations to enable such organizations 
to provide activities designed to promote and protect the 
interests of children and families, outside of school hours, 
including keeping schools open during evenings and weekends 
for mentoring and study. 
"(4) In order to assist disadvcuitaged adults and youths 
in achieving and maintoining economic self-support, a Stote 
may use amounts paid under this section to— 
"(A) fund services designed to promote community and 
economic development in qualified empowerment zones and 
qualified enterprise communities, such as skills training, 
job counseling, transportation services, housing counseling, 
financial management, and business counseling; 
"(B) assist in emergency and transitional shelter for 
disadvantaged families and individuals; or 
"(C) support programs that promote home ownership, 
education, or other routes to economic independence for 
low-income families and individuals. 
"(c) USE OF GRANTS.— 
107 STAT. 666 
PUBLIC LAW 103-66—AUG. 10, 1993 
"(1) IN GENERAL.—Subject to subsection (d) of this section, 
each State that receives a grant under this section with respect 
to an area shall use the grant— 
''(A) for services directed only at the goals set forth 
in paragraphs (1), (2), and (3) of section 2001; 
"(B) in accordance with the strategic plan for the area; 
and 
"(C) for activities that benefit residents of the area 
for which the grant is made. 
**(2) TECHNICAL ASSISTANCE.—A State may use a portion 
of any grant made under this section in the manner described 
in section 2002(e). 
"(d) REMITTANCE OF CERTAIN AMOUNTS.— 
"(1) PORTION OF GRANT UPON TERMINATION OF DESIGNA-
TION.—^Each State to which an amoimt is paid under this 
subsection during a fiscal year with respect to an area the 
designation of which under part I of subchapter U of chapter 
1 of the Internal Revenue Code of 1986 ends before the end 
of the fiscal year shall remit to the Secretary an amount equal 
to the total of the amounts so paid with respect to the area, 
multiplied by that proportion of the fiscal year remaining after 
the designation endis. 
"(2) AMOUNTS PAID TO THE STATES AND NOT OBUGATED 
W
I
T
H
I
N 2 Y
E
A
R
S
.
—
^
E
a
c
h State shall remit to the Secretary any 
amount paid to the State under this section that is not obligated 
by the end of the 2-year period that begins with the date 
of the payment, 
''(e) DEFINITIONS.—As used in this section: 
"(1) QUALIFIED EMPOWERMENT ZONE.—The term 'qualified 
empowerment zone' means, with respect to a State, an area— 
"(A) which has been designated (other than by the 
Secretary of the Interior) as an empowerment zone under 
p€urt I of subchapter U of chapter 1 of the Internal Revenue 
Code of 1986; 
"(B) with respect to which the designation is in effect; 
"(C) the strategic plan for which is a qualified plan; 
and 
"(D) part or all of which is in the State. 
"(2) QUAUFIED E
N
T
E
R
P
R
I
S
E C
O
M
M
U
N
I
T
Y
.
—
T
h
e term 'quali-
fied enterprise community* means, with respect to a State, 
an area— 
"(A) which has been designated (other than by the 
Secretary of the Interior) as an enterprise community under 
part I of subchapter U of chapter 1 of the Internal Revenue 
Code of 1986; 
"(B) with respect to which the designation is in effect; 
"(C) the strategic plan for which is a qualified plan; 
and 
"(D) part or all of which is in the State. 
"(3) STRATEGIC PLAN.—^The term 'strategic plan' means, 
with respect to an area, the plan contained in the application 
for designation of the area under part I of subchapter U of 
chapter 1 of the Internal Revenue Code of 1986. 
"(4) QUALIFIED PLAN.—The term 'qualified plan' means, 
with respect to an area, a plan that— 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 667 
''(A) includes a detailed description of the activities 
proposed for the area that are to be funded with amounts 
provided under this section; 
"(B) contains a commitment that the amoimts provided 
imder this section to any State for the area will not be 
used to supplant Federal or non-Federal funds for services 
and activities which promote the purposes of this section; 
"(C) was developed in cooperation with the local govern-
ment or governments with jurisdiction over the area; and 
"(D) to the extent that any State will not use the 
amoimts provided under this section for the area in the 
manner described in subsection (b), explains the reasons 
why not. 
**(5) RURAL AREA.—^The term 'rural area' has the meaning 
^ven such term in section 1393(aX2) of the Internal Revenue 
Code of 1986. 
"(6) URBAN AREA.—^The term 'urban area* has the meaning 
given such term in section 1393(aX3) of the Internal Revenue 
ode of 1986.". 
Subchapter D—Customs and Trade Provisions 
SEC. 13800. TABLE OF CONTENTS. 
SUBCHAPTER D—CUSTOMS AND TRADE PROVISIONS 
Sec. 13800. Table of contente. 
PART I—EXTENSION OF CUSTOMS USER FEE, GSP, AND TRADE ADJUSTMENT 
ASSISTANCE PROGRAMS 
Sec. 13801. Extension of authority to levy customs user fees. 
Sec. 13802. Generalized system of preferences. 
Sec. 13803. Extensionof trade adjustment assistance program. 
PART II—CUSTOMS OFFICER PAY REFORM 
Sec. 13811. Overtime and premium pay for customs ofilcers. 
Sec. 13812. Additional benefits for customs officers. 
Sec. 13813. Reimbursements from the customs user fee account. 
PART I—EXTENSION OF CUSTOMS USER FEE, 
GSP, AND TRADE ADJUSTMENT ASSISTANCE 
PROGRAMS 
SEC. 13801. EXTENSION OF AUTHORITY TO LEVY CUSTOMS USER FEES. 
Section 13031(jX3) of the Consolidated Omnibus Budget Rec-
onciliation Act of 1985 (19 U.S.C. 58c(jX3)) is amended by striking 
out "1995" and inserting "1998". 
SEC. 13802. GENERALIZED SYSTEM OF PREFERENCES. 
(a) TREATMENT OF COUNTRIES FORMERLY WITHIN THE UNION 
OF SOVIET SOCIALIST REPUBLICS.—The table in section 502(b) of 
the Trade Act of 1974 (19 U.S.C. 2462(b)) is amended by striking 
out "Union of Soviet Socialist Republics". 
(b) EXTENSION OF DUTY-FREE TREATMENT UNDER SYSTEM.— 
(1) IN GENERAL.—Section 505(a) of the Trade Act of 1974 
(19 U.S.C. 2465(a)) is amended by striking out "July 4, 1993" 
and inserting "September 30,1994*. 
(2) RETROACTIVE APPUCATION FOR CERTAIN LIQUIDATIONS I9 use 2465 
A
N
D RELIQUIDATIONS.—Notwithstanding section 514 of the Tar- ^°^^-
107 STAT. 668 
PUBLIC LAW 103-66—AUG. 10, 1993 
ifif Act of 1930 or any other provision of law, upon proper 
request filed with the appropriate customs officer within 180 
days after the date of the enactment of this Act, the entry— 
(A) of any article to which duty-free treatment under 
title V of the Trade Act of 1974 would have applied if 
the entry had been made on July 4,1993, and 
(B) that was made after July 4, 1993, and before such 
date of enactment, 
shall be liquidated or reliquidated as free of duty, and the 
Secretary of the Treasury shall refund any duty paid with 
respect to such entry. As used in this paragraph, the term 
"entty^ includes a withdrawal from warehouse for consumption. 
SEC. 13803. EXTENSION OF TRADE ADJUSTMENT ASSISTANCE PRO-
GRAM. 
(a) EXTENSION.— 
(1) Section 285 of the Trade Act of 1974 (19 U.S.C. 2271, 
preceding note) is amended— 
(A) by striking "No" and all that follows through "and 
no duty" in subsection (b) and inserting "No duty"; and 
(B) by adding at the end the following new subsection: 
"(c) No assistance, vouchers, allowances, or other payments 
may be provided under chapter 2, and no technical assistance 
may be provided under chapter 3, after September 30, 1998.". 
(2) Sections 245 and 256(b) of the Trade Act of 1974 (19 
U.S.C. 2317 and 2346(b)) are each amended by striking "1988, 
1989, 1990, 1991, 1992, and 1993" and inserting "1993, 1994, 
1995,1996,1997, and 1998". 
(b) TRAINING.—Section 236(aX2XA) of the Trade Act of 1974 
(19 U.S.C. 2296(aX2XA)) is amended by inserting before the end 
period ", except that for fiscal year 1997, the total amount of 
payments made under paragraph (1) «hall not exceed $70,000,000". 
PART 
n—CUSTOMS 
OFFICER 
PAY 
REFORM 
SEC. 13811. OVERTmE AND PREBOUM PAY FOR CUSTOMS OFFICERS. 
(a) IN GENERAL.—Section 5 of the Act of February 13, 1911 
(19 U.S.C. 261 and 267) is amended to read as follows: 
19 use 267. 
*^EC. 5. OVERTIME AND PREMIUM PAY FOR CUSTOMS OFFICERS. 
"(a) OVERTIME PAY.— 
"(1) IN GENERAL.—Subject to paragraph (2) and subsection 
(c), a customs officer who is officially assigned to perform work 
in excess of 40 hours in the administrative workweek of the 
officer or in excess of 8 hours in a day shall be compensated 
for that work at an hourly rate of pay that is equal to 2 
times the hourly rate of the basic pay of^the officer. For purposes 
of this paragraph, the hourly rate of basic pay for a customs 
officer does not include any premium pay provided for under 
subsection (b). 
"(2) SPECIAL PROVISIONS RELATING TO OVERTIME WORK ON 
CALLBACK BASIS.— 
"(A) MINIMUM DURATION.—Any work for which com-
pensation is authorized under paragraph (1) and for which 
the ciistoms officer is required to return to the officer's 
place of work shall be treated as being not less than 2 
hours in duration; but only if such work begins at least 
1 hour after the end of any previous regularly scheduled 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 669 
work assignment and ends at least 1 hour before the begin-
ning of the following regularly scheduled work assignment. 
*
*
(
B
) COMPENSATION FOR COMMUTING TIME.— 
**(i) IN GENERAL.—Except as provided in clause 
(ii), in addition to the compensation authorized under 
paragraph (1) for work to which subparagraph (A) 
applies, the customs officer is entitled to be paid, as 
compensation for commuting time, an amount equal 
to 3 times the hourly rate of basic pay of the officer, 
"(ii) EXCEPTION.—Compensation for commuting 
time is not payable under clause (i) if the work for 
which compensation is authorized imder paragraph 
(1>-
"(I) does not commence within 16 hours of 
the customs officer's last regularly scheduled work 
assignment, or 
(II) commences within 2 hours of the next 
regulari^ scheduled work assignment of the cus-
toms officer. 
"(b) PREMIUM PAY FOR CUSTOMS OFFICERS.— 
"(1) NIGHT WORK DIFFERENTIAL.— 
"(A) 3 P.M. T
O MIDNIGHT SHIFTWORK.—If the m£«ority 
of the hours of regularly scheduled work of a customs 
officer occurs during the period beginning at 3 p.m. and 
ending at 12 a.m., the ofiticer is entitled to pay for work 
diuing such period (except for work to whidi paragraph 
(2) or (3) applies) at the officer's hourly rate of basic pay 
plus premium pay amounting to 15 percent of that basic 
rate. 
"(B) 11 P.M. T
O 8 A.M. SHIFTWORK.—If the m£oority 
of the hours of regularly scheduled work of a customs 
officer occurs during the period beginning at 11 p.m. and 
ending at 8 a.m., the ofiacer is entitled to pay for work 
during such period (except for work to which paragraph 
(2) or (3) applies) at the officer's hourly rate of basic pay 
plus premiimi pay amounting to 20 percent of that basic 
rate. 
"(C) 7:30 P.M. T
O 3:30 A.M. SHIFTWORK.—If the regularly 
scheduled work assignment of a customs officer is 7:30 
§.m. to 3:30 a.m., the officer is entitled to pay for work 
uring such period (except for work to which paragraph 
(2) or (3) applies) at the officer's hourly rate of basic pay 
plus premium pay amounting to 15 percent of that basic 
rate for the period from 7:30 p.m. to 11:30 p.m. and at 
the officer's hourly rate of basic pa^ plus premium i>ay 
amounting to 20 percent of that basic rate lor the period 
from 11:30 p.m. to 3:30 a.m. 
"(2) SUNDAY DIFFERENTIAL.—A customs officer who per-
forms any regularly scheduled work on a Sunday that is not 
a holiday is entitlea to pay for that work at the officer's hourly 
rate of Sasic pay plus premium pay amounting to 50 percent 
of that basic rate. 
"(3) HOLIDAY DIFFERENTIAL.—A customs officer who per-
forms any regularly scheduled work on a holiday is entitled 
to pay for that work at the officer's hourly rate of basic pay 
plus premium pay amounting to 100 percent of that basic 
rate. 
107 STAT. 670 
PUBLIC LAW 103-66—AUG. 10, 1993 
"(4) TREATMENT OF PREMIUM PAY.—^Premium pay provided 
for under this subsection may not be treated as being overtime 
pay or compensation for any purpose. 
*'(c) LIMITATIONS.— 
"(1) FISCAL YEAR CAP.—^The aggregate of overtime pay 
under subsection (a) (including commuting compensation under 
subsection (aX2XB)) and premium pay under subsection (b) 
that a customs officer may be p€dd in any fiscsd year may 
not exceed $25,000; except that the Commissioner of Customs 
or his designee may waive this limitation in individual cases 
in order to prevent excessive costs or to meet emergency 
requirements of the Customs Service. 
**(2) EXCLUSIVITY OP PAY UNDER THIS SECTION.—A customs 
officer who receives overtime pay under subsection (a) or pre-
mium pav under subsection (b) for time worked may not receive 
pay or other compensation for that work under any other provi-
sion of law. 
"(d) REGULATIONS.—The Secretary of the Treasury shall 
promulgate regulations to prevent— 
"(1) abuse of callback work assignments and commuting 
time compensation authorized under subsection (aX2); and 
"(2) the disproportionately more frequent assignment of 
overtime work to customs officers who are near to retirement, 
"(e) DEFINITIONS.—^As used in this section: 
"(1) The 
term 
'cvustoms officer* means an individualperform-
ing those functions specified by regulation by the Secretary 
of the Treasury for a customs inspector or canine enforcement 
officer. Such functions shall be consistent with such applicable 
standards as may be promulgated by the Office of Personnel 
Management. 
"(2) The term 'holiday' means any day designated as a 
holiday under a Federal stetute or Executive order. . 
(b) NECESSARY CONFORMING AMENDMENTS.— 
(1) Section 2 of the Act of June 3, 1944 (19 U.S.C. 1451a), 
is repealed. 
(2) Section 450 of the Tariff Act of 1930 (19 U.S.C. 1450) 
is amended— 
(A) bjr striking out "at night" in the section heading 
and inserting "during overtime hours"; 
(B) by striking out "at night" and inserting "during 
overtime hours"; and 
(C) by inserting "aircraft," immediately before "vessel". 
19 use 267 note. 
(c) E
F
F
E
C
T
I
V
E DATE.—The amendmente made by subsections 
(a) and (b) apply to customs inspectional services provided on or 
after January 1,1994. 
SEC. 13812. ADDITIONAL BENEFITS FOR CUSTOMS OFFICERS. 
(a) TREATMENT OF CERTAIN PAY FOR RETIREMENT PURPOSES.— 
Section 8331(3) of title 5, United Stetes Code, is amended— 
(1) by striking out "and" at the end of subparagraph (C); 
(2) by striking out the semicolon at the end oi subparagraph 
(D) and inserting ; and"; 
(3) by adding after subparagraph (D) the following: 
(E) with respect to a customs officer (referred to in 
subsection (eXD of section 5 of the Act of February 13, 
1911), compensation for overtime inspectionsd services pro-
vided for under subsection (a) of such section 5, but not 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 671 
to exceed 50 percent of any statutory maximum in overtime 
pay for customs officers which is in effect for the year 
involved;"; and 
(4) by striking out "subparagraphs (B), (C), and (D) of 
this paragraph," and inserting "subparagraphs (B), (C), (D), 
and (E) of this paragraph". 
(b) FOREIGN LANGUAGE PROFICIENCY AWARDS.—Cash awards Regulations. 
for foreign language proficiency may, under regulations prescribed ^^ ^^^ ^^^^" 
by the Secretary of the Treasury, be paid to customs officers (as 
referred to in section 5(eXl) of the Act of February 13, 1911) 
to the same extent and in the same manner as would be allowable 
under subchapter III of chapter 45 of title 5, United States Code, 
with respect to law enforcement officers (as defined by section 
4521 of such title). 
(c) EFFECTIVE DATES.— 
(1) SUBSECTION (a) AMENDMENTS.—The amendments made 5 use 8331 note. 
by subsection (a) take effect on January 1, 1994, and apply 
only with respect to service performed on or £ifter such date. 
(2) SUBSECTION (b).—Subsection (b) takes effect on January 1
9 use 267a 
1,1994. 
'^^^^ 
SEC. 13813. REIMBURSEMENTS FROM THE CUSTOMS USER FEE 
ACCOUNT. 
Section 13031(0(3) of the Consolidated Omnibus Budget Rec-
onciliation Act of 1985 (19 U.S.C. 58c(£X3)) is amended— 
(1) by amending clause (i) of subparagraph (A) to read 
as follows: "(i) in— 
"(I) pajdng overtime compensation under section 5(a) 
of the Act of February 13,1911, 
"(II) pajdng premium pay under section 5(b) of the 
Act of February 13, 1911, but the amotmt for which 
reimbursement may be made under this subclause may 
not, for any fiscal year, exceed the difference between the 
cost of the premium pay for that year calculated under 
such section 5(b) as amended by section 13811 of the Onmi-
bus Budget Reconciliation Act of 1993 and the cost of 
such pay calculated under subchapter V of chapter 55 
of title 5, United States Code, 
"(III) paying agency contributions to the Civil Service 
Retirement and Disability Fund to match deductions from 
the overtime compensation paid under subclause (I), 
"(IV) providing all preclearance services for which the 
recipients of such services are not required to reimburse 
the Secretary of the Treasury, and 
"(V) pajdng foreign language proficiency awards imder 
section 13812(b) of the Omnibus Budget Reconciliation Act 
of 1993, and"; 
(2) by inserting before the flush sentence appearing after 
clause (ii) of subparagraph (A) the following sentence: "The 
transfer of funds required under subparagraph (CXiii) has prior-
ity over reimbiu-sements under this subparagraph to carry out 
subclauses (II), (III), (IV), and (V) of clause (i)."; 
(3) by striking out "except for costs described in subpara-
graph (AXi) (I) and (II)," in subparagraph (BXi); and 
(4) by amending subparagraph (O— 
107 STAT. 672 
PUBLIC LAW 103-66—AUG. 10, 1993 
(A) by striking out '
M
» fully reimburse inspectional 
overtime and preclearance costs" in clause (i) and mserting 
"to reimburse costs described in subparagraph (AXi)"; and 
(B) by inserting after clause (ii) of subparagraph (C) 
the following: 
"(iii) For each fiscal year, the Secretary of the Treasury 
shall calculate the difference between— 
"(I) the estimated cost for overtime compensation that 
woiild have been incurred during that fiscal year for 
inspectional services if section 5 of the Act of February 
13, 1911 (19 U.S.C. 261 and 267), as in effect before the 
enactment of section 13811 of the Omnibus Budget Rec-
onciliation Act of 1993, had governed such costs, and 
"(II) the actual cost for overtime compensation, pre-
mium pay, and agency retirement contributions that is 
incurred during that fiscal year in regard to inspectional 
services under section 5 of the Act of February 13, 1911, 
as amended by section 13811 of the Omnibus Budget Rec-
onciliation Act of 1993, and imder section 8331(3) of title 
5, United States Code, as amended by section 13812(aXl) 
of such Act of 1993, plus the actual cost that is incurred 
during that fiscal year for foreign language proficiency 
awards under section 13812(b) of such Act of 1993, 
and shall transfer fix>m the (Customs User Fee Account to 
the General Fund of the Treasury an amount equal to the 
difference calculated under this clause, or $18,000,000, which-
ever amount is less. Transfers shall be made imder this clause 
at least quarterly and on the basis of estimates to the same 
extent as are reimbursements under subparagraph (BXiii).". 
Mickey Leland 
CHAPTER »—FOOD STAMP PROGRAM 
Childhood 
A
d
T
^
^
"
^ ^
®
^
^
®
^ 
SEC. 13901. SHORT TITLE; TABLE OF CONTENTS. 
7 use 2011 note. 
(a) SHORT TiTLE.—This chapter may be cited as the "Mickey 
Leland Childhood Hunger Relief Act". 
(b) TABLE OF CoNTENTS.~The table of contents of this chapter 
is as follows: 
CHAPTER 3—FOOD STAMP P
R
O
G
R
A
M 
Sec. 13901. Short title; table of contents. 
Sec. 13902. References to Act. 
SUBCHAPTER A—ENSURING ADEQUATE FOOD ASSISTANCE 
Sec. 13911. Helping low-income high school students. 
Sec. 13912. Families with h i ^ shelter emenaea. 
Sec. 13913. Resource exclusion for earned income tax credits. 
Sec. 13914. Homeless families in transitional housing. 
Sec. 13915. Households benefiting firom general assistance vendor payments. 
Sec. 13916. Continuing benefits to eligible households. 
Sec. 13917. Improving the nutritional status of children in Puerto Rico. 
SUBCHAPTER B—^PROMOTING SELF-SUFFICIENCY 
Sec. 13921. Child support payments to nonhousehold members. 
Sec. 13922. Improving access to employment and training activities. 
Sec. 13923. Vehicles needed to seek and continue employment and for household 
transportation. 
Sec. 13924. Vehicles necessary to carry fuel or water. 
Sec. 13925. Testing resource accumulation. 
SUBCHAPTER 0—SIMPUFYING THE PROVISION OF FOOD ASSISTANCE 
Sec. 13931. Simplifying the household definition for households with children and 
others. 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 673 
Sec. 13932. Eligibility of children of parents participating in drug or alcohol treat-
ment programs. 
SUBCHAPTER D—IMPROVING PROGRAM INTEGRirY 
Sec. 13941. Additional means (^claims collection. 
Sec. 13942. Disqualification of recinients for trading firearms, ammunition, explo-
sives, or controlled substances for coupons. 
Sec. 13943. Increased cap for civil money penally for trafficking in coupons. 
Sec. 13944. Increased cap for dvil money penalfy for selling 
firearms, 
ammunition, 
explosives, or controlled substances for coupons. 
SUBCHAPTER E—IMPROVING FOOD STAMP PROGRAM MANAGEMENT 
Sec. 13951. Expedited claim collection; adjustments to error rate calculations. 
SUBCHAPTER F—UNIFORM REIMBURSEMENT RATES 
Sec. 13961. Uniform reimbursement rates. 
Sec. 13962. Mandatory funding for nutrition programs. 
SUBCHAPTER G—^IMPLEMENTATION AND EFFECTIVE DATES 
Sec. 13971. Implementation and effective dates. 
SEC. 13902. REFERENCES TO THE ACT. 
Except as otherwise provided in this chapter, references in 
this chapter to "the Act" and sections of the Act shall be deemed 
to be references to the Food Stamp Act of 1977 (7 U.S.C. 2011 
et seq.) and the sections of such Act. 
Subchapter A—^Ensurinif Adequate Food Assistance 
SEC. 13911. HELPING LOW-INCOME HIGH SCHOOL STUDENTS. 
Section 5(dX7) of the Act (7 U.S.C. 2014(dX7)) is amended 
by striking "who is a student, and who has not attained his eight-
eenth birtnday" and inserting "who is an elementary or secondary 
school student, and who is 21 years of age or younger^ 
SEC. 13912. FAMILIES WITH HIGH SHELTER EXPENSES. 
(a) COMPUTATION.—Section 5(e) of the Act (7 U.S.C. 2014(e)) 
is amended— 
(1) in the fourth sentence by striking ": Provided, That 
the amount" and all that follows througfh "June 30"; and 
(2) in the fifth sentence by striking "under clause (2) of 
the preceding sentence". 
(b) LIMITATIONS.— 
(1) INTERIM CAPS.—Section 5(e) of the Act (7 U.S.C. 2014(e)) 
is amended by inserting after the fourth sentence the following: 
"In the 15-month period ending September 30, 1995, such excess 
shelter expense deduction shall not exceed $231 a month in the 
48 contiguous States and the District of Columbia, and shall not 
exceed, m Alaska, Hawaii, Guam, and the Virgin Islands of the 
United States, $402, $330, $280, and $171 a month, respectively. 
In the 15-month period ending December 31, 1996, such excess 
shelter expense deduction shall not exceed $247 a month in the 
48 contiguous States and the District of Columbia, and shall not 
exceed, in Alaska, Hawaii, Guam, and the Virgin Islands of the 
United States, $429, $353, $300, and $182 a month, respectively.". 
(2) SUBSEQUENT R
E
M
O
V
A
L OF CAP.—Section 5(e) of the Act 
(7 U.S.C. 2014(e)), as amended by paragraph (1), is amended 
by striking the fifth and sixth sentences. 
SEC. 13913. RESOURCE EXCLUSION FOR EARNED INCOME TAX CRED-
ITS. 
Section 5(gX3) of the Act (7 U.S.C. 2014(gX3)) is amended 
by adding at the end the foUoMdng: 
107 STAT. 674 
PUBLIC LAW 103-66—AUG. 10, 1993 
The Secretary shall also exclude from financial resources any 
earned income tax credits received by any member of the household 
for a period of 12 months from receipt ii such member was partici-
pating in the food stamp program at the time the credits were 
received and participated m such program continuously during 
the 12-month period.". 
SEC. 13914. HOMELESS FAMILIES IN TRANSITIONAL HOUSING. 
Section 5(kX2XF) of the Act (7 U.S.C. 2014(kX2XF)) is amended 
to read as follows: 
"(F) housing assistance payments made to a third party 
on behalf of the household residing in transitional housing 
for the homeless;**. 
SEC. 1381S. HOUSEHOLDS BENEFITING FROM GENERAL ASSISTANCE 
VENDOR PAYMENTS. 
Section 5(kXlXB) of the Act (7 U.S.C. 2014(kXlXB)) is amended 
by striking 'living expenses** and inserting liousing expenses, not 
including energy or utility-cost assistance,**. 
SEC. 13916. CONTINUING BENEFITS TO EUGIBLE HOUSEHOLDS. 
Section 8(cX2XB) of the Act (7 U.S.C. 2017(cX2XB)) is amended 
by inserting "of more than one month in** after "following any 
period**. 
SEC. 13917. IMPROVING THE NUTRITIONAL STATUS OF CHILDREN IN 
PUERTO RICO. 
Section 19(aXlXA) of the Act (7 U.S.C. 2028(aXlXA)) is 
amended— 
(1) 
by 
striking 
"$1,091,000,000** 
and 
inserting 
"$1,097,000,000**; and 
(2) 
by 
striking 
"$1,133,000,000** 
and 
inserting 
"$1,143,000,000**. 
Subchapter B—^Promoting Self-Sufficiency 
SEC. 13921. CHILD SUPPORT PAYMENTS TO NON-HOUSEHOLD MEM-
BERS. 
Section 5(e) of the Act (7 U.S.C. 2014(e)) is amended by adding 
at the end the following: 
Regulations. 
"Before determining the excess shelter expense deduction, all house-
holds shall be entitled to a deduction for child support payments 
made by a household member to or for an individual wno is not 
a member of the household if such household member was legally 
obligated to make such payments, except that the Secretary is 
authorized to prescribe by regulation the methods, including calcula-
tion on a retrospective basis, that State agencies shall use to deter-
mine the amount of the deduction for child support payments.**. 
SEC. 13922. IMPROVING ACCESS TO EBfPLOYMENT AND TRAINING 
ACTIVITIES. 
(a) DEPENDENT CARE DEDUCTION.—Section 5(e) of the Act (7 
U.S.C. 2014(e)) is amended in clause (1) of the fourth sentence— 
(1) by striking "$160 a month for each dependent** and 
inserting "$200 a month for each dependent child under 2 
years of age and $175 a month for each other dependent**; 
and 
(2) by striking ", regardless of the dependent's age,**. 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 675 
(b) REIMBURSEMENTS TO PARTICIPANTS IN EMPLOYMENT AND 
TRAINING PROGRAMS.—Section 6(dX4XIXiXII) of the Act (7 U.S.C. 
2015(dX4XIXiXn)) is amended to read as follows: 
"(11) the actual costs of such dependent care expenses that 
are determined by the State agency to be necessary for the 
participation of an individual in the program (other than an 
mdiviaual who is the caretaker relative of a dependent in 
a family receiving benefits under part A of title IV of the 
Social Security Act (42 U.S.C. 601 et sec^i.) in a local area 
where an employment, training, or education program under 
title IV of such Act is in operation, or was in operation, on 
the date of enactment of the Hunger Prevention Act of 1988) 
up to any limit set by the State agency (which limit shall 
not be less than the limit for the dependent care deduction 
iinder section 5(e)), but in no event shall such payment or 
reimbursements exceed the applicable local market rate as 
determined by procedures consistent with any such determina-
tion under the Social Security Act. Individuals subject to the 
program under this paragrapn may not be required to partici-
gate if dependent costs exceed the limit established oy the 
tate agency under this subclause or other actual costs exceed 
any limit established under subclause (I).". 
(c) CONFORMING AMENDMENT.—Section 16(hX3) of the Act (7 
U.S.C. 2025(hX3)) is amended by striking "representing $160 per 
month per dependent" and inserting "equal to the payment made 
under section 6(dX4XIXiXII) but not more than the applicable local 
market rate,". 
SEC. 13923. VEHICLES NEEDED TO SEEK AND CONTINUE EMPLOY-
MENT AND FOR HOUSEHOLD TRANSPORTATION. 
Section 5(gX2) of the Act (7 U.S.C. 2014(gX2)) is amended 
by striking "$4,500" and inserting the following: 
"a level set by the Secretary, which shall be $4,500 through August 
31, 1994, $4,550 beginning September 1, 1994, through September 
30, 1995, $4,600 beginning October 1, 1995, through September 
30, 1996, and $5,000 beginning October 1, 1996, as a4}usted on 
such date and on each October 1 thereafter to reflect changes 
in the new car component of the Consumer Price Index for All 
Urban Consumers published by the Bureau of Labor Statistics 
for the 12-month period ending on June 30 preceding the date 
of such a4justment and rounded to the nearest $50". 
SEC. 13ltt4. VEHICLES NECESSARY TO CARRY FUEL OR WATER. 
Section 5(gX2) of the Act (7 U.S.C. 2014(gX2)) is amended 
by adding at the end the following: 
"The Searetary shall exclude from financial resources the value 
of a vehicle that a household depends upon to carry fuel for heating 
or water for home use when such transported fuel or water is 
the primary source of fuel or water for the household.". 
SEC. 13025. TESTING RESOURCE ACCUMULATION. 
Section 17 of the Act (7 U.S.C. 2026) is amended by adding 
at the end the following: 
"(k) The Secretary shall conduct, under such terms and condi-
tions as the Secretary shall prescribe, for a period not to exceed 
4 years, projects to test allowing not more than 11,000 eligible 
households, in the aggregate, to accimiulate resources up to $10,000 
each (which shall he excluded from consideration as a resource) 
107 STAT. 676 
PUBLIC LAW 103-66—AUG. 10, 1993 
for later expenditure for a purpose directly related to improving 
the education, training, or employability (including self-employ-
ment) of household members, for the purchase of a home for the 
household, for a change of the household's residence, or for making 
major repairs to the household's home.". 
Subchapter C—Simplifying the Provision of Food Assistance 
SEC. 13931. SDdPLIFYING THE HOUSEHOLD DEFINrnON FOR HOUSE-
HOLDS WITH CHHJDREN AND OTHERS. 
Section 3(i) of the Act (7 U.S.C. 2012(i)) is amended— 
(1) in the first sentence— 
(A) by striking "(2)" and inserting "or (2)"; 
(B) by striking *
*
, or (3) a parent of minor children 
and that parent's children" and all that follows through 
"parents and children, or siblings, who live together", and 
inserting the following: 
". Spouses who live together, parents and their children 21 
years of age or younger (who are not themselves parents living 
with their childbren or married and living with their spouses) 
who Uve together, and children (excluding foster children) under 
18 years of age who live with and are under the parental 
control of a person other than their parent together with the 
person exercising parental control"; and 
(C) striking ", unless one of " and all that follows 
through "disabled member"; and 
(2) in the second sentence by striking "clause (1) of the 
preceding sentence" and inserting "the preceding sentences". 
SEC. 13932. EUGmnjTY OF CHHJ)REN OF PARENTS PARTICn>ATING 
IN DRUG OR ALCOHOL ABUSE TREATMENT PROGRAMS. 
Section 3 of the Act (7 U.S.C. 2012) is amended— 
(1) in the last sentence of subsection (i) by inserting ", 
together with their children," after "narcotics addicts or alcohol-
ics"; and 
(2) in subsection (gX5) by inserting ", and their children," 
after "or alcoholics". 
Subchapter D—^Improving Program Integrity 
SEC. 13941. ADDITIONAL MEANS OF CLAIMS COLLECTION. 
(a) SAFEGUARDS.—Section ll(eX8) of the Act (7 U.S.C. 
2020(eX8)) is amended— 
(1) by striking "and (B)" and inserting "(B)"; and 
(2) by striking the semicolon at the end and inserting 
the following: 
", and (C) such safeguards shall not prevent the use by, or 
(tisclosure of such information, to agencies of the Federal 
Government (including the United States Postal Service) for 
purposes of collecting the amoimt of an overissuance of coupons, 
as determined under section 13(b) of this Act and excluding 
claims arising from an error of the State agency, that has 
not been recovered pursuant to such section, from Federal 
pay (including salaries and pensions) as authorized pursuant 
to section 5514 of title 5 of the United States Code;". 
(b) RECOVERY.—Section 13 of the Act (7 U.S.C. 2022) is 
amended by adding at the end tiie following: 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 677 
"(d) The amount of an overissuance of coupons as determined 
under subsection (b) and except for claims arising from an error 
of the State agency, that has not been recovered pursuant to such 
subsection may be recovered from Federal pay (including salaries 
and pensions) as authorized by section 5514 of title 5 of the United 
States Code.". 
SEC. 13942. DISQUALIFICATION OF RECIPIENTS FOR TRADING FUtE-
ARMS, AMMUNITION, EXPLOSIVES, OR CONTROLLED 
SUBSTANCES FOR COUPONS. 
Section 6(bXl) of the Act (7 U.S.C. 2015(bXl)) is amended 
by striking subdivisions (ii) and (iii) and inserting the following: 
"(li) for a period of 1 year upon— 
"(I) the second occasion of any such determination; 
or 
"(II) the first occasion of a finding by a Federal, State, 
or local court of the trading of a controlled substance (as 
defined in section 102 of uie Controlled Substances Act 
(21 U.S.C. 802)) for coupons; and 
**(iii) permanently upon— 
"(I) the third occasion of any such determination; 
"(II) the second occasion of a finding by a Federal, 
State, or local court of the trading of a controlled substance 
(as defined in section 102 of the Controlled Substances 
Act (21 U.S.C. 802)) for coupons; or 
"(III) the first occasion of a finding by a Federal, State, 
or local court of the trading of firearms, ammunition, or 
explosives for coupons.". 
SEC. 13943. INCREASED CAP FOR CIVIL MONEY PENALTY FOR 
TRAFFICKING IN COUPONS. 
Section 12(bX3XB) of the Act (7 U.S.C. 2021(bX3XB)) is 
amended by striking "during a 2-year period" and inserting "for 
violations occurring during a single mvestigation". 
SEC. 13944. INCREASED CAP FOR CIVIL MONEY PENALTY FOR SELL-
ING FIREARMS, AMMUNITION, EXPLOSIVES, OR CON-
TROLLED SUBSTANCES FOR COUPONS. 
Section 12(bX3XC) of the Act (7 U.S.C. 2021(bX3XC)) is 
amended— 
(1) by striking "substances (as the term is" and inserting 
"substance (as"; and 
(2) by striking "during a 2-year period" and inserting "for 
violations occurring during a single investigation". 
Subchapter E—^Improving Food Stamp Program 
Management 
SEC. 139S1. EXPEDITED 
CLAIM 
COLLECTION; ADJUSTMENTS 
TO 
ERROR RATE CALCULATION& 
(a) COLLECTION AND DISPOSITION OF CLAIMS.—Section 13(aXl) 
of the Act (7 U.S.C. 2022(aXl)) is amended— 
(1) in the fifth sentence by striking "(after a determination 
on any request for a waiver for good cause related to the 
claim has been made by the Secretary)"; and 
(2) in the sixth sentence by striking "2 years" and inserting 
"lyear". 
107 STAT. 678 
PUBLIC LAW 103-66—AUG. 10, 1993 
(b) ADMINISTRATIVE AND JUDICIAL REVIEW.—Section 14(a) of 
the Act (7 U.S.C. 2023(a)) is amended— 
(1) in the sixth sentence by inserting after "pursuant to 
section 16(c)'' the following: "(including determinations as to 
whether there is good cause for not imposing all or a portion 
of the penalty)"; and 
(2) by striMng the last sentence. 
(c) QUALITY CONTROL SYSTEM.—Section 16(c) of the Act (7 
U.S.C. 2025(c)) is amended— 
(1) in paragraph (IXC)— 
(A) by striking "payment error tolerance level" and 
inserting national penormance measure"; and 
(B) by striking "egual to" and all that follows through 
the first period and mserting the following: "equal t
c
K
— 
"(i) the product of— 
"(I) the value of all allotments issued by the State 
agency in the fiscal year; times 
"(II) the lesser of— 
"(aa) the ratio o
f
— 
"(aaa) the amount by which the payment 
error rate of the State agency for the fiscal 
year exceeds the national performance meas-
ure for the fiscal year; to 
"(bbb) the national performance measure 
for the fiscal year, or 
"(bb) 1; times 
"(III) the amount by which the payment error rate 
of the State agency for the fiscal year exceeds the 
national performance measure for the fiscal year."; 
(2) in paragraph (3XA) by striking "60 days (or 90 days 
at the discretion of the Secretary)" and inserting "120 days"; 
(3) in paragraph (6) by striking "shall be used to establish" 
and all that follows through "level" the last place it appears; 
and 
(4)]^ adding at the end the following: 
"(8XA) This paragraph applies to the determination of whether 
a payment is due by a State agency for a fiscal year under para-
graph (IXC). 
"(B) Not later than 180 days after the end of the fiscal year, 
the case review and all arbitrations of State-Federal difference 
cases shall be completed. 
"(C) Not later than 30 days there€dter, the Secretary shall— 
"(i) determine final error rates, the national average pay-
ment error rate, and the amounts of payment claimed against 
State agencies; and 
"(ii) notify State agencies of the payment claims. 
"(D) A State agency desiring to appesd a payment claim deter-
mined under subparagraph (C) shall submit to an administrative 
law judge— 
"(i) a notice of appeal, not later than 10 days after receiving 
a notice of the claim; and 
"(ii) evidence in support of the appeal of the State agency, 
not later than 60 days after receiving a notice of the claim. 
"(E) Not later than 60 days after a State agency submits 
evidence in support of the appeal, the Secretary shall submit respon-
sive evidence to the administrative law judge to the extent such 
evidence exists. 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 679 
"(F) Not later than 30 days after the Secretary submits respon-
sive evidence, the State agen<^ shall submit rebuttal evidence to 
the administrative law judge to the extent such evidence exists. 
''(G) The administrative law judge, after an evidentiary hearing, 
shall decide the appeal— 
"(i) not later than 60 days after receipt of rebuttal evidence 
submitted by the State agency; or 
"(ii) if the State agency does not submit rebuttal evidence, 
not later than 90 days after the State agency submits the 
notice of appeal and evidence in support of the appeal. 
"(H) In considering a claim under fiiis paragraph, the adminis-
trative law judge shall consider all grounds for denying the claim, 
in whole or in p£u*t, including the contention of a State agency 
that the claim should be waived, in whole or in part, for good 
cause. 
"(I) The deadlines in subparagraphs (D), (E), (F), and (G) shall 
be extended by the administrative law judge for cause shown. 
"(9) As used in this subsection, the term 'good cause' includes— 
"(A) a natural disaster or civil disorder that adversely 
affects food stamp program operations; 
"(B) a strike by employees of a State agency who are 
necessary for the determination of eligibility and processing 
of case changes luider the food stamp program; 
"(C) a significant growth in food stamp caseload in a State 
prior to or during a fiscal year, such as a 15 percent growth 
in caseload; 
"(D) a change in the food stamp program or other Federal 
or State program that has a substantial adverse impact on 
the management of the food stamp program of a State; and 
"(E) a significant circimistance beyond the control of the 
State agency.". 
Subchapter F—^Uniform Reimbursement Rates 
SEC. 13961. UNIFORM REIMBURSEMENT RATES. 
Section 16 of the Act (7 U.S.C. 2025) is amended— 
(1) in the first sentence of subsection (a)— 
(A) by striking "and (5)" and inserting "(5)"; 
(B) by inserting before ": Provided," the following: *
*
, 
(6) automated data processing and information retrieval 
systems subject to the conditions set forth in subsection 
(g), (7) food stamp program investigations and prosecutions, 
and (8) implementing and operating the immigration status 
verification system established under section 1137(d) of 
the Social Security Act (42 U.S.C. 1320b-7(d))''; and 
(C) in the proviso, by striking "authorized to pay each 
State agency an amount not less than 75 per centimi of 
the costs of State food stamp program investigations and 
prosecutions, and is fiirther"; 
(2) in subsection (g) by striking "an amount equal to 63 
percent effective on October 1, 1991, or and inserting "the 
amount provided under subsection (aX6) for"; 
(3) by striking subsection 0); and 
(4) by redesignating subsection (k) as subsection (j). 
-194 O - 94 - 23 : QL. 3 Part 1 
107 STAT. 680 
PUBLIC LAW 103-66—AUG. 10, 1993 
SEC. 13962. MANDATORY FUNDING FOR NUTRITION PROGRAMS. 
Out of any funds in the Treasury not otherwise appropriated, 
the Secretary of the Treasury shall pay to the Secretary of Agri-
culture $230,000 for each of the fiscal years 1994, 1995, and 1996 
for the piirchase, processing, and distribution of additional commod-
ities which are relatively lower in saturated fats, are a good source 
of calciiun, are relatively low in sodivmi and sugars, or are high 
in iron, and which are a good source of protein or other valuable 
nutrients. Such corrmiodities shall be easy for low-income feunilies 
to use, be not easily spoilable, and be easy to handle. Such commod-
ities shall include low-sodium peanut butters, low-fat or low-sodium 
cheeses, lower fat canned meats, fruits and vegetables, or other 
similar foods. The Secretary shall select 2 States to carry out 
this 3-year reauired effort to improve the health of low-income 
individuals ana to test the acceptability by, ease of storage and 
preparation by, and impact on low-income participants in the emer-
f
ency food assistance program established imder the Emergency 
'ood Assistance Act of 1983 (7 U.S.C. 612 note). These additional 
conunodities shall be provided to each such State and such State 
shall be entitled to receive such commodities during each such 
fiscal vear 1994,1995, and 1996 and in addition to any commodities 
provioed under other Federal programs. Out of $230,000 required 
to be provided each year to tne Secretary of Agriculture by the 
Secretary of the Treasury, $220,000 ($110,000 per State) shall 
be used by the Secretary of Agriculture to purchase, process and 
distribute the commodities to such States and $10,000 ($5,000 
per State) shall be provided to such States for State and local 
E
ayments for costs associated with the distribution of commodities 
y emergency feeding organizations in such States. 
Subchapter G—^Implementation and Effective Dates 
7 use 2025 note. SEC. 13971. IMPLEMENTATION AND EFFECTIVE DATES. 
(a) GENERAL EFFECTIVE DATE AND IMPLEMENTATION.—Except 
as provided in subsection (b), this chapter and the amendments 
made by this chapter shall take effect, and shall be implemented 
beginning on, October 1,1993. 
(b) SPECIAL EFFECTIVE DATES AND IMPLEMENTATION.—(IXA) 
Except as provided in subparagraph (B), section 13951 shall take 
effect on October 1,1991. 
(B) The amendment made by section 13951(c)(2) shall take 
effect on October 1,1992. 
(2XA) Except as provided in subparagraph (B), the amendments 
made by section 13961 shall be ef^ctive with respect to calendar 
quarters beginning on or after April 1,1994. 
(B) In the case of a State whose legislature meets biennially, 
and does not have a regular session scheduled in calendar year 
1994, and that demonstrates to the satisfaction of the Secretary 
of Agriculture that there is no mechanism, under the constitution 
and laws of the State, for appropriating the additional funds 
required by the amendments made by this section before the next 
such regular legislative session, the Secretary may delay the effec-
tive date of all or part of the amendments made by section 13961 
until the begirming date of a calendar quarter that is not later 
than the first calendar qusirter beginning after the close of the 
first regular session of the State legislature after the date of enact-
ment of 
this Act. 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 681 
(3) Sections 13912(a) and 13912(bXl) shall take effect, and 
shall be implemented beginning on, July 1,1994. 
(4) Sections 13911, 13913, 13914, 13915, 13916, 13922, 13924, 
13931,13932, and 13942 shall take effect, and shall be implemented 
beginning on, September 1,1994. 
(5XA) Except as provided in subparagraph (B), section 13921 
shall take effect, and snail be implemented beginning on, September 
1,1994. 
(B) State agencies shall implement the amendment made by inter-
section 13921 not later than October 1,1995. 
governmental 
(6) Section 13912(bX2) shall take effect, and shall be imple-
mented beginning on, January 1,1997. 
relations. 
CHAPTER 4—TIMBER SALES 
SEC. 13981. TABLE OF CONTENTS. 
16 USC 500 note. 
The table of contents of this chapter is as follows: 
CHAPTER 4—TIMBER SALES 
Sec. 13981. Table of contents. 
Sec. 13982. Sharing of Forest Service timber sale receipts. 
Sec. 13983. Sharingof Bureau of Land Management timber sale receipts. 
SEC. 13982. SHARING OF FOREST SERVICE TIMBER SALE RECEIPTS. 
(a) DEFINITIONS.—As used in this section: 
(1) 
APPLICABLE 
PERCENTAGE.—The term 
"applicable 
percentage" means— 
(A) for fiscal year 1994, 85 percent; and 
(B) for each of fiscal years 1995 through 2003, 3 
percentage points less than the applicable percentage for 
the preceding fiscal year. 
(2) 25-PERCENT P
A
Y
M
E
N
T
S TO STATES.—The term "25-per-
cent payments to States" means the 25 percent payments 
authorized by the Act of May 23, 1908 (35 Stat. 260, chapter 
192; 16 U.S.C. 500) for the States of Washington, Oregon, 
and California for the benefit of counties in which national 
forests are situated and that are affected by decisions related 
to the northern spotted owl. 
(3) SPECIAL PAYMENT AMOUNT.—The term "special payment 
amoimt" means the amoimt determined by multiplying— 
(A) the applicable percentage; by 
(B) the annual average of the 25-percent payments 
to States made to a county pursuant to such Acts during 
the 5-year period consisting of fiscal years 1986 through 
1990. 
(b) PAYMENTS.— 
(1) IN GENERAL.—^In lieu of making the 25-percent pay-
ments to States, the Secretary of the Treasury shall make 
payments to States, for the benefit of coimties, that are eligible 
to receive the 25-percent payments to States as of the date 
of enactment of this Act in accordance with paragraph (2). 
(2) AMOUNT OF PAYMENTS.— 
(A) FISCAL YEARS 1994 THROUGH 1998.—For each of fiscal 
years 1994 through 1998, the payment to each State for 
the benefit of each county in the State referred to in para-
graph (1) shall be equ£d to the sum of the special payment 
amounts for each coimty in the State. 
(B) FISCAL YEARS 1999 THROUGH 2003.— 
107 STAT. 682 
PUBLIC LAW 103-66—AUG. 10, 1993 
(i) IN GENERAL.—For each of fiscal years 1999 
through 2003, the payment to each State for the benefit 
of each county in the State referred to in paragraph 
(1) shall be equal to the sum of the pajrments for 
each county in the State as calculated under clause 
(ii). 
(ii) PAYMENTS FOR COUNTIES.—The payment for 
each county referred to in clause (i) shall be equal 
to the greater of— 
(I) the special payment amount for the coimty; 
or 
(II) the share of the 25-percent payments to 
States allocable to the county. 
43 u s e 1181f 
SEC. 13983. SHARING OF BUBEAU OF LAND MANAGEMENT TIMBER 
note. 
SALE RECEIPTa 
(a) DEFINITIONS.—As used in this section: 
(1) 
APPUCABLE PERCENTAGE.—The term "applicable 
percentage" means— 
(A) for 
fiscal 
year 1994,85 percent; and 
(B) for each of fiscal years 1995 through 2003, 3 
percentage points less than the applicable percentage for 
the preceding 
fiscal 
year. 
(2) 50-PERCENT P
A
Y
M
E
N
T
S T
O COUNTIES.—The term "50-
percent pajrments to counties" means the 50-percent share paid 
to coimties in the States of Oregon and California pursuant 
to title II of the Act of August 28, 1937 (50 Stat. 875, chapter 
876; 43 U.S.C. 1181f), and the payments made to counties 
pursuant to the Act of May 24, 1939 (53 Stat. 753, chapter 
144; 43 U.S.C. 1181f-l et seq.). 
(3) SPECIAL PAYMENT AMOUNT.—The term "special payment 
amount" means the amount determined by multiplying— 
(A) the applicable percentage; by 
(B) the annual average of the 50-percent payments 
to counties made to a county pursuant to such Acts during 
the 5-year period consisting of fiscal years 1986 through 
1990. 
(b) PAYMENTS.— 
(1) IN GENERAL.—In lieu of making the 50-percent pay-
ments to counties, the Secretary of the Treasury shall make 
pa3rments to counties that are eligible to receive the 50-percent 
payments as of the date of enactment of this Act in accordance 
with paragraph (2). 
(2) AMOUNT OF PAYMENTS.— 
(A) FISCAL YEARS 1994 THROUGH IQQS.-For each of fiscal 
years 1994 through 1998, the Secretary of the Trecisury 
shall pay to each county referred to in paragraph (1) the 
special payment amount. 
(B) FISCAL YEARS 1999 THROUGH 2003.—For each of fiscal 
years 1999 through 2003, the Secretary of the Treasury 
shall pay to each county referred to in paragraph (1) the 
greater o
f
— 
(i) the special payment amount; or 
(ii) the share of the 50-percent payments to coun-
ties allocable to the county. 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 683 
TITLE XIV—BUDGET PROCESS 
PROVISIONS 
SEC. 14001. PURPOSE. 
The Congress declares that it is essential to— 
(1) preserve the deficit reduction achieved by this Act; 
(2) extend the system of discretionary spending limits for 
the single discretionary category set forth in section 601 of 
the Congressional Budget Act of 1974; 
(3) extend the pay-as-you-go enforcement system; and 
(4) prohibit the consiaeration of direct spending or receipts 
legislation that would decrease the pay-as-you-go surplus 
achieved by this Act and created under section 252 of the 
Balanced Budget and Emergency Deficit Control Act of 1985. 
SEC. 14002. DISCRETIONARY SPENDING UMITS. 
(a) DEFINITION OF T)iscREnoNARY SPENDING LIMIT*.—Section 
601(aX2) of the Congressional Budget Act of 1974 is amended— 2 use 665. 
(1) in subparagraph (D) by striking the word "and"; and 
(2) by inserting aner subparagraph (£) the following: 
"and 
"(F) with respect to fiscal years 1996, 1997, and 1998, 
for the discretionary category, the amounts set forth for 
those years in section 12(bXl) of House Concurrent Resolu-
tion 64 (One Hundred Third Congress);". 
(b) POINT OF ORDER IN THE SENATE.—Section 601(bXl) of the 
Congressional Budget Act of 1974 is amended to read as follows: 
"(1) Except as otherwise provided in this subsection, it 
shall not be in order in the Senate to consider any concurrent 
resolution on the budget for fiscal year 1995, 1996, 1997, or 
1998 (or amendment, motion, or conference report on such 
a resolution) that woidd exceed any of the discretionary spend-
ing limits in this section.". 
(c) CONFORMING AMENDMENTS.—(1) Section 251 of the Balanced 
Budget and Emergency Deficit Control Act of 1985 is amended— 2 use 901. 
(A) in subsection (a) by striking "FISCAL YEARS 1991-1995 
ENFORCEMENT.—" and inserting "FISCAL YEARS 1991-1998 
ENFORCEMENT.—"; 
(B) in subsection (bXl)— 
(i) in the matter before subparagraph (A), by— 
(I) striking "When the President submits the 
budget under section 1105(a) of title 31, United States 
Code, for budget year 1992, 1993, 1994, or 1995" and 
inserting "When the President submits the budget 
under section 1105(a) of title 31, United States Code, 
for budget year 1992, 1993, 1994, 1995, 1996, 1997, 
or 1998*; and 
(II) striking "the budget shall include, adjustments 
to discretionary spending limits (and those limits as 
cumulatively adjusted) for the budget year and each 
outyear through 1995" and inserting "the budget shall 
include, adjustments to discretionary spending limits 
(and tJiose limits as cumiilatively adjusted) for the 
budget year and each outyear through 1998"; 
(ii) in paragraph (IXB), by inserting at the end thereof 
the following new clause: 
107 STAT. 684 
PUBLIC LAW 103-66—AUG. 10, 1993 
"(iii) For a budget submitted for budget year 1996, 
1997, or 1998, the adjustments shall be those necessary 
to reflect changes in inflation estimates since those 
of March 31, 1993, set forth on page 46 of House 
Conference Report 103-48."; 
(iii) in the matter before subparagraph (A) in para-
graph (2) b y -
C
D striking "When 0MB submits a sequestration 
report under section 254 (g) or (h) for fiscal year 1991, 
1992, 1993, 1994, or 1995* and inserting "When 0MB 
submits a sequestration report imder section 254 (g) 
or (h) for fiscal year 1991, 1992, 1993, 1994, 1995, 
1996,1997, or 1998"; and 
(II) striking "for the fiscal year and each succeed-
ing year through 1995," and inserting "for the fiscal 
year and each succeeding year through 1998,"; 
(iv) in paragraph (2XDXi), by striking "for fiscal year 
1991, 1992, 1993, 1994, or 1995," and inserting "for any 
fiscal year,"; 
(v) in paragraph (2XE), by— 
(I) striking the final word "and" in subparagraph 
(ii); and 
(II) inserting before the final period the following: 
"; and 
"(iv) if, for fiscal years 1994, 1995, 1996, 1997, 
and 1998, the amount of new budget authority provided 
in appropriation Acts exceeds the discretionary spend-
ing limit on new budget authority due to tecnnical 
estimates made by the director of the Office of Manage-
ment and Budget, the adjustment is the amount of 
the excess, but not to exceed £in amount (for any one 
fiscal year) equal to 0.1 percent of the adjusted 
descretionary spending limit on new budget authority 
for that fiscal year"; and 
(vi) in paragraph (2XF), by inserting immediately 
before the final period the foUowing: ", and not to exceed 
0.5 percent of the adjusted descretionary spending limit 
on outlays for the fiscal year in fiscal year 1996, 1997, 
or 1998". 
(2) REPORTS.—Sections 254(dX2) and 254(gX2XA) of the Bal-
2 use 904. 
anced Budget and Emergency Deficit Control ^ t of 1985 are each 
amended by striking "1995" and inserting "1998". 
2 use 900 note. 
(3) EXPIRATION.—(A) Notwithstanding section 275(b) of the Bal-
anced Budget and Emergency Deficit Control Act of 1985, sections 
250, 251, 252, and 254 through 258C of that Act shall expire 
on September 30,1998. 
2 use 665 note. 
(B) Section 607 of the Congressional Budget Act of 1974 is 
amended by striking "shall apply to fiscal years 1991 to 1995" 
and inserting "shall apply to 
fiscal 
years 1991 to 1998". 
SEC. 14003. ENFORCING PAY-AS-YOU-GO. 
(a) Section 252 of the Balanced Budget and Emergency Deficit 
2 use 902. 
Control Act of 1985 is amended— 
(1) in subsection (a), by striking "FISCAL YEAR 1992-1995 
ENFORCEMENT." and inserting 
"FISCAL YEAR 1992-1998 
ENFORCEMENT."; 
PUBLIC LAW 103-66—AUG. 10, 1993 
107 STAT. 685 
(2) in subsection (d), by striking ''estimate of the amount 
of cheinge in outlays or receipts, as the case may be, in each 
fiscal year through fiscal year 1995" both places that it appears 
and inserting ''estimate of the amount of change in outlays 
or receipts, as the case may be, in each fiscal year through 
fiscal year 1998" both places; and 
(3) in subsection (e), bv striking "for fiscal year 1991, 1992, 
1993, 1994, or 1995," and inserting "for any fiscal year firom 
1991 through 1998,". 
(b) Section 254(gX3) of the Balanced Budget and Emergency 
Deficit Control Act of 1985 is amended by striking "1995"*^ and 
2 use 904. 
inserting "1998". 
(c) Upon enactment of this Act, the director of the Office of 2 use 902 note. 
Management and Budget shall reduce the balances of direct spend-
ing and receipts legislation applicable to each fiscal year under 
section 252 of the Balanced Budget and Emergency Deficit Control 
Act of 1985 by an amount equal to the net deficit reduction achieved 
through the enactment in this Act of direct spending and receipts 
legislation for that year. 
SEC. 14004. EXERCISE OF RULE-MAKING POWERS. 
2 USe 900 note. 
The Congress enacts the provisions of this part— 
(1) as an exercise of the rule-making power of the Senate 
and the House of Representatives, respectively, and as such 
these provisions shall be considered as part of the rules of 
each House, respectively, or of that House to which they specifi-
cally apply, and such rules shall supersede other rules only 
to the extent that they are inconsistent therewith; and 
(2) with full recognition of the constitutional right of either 
House to change such rules (so far as relating to such House) 
at any time, in the same manner, and to the same extent 
as in the case of any other rule of such House. 
Approved August 10, 1993. 
LEGISLATIVE HISTORY—H.R. 2264 (S. 1134): 
HOUSE REPORTS: Nos. 103-111 (Comm. on the Budget) and 103-213 (eomm. of 
CONGRESSIONAL RECORD, Vol. 139 (1993): 
May 27, considered and passed House. 
June 23, 24, S. 1134 considered in Senate; H.R. 2264, amended, passed in lieu. 
Aug. 5, House agreed to conference report. 
Aug. 6, Senate agreed to conference report. 
WEEKLY COMPILATION OF PRESIDENTIAL DOCUMENTS, Vol. 29 (1993): 
Aug. 10, Presidential remarks.